Urbanization and Economic Growth Relationship Analysis
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https://doi.org/10.5281/zenodo.17090615Keywords:
Urbanization, Economic Growth, Industrialization, Urban Migration Rate, Population Growth, GDP, Per Capita Income, Labor Force Participation Rate, Granger Causality Test, Unit Root Tests, Pollution RateAbstract
The relationship between urbanization and economic growth is considered one of the fundamental dynamics of economic development. Urbanization is a phenomenon that occurs through the process of migration from rural areas to city centres; This process affects economic growth both locally and globally, positively or negatively. The urbanization process has become one of the important forces of economic growth. Large cities, thanks to their high population density, encourage economies of scale and enable the workforce to work more effectively. One of the main reasons why countries in Europe and North America were successful in the industrialization process in the 19th and 20th centuries was possible because the relationship between urbanization and economic growth complemented each other effectively and dynamically. The industrialization process has contributed significantly to the expansion of production, the success of the supply system, and the easy transport and sale of goods to the market by triggering urbanization.
Urbanization brings with it infrastructure investments. Basic infrastructure such as transportation, energy, technology and innovation, water and waste management are important for economic growth. Such investments ensure that products are produced efficiently and growth is maintained steadily. It shows that urbanization has many mechanisms that support economic growth and generally has a positive effect. In particular, factors such as industrialization, innovation, spread of technological and physical infrastructure, and the strengthening and development of human capital show that urbanization has positive effects on growth.
According to the Granger Causality Test, the urbanization rate is both a short-term and long-term cause of economic growth. In other words, the structure of urbanization increases economic growth. Migration rate and population growth have a direct causal relationship with per capita income and industrialization. In particular, it has been observed that rural-to-urban migration encourages the contributions of the industrial sector and promotes economic growth. There is a strong and positive relationship between education level and per capita income. Increasing the level of education enhances productivity, thereby improving economic efficiency. There is an inverse relationship between the green space ratio and urbanization. As urbanization increases, the amount of green space per capita decreases. This situation emphasizes the need for enriched sustainable development policies. There is also a strong relationship between water usage and industrialization. With the increase in industrialization, the demand for water has grown, but this has raised concerns regarding the sustainability of growth.
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