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Introduction
Throughout mankind's history, urbanization has been a key factor in the development process (Bairoch, 1988). Arguably, the two processes are interdependent, i.e. development cannot take place without urbanization and vice versa. However, the causal relationship between these two processes is not clear (Jacobs, 1969). Urbanization is not only the result but also a cause of the economic development (Gallup et al. , 1999). In conjunction with the economic development, the proportion of the urban population in the world increased from 30 percent in 1950 to around 50 percent in 2010 (United Nations, 2007).
Today, 54 percent of the population in the world lives in urban areas and this trend is expected to continue. According to the World Bank (2015), the expected number of people living in cities will rise to six billion by 2045, an increase of two billion urban inhabitants. With over 80 percent of global GDP will be generated in cities, urbanization will contribute to the sustainable growth if the increasing productivity will be well managed, thus enabling innovation and implementation of new ideas.
The relationship between urbanization and economic development among different countries is significant. Whether economic growth stimulates urbanization or the reverse, or whether they are independent is an outstanding question. Historical data have provided some insights into the development of urbanization and per capita income over time. In the USA, the rate of urbanization and per capita income increased together until about 1940 and when the urbanization rate reached 60 percent, then the per capita income increased much faster. According to the World Development Indicator's report, during 1980-2006, China and India witnessed a decline in the rural population of 26 and 8 percent, respectively, with an increase in per capita income of 88 and 65 percent, respectively. This indicated that the relationship between urbanization and economic growth is prominent in both countries (Tamang, 2013). In contrast to the above results, Fay and Opal (2000) reported that Kenya was going through the process of urbanization without witnessing growth. The level of urbanization in Kenya in 1960 was very low, i.e. only 7 percent. Rapid urbanization increased this level, but it was still low, and by 2000, it reached nearly 20 percent. Collier's (2006) study showed that countries which are...