Urbanization, informal sector, and development

Urbanization is a universal phenomenon in the postwar world, but its qualitative nature is varied across countries. Some nations have experienced urbanization that accompanied skill upgrading, industrialization, and the expansion of the urban formal (modem) sector, but others urbanized without such modernization and underwent the expansion of the urban informal (traditional) sector simultaneously. The question that naturally arises is what are the underlying causes for the differences. The purpose of the paper is to tackle this question analytically based on a dynamic model of urbanization and development. (C) 2006 Elsevier B.V. All rights reserved.