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Rural - Urban Migration and Urbanization: India and Botswana

Dr. Dawit Eshtu March 13, 2012 BRDV9206 Daniel Zwart, Mark Druzina

Introduction ! The world is experiencing a massive social and economic shift that has never before been seen in human history. The high rate of rural-urban migration around the globe, this is especially prevalent in developing countries in Africa, Latin America, and Asia. The case study discussed in this paper focuses on India and Botswana, and how urbanization economies and rural-urban migration has affected them. The United Nations documented that in 2008, the world became more urban than rural, a rst in human history. Furthermore, it is estimated that by 2050 the world population will surpass nine billion inhabitants. The population growth will be most extreme in the developing world. (Todaro & Smith, 2012) India Population: 1.2 billion (approximately) Density: 372.5/km2 GDP (PPP): $4.7 trillion (estimate)(total), $3,851 (per capita)(estimate) GDP (Nominal): $1.95 trillion (estimate)(total), $1,592 (per capita)(estimate) Gini Coefcient: 36.8 HDI: 0.547 Currency: Indian Rupee Area: 3.2 million km2 ("India - data,") Summary of the Case ! Bajswajit Banejee studied rural to urban migration in India. The assumption was that this event could be translated statically to better understand the reasonings behind rural to urban migration. The ndings found that the main reasoning behind rural-urban migration was that the employment in an urban centre produced higher wages and consistent employment. Furthermore the waiting time for a rst job was short, with 64% of the migrants receiving their rst job within one week. The average waiting time was 17 days. (Todaro & Smith, 2012) However most of the migrants were working within the informal sector, an example of this is a family run and owned business such as a corner store or market stand. The informal sector has the characteristics of low-skilled, low productivity, and usually self employed jobs. Interestingly the informal sector has the potential to produce up to one-third of the income in an urban sector. It was viewed that the migrants would use the informal employment as a stepping stone into the modernformal sector, but only 5% to 15% made this shift over a year in which the study was made. The rural migrators were more attracted to the informal positions such as general laborers and manufacturing positions. The migrants that made direct entry into formal contacts did so through personal contacts, about two-thirds of direct entrants. Similarly one third of the migrants that switched from informal to formal also did so through personal contacts. Many of the rural migrants kept their ties with the villages that they migrated from, and 60% of those that kept ties transferred their earned income back to the village, approximately 23%. Again, the primary reasoning for migration was higher wages, and better employment with more opportunities available to them.(Todaro & Smith, 2012)

Botswana - Statistics Population: 2.02 million (approximately) Density: 3.4/km2 GDP (PPP): $29.7 billion (total), $16,029 (per capita) GDP (Nominal) $17.57 billion (total), $9,480 (per capita) Gini Coefcient: 63 HDI: 0.633 Currency: Pula Area: 581,730km2 ("Botswana - data,") Summary of the Case ! Robert E.B. Lucas performed a study of migrational behavior in Botswana, the report he led included great care and detail in its creation. The econometric model he created was developed into four groups of equations; employment, earnings, internal migration, and migration to South Africa. The ndings were that unadjusted urban incomes were 68% higher than rural incomes for males only, however the inequality was lessened when education and experience were brought into the equation. Furthermore the employment, as with India, was much more consistent than that of rural jobs. The higher the expected earnings, the higher of the probability of expected employment, the higher the chance that individual would migrate. The same is true if that attitude is taken towards rural jobs. Interestingly, it has been estimated that the creation of one job in an urban centre would draw more than one new migrant from the rural areas. Differing from India, migrants in Botswana moved to town sized urban centers as opposed to metropolitans such as Delhi or Mumbai. (Todaro & Smith, 2012) Issues with Rural-Urban Migration ! When discussing the relatively modern issue of mass rural-urban migration, we have to look at urbanization to rst understand some of the major issues surrounding it. Urbanization has clear trends in the world, there is a positive correlation between urbanization and per capita income. When the per capita income of country is high, like that of Switzerland, Netherlands, or Finland; the urbanization of that country is also high. Whereas some of the worlds poorest countries like Somalia, have the lowest levels of urbanization because the income per capita is also the lowest. It is important to remember that the developing of today are far more developed, then when the developed countries of today were at a comparable development level. (Todaro & Smith, 2012) ! Urban Giantism is a hefty issue with mass rural-urban migration, especially in developing countries. In simpler terms, urban giantism causes a city to grow in population faster than the infrastructure can handle. There are several reasons for why this is caused, for example in an unstable dictatorship, the rst city bias is used strongly to allow the largest concentration of country in one place. This allows the dictatorship to maintain control of the population through the rst city bias. An estimated 37% of the population will live in the rst-city. Where in stable democracies, only an estimated 23% of the population will live in the rst-city, because the bias is not nearly as strong.

! Urban giantism is a breeding ground for poverty, poor infrastructure, and economic instability. India and Botswana do not appear to suffer from this problem, despite that India has a population of over one billion people. (Todaro & Smith, 2012) ! While the informal sector of business is very popular in the major cities of developing countries, many cities suffer from out dated laws on housing and infrastructure. For example, as stated in the textbook, in Nairobi, Kenya, it is illegal to build a home for less than $3,500 dollars. Many people cannot afford to build proper housing and such the slums that people are living in are not able to improve. Ruralurban migration further worsens the slums because the migrants also cannot afford the proper housing, so they build more shanties and shacks in the slums. The population density also increases because the slums are built in it small areas of the city, as they arent technically legal. These people also do not have easy access to things like running water and clean air. Harris-Todaro Model and Implications ! According to the Todaro model, migration is an economically rational decision made by many families across the developing world. Leaving one area of the country in search of better wages and opportunities is completely normal. Unfortunately because of the inequalities between rural and urban wages, Harris-Todaro model shows that there is a wage gap between the two areas. Ideally if there was equilibrium, the wages would be equal. Thus, there wouldnt be heavy migration in the developing world. There are four major characteristics of the Todaro migration model: 1. Migration is stimulated primarily by rational economic considerations for relative benits and costs, mainly nancial. 2. The decision to migrate depends greatly on expected rather than actual urban-rural real-wage differentials where the expected differential is due to two factors; actual urban rural wage difference, and probability of employment. 3. The probability of employment in an urban center is directly correlated to the unemployment rate. 4. Migration rates are generally higher than urban employment rates. Which leads to higher urban unemployment and labour shortages in the rural sector. (Todaro & Smith, 2012) ! While the Harris-Todaro model provides rational decisions for why people migrate, the socioeconomic conditions are not always as optimistic. If there is wide spread migration in a short period of time, then there can be higher levels of unemployment, lower wages, and rural labour shortages. The problem is also expands upon itself because the expected wages are higher in urban centers, which causes more migration, more unemployment, and busier cities. ! Creating more urban-modern sector jobs without creating improvements in rural incomes and employment is not an appropriate solution either, because in the ruralurban migration case the Keynesian economic solution has the potential to lead to further unemployment. This is again connected to the expected incoming-earning by migrants into urban centers. If 100 new jobs are created in the urban sector, potentially 300 rural migrants may come to the city. Leaving 200 unemployed, as well as lower agricultural output. This is known as induced migration. Those that have been more well educated are also at rst pick for employment, because employers tend to use the

amount of years in school as rational for choosing employees. In the case of the migrants from rural areas, many of them are under educated and may not be considered or rst choice for a job position. This adds to further unemployment and counter productivity in an economy. Wage subsidies in urban centers are also considered ineffective. The correct wage is often not used, and this encourages more labour intensive employment opportunities, which can have a positive affect. However, induced migration counter acts this idea because the expected-income earning is enticing to many rural dwellers and would raise unemployment. The problem cannot be solved unless the government puts more resources into improving the employment opportunities and wages in the rural sector, as well as using the correct wage in urban centers. In this way both sectors can development and lower unemployment rates. (Todaro & Smith, 2012) Discussion Questions 1. How do you see the application of Todaro model in India and Botswana? ! The Todaro model is used in India and Botswana in similar ways. While the urban centers in Botswana are much smaller than that of India, the rural migrants were moving to cities with economic purpose, to nd better employment. The rural regions do not provide enough reliable and well paying jobs, so they must move to survive. The HarrisTodaro graph shows the wage-gap between urban and rural wages, and effectively explains the unemployment and low-paying informal sector jobs. 2. What social and economic factors are behind rural-urban migration in the two countries? ! Economically both countries are experiencing similar reasoning behind ruralurban migration, in search of better employment. India is one of the faster growing economies in the world and is seeing an incredible rise in the amounts of middle class individuals living in cities. Botswana is a much smaller country, with a smaller GDP and a smaller population. The GDP per capita is higher in Botswana than it is in India, and the population density of Botswana is also much lower than India. Socially the higher wage allows for a higher standard of living and the potential for a better life than that of a farmer. 3. What kinds of policies are required to effectively address the rural migration problem? ! Both countries need to adapt a policy that encompasses more than just the urban centers. The problem will become that there will be too many people in the cities and not enough farmers to feed them. India and Botswana need to improve wages and employment opportunities in the rural parts of their countries as well as improve policies in the urban centers. Modern sector jobs will lower unemployment if it is done simultaneously with rural improvements. Less people will migrate and more people in urban environments will be working, both sectors will develop more and improve further.

4. How is the rural-urban migration in less developed countries different from developed countries? ! In a developed country like Canada, migrating to an urban center is a choice much more than it is a necessity. Rural employment such as farming is on a larger scale and is more lucrative than in India or Botswana. Furthermore the rural jobs are well protected and government incentives allow farmers to expand their businesses, higher employees, and buy equipment to lighten the heavy labour.

Works Cited Todaro, M. P., & Smith, S. C. (2012). Economic Development . (11th ed., pp. 311-355). Addison-Wesley. Botswana - data. (n.d.). Retrieved from http://data.worldbank.org/country/botswana India - data. (n.d.). Retrieved from http://data.worldbank.org/country/india