work for all.
Rapid urbanization has not brought commensurate
economic benefits to the Middle East and North Africa
Urbanization is high across the region The Middle East and North Africa region has become one of the most urbanized regions in the world, with 65 percent of its population living in cities in 2018.2 Although only 34 percent of these economies’ popula-tions were living in cities back in 1960, the region has been progressively closing the gap with Europe and following the urbanization rhythm of Latin America (figure 1.1).
Over 1970–2010, the region’s urban pop-ulation almost quadrupled. Forecasts predict that, compared to 2015, it will double by 2050, with the urbanization level reaching 71 percent (UN DESA 2019).3 This rapid urban growth has been driven by economic development, migration to oil-rich countries, drought, and conflict. In 2018, the Middle East alone hosted an estimated 7.2 million refugees, 10.5 million internally displaced persons (IDPs), and 15 million economic migrants.4
Urbanization varies across subregions, reflecting different drivers, as follows:5
• The Mashreq is moderately to highly urbanized (from 43 percent in the Arab Republic of Egypt to 87 percent in Lebanon). As a result of wars and ongo-ing conflicts, it shelters half the world’s registered refugees, adding to the pres-sure on large cities (box 1.1). With lim-ited options for expansion in the larger cities, governments are emphasizing development of secondary cities and sat-ellite locations.
FiGURE 1 .1 Urbanization in the Middle East and North Africa is catching up with Europe and Latin America, 1960–2015
Source: World Development Indicators database.
Note: The “urbanization rate” is the percentage of total population living in urban areas.
90
70 60 50 40 30
Urbanization rate (%) 20
10 0
1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990199219941996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 80
Latin America and the Caribbean Middle East and North Africa
South Asia
Europe and Central Asia Sub-Saharan Africa
The wars and turmoil that have shaken the Middle East and North Africa since 2010 have also shaped patterns of urbanization. They created an estimated 2 million refugees and over 6 million internally dis-placed persons (IDPs), most of whom have settled in large urban areas (Serageldin, Vigier, and Larsen 2014). The number and location of displaced popula-tions shift regularly in response to the changing lev-els of violence in Iraq, Libya, Sudan, the Syrian Arab Republic, and the Republic of Yemen (UNHCR 2014).
A comparison of urban footprints (proxied by nighttime lights) in the Mashreq subregion reveals a clearly visible change between 2012 and 2015 as luminosity increased in urban areas in Jordan and Lebanon and decreased in Syria (map B1.1.1). Jordan’s population growth rate, which averaged 3.2 percent over 2000–16, rose to 7 percent a year from 2011 onward as a consequence of the large influx of refu-gees (World Bank 2017).
Similarly, the ongoing crisis in the West Bank and Gaza from conflict with Israel has led to uncon-trolled urban expansion in neighboring countries, while the Iraq war led to large waves of internal displacement (Serageldin, Vigier, and Larsen 2014).
More than 60 percent of the West Bank and Gaza population has migrated, and most of the migrants have settled in neighboring Arab countries.a An estimated 1.5 million people from the West Bank and Gaza are living in the 58 recognized United Nations Refugee Agency (UNHCR)-run camps for this population in Jordan, Lebanon, Syria, and the West Bank and Gaza.b Over the years, the popu-lation has overflowed the camp boundaries and contributed to the formation of large informal set-tlements in the urban centers of the region, espe-cially in Jordan and Lebanon.
Internal displacements since 2003 from the war in Iraq (more than 1.8 million people) have also affected urbanization patterns, leading to the expansion of a few cities. Baghdad, one of the cit-ies closest to the conflict-affected areas, has been the major recipient of IDPs. Many other cities in the country attract large numbers, contributing to unplanned urbanization (Serageldin, Vigier, and Larsen 2014). In the Anbar region, 66 percent of IDPs have remained in the province, making Fallujah and Ramadiyah the two fastest-growing urban centers of the country.
a. West Bank and Gaza migration data from “Estimated number of Palestinians in the world by country of residence, end year 2010,” Palestine Central Bureau of Statistics website: http://www.pcbs.gov.ps/Portals/_Rainbow /Documents/PalDis-POPUL-2010E.htm.
b. West Bank and Gaza refugee data from “Palestine Refugees” web page of the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA):
https://www.unrwa.org/palestine-refugees.
BOX 1.1 The impact of conflicts on urbanization in the Middle East and North Africa
Source: Images from the Visible Infrared Imaging Radiometer Suite (VIIRS) instrument of the National Aeronautics and Space Administration (NASA) Applied Sciences Program, 2015.
Note: Map shows the intensity of light in urban areas of the region surrounding the war-torn Syrian Arab Republic (Damascus), including in the countries of Lebanon (Beirut) and Jordan (Amman), to which many war refugees have fled.
a. 2012 b. 2015
MAP B1.1.1 Massive migration patterns to urban areas in the Mashreq region are visible through nighttime light changes
• The Maghreb has an urbanization rate typically above 50 percent, but cur-rent urban growth rates are low (below 2 percent a year on average over 2000–16, as shown in figure 1.2).
• The GCC countries are among the rich-est and most urbanized in the world, in part owing to environmental factors.
Several (Bahrain, Kuwait, and Qatar) are like city-states, with an urbanization rate of around 80 percent and a foreign-born population of around 40 percent.
The main drivers of urbanization vary considerably by subregion, leading to dif-ferent urbanization patterns. Urbanization in the GCC “city-states” is driven predomi-nantly by external and internal migration to cities, whose development is fueled by the wealth accumulated from oil exports.
This pattern resulted in spectacularly high u rba n g row t h rat e s over 2 0 03 –13 (5–8.5 percent a year on average), when i nt er n at ion a l oi l pr ic e s were h ig h ( figure 1.2). The GCC cities have thus become major nodes in the flow of people, global capital, and services.
In the Mashreq and Maghreb subregions, urbanization has resulted largely from the internal migration of rural people seeking better opportunities as rising temperatures reduced agricultural productivity by 10–40 percent (UN-Habitat 2012). Improved public services, better education, and a high concentration of jobs in urban areas have attracted rural populations into the main cit-ies of these countrcit-ies. The Mashreq area has also received large waves of war refugees who moved within and between countries and settled in major cities, contributing to consis-tently higher urban growth rates than in Maghreb countries over the past 20 years (box 1.1).
The Middle East and North Africa region overall displays a spectacular urbaniza-tion rate. When measured with the agglomera-tion index—a metric of urbanizaagglomera-tion that uses consistent criteria for all countries (Uchida and Nelson 2008, see Annex 1A)—the Middle East and North Africa is by far the world’s m o s t u r b a n i z e d r e g i o n , w i t h a n index of 68; followed by Europe and Central Asia, whose high agglomeration index seems to be driven by high-quality transport
9 8 7 6 5 4 3 2 1 0
1990
Urbanization rate (%)
19911992 19931994 1995 1996 1997 1998 1999 2000200120022003200420052006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Mashreq Maghreb GCC
FiGURE 1 .2 Urban population growth rates in the Middle East and North Africa vary by subregion, 1990–2016
Source: World Development Indicators database.
Note: Maghreb refers to Algeria, Libya, Morocco, and Tunisia; Mashreq to the Arab Republic of Egypt, Iraq, Jordan, Lebanon, and the Syrian Arab Republic;
and the Gulf Cooperation Council (GCC) to Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.
infrastructure; and Latin America and the Caribbean, where it is driven by high urban primacy (figure 1.3).6 The GCC and Mashreq subregions display even higher scores, driving the high regional agglomeration index.
Yet the region’s economies have not reaped the full benefits of urbanization
Urbanization in the Middle East and North Africa has not been accompanied by commen-surate economic growth. The relationship between urbanization and economic growth per capita in the region is below the trend observed in the rest of the world (figure 1.4).
Cities allow workers to be closer to jobs, increasing opportunities and fueling produc-tivity. They bring people together physically, facilitating the exchange of ideas and bringing about innovations. So, urbanization has usu-ally gone hand in hand with sustained eco-nomic growth, as measured by gross domestic
80
70
60
50
40
30
20
10
0
Europe and Central Asia
Latin America andthe Caribbean
East Asia and Pacific Regions
Agglomeration index
Subregionsa South Asia
Africa GCC
Mashreq 90
Maghreb Middle East andNorth Africa
FiGURE 1 .3 The Middle East and North Africa displays the world’s highest urban concentration as measured by the agglomeration index
Source: World Bank 2009b.
Note: The agglomeration index is a metric of urbanization that classifies the economic density of economies using standardized criteria for population density, the population of a “large” urban center, and travel time to that urban center.
a. Maghreb refers to Algeria, Libya, Morocco, and Tunisia; Mashreq to the Arab Republic of Egypt, Iraq, Jordan, Lebanon, and the Syrian Arab Republic; and the Gulf Cooperation Council (GCC) to Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.
50,000
10,000
GDP per capita (PPP 2011 US)
500
0% 20%
Urban share of population
40% 60% 80% 100%
Egypt, Arab Rep.Algeria
Iran, Islamic Rep.
Saudi Arabia
Lebanon
Jordan Tunisia Morocco
All countries MENA
Source: World Development Indicators database.
Note: Country curves represent the evolution of the urbanization-to-gross domestic product (GDP) per capita ratio in selected countries from 1990 to 2016. MENA = Middle East and North Africa;
PPP = purchasing power parity.
FiGURE 1 .4 Economic growth per capita has not kept pace with urbanization in the Middle East and North Africa, 1990–2016
product (GDP) per capita. However, when compared with international standards, GDP in the Middle East and North Africa is below its potential. Although urbanization is indeed associated with economic growth, GDP per capita remains, on average, below what could be expected for any given urbanization level based on the world average.
Notably, however, the patterns vary widely by country. Egypt, for example, dis-plays astonishing economic growth with a near constant urbanization rate, whereas Algeria is associated with rapid urbaniza-tion but slower growth of GDP per capita.
Among the possible factors in the lower GDP per capita is the domination of the non-tradables (services) sector in the region’s urban employment, which limits returns to scale, economic growth, and job creation.
The share of the tradable sector (such as manufacturing) in urban employment is only around 41 percent (figure 1.5), in line with Sub-Saharan Africa (42 percent) but well below South Asia (53 percent), Europe and Central Asia (50 percent), and East Asia and Pacific (49 percent).
Specializing in nontradable goods means that the demand for the region’s urban out-put is local and necessarily limited in volume.
Faced with limited demand, urban firms in the Middle East and North Africa benefit from limited scale economies and, all else equal, create fewer jobs (Lall, Henderson, and Venables 2017). Conversely, specializa-tion in tradable goods such as manufactured products allows for a larger and elastic poten-tial demand that goes well beyond local mar-kets. Catering to such international needs implies making the most of firm-level scale economies and beyond, often boosting agglomeration economies through a buoyant ecosystem of local suppliers. In the Middle East and North Africa, cities and their firms risk being unable to reverse the current trend and break into tradables because cities are too costly. Expensive cities typically require wages that would compensate workers for high urban costs and so would entail produc-tion costs above the internaproduc-tional price for any given good (Venables 2017).