Special Report

Special Report (Vol. 61)

  • 2022-01-17
  • GDPC

Special Report Vol. 61 (2021)

Which Urban Agglomeration is Efficient for Development in ASEAN Countries?

Chapter I. Introduction

1. Background and Purpose
2. Scope and Method of Research

Chapter II. Literature Review

1. Theoretical Review
2. Literature Review

Chapter III. Methodology of Analysis

1. Methodology and Data
2. Descriptive Statistics

Chapter IV. Results of Panel Analysis

1. Validation
2. Estimation Results

Chapter V. Conclusions


Urbanization, which means an increase in the urban population, has a catalytic effect on economic development and, at the same time, it is considered the core of poverty reduction strategies. However, it is difficult to estimate the urbanization effect by urbanization size because most urbanization indicators use the ratio of the population living in cities among the total population of the country; that is, the integrated level of urbanization. For this reason, it is necessary to subdivide and examine the urbanization effect based on the urban agglomeration because urban agglomeration activities and external effects may vary according to the size of the population. Therefore, the purpose of this study is to identify the optimal size of urban agglomeration that has a positive effect on the economic development and poverty reduction of ASEAN countries, which emphasizes cooperative relations through the Korean government's New Southern policy. To this end, panel data analysis of 8 ASEAN countries was conducted from 1980 to 2015. By dividing the size of the city into large cities (more than 5 million), intermediate cities (more than 500,000, but less than 5 million), and small cities (less than 500,000), quantitative analysis was conducted on the impact of changes in urbanization rates on national economic growth and poverty reduction.

The following four conclusions were drawn on the analysis results. First, urbanization of large cities not only serves as a catalyst for economic growth but also contributes to the reduction of the poor population, therefore, the role of large cities should be expanded to the poverty area. Some preceding studies have argued that urbanization of large cities increases poverty, but the increase in urbanization rates in ASEAN metropolitan cities has the effect of reducing poverty rates at a level comparable to that of intermediate cities and small cities.

Second, intermediate cities with a population of 500,000 to less than 5 million are more effective in economic growth and poverty reduction when linked to urbanization functions of large cities than their own urbanization effects. Intermediate cities play an important role in connecting the external effects of upper and lower urban agglomeration, and it can be estimated that the rate of contribution to development is higher, especially when developed in connection with the agglomeration effect of large cities.

Third, small cities with a population of less than 500,000 are urban areas with the highest potential of their own development. In 2015, 58.05% of the urban population of 8 ASEAN countries lived in small urban areas. The process of changing from a rural to urban society is about 25% of the total population. The urbanization effect of small cities spreads as an economic linkage effect, inducing welfare improvement and income distribution of the poor in rural areas. As a result, it has a high contribution to reducing poverty inequality, so in order to alleviate poverty inequality, the implication that the development of small cities with a population of less than 500,000 is effective was derived.

Finally, for the economic development of ASEAN countries and the reduction of the poor population, urban development linking the agglomeration effect of large and intermediate cities or development for non-agriculture and industrialization of small cities is considered effective. In order to alleviate the poverty gap and poverty inequality within the poor population, the urbanization effect of small cities with a population of less than 500,000 is the highest, so small city development can be included when considering policies to improve the quality of poverty. In addition, intermediate cities play the bridge in connecting the external effects of large cities and small cities, and the urbanization effect of intermediate cities can be further amplified when linked to large cities than small cities.

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