Economic Dependence, Overurbanization, and Economic Growth: A Study of Less Developed Countries

Abstract

Excessively large and rapidly growing urban populations characterize social structural change in less-developed countries. This is in contrast to the developmental patterns which accompanied structural transformation in the presently rich, industrialized countries of the world. Many less-developed countries are thus said to be “overurbanized.” In this paper, quantitative cross-national data are brought to bear on the hypothesis that overurbanization has been fue1ed by the economic dependence to which these countries are, to varying degrees, subject. The hypothesis that the degree of overurbanization and changes therein inhibit economic growth is also examined. But the overurbanization question is often framed as a matter of the relative distribution of the labor force into service and manufacturing occupations. We herefore examine parallel hypotheses which define overurbanization in terms of the urban labor distribution. Constraints on the availability of labor force data, however, relegate these findings to a subordinate role.Panel regression analysis provides support for the proposition that dependence upon foreign capital leads to overurbanization (defined as either the urban/development relationship or in terms of labor structure imbalance). Furthermore, relative increases in overnrbanization are consistently accompanied by relative declines in per capita economic growth, though the effects of higher levels of overurbanization do not appear to impede economic growth.

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