NAMA : SHABRINA AYU LARASATI

NIM : C1G016013

DEVELOPMENT ECONOMICS - URBANIZATION AND RURAL URBAN

MIGRATION: THEORY AND POLICY

A. DIRECTION OF MIGRATION AND URBANIZATION

The very complex dilemma of the development process is the phenomenon of massive
and unprecedented population movements in various rural areas to cities in Africa, Asia and
Latin America.

B. URBANIZATION: TRENDS AND PROJECTIONS

The positive link between urbanization and per capita income is one of the most obvious
and surprising "facts that are bent" from the development process. Generally, the more
advanced a country is, as measured by per capita income, the more the population lives in urban
areas. The highest income countries, most of them live in cities or are most urbanized, while
the poorest countries are those with the majority of the population not living in cities. At the
same time, when many countries become more urbanized as development progresses, today
the poorest countries are far more urban than developed countries when the level of
development is equal, as measured by per capita income; and the poorest countries (LDCs or
less developed countries) are experiencing urbanization at a faster rate. Urbanization can occur
anywhere in the world, even at different rates.

The population of the urban population in the world today is almost as large as the
population of the countryside for the first time in history. Almost all of the increase in world
population will come from the growth of urban areas, along with the continued flow of migrants
from rural areas to urban areas and in line with the pace of urbanization in the third world
which continues to approach the level that occurs in developed countries.

The core question of the surge in population in the urban area is: How cities in the
poorest countries will overcome various problems, whether those with economic dimensions,
the environment, or those with political dimensions, due to the concentration of the population.
Perhaps the surge in total population will indeed bring certain economic benefits, such as the
creation of giant economies of scale that allow savings in cost units to carry out various types
of production activities, implement services and social facilities, very large sources of skilled
labor, and so on. However, the social costs that will arise are also enormous. The current
population explosion has in fact been very difficult to balance with the provision of adequate
housing and other social services. This has not yet been counted as an increase in crime,
pollution of the environment, traffic congestion, and so on. In summary, the magnitude of the
benefits brought about by the population explosion, the costs, losses, and difficulties that will
be caused are even greater.

Along with the continued expansion of urbanization and urban bias in the development
strategy, there are also thriving bags of slum settlements and villages in the midst of shantytown
cities. More and more urban residents will stay huddled in various residential centers that are
actually not suitable for humans. Settlements are all dirty and far from the standard of health
and comfort of life. Today, of all urban populations in various Third World countries, more
than a third are slum dwellers.

Although population growth and migration from rural to urban areas that continue to
increase are the main causes of the increasing number of slum settlements in cities, most of
them are caused by the poorest governments in each country. Conscious or not they also helped
create the slums. Errors in formulation and or implementation of government policies in urban
development and urban planning that are also often outdated have resulted in 80% to 90% of
existing housing in urban areas being classified as "illegal".

Nearly all countries that are concerned about the number and population growth in their
cities are aware that internal migration from village to city is the main cause. Concern and
anxiety about the rapid growth of urban population in developing countries reveals the most
important issue to be discussed, namely how far the government in a country can formulate
development policies that have a definite impact on urban growth. The orthodox development
strategy that was carried out in the past few decades, which prioritized industrial
modernization, technological sophistication, and the growth of the metropolis clearly created
geographical inequality in spreading economic opportunities or opportunities, as well as being
the main cause of the large-scale migration of villagers to cities -the city constantly.

C. CITY ROLE

In general, a city is formed because it can provide cost advantages to producers and
consumers, through what is known as agglomeration economis. Agglomeration economics
comes in two forms, namely:
 1. Urbanization economies: i.e. impacts related to the growth of a generally centralized
geographical area.
2. Localization economies: i.e. impacts caused by special sectors in the economy. The
localization economy often appears in the form of forward and backward linkages;
when transportation costs are significant, industrial output users will benefit from
choosing a location closer to the market to save costs. This advantage is one type of
linkage going forward. In addition, companies engaged in the same industry or related
industries can also benefit because they choose locations in the same place, so that they
can attract a large number of workers who have special skills needed in the sector, or
because of specialized infrastructure. This is a form of backward linkage. Workers with
special skills in accordance with the industry will prefer to live in the same location, so
that they can easily find new jobs or have a more favorable position in choosing the
opportunities available.

D. INDUSTRIAL DISTRICT

Companies also often choose locations where they can learn about the activities of other
companies in the same industry. This learning can be done in the form of formal relationships,
such as joint ventures and informal relations. So medium-sized companies do not need to reject
large orders due to limited production capacity that is "flexible specialization".

Many growing supporting evidence shows that the localization of industry today is
becoming very common in developing countries, at the stage of industrial development that
varies from home industries to the use of more modern technique and will be a significant
factor in developing competitive advantage.

Not all collective efficiency gains from the existence of industrial districts are obtained
through passive locations. Some others are made actively through joint investment and various
promotional activities from many companies within the company's capabilities in the district.
The factor that determines the dynamism of a district is the ability of companies in it to find a
mechanism for carrying out these collective actions. While the government can provide
financial support from other important services in facilitating cluster development, social
capital is also important, especially trust in the group and shared history of successful collective
action, which certainly requires time to develop. The government can help this process by
bringing together the relevant parties to work together in achieving small goals, before trying
to achieve greater goals, but social capital usually grows organically in the economic
community and clearly cannot be forcibly grown. Even with collective action to trigger passive
profits from the agglomeration economy, traditional clusters may not be able to survive in their
original form in order to enter the more advanced stages of industrialization.

E. EFFICIENT URBAN CITY SCALE

There are two theories about the size of the city that are generally known, namely the city
hierarchy model or central place theory (urban hierarchy model / central place theory) and
differentiated land model (differentiated plane model).

1. City hierarchy model or central place theory (urban hierarchy model / central place
theory)
According to August Losch and Walter Christaller, various factories from different
industries have a radius of market characteristics resulting from the introduction of
three factors: economies of scale in production, transportation costs, and how the
demand for land is spread compared to available places. The greater the economic scale
used and the lower the transportation cost, the greater the radius served by the industry
to reduce costs. Conversely, if land prices increase rapidly in the city concerned, it will
produce smaller service areas. As a result, small towns have activities that serve a
narrow range, while larger cities have activities that can have a wide and narrow range.
Generally, activities on a national scale, such as government or finance, will be placed
in one city. This approach can be better implemented in industries that are not involved
in foreign trade than the export industry. When a country has different specializations
in international markets or in different stages of economic development, the range of
intercity distributions will have a potential difference.
2. Differentiated plane models.
In the theory of this second model proposed by Weber, Isard, and Moses, the limitations
of transportation routes that connect various industries in an economy have a very
important role. This model predicts the concentration of a city when the existing
transportation routes are limited, called "internal nodes". The hierarchy of the size of
the city depends on the pattern of the nodes and the existing industrial mix. The primary
industrial process has only a few inputs and is usually located near the location of the
main resource. Even so, there will be several reasons for industries that have a future
 (upstream) and backward (downstream) relationship that is strong enough to be placed
in the same city.

F. PROBLEMS THAT CONSTRAINED GIANT CITY

In developing countries, governments are less involved in dividing economic activity into
measures that are more likely to be managed properly or even if they are involved, this
involvement is often ineffective.

G. BIAS AGAINST CUSTOMERS

One deviant view that often causes quite complicated problems can be called a bias towards
the capital (first city bias). This means that the largest city of the country receives enormous
public investment and encourages disproportionate private investment, compared to the second
city or other smaller cities in the country. As a result, the capital has a very large population
and an inefficient and disproportionate level of economic activity.

H. CAUSE OF THE INCREASE OF GIANT CITY

In general, the problems posed by the city are likely to come from a combination of hub-
and-spoke transportation systems and political capital placement in the largest cities, thus
combining the impact of the city hierarchy model with the impact of differentiated land models.
Another recent explanation for the big city is focused on the efforts of dictators to remain in
power in their country.

In developing countries, until now there are only a few countries that use a democratic
system that works effectively. Political economic factors ultimately have an important
contribution in giving birth to the giant capital (capital city giantism) is more profitable for
companies to choose locations where they get easier access to government officials. The
problem of this giant capital can also be seen as a form of underdevelopment trap, which can
be avoided as a whole through the implementation of democratic policies along with the
balance of the climate of competition for export and domestic consumption.

Four explanations outlining the causes of the emergence of giant cities, namely: production
for the domestic market which is loaded with protection and high transportation costs; very few
smaller cities are sufficient to become alternative locations for companies that reflect
infrastructure patterns; the location of the capital in the largest city; and the political logic of
an unstable dictatorship melengkapi is complementary and helps explain some democratic
advantages with more balanced economic policies, including more planned investments in
infrastructure. If carried out consequently, these countries have the ability to avoid a number
of costs that can be caused by giant cities.

I. INFORMAL SECTOR IN URBAN

The main focus of the theory of development is on the nature of each country developing
which is dualistic. The existence of the modern capitalist sector capital and capital involving
large-scale production is present simultaneously with the agricultural-traditional sector
subsystem which is labor intensive and has small-scale production. In recent years, the analysis
of these dualistic traits has also been applied specifically to urban economies which have been
divided into formal and informal sectors.

The existence of the informal sector (informal sector), which was generally not organized
and specifically organized through the regulation, was officially known only in the 1970s after
a series of observations in several developing countries where a large number of urban workers
did not get a place or employment in the sector modern formal. The informal sector continues
to play an important role in developing countries, even though for years it has been neglected
or even opposed. In many developing countries, about half of the urban population works in
the informal sector. the informal sector is generally characterized by several unique
characteristics such as the very varied fields of production of goods and services, small scale,
production units owned individually or family, many use labor (labor intensive), and the
technology used is relatively simple. This sector tends to operate as companies monopolize
competition in the face of decreasing income, overcapacity, and controlling profit competition
(income) which decreases against the average price of new potential labor offers.

J. POLICY FOR THE URBAN INFORMAL SECTOR

The informal sector is related to the rural sector in terms of the area or rural sector is an
excess source of poor labor, which then fills the informal sector in urban areas to avoid poverty
and unemployment in the village, although actual working conditions and quality of life in
cities are not necessarily better. In addition, the informal sector is also closely related to the
urban formal sector; that is, the formal sector depends on the informal sector in the supply of
production inputs and cheap labor, while the informal sector relies heavily on the formal sector
in its position as the principal market of most of the income they receive.
 There are several arguments that also underline the importance of promoting the informal
sector. First, the available evidence shows that the informal sector is able to create a surplus,
even in the midst of a hostile environment, which prevents access to various facilities and
facilities commonly offered to the formal sector such as the availability of credit, foreign
exchange and tax concessions. So the surplus that it produces proves to be a very positive driver
for urban economic growth. Second, as a result of the low intensity of capital, the informal
sector only requires a small portion of capital from the amount of capital needed by the formal
sector to employ a number of the same workforce. This is one of the ways to save big enough
for developing countries that often face difficulties or lack of capital. Third, the informal sector
is also able to provide vocational training and apprenticeship at very low costs when compared
to costs that play an important role in the formation or formation and formation of human
resources.

Nevertheless, the promotion of the informal sector also contains several kinds of problems
or weaknesses. One of them is based on the very close relationship between rural-urban
migration and employment by the sector. In addition, if the informal sector develops too large,
the environmental conditions in urban areas will get worse. The promotion of the informal
sector also encourages the proliferation of slums and low-income environments, which if
combined with poor quality public services can lead to various urban barriers.

Limited working capital is a major obstacle to activities in the informal sector. Therefore,
the provision of soft loans will greatly help small business units in the informal sector to
develop and produce more profits, so that in the end they can create more income and
employment. Appropriate technology assistance will also provide similar results. Providing
infrastructure facilities and supporting work locations can prevent the emergence of
environmental problems along with the development of the informal sector. even more
important is that repairs to settlement conditions also need to be carried out immediately.

K. PEOPLE IN THE INFORMAL SECTOR

Female.headed family members usually only work in the informal sector with low
productivity and on the other hand have to bear the burden of high dependency, it is not
surprising that families headed by women are mostly poor, malnourished and rarely get
education, public health services and clean water and sanitation facilities. Many women
workers run small businesses, which are called microenterprises units, which require very little
capital. Actually, if calculated from the amount of capital used, the rate of return or rate of
return of the micro business unit occupied by women is very high, only the energy and time
they devote are very large, so that when calculated based on the ratio of labor capital, their
productivity is very low.

To overcome the poverty suffered by many women in urban areas, the government must
strive seriously to integrate women in each of its economic programs. In order for them to be
fully involved in development activities while at the same time having the opportunity to
participate in enjoying the results, all obstacles and limitations that they still face must be taken
into account in each policy formulation.

L. CONSTRUCTION IN URBAN

One of the main consequences of the soaring flow of urbanization is the explosion of the
number of job seekers, both in the formal sector and in the informal sector in the urban
economy. In many developing countries, the level of supply of labor far exceeds the level of
existing demand resulting in high unemployment in urban areas.

M. MIGRATION AND DEVELOPMENT

Migration exacerbates structural imbalances between villages and cities directly in two
ways. First, on the supply side, excessive internal migration will increase the number of job
seekers in urban areas that exceed the level or limits of population growth, which are supposed
to still be supported by all economic activities and services in urban areas. Second, on the
demand side, the creation of employment opportunities in urban areas is more difficult and far
more expensive than job creation in rural areas, because most types of work in industrial sectors
in urban areas require a variety of complementary inputs that are very many in number and
type.

Indeed, the most important significance of the phenomenon of migration in developing

countries is not in the forms of the process or in the impact on the sectoral allocation of human
resources, but on the negative implications that have always resulted in the level of economic
growth and development efforts as a whole, especially those that manifest or manifest from the
process of continually worsening the distribution of income or the results of development. Thus
we must recognize that the flow of migration far beyond existing employment opportunities is
a symptom and one of the main causes of third world backwardness. Therefore, understanding
of the causes, determinants, and consequences of rural-urban internal migration is a basic
provision for us to understand the characteristics and nature of the development process, and
to formulate the most appropriate policies to be able to influence the process by means of which
is socially acceptable. One simple but very important step in understanding how important the
phenomenon of migration is to understand that any economic or social policy that affects the
real incomes of rural and urban residents, directly or indirectly, will ultimately affect the
migration process.

N. TOWARDS ECONOMIC THEORY OF URBAN-RURAL MIGRATION

Urbanization and industrialization are basically two sides of the same coin. This historical
model is then considered a new blueprint or explanation standard for the development process
in the poorest countries.

However, the data that stood out over the past few decades, namely when developing
countries experienced the peak of the wave of migration, large-scale villagers to urban areas,
turned out not to support statements or ideas that highlighted the benefits of the movement of
labor; let alone spur industrialization in cities, migration from village to city actually creates
problems of unemployment and various other difficulties that are all complicated and
troublesome. Thus, the existing empirical data has shaken the validity of the two-sector
development model of Lewis.

O. VERBAL DESCRIPTION OF THE TODARO MODEL

The Todaro model departs from the assumption that migration from village to city is
basically an economic phenomenon. Therefore, the decision to migrate is also a decision that
has been formulated rationally; migrants still leave despite knowing how high the
unemployment rate is in urban areas. Furthermore, the Todaro model based itself on the idea
that the migration flow took place in response to differences in income between villages and
cities. But the income or income in question here is not actual income, but expected income.
The basic premise in this model is that migrants always consider and compare the various types
of labor markets available to them in the rural and urban sectors, and then choose one of them
which can maximize the "expected gains" from migration.

Basically, the Todaro model assumes that the entire workforce, both actual and potential,
always compares "expected" income over a certain period of time in the urban sector (i.e. the
difference between income and migration costs) with the average level of income that can be
obtained in the countryside. They will only decide to migrate if the net income available in the
city exceeds the net income available in the village.
 So in short, the miracle model of Todaro has four basic thoughts as follows:

Village-urban migration is stimulated, in particular by a variety of rational economic

considerations and that are directly related to the benefits or benefits and relative costs of
migration itself.

The decision to migrate depends on the difference between the expected level of income in
the city and the actual income level in the countryside (the expected income is a number of
revenues that can rationally be expected to be achieved in the future). The size of the difference
in income itself is determined by two main variables, namely the difference in actual wages in
the city and in the village, and the large or small possibility of getting a job in urban areas that
offers the level of income as expected.

The possibility of getting a job in urban areas is directly related to the level of employment
in urban areas, which is inversely proportional to the unemployment rate in urban areas.

The rate of rural-urban migration can continue even though it has exceeded the rate of
employment growth. This fact has a rational foundation; because there is a very wide difference
in income expectations, that migrants go to the city to achieve higher real wage levels (indeed
available). Thus, the surge in unemployment in urban areas is an unavoidable consequence of
the very severe imbalance of economic opportunities between urban and rural areas, and such
inequalities are very easily found in most Third World countries.

P. FIVE POLICY IMPLICATIONS

Although the Todaro model at a glance seems to pay little attention to the importance of
rural-urban migration (because this model argues that migration is basically a mechanism for
adjusting labor allocations in villages and cities), the model contains a number of policy
implications that are very important for countries third world that continues to be troubled by
it. The explanations can be used to support the formulation of development strategies,
especially those relating to wage and income levels, rural development, and industrialization.
The following are the five most important policies:

1. Inequality of employment between cities and villages must be reduced.

2. Solving the problem of unemployment is not enough just to create jobs in the city.
3. The development of excessive education can lead to migration and unemployment.
4. The provision of wage subsidies and the determination of the prices of traditional
production factors (labor) actually reduce productivity.
 5. Integrated village development programs must be encouraged.

SOURCE: https://daramuliya.wordpress.com/2013/11/30/ekonomi-pembangunan-urbanisasi-
dan-migrasi-desa-kota-teori-dan-kebijakan/