Do macroeconomic factors promote urbanization? Evidence from BRICS countries
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Do macroeconomic factors promote urbanization? Evidence from BRICS countries Sabyasachi Tripathi1,2 Received: 17 June 2020 / Accepted: 24 October 2020 © The Japan Section of the Regional Science Association International 2020
Abstract Macroeconomic factors linking urban policies are missing in fast-growing Brazil, Russia, India, China, and South Africa (BRICS) countries. In this context, we assess the impact of macroeconomic factors on urbanization that is measured by the size, growth, and density of urban populations. In this paper, we estimate the dynamic panel data models for the period of 1960–2015 with a 5-year interval data by considering BRICS countries. Our analysis suggests that to increase the percentage of urbanization foreign direct investment, gross domestic product (GDP), exports and imports of goods and services, broad money, inflation, employment in industry and services, the population aged 15–64 years, and use of energy are very important. However, the GDP growth rate and gross capital formation matter for increasing the size and growth rate of the urban populations. Finally, we suggest that to make urban policies more effective and instrumental to higher economic development, macroeconomic factors must be linked with regular urban policies. Keywords Macroeconomic factors · Development · Urbanization · BRICS countries JEL Classifications R11 · E31 · O11
1 Introduction It is time that we promote urbanization, especially for developing countries from a macroeconomic perspective. No country has ever reached middle-income status without a significant increase in urbanization (Annez and Buckley 2009). Urbanization has contributed not only to higher income but also it has improved people’s lives (Jacobs 1984; Hall 1998). Therefore, the promotion of urbanization is very * Sabyasachi Tripathi [email protected] 1
National Research University Higher School of Economics, 20 Myasnitskaya St, 101000 Moscow, Russia
2
Adamas University, Kolkata, India
13
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Asia-Pacific Journal of Regional Science
important for many developing countries such as India. As per the data, International Monetary Fund 2019 estimated that India is the 5th largest economy in the world in terms of nominal gross domestic product (GDP) with $3 trillion. But in terms of per capita GDP, its world rank is 142. This could be because of unequal distribution of GDP. But India’s extent of inequality is medium. Almost 22% of Indians are living below the poverty line with higher rural poverty in 2011–2012. This indicates that India’s abundant resources such as labor and land are not used productively through urbanization. India’s progress of urbanization is very low compared to its peers. Turok (2014a) argued that India’s urbanization model is unsteady. This story, in perspective, holds true for many large developing countries such as China, South Africa, and Russia. Now the question that arises is what is the impact of urbanization? How does it improve people’s incomes? The basic idea is that urbanization p
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