Urbanization, Industrialization and Inequalities in Africa: does threshold matter?

Bruno Emmanuel Ongo Nkoa,Jaques Simon Song,Richard Zogo Ekassi

doi:10.18535/ijsrm/v9i08.em01

Abstract

This paper examines the impact of urbanization and industrialization on observed inequalities in a sample of 48 African countries. We specify and estimate a panel data model using the Generalized Method of Moments-System (GMM-S) over the period 1980-2016 along the different dimensions of inequality. Our results show that urbanization increases income, environmental and housing inequalities in Africa, while industrialization reduces them. Our results remain robust with the use of Panel Smooth Transition Regression Model (PSTR) and Panel Transition Regression Model (PTR). We suggest taking into account the disparities identified in the inclusive urbanization and industrialization policies of African cities.

Highlights

Two major facts have characterized economic development in Africa for at least three decades: rapid urbanization and steady deindustrialization
The results of the basic model Effects of urbanization and industrialization on income inequality Overall, the results show that income inequality in the previous year has a memory effect and significantly increases income inequality in the current year
The results suggest that urbanization increases income inequality

Summary

Introduction

Two major facts have characterized economic development in Africa for at least three decades: rapid urbanization and steady deindustrialization. Urbanization, GDP/capita, and governance have positive and statistically significant effects on housing inequality in Africa This result is explained by the fact that urbanization implicitly induces poor housing conditions, overcrowding, noise pollution, unemployment, poverty, and cultural dislocation that exacerbate health problems, anxiety, depression, insomnia, and substance abuse. Taking urbanization and industrialization into account shows a reduction in housing inequalities through sectoral policies that create jobs and access to basic social services Achieving this result depends on an acceptable level of income, pro-poor domestic investment, market-creating FDI, and sustainable democracy through agglomeration economies that make the urban habitat more attractive.

Robustness analysis

Findings

Conclusion and policy Recommendations