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WP/050 Can Cities or Towns Drive African Development? Economy-wide Analysis for Ethiopia and Uganda

Rapid urbanization is an important characteristic of African development and yet the structural transformation debate focuses on agriculture’s relative merits without also considering the benefits from urban agglomeration. As a result, African governments are often provided conflicting recommendations on the importance of rural agriculture or urban industry. We develop dynamic economy-wide models for Ethiopia and Uganda that capture both traditional aspects of the debate (growth linkages and foreign trade) and benefits from urbanization (internal migration and agglomeration effects). Simulations suggest that urban agglomeration is an important source of long-term growth and structural transformation, but that investing in cities does not greatly reduce national poverty over the short-term. In this regard, agricultural growth is more effective, albeit with slower national growth. Given these trade-offs, we conclude that the urbanization’s benefits argue against an ‘agro-fundamentalist’ approach to African development, but the short-term imperative of reducing poverty necessitates further agricultural investment.
Publisher:
UNU-WIDER
Series:
WIDER Working Paper
Volume:
2012/50
Title:
WP/050 Can Cities or Towns Drive African Development? Economy-wide Analysis for Ethiopia and Uganda
Authors:
Paul Dorosh, and James Thurlow
Publication date:
May 2012
ISBN 13 Web:
978-92-9230-513-0
Copyright holder:
© UNU-WIDER
Copyright year:
2012
Keywords:
urbanization, rural development, growth, poverty, CGE model, Africa
JEL:
D58, O18, R11, R23
Project:
New Directions in Development Economics (2010)
Sponsor:
UNU-WIDER acknowledges the financial contributions to the research programme by the governments of Denmark (Ministry of Foreign Affairs), Finland (Ministry for Foreign Affairs), Sweden (Swedish International Development Cooperation Agency—Sida) and the United Kingdom (Department for International Development).
Format:
online
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