How is Urbanization is reshaping industrial development?

 

Demographic transitions, including population growth, migration and urbanization, are reshaping global demand patterns. As populations expand and incomes rise, particularly in Africa and Asia, Demand for food, consumer goods and other essential products will increase. Per capita calorie consumption is expected to rise, and global crop calorie production will need to increase by 47% between 2011 and 2050 to meet this demand. These changes in lifestyle and in energy consumption will also drive Demand for new types of goods, creating opportunities for industries to expand and diversify.

 On the other hand, as the global population ages, demand for healthcare services and related industries will increase. By 2050, the share of people aged 60 and older is expected to double, rising from 12% to 22%. While the largest share of older people currently lives in higher income countries, it is expected that by 2050, 80% of this ageing population will be living in LICs and LMICs. This demographic shift will drive increased demand for pharmaceuticals, healthcare services and medical technologies, as ageing populations face higher rates of chronic and acute illnesses.

 Urbanization will also have profound implications for industrial development. By concentrating people, capital and resources in cities, which in turn stimulates demand for construction materials, Demand for consumer goods and services, urbanization can drive industrial development. However, the extent to which countries can harness urbanization’s industrial potential hinges on their ability to foster productive activities in urban areas.

 Some countries experience a rise of “consumption cities”, where urbanization is primarily driven by resource extraction and non-tradable services, limiting broader Industrial Development. In contrast, “production cities” focus on manufacturing and industrial growth, fostering more dynamic economic environments.

Urbanization, coupled with the rise of the middle class, presents a significant opportunity for domestic, demand-driven industrialization, which can complement export-led strategies.