Fertility and Its Various Dimensions with Applicability

Introduction

Populations change through three major processes:

· Fertility,

· Mortality, and

· Migration

A useful way to express the rate at which women have children is the Total Fertility Rate (TFR). TFR is the average number of children that would be born per woman if all women lived to the end of their childbearing years and bore children according to a given set of age-specific fertility rates. If the average woman has approximately 2 children in her lifetime, this is just enough to maintain the population.

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Figure 1: TFR in countries in 2002 [21].

As seen in Figure 1, some countries have high and some low TFR. In most European countries TFR in 2006 was below 1.5 children per women, which is far less than desired. Namely, sustained low fertility rates can lead to a rapidly aging population and, in the long run, may place a burden on the economy and the social security system because the pool of younger workers responsible for supporting the dependent elderly population is getting smaller. Tracking trends of fertility rates and factors that influence them helps to support effective social planning and the allocation of basic resources across generations.


Related Work

So far scientific efforts in demography were devoted mainly to exploration and definition of the process of data collection and qualitative interpretation of the statistical results, consequently not putting emphasis on new data analyzing methods. Data is typically analyzed with event history regression methods, Markov transition models and Optimal matching method using common spread statistical packages like (SPSS, SAS, S-Plus, Stata, R, TDA, etc.). The hypothesis is that between these typical aggregate descriptions and causal analysis there is a deficit of research on complex relations. Several modern methods, including data mining, offer opportunities to fill this gap.

In the last decades, data mining tools for knowledge discovery from data (KDD) proved successful in various fields. However, searching through the internet showed that these approaches have received little attention in demographic analyses. There are some publications, e.g. Blockeel et al. showed how mining frequent item sets may be used to detect temporal changes in event sequences frequency from the Austrian FFS data. In Billari et al., three of the authors experienced an induction tree approach for exploring differences in Austrian and Italian life event sequences. Oris et al. initiated social mobility analysis with induction trees. Unlike the statistical modeling approach, the methods make no assumptions about an underlying process generating the data and proceeds mainly heuristically. The approach differs from ours because we study rather static data and do not yet apply sequential rule mining analysis on historical demographic data.

Data Mining for Demography

Successful data mining is based on various investigations of the data using different methods, parameters, and data to find most meaningful relations.

Basic data description

Data for machine learning and data mining are most commonly presented in attribute-class form, i.e. in a “learning matrix”, where rows represent examples and columns attributes. In our case, an example corresponds to one country, and a class of the country, presented in the last column, denotes fertility rate. The first attribute is the name of the country. Altogether there are 95 basic attributes and 147 countries. Attributes and their values were partially obtained from the demographic sources such as UN, Eurostat, and the Slovenian statistical database. Several of the attributes were obtained from the internet, based on the assumption that they might show some interesting demographic relation. We were trying to get as many attributes as possible, nondiscriminatory whether positive or negative in terms of fertility rate.

Attributes in demographic literature are grouped into biological and social since human fertility is a socially formed biological process. Newer literature introduces more and more complex structures, based on detailed grouping of social factors. Malai divided factors that impact fertility rate in six groups:

· biological,

· economical,

· social,

· cultural,

· anthropological and

· psychological

Data Modifications

Attribute Modifications

By attribute modifications we denote eliminating some columns in the learning matrix, and adding new columns, i.e. attributes. Subgroups of columns were chosen based on the demographic categories, and by DM methods. There were 5 new attributes added during the process of DM, thus bringing the total number of attributes to 100. Around half of the experiments were performed on 100 attributes.

Class Modifications

Besides the basic class discretization into two values, three values of TFR were tried as well: low (< 2), middle (2-3) and high (>3).

In another attempt countries were classified according to decrease or increase of TFR. First calculated average UN predicted TFR for years 2005-2010 and subtracted average TFR for years 2000-2005. The obtained value was discretized into two classes:

· ΔTFR>0,

· ΔTFR≤0;

Or three classes:

· decreasing (ΔTFR<0.5),

· stable (-0.5<ΔTFR<0.5), and

· increasing (ΔTFR>0.5).

Modifications of Learning Examples

Learning examples consisted of 147 countries, each represented by a row in the learning matrix. Modifications were performed as eliminating or choosing specific rows to form a new learning matrix. A typical example would be a subgroup “developed countries”, consisting only of countries with high gross domestic product (GDP) or Failed States Index (FSI). GDP is defined as the total market value of all final goods and services produced within a given country or region in a given period of time (usually a calendar year). FSI on the other hand consists of several attributes, describing the strength of central government, provision of public services, level of corruption and criminality; percentage of refugees and involuntary movement of populations, and an amount of economic decline. Since 2005, the index has been published annually by the United States think-tank, the Fund for Peace and the magazine Foreign Policy. GDP review extracted two groups of countries:

· well developed countries with GDP above 1000$ per habitant (39 countries), and

· developing countries with GDP less than 1000$ per habitant (108 countries).

Examination of FSI revealed three groups of countries:

· developed with FSI lower then 39.45 (29 countries),

· moderately developed with FSI 39.45-61.4 (21 countries), and

· developing with FSI>61.4 (97 countries).

3.3 Methods

Machine learning and lately data mining are among the most successful artificial intelligent application areas. Whenever there are lots of learning examples, these systems learn properties of the domain and make predictions about future cases. These systems not only compete with statistical methods in terms of accuracy, they also introduce several new approaches such as cooperation between systems and humans. The constructed knowledge is often in the form of readable, understandable trees, rules and other representations thus enabling further study and fine tuning. Two examples of successful scientific and engineering DM tools are Weka and Orange. Both systems provide tens of DM systems, several data preprocessing and visualization tools. From the ML and DM techniques available in Weka and Orange J48 was chosen, the implementation of C4.5, a method used for induction of classification trees. This method is most commonly used when the emphasis is on transparency of the constructed knowledge. In our case this was indeed so, since the task was to extract most meaningful relation from hundreds of constructed trees.

Most meaningful relations are those most significant to humans with best classification accuracy at the same time. To estimate the accuracy of the trees, 10-fold cross-validation, built in the system, was used. The estimated accuracy of a classification tree corresponds to a probability that a new example will be correctly classified.

A short description of decision trees is presented in this paragraph for readers not familiar with classification trees. Classification trees are built in a top-down manner. The first task is to choose the most informative attribute which will be placed at the root of the classification tree. The next step is to add branches according to the values of the attribute. For a discrete attribute, there are as many branches as there are different values. In case of a numeric attribute, there are only two branches, one that represents values less or equal than the border value as proposed by the system, and the other branch with greater values. The set of examples is divided into subsets corresponding to the branches. Now the process can be repeated recursively for each branch, using only those instances at each particular branch. If at any time all instances at a node have the same classification, further branching is stopped and the classification into that class is proclaimed. The splitting process is usually stopped as soon as sufficient statistical significance is obtained, classifying into the majority class. Classification is performed by starting at the top of the tree and choosing appropriate attribute values to proceed with the chosen branch. At the leaf, the numbers represent all examples and those with different class.

Experiments were performed with various method parameters, mainly changing levels of pruning. However, it turned out that default parameters were most successful.

Experiments

Tens of trees were created in a systematic way, as presented in Figure 2. First experiments were performed with TFR and ΔTFR, then with all and only developed countries. Finally, several selections of the attributes were tested: all, economical, direct, social, economical, and educational. These tests resulted in 24 basic trees. In addition, various further experiments were performed.

Due to lack of space, only most interesting trees are presented in this paper, those with most meaningful relations to humans and with best classification accuracy at the same time.

TFR Class

Firstly, the analysis was based on TFR as a class, with 2, 3 or more values. Only experiments with 2 or 3 values were interesting enough to be presented in this paper.

All Countries
All attributes

In the first fertility rate analysis all 147 countries and all 95 available attributes were taken into consideration. The obtained tree is presented in Figure 3, showing that the most important indicator for high TFR is the number of stillborn children per 1000 births. More than 11.5 stillborn children per 1000 births is a strong supporting factor in favor of high TFR of the country and vice versa. The results are consistent with practically all literature in the demographic field and experts’ opinions, who claim that death of newborns is in tight connection with social and economical status of mothers who need to have several children to compensate for those dead. According to experts, higher educated mothers usually have less children and lower newborn mortality, low percentage of stillborn is supposed to be related to the costs of child life-support , different life condition of the urbanized and industrialized society, changes of the attitude towards women, decaying of old patriarchal community etc. as the main reasons for fertility decline. As the tree in Figure 3 shows, these relations are indeed statistically most relevant. However, the tree shows additional relations in a structured way with appropriately weighted leaves, i.e. nodes at the bottom of the tree. For example, the top right leaf “high (104/16)” includes 88 countries with high TFR and 16 with low TFR. The bottom left leaf, on the other hand, encapsulates only 2 countries with high TFR, rendering this information as statistically less important. Therefore, in the tree there is just another statistically strongly confirmed relation: when number of dead born children is less than 11.5 and majority religion is Christianity and there are fewer men than women then TFR is low (35/1). This relation shows another crucial matter regarding interpretations of the tree. Why should Christian majority be negative for fertility rate while Christians give high emphasis on families, strong marriages and devotion to children? Indeed, further analysis show, as pointed out by demographic experts long time ago that population in these countries have high divorce rates etc. meaning that people do not follow church directions, but live according to their own desires. The bottom right part of the tree, starting with low percentage of women in the population is statistically rather meaningless, however, density and number of inhabitants gives some indication that these are among relevant attributes. Therefore, reading and interpreting trees demands some understanding of statistics, trees and demographic literature.

At each Figure title, there is cross-validation accuracy estimate. For Figure 3 it is over 80%, which is a reasonably good result. Default accuracy obtained by classifying only into the majority class is 89, 4%.

In another attempt the class values was divided into three groups:

· low,

· moderate and

· high TFR rate

The experiment once again revealed the most important attribute: “number of stillborn children”. However, the branching point leading to high TFR is in this case much higher: 53.56 children per 1000 births. In this tree, there are three major groups all from 30 to 40 countries: high, moderate and low. The major attribute distinguishing between moderate and low TFR countries is the length of the maternity leave. At this point one should be aware that such attributes are semantically potentially misleading – countries with low TFR probably introduced lengthier maternity leave as a consequence and not as cause. The tree therefore shows most important relations without knowing the nature of them.

After obtaining the first tree, in a series of tests seemingly most important attributes are being eliminated in order to test if other attributes can replace them and still obtain similar accuracy. Instead of “number of stillborn children” several attributes can be used: human development index (HDI), life expectancy rate, literacy rate, etc. all denoting the same concept. It is generally accepted that in these, developing countries, TFR is high.

For the maternity leave, the elimination of the attribute results in lower accuracy 68%. Although this attribute is obviously important, we are not able to establish the type of relation. Whatever the case, countries with short maternity leave have moderate TFR, and those with long maternity leave low TFR.

Although the rest of the relations are not so significant, they represent a bigger share than in the previous tree and they seem to have two common denominators: developmental status and value system.

Altogether, analysis so far indicate that the developed countries have low TFR, e.g. most of the European and north American countries, developing countries have high TFR, and moderately developed countries like Botswana, Bolivia, Honduras, Jamaica, etc. have moderate TFR.

Selected attributes

We further filtered attributes according to the algorithms in DM tools. Again, as seen in Figure 5, the most distinctive attribute regarding TFR rate appears to be the number of stillborn children per 1000 births. When this number is lower or equal to 11.55, the TFR is low (under 2), with the exception of the countries that do not ensure appropriate delivery treatment and invest most of its educational foundation in a primary sector.

On the other hand, TFR is low despite high number of stillborn children in the case when the human development index (consists of life expectancy rate, literacy rate, educational rate and standard of living) is high, abortion is allowed and unemployment rate is low (under 13.9 %), or if abortion is not allowed, but the country invests most of its educational foundation in a primary sector and has long maternity leave (more than 11 weeks). The discovered relations indicate a meta attribute – developmental status of the country.

Direct attributes

The demographic experts classify fertility attributes, i.e. factors, on direct and indirect. Direct factors have direct influence on fertile persons. In this context a decision tree including 4 attributes was built:

· legality of demanded abortion,

· number of abortions per 1000 people,

· percent of married women (between 15 and 49 years old) that use contraception and

· percent of elders infected with HIV virus or AIDS.

The obtained 82, 31% accurate tree is presented in Figure 6. Legal abortion associated with low percent of HIV infected elderly relates to low TFR while illegal abortion and lower percent (less than 70) of women using contraception leads to high TFR. These attributes again seems to correlate to the meta attribute – developmental state of the country and to the value system. The other derivation could be that the value system plays an important role. The accuracy is very high indicating that these attributes are meaningful.

Social attributes

Since many experts in the field agree that only direct factors cannot explain the fertility rate determination, we further examined influence of the indirect TFR factors. 11 attributes were analyzed that express the society attitude towards general life questions: legality of homosexuality, legality of homosexual marriages, possibility of adoptions to homosexuals, number of suicides per 10000 persons (men only, women only, altogether), legality of abortion, number of abortions per 1000 people, number of divorces per 1000 persons, percent of women in the parliament.

Economical attributes

Experts generally find low TFR strongly related to the economical factors, society modernization and liberalization. The nature of economic relations was established by extracting 13 economical attributes that refer to the field of unemployment, GDP, public health and social protection expenditure, number of working hours per week and inflation rate.

The tree indicates that high GDP, low unemployment rate and high inflation GDP deflator relate to low fertility rate, while low GDP per capita usually relates to a high TFR.

As David Heer said, economical progress should positively influence fertility rate. Overall statistics significantly disconfirm the hypothesis at least in the modern world where food is not scarce. Our analysis indicates that direct economical attributes are not very relevant for fertility on their own, at least not as other groups of attributes. For example in figure 8 in some cases high GDP per capita leads to high and in others to low TFR. Becker (1981) presents a plausible explanation of such GDP-TFR relations. He claims that TFR depends on the disposable expenses and expected usefulness of the children. To uphold the thesis he gives an example of the rural family that used to have more children in order to assure help for maintaining the family. Human resources were urgent for working on the fields, in the woods, etc. Nowadays, agriculture has become more and more automated, thus reducing the need for human forces. Consequently, the cost benefit of the children dropped drastically and families began to shrink. Besides, factors like higher educational level, lower child mortality rate, and the desire for career making among young people, pushes TFR even lower. This linkage between income and fertility is typical for developed countries, where despite constant income growth, TFR is continually decreasing, whereas in developing countries, low income does not influence fertility rate.

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Figure 8: TFR classification tree with two-valued class, considering only economical attributes (78, 2%).

In any case, the tree from Figure 8 is only 78.23 % accurate, which is low in comparison with trees based on other attributes. This indicates that direct economical factors are not the main cause for the distinction among countries with low and countries with high fertility rate.

Educational attributes

Analyzing the relation between educational factors and TFR resulted in the tree presented in Figure 9. High percentage of enrolment in primary educational level is in general related with high fertility rate, whereas low TFR is more related to enrolment in secondary or tertiary educational factors. As observed by experts before, high education, especially of women, decreases TFR.

Developed countries

While developing countries have problems with too high TFR, developed countries, especially in Europe, have problems with low TFR. Mark Steyn, a conservative polemicist, argues that Europe is quickly becoming a barren, ageing, enfeebled place. In the decades after the Second World War, rich countries everywhere experienced similar trends. The bonds of traditional family life began to slacken, more women got jobs, and people sought enjoyment and satisfaction more and more through individual pursuits rather than in families. This social transformation, which is occurring also in America and East Asia, led to a demographic bonus (a bulge of people working) and to what might be called “the postponement of everything”. People left school later, left home later, married later, had children later, they also died later [6]. Even though these interpretations are not uniformly accepted, they seem to be statistically quite well grounded.

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Figure 9: TFR classification tree with two-valued class, considering only educational attributes (78.2%).

Having that in mind, the relevant question is: Why do some rich countries still have high TFR? In the following experiments we denoted 39 countries with high GDP as rich.

Selected attributes

The tree in Figure 10 indicates that exceptions to the low fertility rate have poor education and social system. Further analyses showed that these countries rely on natural resources such as oil.

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Figure 10: TFR classification tree with two-valued class and automatically selected attributes (78.2%).

Social attributes

Analyses of the obtained tree presented in Figure 11 revealed that countries with oil are rich and have Muslim religion. But the relation can be interpreted originally as follows: when Islam is the prevailing religion of the country, then TFR is most likely to be high, while otherwise, TFR decline is the more likely option. Results are consistent with the previously observed relations that TFR is higher in more conservative countries, which Islam countries certainly are.

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Figure 11. TFR classification tree with two-valued class considering only social attributes (89.7%).

ΔTFR Class

The newest studies of Worldwatch Institute conclude that there is so much variability in fertility rates that we cannot know with any confidence how many people the future holds. Indeed, it seems reasonable that ΔTFR analyses are a bit less relevant as those with TFR, since they measure the amount of change and not the obtained situation. Even though, our next attempt was to established factors that might influence TFR growth and decline. In the next section a few of the most interesting and accurate trees are presented.

All Countries
All Attributes

Again, literacy seems to be an important indicator of TFR trends (see Figures 12 and 13). Countries with low percent of literate habitants generally have increase in TFR. Countries with high percent of literate citizens (above 97.9%) and low unemployment rate (below 9.6%) on the other hand have decreasing TFR trend.

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Figure 12: ΔTFR classification tree with three-valued class (81,1%).

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Figure 13: Unprunned ΔTFR classification tree with three-valued class indicator (83,2%).

Similar conclusions can be drawn from the tree on Figure 14, when attributes were automatically selected. This tree has surprising high accuracy.

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Figure 14: ΔTFR classification tree with three-valued class, automatically selected attributes (85,3%).

Social attributes

Considering only social attributes, the same tree as in the case of TFR class appeared (see Figure 7), again exposing the importance of conservative politics of the country for the TFR growth trend. Countries that don’t allow abortion and adoption to homosexuals have TFR growth trend, whereas countries that allow abortion and homosexuality have TFR decline trend. Accuracy in this case is 78.32%, much lower than in the tree presented in Figure 14.

Developed countries

In this case criteria for dividing countries by their developmental status was FSI. A country was classified as well developed if FSI index was less than 39.45, resulting in 27 countries. Analyses were performed on the attributes separately merged in smaller groups.

All attributes

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Figure 15: ΔTFR classification tree with two-valued class (accuracy is 84.6 %).

Race appeared to be an important factor of TFR trend (see Figure 15). In nations with prevalent Asian and combined race, TFR is likely to increase, while in countries with a majority of white race, TFR is declining. The nature of this genetic relation is not cleat at this point.

Economical attributes

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Figure 16: ΔTFR classification tree with two-valued class, considering only economical attributes (84.6 %).

We can see that highly economical developed countries with more than 10100 GDP per capita ($) have TFR decline. This thesis is for example not in agreement with the Worldwatch Institute study noting that fertility rate is rising in the United States. However, this study is violating the age-old dictum that rich countries do not make lots of babies as well. The tree based on economical attributes is this time quite accurate. Therefore, ΔTFR analyses gave more statistical relevance on economical attributes than analyses with TFR.

Social attributes

When selecting only social attributes, the accuracy of ΔTFR classification trees dropped drastically (on 76.9%) what means that these factors are not good indicators for TFR trends.

Conclusion and discussion

In fertility analyses, the data mining tools again proved their major asset: the constructed knowledge is in a transparent form, enabling human comprehension of relevant relations in complex forms. In this way, an interactive and interaction process is enabled between computers and humans, exploiting best properties of the two most advanced information machines. Computers fast examine vast search spaces with their advanced speed and accuracy while humans make conclusions and guide search with the advanced cognitive skills.

To readdress the problem, let us restate that the space of all potential hypotheses for 100 binary attributes and a single binary class is 22^100. This number is far larger than the number of all atoms in our universe, which is according to Wikipedia around 1080, i.e. 2266. Therefore, there is no way humans can analyze any meaningful share of all the hypotheses. But we can examine results of one search, make conclusions and redo the search changing specific details of the search. In this way humans can “mine” for relevant hypothesis.

Regarding the fertility relations, the DM tools enabled rediscovery of major properties. The authors are not experts in the fertility or demographic field, therefore verification of our conclusions by an expert and further analyses of interesting new patterns are a matter of further research

This work is licensed under a Creative Commons license.

Five Year Plans in India: Policies and Programs for Urban Development

INDIAN ECONOMY

When India gained independence, its economy was grovelling in dust. The British had left India economically crippled. The fathers of development formulated a five year plan to overhaul an obvious financial (disability, handicap, mire, or whatever you may call). The five years plan in India is framed, executed and monitored by the Planning Commission of India. Currently, India is in its 11th five year plan. The policies of urban development and housing in India have come a long way since 1950s. The pressure of urban population and lack of housing and basic services were very much evident in the early 1950s. In some cities this was compounded by migration of people from Pakistan. However, the general perception of the policy makers was that India is pre-dominantly an agricultural and rural economy and that there are potent dangers of over urbanisation which will lead to the drain of resources from the countryside to feed the cities. The positive aspects of cities as engines of economic growth in the context of national economic policies were not much appreciated and, therefore, the problems of urban areas were treated more as welfare problems and sectors of residual investment rather than as issues of national economic importance.


A policy of mixed economy is followed in the country. In a mixed economy, the public sector enterprises (government-owned) exist alongside the private sector to achieve a socialist pattern of society in a welfare state. Let’s see the journey of five year’s plan in India and the objectives in each plan.

PLANNING IN INDIA

Planning Commission (Estb. 1950)

In March 1950, Government of India constituted a statutory body with the Prime Minister of India as its Chairman-called the Planning Commission. Pt. Jawaharlal Nehru was the first Chairman of the Planning Commission.

National Planning Council (Estb. 1965)

It is an advisory body attached to the Planning Commission and was established in 1965. It includes experts representing a cross-section of the Indian economy.

National Development Council (Estb. 1951)

Chief Ministers of the states, together with the members of the Planning Commission, constitute the National Development Council. The Prime Minister of India presides over the Council.

Five Year Plans

The development plans are drawn by the Planning Commission to establish India’s economy on a socialistic pattern in successive phases of five year Periods-called the Five Year Plans. The organisation was set up to formulate basic economic policies, draft plans and watch its progress and implementation. It consists of:

I. Planning Commission of India

II. National Planning Council

III. National Development Council and State Planning Commissions

DETAILS OF THE FIVE YEAR PLANS

First Five Year Plan (1951-56)

In July 1951, the Planning Commission issued the draft outline of the First Five Year Plan for the period April 1951 to March 1956. It was presented to the Parliament in December 1952. In the First Plan, agriculture received the main thrust, for sustaining of growth and development of industries which would not be possible without a significant rise in the yield of raw materials and food.

Objectives

i. To increase food production.

ii. To fully utilise available raw materials.

iii. To check inflationary pressure.

Outlay: The total proposed outlay was Rs. 3,870 crore.

Urban Development

In the First Five Year Plan (1951-56), the emphasis was given on institution building and on construction of houses for Government employees and weaker sections. The Ministry of Works & Housing was constituted and National Building Organisation and Town & Country Planning Organisation were set up. A sizeable part of the plan outlay was spent for rehabilitation of the refugees from Pakistan and on building the new city of Chandigarh. An Industrial Housing Scheme was also initiated. The Centre subsidised Scheme to the extent of 50% towards the cost of land and construction.

SLUM CLEARANCE

Slums have grown up in practically all the major industrial cities of India as a result of negligence in enforcing building regulations. These slums are a disgrace to the country and it is a matter of regret that Governments, both Central and State, have so far paid little attention to this acute problem. No city can be considered healthy which tolerates within itself the existence of a highly congested area with only the minimum amenities of life where some of the poorest elements of population are huddled together in almost sub-human conditions. It has observed that slums are a national problem. In certain cities, improvement trusts have made some efforts at slum-clearance. Their efforts have been rather sporadic in character, mainly because the improvement trusts, to a greater degree than other local authorities, suffer from limitation of funds. The competent authority should, after proper survey and enquiry, issue a clearance order. Compensation should be assessed on the basis of the use to which the land was put on the date of the issue of the clearance order. No additional compensation on account of the compulsory nature of acquisition should be allowed in case of acquisition of slum, out of the provision of Rs. 38-5 crores for housing schemes in the period of the Plan a certain amount should be set apart every year for issue as loans by the Central Government to improvement trusts and other local authorities through the State Government concerned for providing the initial capital for acquisition and demolition of slums.

NATIONAL BUILDING ORGANISATION

Though research is being carried on in different institutions for cheapening cost and improving building techniques, there is no authority to co-ordinate the results of such research and to make it available in a form which would have ready acceptance with Govern ments as well as private firms and individuals engaged in building activity. It is for this reason that the setting up of a National Building Organisation as an important activity connected with housing has become necessary. We suggest that such a body should be set up with the following principal objectives :—

· to co-ordinate and evaluate results of research on building materials and technical development now being carried on in different institutions;

· to suggest from time to time subjects of further research and development with due regard to their relative importance and urgency ;

· to incorporate the results of such research in actual building practice;

· to ensure effective utilisation of all available building materials including non-traditional materials;

· to guide industry and public in general on the use of new materials and techniques in building construction;

· to initiate proposals for increased production of building materials and their proper distribution;

· to examine building costs with a view to reduction in overheads and other expenses particularly in the public sector;

· to provide museums or standing exhibitions where methods of cheap houses and techniques for economic building can be displayed, explained and demonstrated;

· to take necessary steps for the standardisation of building components and to organise production and distribution of such standardised components on a large scale;

· to advise Government on technical matters including experiments, research, bull ding education and new techniques; and

· to provide for training in building work and improved techniques and to organise refresher courses for engineers and architects.

Such a body should consist of persons who are eminent in their professions and whose decisions would carry weight. It must also have facilities for experiments in various types of building materials and it must be associated with a Ministry of the Central Government which should act as its executive wing to translate its recommendations into actual practice. We are, therefore, of the opinion that the Council of the Organisation should consist of such persons as the Chief Engineer, Central Public Works Department, the Director-in-charge of Civil Engineering in the Railway Board, the Road Development Adviser to the Central Government, the Engineer-in-Chief at the Army Headquarters, the Director of the Forest Research Institute, Dehra Dun, and the Director of the Central Building Research Institute, Roorkee. The Council should be assisted by an advisory body consisting of three experts, respectively on steel and concrete, clay products, and timber and forest products. There should be a whole-time Chairman who will coordinate the work of the Council and the advisory body. The National Building Organisation should hold annual conferences on building techniques and designs to which may be invited not only all those who are interested in the subject but, in particular, the Chief Engineers of Roads and Buildings of the State Governments. We consider that dissemination of new ideas through such conferences is of considerable value specially when persons in charge of large constructions are themselves convinced of the suitability of the new techniques and processes.

We also recommend the establishment of a permanent museum, or preferably several regional permanent museums, where exhibits of cheap housing can be displayed and the comparative costs, building techniques and methods, use of substitutes for traditional building materials can be studied with profit by engineers, industry and the general public.

HOUSING BOARDS

We recommend the setting up of housing boards which would be statutory autonomous bodies appointed by Government and responsible for implementing the housing programme. Such boards should be both Central and Regional and should have an executive body with a president, a whole-time secretary and not more than five other members, some of whom at least should be specialists in town-planning, architecture, and the social, economic and financial aspects of housing problems. The boards may have associated with them advisory bodies consisting of representatives of employers, tenants, building trade and the general public. 

The principal functions of the Central Housing Board may be indicated as follows :—

a. to administer the Central Housing Fund ,

b. to activate housing programmes ;

c. to administer such housing projects as are directly entrusted to it by the Central Government ;

d. to lay down principles for the guidance of the Regional Boards, regarding selection and development of sites for housing schemes and fixation of priorities in the allotment of tenements ;

e. to advise on rationalisation on building legislation and to prepare model building bye-laws for adoption by regional and local authorities;

f. to suggest action in regard to slum clearance and improvement in environmental conditions of housing; and

g. to recommend from time to time any legislation or amendment of existing legislations which have a bearing on the problems of housing, town and village planning, fixation of rents and such allied subjects.

h. There should be a Regional Housing Board for each State where there is an active housing programme; but in suitable cases, there may be more than one board in a State. The principal functions of these boards may be indicated as follows :—

i. to administer the Regional Housing Fund;

j. to activate the State building programme;

k. to collect information regarding housing needs of different classes of people and to undertake surveys for the purpose;

l. to undertake the construction of houses in selected areas according to approved plans;

m. to allot tenements to workers and other low-income groups in accordance with the policy laid down by Central Housing Board;

n. to establish new townships and industrial suburbs and to prepare Master Plans for the same;

o. to undertake and encourage slum clearance and improvement of existing-conditions of housing within their jurisdiction;

p. to undertake maintenace of houses and other properties belonging to the Board and to realise rents for the same;

q. to encourage self-builders both in the shape of co-operatives and individuals;

r. to organise building trades and to provide facilities for vocational training for building labour;

s. to guarantee loans taken by private builders for house-building, provided adequate securities are furnished; and

t. To organise training for building-labour generally and in specialised types of work, such as laying patent-stone floors, reinforced cement concrete roofs and beams, etc.

The housing boards which we envisage should be statutory autonomous bodies, It will, therefore, be necessary to provide them with independent sources of income in addition to grants and subsidies which may be made available from the Central or the State Exchequer. While it is true that for many years, the Central Government will have to subsidise the construction of houses for the lowest-income groups and also to provide funds in the shape of loans, it is our intention that the housing boards should be financially self-supporting to a large extent so as to undertake housing programmes on their own, if not for the lowest-income groups, at least for the middle classes. In States where improvement trusts have been set up, it may be considered whether their functions cannot conveniently be amalgamated with those of housing boards, the aims and objectives of both the organisations being more or less similar.

The principal sources of revenue of housing boards may, therefore, be stated as follows :—

a. grants from the Central or State Governments and municipal authorities;

b. rents and recoveries from housing estates constructed by the boards;

c. sale proceeds of lands acquired for development by the boards;

d. betterment levies which the boards may be authorised to charge from persons benefiting from an improvement scheme;

e. terminal tax on passengers and goods, arriving by road or rail, in cities where housing programmes have been undertaken within the jurisdiction of the boards;

f. issue of housing bonds with the consent of the Central or the State Government, as the case may be, at rates half per cent above the current rate of Government borrowing; and

g. loans from banks, insurance companies and such financing institutions on terms to be approved by Central or State Governments;

An additional surcharge on stamp duty on the value of immovable property transferred or mortgaged within the State is also recommended for those States where there is still scope for an increase in the rate of stamp duty.

TOWN AND COUNTRY PLANNING

The solution of the housing problem on a permanent basis has to be linked up with town and country planning. We have already seen how haphazard growth and ribbon development have been caused by inadequate legal powers to control use of land and construction of buildings, though it must be admitted that neither the State Governments nor local authorities have shown a full appreciation of the situation or utilised such powers as they already have to arrest the unhealthy growth. In some States, legislation on town planning has been enacted or is contemplated. It is, however, desirable that there should be a uniform policy in the matter and we recommend that there should be a National Town and Country Planning Act, which would provide for zoning and use of land, control of ribbon development, location of industries in areas considered suitable, clearance of slums, carrying out of civic and diagnostic surveys and preparation of Master Plans.

Regional planning has become even more important in view of the implementation of the several river valley schemes and community development projects. Such regional planning should take into account the population, agricultural condition, industries, and communications of a region with a view to secure a balance of population in the particular area between villages, market towns and industrial centres. Such plans will aim at integrating agriculture and industry in rural areas, and will provide for dispersal of industries from existing centres, development of cottage and small-scale industries, services like medical aid, education and recreation facilities.

Major programs

· Slum clearance

· Rural housing

· National building organisation

· Housing board

· Suggested Model Town and Country Act that will provide for zoning and planned use of land

· Control of ribbon development

· Slum clearance

· Diagnostic surveys and preparation of master plans

· Town Planning Organization (later renamed as Town and Country Planning Organization) formed at the Center in 1955

· Entrusted with the responsibility of Preparing Master Plan for Delhi

Second Five Year Plan (1956-61)

The main objective was to launch upon industrialisation and strengthen the industrial base of the economy. It was in this light that the 1948 Industrial Policy Resolution was revised and a new resolution of 1956 was adopted. The Second Plan started with an emphasis on the expansion of the public sector and aimed at the establishment of a socialistic pattern of society.

Objectives

i. A sizeable increase in national income so as to raise the level of living.

ii. Rapid industrialisation of the country with particular emphasis on the development of basic and key industries.

Outlay: The Second Plan proposed a total public sector outlay of Rs. 4,800 crores though actual outlay was only Rs. 4,672 crore.

Urban Development

The scope of housing programme for the poor was expanded in the Second Plan (1956-61). The Industrial Housing Scheme was widened to cover all workers. Three new schemes were introduced, namely, Rural Housing, Slum Clearance and Sweepers Housing. Town & Country Planning Legislations were enacted in many States and necessary organisations were also set up for preparation of Master Plans for important towns.

Each State should have a phased programme for the survey and preparation of master plans for all important towns. These should provide for integration of land use and zoning principles in each town or area with a view to obtaining the maximum amount of efficiency and economy in working and living conditions. In this connection towns and cities such as Delhi, Bombay, Calcutta, Madras, Ahmedabad, Hyderabad, Kanpur, Lucknow, Poona etc. would require early attention.

A number of new towns have recently come into existence; others are likely to develop rapidly during the second and subsequent plans as industrialisation proceeds. Sindri, Durgapur, Bhilai, Rourkela, Chittaranjan and Neiveli are illustrations of towns in this group. As early as possible, the preparation of regional plans for such towns should be worked upon.

Development of river valley areas should be based on careful surveys of their topography, resources and development needs and potential. A pilot project for a regional planning survey of the Damodar Valley are will shortly be undertaken. Surveys on similar lines are required, for instance, in areas served by the Bhakra Nangal, Hirakud, Chambal, Tungabhadra, Koyna and other important projects.

Town and country planning legislation has been so far enacted in four States, namely, Madras, Bombay, Hyderabad and Saurashtra. Uttar Pradesh has such legislation under consideration. It is recommended that town and country planning legislation should be enacted in all States and the necessary machinery for its implementation should be set up.

There are a number of programmes in the second five year plan which have considerable bearing, on urban development and re-development, such as, large industrial and other undertakings whose location is determined or influenced by the Government, development of village and small industries and of industrial estates and townships, major irrigation and power projects, small town an rural electrification schemes, establishment of warehouses and marketing centres for agricultural produce, urban water supply and sanitation schemes, industrial and low-income group housing schemes, expansion of transport facilities etc. These and other programmes should be implemented in an integrated manner with careful attention to their impact on urban and regional development and with reference to the present and future requirements of planning in different parts of each State or region. Such coordinated planning will ensure that the resources devoted to these programmes will yield satisfactory results, and the costs of economic development as well as of providing civic amenities will be reduced.

Major programs

· Reiterated the need for preparing master plans for all important towns and setting up machinery for the purpose in each state

· Town and Country Planning legislation in all states

· Need for regional planning to evolve balanced rural-urban regions

THIRD FIVE YEAR PLAN (1961-66)

In the third Plan, the emphasis was on long-term development. The Third Plan report stated that during the five-year period concerned, the Indian economy “must not only expand rapidly but, at the same time, become self-reliant and self-generating.”

Objectives

i. An increase in national income of more than 5 per cent annually. The investment pattern laid down must be capable of sustaining this growth rate in the subsequent years.

ii. An increase in the agricultural produce and to achieve self sufficiency by increasing food grain production.

iii. Greater equality of opportunities, more even distribution of economic power and reducing wealth and income disparities.

Urban Development

The general directions for housing programmes in the Third Plan (1961-66) were co-ordination of efforts of all agencies and orienting the programmes to the needs of the Low Income Groups. A Scheme was introduced in 1959 to give loans to State Govts. for a period of 10 years for acquisition and development of land in order to make available building sites in sufficient numbers. Master Plans for major cities were prepared and the State capitals of Gandhi Nagar and Bhubaneswar were developed.

Urban Planning and Land Policy

Urbanisation s an important aspect of the process of economic and social development and is closely connected with many other problems such as migration from villages to towns, levels of living in rural and urban areas, relative costs of providing economic and social services in towns of varying size, provision of housing for different sections of the population, provision of facilities like water supply, sanitation, transport and power, pattern of economic development, location and dispersal of industries, civic administration, fiscal policies, and the planning of land use. These aspects are of special importance in urban areas which are developing rapidly. The number of cities with a population of 100,000 or more has increased from 75 in 1951 to 115 in 1961, and their population now forms about 43 per ‘cent of the total urban population. Of the aspects mentioned above, in the long run, the most decisive are the pattern of economic development and the general approach to industrial location. The broad objective must be to secure balanced development between large, medium-sized and small industries, and between rural and urban areas. While this is by no means easy to realise, the main ingredients of developmental policy are the following:

a. As far as possible, new industries should be established away from large and congested cities.

b. In the planning of large industries, the concept of region should be adopted. In each case, planning should extend beyond the immediate environs to a larger area for whose development the new industry would serve as a major focal point.

c. In community development projects or other areas within a district the rural and urban components of development should be knit into a composite plan based in each case on schemes for strengthening economic inter-depen-dence between towns and the surrounding rural areas.

d. Within each rural area the effort should be to secure a diversified occupational pattern in place of the present extreme dependence on agriculture.

In considering the nature of the urban problem to be phased over the next decade, it is necessary both to deal with the situation which exists now and to ensure action along the right lines for the future.

Costs of urban development

Much of the deterioration which occurs in living conditions in rapidly growing urban areas is due to the high costs of urban development, in particular, the costs of providing housing, water supply, drainage, transport and other services. The situation is further accentuated by the existence of unemployment, overcrowding and the growth of slums and the fact that a significant proportion of the population in many cities is without shelter. The problems to be faced are formidable in size and complexity, and solutions for them can be found only if their nature is fully appreciated not only by the State Governments, but also by municipal administrations and by the public generally and if an increasing amount of community effort and citizenship participation can be called forth within each urban area. There are certain minimum directions in which action should be taken during the Third Plan so that, for the future, at any rate, a correct course is set. These are :

a. control of urban land values through public acquisition of land and appropriate fiscal policies;

b. physical planning of the use of land and the preparation of master plans;

c. defining tolerable minimum standard* for housing and other services to be provided for towns according to their requirements and also prescribing maximum standards to the extent necessary; and

d. Strengthening of municipal administrations for undertaking new development responsibilities.

Control of urban land values

The most important elemev.t in raising housing and other costs and in restricting the scale on which improvements can be undertaken in the interests of low income groups is high land prices. Apart from normal increases, a major factor in raising land prices is speculation. In some towns, there are powerful factors like the setting up of new industries and the establishment of new public and other offices which stimulate speculative activity. However, since the rapid economic development of the country as a whole is under way and exerts its influence in all directions, elements of rising land values are present in larger or smaller degree in almost every urban area. In several urban areas, there is need for drastic measures, legislative and others, for freezing land values and also for undertaking large scale public acquisition of land. According to the nature of the situation the need for adequate measures for taxation of urban land and property exists, without exception, in all towns.

Specific measures for checking rise in land values can become effective if there is strict regulation of the uses of land, especially in and around metropolitan cities, large and growing cities and new industrial towns. It is for such towns that the preparation of master plans referred to later is of special importance. The following are the principal steps to be taken for controlling land values:

a. Issue of notifications for freezing land values with a view to early acquisition of land by public authorities.

b. Acquisition and development of land by public authorities in accordance with the interim general plans is essential for preventing speculation. The land should bs acquired in bulk, although, depending upon local circumstances, the programme of acquisition would have to be suitably phased. Acquisition proceedings should be speedy and legal proceuures should be simplified as far as possible. It is important that development of the acquired lands should be expedited. The essential services have to be provided by public authorities. Besides development undertaken directly by them, under appropriate regulations, cooperative and private agencies should also be utilised

c. Allotment of land on a lease-hold basis. As a rule, lands acquired by public authorities should be given out onl-f on a lease-hold basis so that, besides the recurring income secured on account of the ground rent, a fair share in the increase in the value of land continues to accrue to the community.

d. Betterment levies and taxation of agricultural lands put to non-agricultural users. These are growing sources of revenue for States and local bodies, but in several States the existing provisions are inadequate.

e. Capital tax on transfer of free-hold lands.

f. Taxation of vacant plots in developed areas with power to acquire if they are not built upon within specified periods.

g. Setting a ceiling on the size of individual plots and limiting the number of plots which a single party may be permitted to acquire.

h. Determination of appropriate norms of rent and regulation and control over rents

These measures lie at the base of proposals for planned urbanisation and have therefore to be given concrete shape as a matter of high priority.

Preparation of master plans

To secure orderly development of towns and cities, town planning is indispensable. The first step in this direction will be the preparation of interim general plans establishing the broad pattern of land use to which developments should conform. This should be followed by the preparation of detailed master plans for urban and regional development. Master plans should be drawn up in the first instance for metropolitan cities. State capitals, port towns, new industrial centres and other large and growng cities where, in the ordinary course, conditions are likely to deteriorate further. A tentative list* of such towns and cities has been drawn up for the Third Plan period. In redeveloping existing cities and building up new towns, it is of the utmost importance that the regional approach should be followed. This is necessary both for securing a proper balance between social and economic development and for achieving greater cultural unity and social integration in the life of developing urban communities. Greater attention to the environment and appreciation of the day to day needs of the people can go a long way to give to all citizen a sense of community in urban life.

The primary responsibility for the preparation of master plans lies with State Governments and the local administrations concerned. For the Third Plan, limited provision has been made at the Centre for assisting the State Governments in the preparation of master plans for these cities and towns. An essential preliminary is the enactment of suitable legislation on town and country planning. It is also necessary that State Governments establish Town Planning Organisations with adequate trained personnel. The Central Regional and Urban Planning Organisation can assist State Governments and organisations concerned with the establishment of new towns, in the preparation of master plans and informulating suitable urban and regional development policies.

Standards

For the solution of the housing problem for the bulk of the population and for the elimination of slums and other evils, it is essential that certain minimum standards of residential and office accommodation and other services are set, keeping in view the requirements of the community as a whole and the limited resources available. It is also desirable that maximum standards should be prescribed. This will go some distance in making the investment on housing yield more socially desirable results. Luxury housing and waste of urban land should be prevented so that larger numbers of modest dwelling units can be constructed for the same investment. For achieving this objective, the principal methods are (a) adoption of fiscal measures including local taxation, aiming at discouraging diversion of funds for luxury housing, (b) advice on building designs, (c) modifications in existing building bye-laws of local bodies so as to facilitate construction of low cost housing in accordance with austere standards and specifications, (d) prefabrication of building components, and (e) greater use of locally available cheaper materials. The systematic study of standards and advice relating to them constitute important aspects of the work of the National Buildings Organisation.

Strengthening municipal administration

At the local level, municipal administrations alone can undertake satisfactorily the task of providing the services needed for development in urban areas, expansion of housing and improvement of living conditions. Most municipal administrations are not strong enough to carry out these functions. They should be sufficiently strengthened by increasing their resources and personnel and by enlarging their jurisdiction and functions. Where the present limits of the selected urban areas are insufficient to cope with the problem, they should be extended. In the case of growing towns, it would be desirable from (he beginning to provide for larger rather than smaller municipal areas, so that these towns and the rural areas surrounding them can be developed together in a coordinated manner without having to face difficulties later on account of separate jurisdictions. Inevitably, municipal administrations have larger functions than in the past for providing civic services. It is envisaged that a large proportion of towns will in future have separate development plans of their own and these will be integrated with the plans of States. In this context, a careful review of the administrative and financial measures which should be taken in cities with a population of one lakh or more other than the metropolitan areas should be undertaken in each State.

Major programs

· Provided for preparation of master plans for major cities (above 100,000 population), state capitals, port towns, new industrial centers, etc

· Metropolitan region plans

· Regional plans for industrial regions, resource regions and river valley regions

o Problem of regional disparity and few cities becoming too big

· Need for decentralized industrial development

· Trend toward rationalization in planning with the objective of coordinated rural urban development

· Control of land use

· Evolving standards for efficient housing and office accommodation

· Strengthening Municipal administration

· T&CPO became a central advisory agency for monitoring grants and helping states in preparation of master plans

· Maharashtra Regional and Town Planning Act 1966

FOURTH FIVE YEAR PLAN (1969-74)

After the ‘Plan Holiday’, the Fourth Plan was begun in 1969.

Objectives

i. To achieve stability and progress towards self-reliance.

ii. To achieve an overall rate of growth of 5.7 per cent annually.

iii. To raise exports at the rate of 7 per cent annually.

Outlay: The total proposed outlay was Rs. 24,880 crore, which included Rs. 15,900 crores as public sector outlay and Rs. 8,980 crore as private sector outlay.

Urban Development

The balanced urban growth was accorded high priority in the Fourth Plan (1969-74). The Plan stressed the need to prevent further growth of population in large cities and need for decongestion or dispersal of population. This was envisaged to be achieved by creation of smaller towns and by planning the spatial location of economic activity. Housing & Urban Development Corporation (HUDCO) was established to fund the remunerative housing and urban development programmes, promising a quick turnover. A Scheme for Environmental Improvement or Urban Slums was undertaken in the Central Sector from 1972-73 with a view to provide a minimum level of services, like, water supply, sewerage, drainage, street pavements in 11 cities with a population of 8 lakhs and above. The scheme was later extended to 9 more cities.

Regional and urban development was accorded particular recognition in the Third Plan, and development plans for 72 urban centres were undertaken. Regional studies in respect of metropolitan regions around Delhi, Greater Bombay and Calcutta were initiated. By 1968, almost all the States Lad introduced Town Planning Legislation with varying scope.

During the period 1963—69, interim development plans for 40 cities were completed. They provided necessary guidelines to Government departments and public authorities in the use of land. Against an allocation of Rs. 5.5 crores during the period 1963—69 for the preparation of these plans, the expenditure is estimated at Rs. 4.23 crores. For lack of adequate resources— financial and organisational—much headway could not be made with implementation except in a few metropolitan towns and new towns. There is an urgent need in the context of the interim plans to prevent unregulated growth of the towns.

Priorities and Programmes.—According to present projections, the urban population is expected to increase from 79 million in 1961 to nearly 152 million in 1981. The number of towns with a population of 50,000 and above is likely to increase from 250 in 1961 to 536 in 1981. Regional studies and planning have to be related to this prospect. The situation in regard to growth of population of metropolitan centres, particularly of Calcutta and Bombay, is already so difficult as to make it almost a law and order problem. To a lesser extent, this is also true of several other large cities. In cities like Calcutta and Bombay it may be necessary to think not only of preventing further growth of population but also of decongestion or dispersal of population. In the case of the other cities, future planning must be oriented towards, stabilisation of population at a desirable optimum figure and towards planning suitable new centres in the region for the likely spill-over. Unless-such positive approach in relation to growth of population in our bigger cities and smaller towns is adopted now, it will be difficult to control the situation later.

In most of the rapidly growing cities, the limits of corporations or municipalities do not coincide with the appropriate planning areas. It is necessary to create larger planning regions and to provide by law that the plans formulated by the regional authority are implemented by the local authority or authorities. Planning to be effective requires the full legal structure tor formulation and implementation. The administrative structure of the local bodies needs to be reviewed and rationalised towards better implementation of development plans. Expenditure on specific schemes, such as on roads, sewerage or water supply, is likely to be highly wasteful in the absence of a long-term plan. In the long run, the plans of development of cities and towns must be self-financing. One of the largest sources of unearned income at present is the rapid increased in values of urban land. On the other hand, high prices of land are one of the main obstacles in the way of properly housing the poorer classes. The evolution of a radical policy in this regard is an immediate requirement for future development.

There is a provision of Rs. 188 crores in the States sector for urban development, housing and metropolitan schemes. To supplement these resources a provision of Rs. 10 cores has been made in the Central Plan as share capital for the establishment of a Housing and Urban Development Finance Corporation. The Corporation is expected to build up a revolving fund of the order of Rs. 200 crores through Governmental allocations, mobilisation of private savings and supported by assistance from appropriate international agencies. Loans will be advanced from this fund to the State Governments or to executing agencies under them, to finance projects of housing and urban development promising quick turnover; the projects would have to be adequately enumerative. To ensure quicker turnover in the initial stages, the major portion of the allocations from the revolving fund may have to be utilised in the larger cities for composite projects covering the requirements of commercial or industrial ventures and middle and lower income group housing. Emphasis will have to be laid on the rapid development of land, its utilisation for sale or house-building, the disposal of built houses to the maximum extent possible on cash and an acceleration of building techniques.

A provision of Rs. 42 crores has been made in the West Bengal Plan for integrated urban development of the Calcutta Metropolitan Region. This provision is proposed to be utilised for schemes relating to water supply, sewerage and drainage roads and traffic, slum clearance, housing and urban development. The scope and effectiveness of these provisions could be enhanced by integrating their use with that of other provisions for land development in sectors such as industry, urban water supply, roads and social and educational institutions. Such programmes could in turn be related to complementary effort in the cooperative and private sectors. It is only comprehensive planning of this kind, supported by legislation, which can bring about efficient and economical layout of land and services within the framework of social objectives.

These provisions should be supplemented by resources at the local level, which will need to be augmented by the State Governments and local authorities through various measures, such as improvement of assessment and collection of taxes, new or enhanced taxes and borrowing programmes of local authorities. The recommendations in this connection of the Rural-Urban Relationship Committee need to be followed up by the State Governments. Action is also required on the reports of the two Committees appointed by the Local Self-Government Ministers’ Council on Augmentation of financial resources of urban local bodies (1965) and on Urban Land Policy which have made useful recommendations for copping up unearned increment in land values. Some of the important measures suggested are levy of a lax on urban properties including vacant lands on the basis of their assessed capital value, enhanced stamp duty or surcharge on the sale of urban properties and lands, conversion tax on change of existing land use to a more profitable use, betterment levy for improvement and increase in value of land due to execution of schemes by local or public authorities on nearby lands, and payment for the services by the beneficiaries. This is particularly applicable to metropolitan cities and other large centres, where the per capita income is much higher than in other areas. The implementation of schemes for the benefit of these cities carries with it a corresponding obligation on the part of the beneficiaries to share the burden. It is hoped that State Government will take all the measures necessary to augment resources at the local level.

Major programs

· Reiterated the need to restrict growth of large urban centers

· Search for optimum city size where new industrial activity could be located

· Growth center approach

· Task force on small and medium towns

· Bombay Metropolitan Regional Planning Board in 1967

· Calcutta Metropolitan Development Authority created in 1970

· Bombay Metropolitan Region Plan in 1970

· Housing and Urban Development Corporation (HUDCO) constituted in 1970 as premier financing agency, particularly for LIG and EWS

· Plans of development of cities and towns must be self-financing.

· comprehensive planning

· Rural-Urban Relationship Committee

FIFTH FIVE YEAR PLAN (1974-79)

The Plan was formulated against the background of sever inflationary pressure.

Objectives

In addition to removal of poverty and attainment of self-reliance, the Fifth Plan had the following major objectives: –

i. 5.5 per cent overall rate of growth in Gross Domestic objectives.

ii. Expansion of productive employment and fuller utilisation of existing skills and equipment.

iii. A national programme for minimum needs and extended programmes of social welfare.

Outlay: A total outlay of Rs. 53,410 crore was proposed for the Fifth Plan.

Urban Development

The Fifth Plan (1974-79) reiterated the policies of the preceding Plans to promote smaller towns in new urban centres, in order to ease the increasing pressure on urbanisation. This was to be supplemented by efforts to augment civic services in urban areas with particular emphasis on a comprehensive and regional approach to problems in metropolitan cities. A Task Force was set up for development of small and medium towns. The Urban Land (Ceiling & Regulation) Act was enacted to prevent concentration of land holding in urban areas and to make available urban land for construction of houses for the middle and low income groups.

Provisions made in the State Plans for integrated Urban Development are being supplemented by funds provided for the scheme of integrated Urban Development in the Central Sector. This scheme provides loan assistance to State Governments for developing the necessary infrastructure. It is expected that over a period of time the State Governments will be able to build up a corpus of seed money for expansion programmes

Urban Development programmes were taken up in the three metropolitan cities of Calcutta, Bombay and Madras and nine other cities in 1974-75. Additional six cities were taken up in 1975-76 and it is expected that six more will be taken up during 1976-77. Work for the preparation of Plans for some other cities is also expected.

In view of the progress made so far, total provision of Rs. 256.13 crores has been made for Urban Development for next two years against a likely expenditure of Rs. 249.33 crores during 1974-77.

The main thrust of the programmes in the Fifth Plan is directed towards ameliorating the conditions of the backward sections of the society. This is sought to be achieved by augmenting the programmes for the construction of housing colonies by State Housing Boards and by taking up on a large scale a programme for the provision of house-sites for landless labourers in rural areas. While the bulk of this programme is being undertaken in the State Plans, the activities of the Housing and Urban Development Corporation in the Central sector are being geared up to meet the expanding demand. A provision is being made to increase the Equity participation in HUDCO to enable it to generate resources of the order of Rs. 150 crores in the Fifth Plan period. Separate provisions have been made for the scheme of subsidised housing for plantation labourers and Dock labourers. Adequate emphasis has also been placed on research and development activities for generating better and cheaper designs.

Major programs

· Focus on removal of poverty

· National Program of Minimum Needs such as elementary education, minimum public facilities, rural water supply, home sites for landless labor, rural roads, rural electrification, and slum improvement

· Development and Improvement of Slums

· Integrated Urban Development Program extended grants to cities which had a master plan and instituted a Development Authority

· Encouraged projects developed on self-financing principle

· Emphasis on infrastructure development

· Integrated programming and funding with emphasis on project implementation

· Urban Land Ceiling (and Regulation) Act 1976

SIXTH FIVE YEAR PLAN (1980-85)

The draft of the Sixth Five Year Plan (1978-1983) was presented in 1978. However, the plan was terminated with the change of Government in January 1980. The new Sixth Five Year Plan was implemented in April 1980.

Objectives

i. To eliminate unemployment and underemployment.

ii. To raise the standard of living of the poorest of masses.

iii. To reduce disparities in income and wealth.

Outlay: The proposed outlay for the Sixth Plan totalled Rs.1, 58, 710 crore.

Urban Development

The thrust of the planning in the Sixth Plan (1980-85) was on integrated provision of services along with shelter, particularly for the poor. The Integrated Development of Small and Medium Towns (IDSMT) was launched in towns with population below one lakh for provision of roads, pavements, minor civic works, bus stands, markets, shopping complex etc. Positive inducements were proposed for setting up new industries and commercial and professional establishments in small, medium and intermediate towns.

In the Sixth Plan, the major emphasis is placed on the following measures:

a. Instead of attempting a massive relocation of slums, the greater emphasis would be on environmental improvement of slums for which substantially increased investment will be made. The proposed investment of about Rs. 150 crores will benefit about 10.0 million people, assuming a per capita expenditure of Rs. 150. This scheme will be applicable to all urban areas irrespective of the size of the city/town. This forms part of the Minimum Needs Programme.

b. A provision of Rs. 96 crores has been made in the Central Sector for the Centrally Sponsored Scheme of Integrated Development of Small and Medium Towns. This will be in the form of assistance to the State Governments on a sharing basis. It is visualised that about Rs. 200 crores would become available from the Central, State Governments and implementing agencies for the development of about 200 towns during the Plan period. Small and medium towns with a population of less than one lakh are eligible to receive assistance from the Centre under the Scheme, provided matching contributions are forthcoming from the State Governments/ implementing agencies.

c. In the next five years, Rs. 423 crores will be spent by the State Governments in urban development programmes. The above provision is meant for providing facilities such as roads, pavements, minor civic works as well as such amenities as bus sheds, markets, shopping complex, theatres etc. A sum of Rs. 247 crores is being provided for the continuing development projects in Calcutta being coordinated by the Calcutta Metropolitan Development Authority and aided by the World Bank. An additional sum of about Rs. 66 crores will be spent on on-going schemes in State Capital Projects in Bhopal, Gandhinagar and Chandigarh.

d. For the National Capital Region around Delhi, a provision of Rs. 10 crores has been made. This scheme, the details of which are under review, is expected to de-concentrate economic activity from the core of Delhi into regional towns-located in U.P, Haryana and Rajasthan.

e. A sum of Rs. 1.60 crores is being provided for research and development in order to improve the formulation of policy on urbanisation and urban development. The roles of different sizes of towns and cities is not well understood; the relationship between urban and rural activities needs to be investigated further in order to improve the links between urban and rural areas; the comparative costs of providing infrastructure and services to large, medium and small cities need to be worked out. Finally, research is necessary to formulate policies to strengthen local bodies so that they can play a greater role in the financing ‘and implementation of programmes.

Major programs

· Concern about environment

· Depleti

Why do people move to cities?

Larger cities are often seen as concentrations of social problems, poverty and high unemployment rates. Thus an interesting question is why do people move to cities? Contemporary migration in developing countries arises from the attraction of the city as compared to the rural areas from which migrants move. Migrants are attracted by better access to public services such as electricity, clinics, schools, as well as better prospects for recreation in cities. Thus, the ‘bright lights’ of the cities may be a pulling factor.

However, although some migrants move for these reasons, numerous studies show that migrants respond primarily to economic incentives. People move from poorer areas to wealthier areas for economic gain. Differences in average income or wage levels between rural and urban areas significantly affect migration between two locations. Economic research supports this. According to the World Bank, the urban-rural wage gap is huge in developing countries. An urban construction worker in Côte d’Ivoire earns 8.8 times the rural wage rate and an urban steel worker in India earns 8.4 times the rural wage in that country. Wages are, in turn, kept high in cities by union pressure, by strict application of minimum wage laws or by the payment of relatively high wages by government and foreign corporations. Thus, rural-urban migration is an example of labour market adjustment.

If economic factors play a critical role in determining rural-urban migration, then urbanisation and city growth are clearly determined by those same factors. It follows that urbanisation and city growth cannot be analysed without giving explicit attention to the interaction between rural and labour markets. To understand the process of urbanisation consider Figure 3 which shows two labour markets where (a) is rural and (b) is urban. In these markets, equilibrium wages are determined by the demand for and supply of rural and urban workers. In equilibrium, the rural wage will be equal to the urban wage since workers would move between the two markets until the equilibrium wage is reached (we). In equilibrium, Lis the number of workers employed in the rural market and Lis the number of workers employed in the urban market.

 

However, government intervention in the form of minimum wage laws is a common feature of urban labour markets in developing countries. Thus, wages are pushed up and kept above the equilibrium level (w*). At the higher-than-equilibrium wage rate in the urban labour market, firms demand less labour (OLd) but more workers wish to work (OLs) and there will be excess supply of workers (LdLs). In other words, the minimum wage will restrict the creation of jobs by LuLand increase the size of the urban labour force (LuLs) as more workers leave the rural sector attracted by the higher wage in the urban market. The incentive to stay in the urban area is that a worker improves his prospects of high-wage employment but at the risk of being unemployed.

The urban labour market is therefore like a lottery: a worker buys a ticket (i.e. goes to the city) in the hope of hitting the jackpot (i.e. getting a high-wage job). As with all lotteries, most people lose. Those who seek a job in the high-wage sector but end up unemployed have three options:

· return to the villages whence they came;

· stay and contribute to urban unemployment;

· settle for a low-wage job while waiting for the jackpot.

It seems that the majority of migrants stay.

Evidence shows that rural workers migrate to the cities even if they are unlikely to find jobs, provided that they expect to hit the jackpot eventually by obtaining high-wage sector employment. The incentive to wait is the large difference between urban and rural wages. Migrants are attracted to the cities, not because they are assured of an increase in wages, but because they gamble on being absorbed in high-wage employment and are willing to be unemployed or accept very low wages in the urban labour market for a period of time in the expectation of achieving a high lifetime income. However, the chances of hitting the jackpot fall as more and more rural workers join the ranks of the unemployed. At some point the unemployed are numerous enough to discourage additional migration in excess of the rate at which new jobs were being created in the high-wage sector, In this way, urban unemployment acts as an equilibrium device, eventually choking off the flow of new migrants.

Who migrates?

If economic forces are so important in influencing m8igration, then we would expect that the people who choose to migrate will be those with most to gain from it. In all developing countries, migration is concentrated in the 15-30 age group, with a substantial portion in the 15-24 sub-group. This accords well with the view that economic factors explain rural-urban explanation because the lifetime income gains are largest for the young. Evidence from most countries show that the probability of migration is generally also higher for the more educated. In Colombia, for example, the migration rate is four times as high for those with higher education as for those with none. Earlier migration surveys describe the typical rural-urban migrant as young and better educated than the average rural resident. It is also known that migrants tend to move to places with higher income and employment levels than their origin locations and that friends and relatives in the destination area increase the attraction of the location, while distance between two locations reduces the attraction.

Benefits and Costs of Urbanisation

Urban growth gives rise to economies of scale. Industries benefit from concentrations of suppliers and consumers which allow savings in communications and transport costs. Large cities also provide big differentiated labour markets and may help accelerate the pace of technological innovation. Urban growth also allows economies of scale in such services as water supply and electric power to be exploited. Evidence from India suggests that substantial economies of scale are found in cities of up to 150,000 inhabitants.

Against these benefits, a major consequence of rural-urban migration is over-urbanisation. In other words, at some point, diseconomies of scale begin to emerge as cities become too big, although the city size at which these become important has not been demonstrated.

Along with the rapid spread of urbanisation has come the prolific growth of huge slums and shanty towns. Today, slum settlements represent over one-third of the urban population in all developing countries; in many cases they account for more than 60% of the urban total. The enormous numbers of squatters and slum-dwellers, who account for half the populations of cities as diverse as Istanbul, Dar es Salaam and Caracas are a visible sign of the ‘lottery’ described above.

Surveys confirm that air pollution, congestion, social disturbances, crime and similar problems increase disproportionately with city size. The concentration of people also causes congestion and raises the cost of travel so that scarce resources like time and fuel are wasted. In addition, the mounting pressure on existing services means deteriorating quality and a reduction of what is available per person. As cities expand, the cost of providing basic services can rise enormously.

Over-urbanisation and its related problems (pollution, noise and congestion) are examples of negative externalities. The presence of such externalities causes a market to operate inefficiently. The market failure will lead to a free-market solution which tends towards over-urbanisation or to a size of city that is above the socially desirable one, because there is a clear divergence between private and social marginal costs (i.e. social costs = private costs + external costs).

This idea can be understood from Figure 4. Migrants impose costs on others e.g. congestion, pollution, noise, etc. This is represented by placing marginal social cost curve (MSC) above the marginal private cost curve (MPC) in Figure 4. In this case private costs fail to coincide with social cost because the true social cost is equal to the private cost plus the cost that migration imposes in terms of overcrowded cities. Since the social marginal cost of migration to cities exceeds the private marginal costs, there is a clear sign that too much migration is taking place. Migrants face a choice of whether to stay in the rural areas or to migrate to the city. They will migrate as long as the benefits of migration exceed the their private costs. So migration takes place up to the point where marginal private cost is equal to the marginal private benefits i.e. MPC=MPB and where the size of cities is Q0. However, the optimal size of cities is Q*. Thus, the distance Q*Qrepresents the negative external effects of migration on city-dwellers i.e. the degree of over-urbanisation in cities or the extent to which large cities are too big.

 

Conclusions

Despite the huge social costs of rural-urban migration, people are still moving to overcrowded cities. This tendency can be understood as a response to large urban-rural wage differentials maintained by minimum wage laws and restrictive practices. Because of the externalities involved in migration decisions there is a good reason to suppose that unregulated markets will tend to promote over-urbanisation. As long as the private costs of migration are less than the social costs and migrants are willing to risk not finding a high-wage job, over-urbanisation is likely to continue to be a serious problem for developing countries.

Review Notes

1. Huge and growing cities are a feature of many developing countries – it is predicted that by early next century 22 of the worlds largest 27 cities will be in developing countries.

2. Whilst cities may have a certain lure in terms of ‘bright lights’ it is economic factors that largely explain this the tendency towards urbanisation – urban wages are very substantially higher than rural wages.

3. High urban wages are maintained by minimum wage laws, union pressure and the presence of high-wage employers (often governments and multinational corporations) so equilibrium is reached not by the adjustment of wages but by high unemployment.

4. The fact that it is mostly the young and the educated who migrate supports this economic explanation of rural-urban migration because these workers have the most to gain in terms of lifetime earnings.

5. Decisions to migrate to urban areas result in many external costs as cities become large – pollution, noise and congestion are some examples of these external costs.

6. In the presence of migration externalities it is likely that there will be over-urbanisation.

Impacts of Internal Migration on Urban Development in China

Introduction

The massive population flow from rural to urban areas in post-reform China is the result of both institutional and structural changes caused by economic growth. In the planned economy, China had implemented a household registration system (hukou system), which is not a simple registration management, but a man-made institutional design to strictly control population migration and labor mobility both between rural and urban areas and across regions. The issuing of Regulations on Household Registration of People’s Republic of China in 1958 marked the beginning of the formal establishment of hukou system. Public security bureaus controlled place-to-place migration and it was almost impossible to make any rural-urban migration without authoritative plans or official agreement. Departments of labor and personnel administration controlled sectoral transfer of labor force. There was no free labor market at all.

The design of hukou system was totally aimed to serve the priority strategy of heavy industrial development and speed up industrialization. In order to accomplish the original accumulation of capital, this system kept rural labor forces staying at agricultural sectors and limited the number of people enjoying low priced food, guaranteed non-agricultural employment and urban social welfares, including basic social security, subsidized public services (education, health care, transportation, and so on), and subsidized housing in urban areas.

Since the market-oriented reform, the control of labor mobility has been gradually relaxed. The introduction of Household Responsibility System (HRS) in early 1980s allowed farmers to claim their revenues based on their efforts, thus solving the long-standing incentive problems associated with the egalitarian compensation rules inherent in the commune system (Meng, 2000). At the same time, the price system of agricultural products was altered, which stimulated the increase in agricultural productivity, thus releasing surplus laborers from agriculture. The higher returns to labor in non-agricultural sectors motivated farmers to migrate out of agriculture (Cook, 1999), producing an increasing pressure to reform the hukou system. As the result of labor mobility from agricultural to non-agricultural sectors and from rural to urban areas, labor markets began to develop.

The gradual abolition of institutional obstacles has been the key to increase labor mobility since 1980s. In 1983, observing the diminishing capacity for absorbing surplus labor in rural sectors, the government began allowing farmers to engage in long distance transport and marketing of their products beyond local market places, the first time that Chinese farmers obtained the legal rights of doing business outside their hometowns. In 1984, regulations were further relaxed and farmers were encouraged by the state to work in nearby small towns where emerging TVEs demanded for labor. A major policy reform took place in 1988, when the central government allowed farmers to work in enterprises and/or run their own business in cities provided that they were self-sufficient in staple foods.

In the earlier 1990s, the central and local governments have adopted various measures to encourage labor mobility between rural and urban areas and among regions, gradually relaxing the hukou system. For example, cities of various scales have issued blue-stamp hukou identities to those who migrated to the cities and paid for certain amount of money (or invested in local business or bought expensive house in the cities). Despite the reluctance to implement these new regulations in some of larger cities, the central government did legitimize the hukou system reform as part of the marketization efforts. But this reform was retrenched in the late 1990s. A few of cities like Beijing, Shanghai and Wuhan had enacted employment protection policies and set up hundreds of industries and positions for laid-off and unemployed urban workers, in which rural migrants were not allowed to be hired. However, a new-round economic growth and export expansion has created more job opportunities, and even caused a local shortage of rural migrants in coastal areas since 2003 (Wang, et al., 2005), providing a loose employment environment for cities to further deepen the hukou system reform.

The gradual reform of the hukou system can be characterized as a bottom-up process since the beginning of the 21th century – that is, relaxation of hukou control started from small towns and gradually extended to medium-sized and big cities. The hukou reform in over 20 thousand small towns is characterized as “minimum conditions and complete opening-up”. After years of experiments in some regions, in 2001, the Ministry of Public Security initiated actions to reform hukou system in small towns. In most small towns the minimum requirement for obtaining local hukou is that the applicants have a stable source of income and a fixed place of residence in the locality. This is considered as a great and significant step in the hukou reform ever since the system was put into place in 1958. The hukou relaxation in some medium (even some large and provincial capital) sized cities is characterized as “abolishing quota and conditional entry”. Criteria for settling in those cities with hukou status have been substantially lowered. The easiest requirement in Shijiazhuang, the capital city of Hebei province, is to have a work contract with a term of more than two years. Cities implementing the reform include both those in coastal and inland regions. This approach to reforming hukou system meets the needs of maturing labour markets and conforms to the strategy of gradualism.

The hukou relaxation in mega cities like Beijing and Shanghai is characterized as “ raising the bar and opening the gate”. Those cities have turned on green lights for intellectuals and professionals, whereas imposing stricter conditions for ordinary migrant workers to come. In short, raising the bar means narrowing the door by imposing stricter standards. Comparatively, the hukou reform in those cities has not made much progress.

From the above three patterns of the hukou system reform, it is evident that cities and towns forcibly promote the reform because of the following two reasons: one is that urban hukou identity now is of little value. Governments promise neither job opportunities nor welfare that can be obtained by hukou. Consequently, the increase in urban population will not aggravate the financial burden on the governments. The other is that local economies have experienced or longed for benefits of reallocating resources by labor force inflow. But as to metropolises that haven’t achieved substantial progress in reform, that is not the case. Their hukou status is still valuable. Governments are obliged to ensure the residents benefits of re-employment services, all-around medical care provision, nice urban environment, and even lower grade for entrance to universities, and so on. Though being aware of the advantage of resource allocation by labor force inflow, they give priority to low unemployment rate and maintaining social stability. Therefore they are not motivated enough to push ahead with the reform.

As indicated by Figure 1, the desire and efforts are affected by the expected net marginal benefit (marginal revenue minus marginal cost, abbreviated as MR and MC) obtained by governments from reforming their hukou system. The comparison of marginal cost and revenue determines what kind of measures to be launched and how much effort to be made to carry them out. Usually with the further enforcement of reform measures and the strengthening of efforts, the marginal cost of reform tends to rise (e.g., increasing opposition from the vested interests), while the marginal revenue tends to go down (people benefited from the reform withdraw their support as their benefit decreases). Finally, efforts stop at the point where the marginal cost and revenue curves intersect (Point E0, Figure 1). In view of the time sequence of the reform and the comparison of different areas, the more developed the market is, the more is the marginal revenue, and the less is the marginal cost. As Figure 1 shows, with the marginal revenue line going up and the marginal cost line going down, the equilibrium points of efforts to reform vary among different backgrounds of market development. The more developed market needs and is able to endure further reform, as indicated by Point E1.

The primary motivation for urban development should be the cost reduction from the economy of scale. But the planned and market economies engender two distinct development models. Cities with the market economic system develop by self-financing. They can reduce the transaction costs by agglomeration, and their expansion lies in efficient investment. On the contrary, those inclined to the planned economy tend to develop by redistribution. Therefore, it is observable that cities at different stages of market development have different motivations and intentions, and different means of reform, and hence different results. Naturally, those with redistribution privileges tend to resist the reform and restrict migration, while cities that increasingly rely on self-financing as the market grows prefer labor force flow.

Spatial Pattern of Migration

Since 1990, income disparities and development gaps between eastern, central and western regions have widened. As a result, in 2004, Beijing, Tianjin, Hebei, Shanghai, Jiangsu, Zhejiang, Fujian and Guangdong accounted for 82.7 percent of total exports value of China and 45.2 percent of total jobs in manufacturing. At the same time, factors markets became more important forces in allocating capital and labor. The booming coastal regions have created more job opportunities and attracted massive flows of labor. Benefiting from early openness of their economies, the coastal provinces have taken the lead in the development of factors markets, which eliminates the institutional obstacles preventing factors of production from moving across regions, and have become major destinations of labor flows. Labor inflows in turn provide an important source of economic growth in these regions and improve their efficiency of labor allocation (Cai et al., 2002). By summarizing data from the 1987 and 1995 population sample surveys, and the 1990 and 2000 national censuses, Table 2 shows the changes in spatial patterns of migration. The share of intra-provincial migration has been higher than that of inter-provincial migration. When we consider the inter-provincial migration, it is more obvious that the eastern region is the prime destination for migrants.

From Table 2, we can see that in 2000, 64.4 percent of the inter-provincial migration in the eastern region happened within this region, while 84.3 percent of inter-provincial migrants from the central region and 68.3 percent from the western region moved to the eastern region. In terms of the time trend, the share of inter-provincial migration within the eastern region increased by nearly 15 percent, and the share of migration from central and western to eastern regions increased by nearly 24 percent.

Migration as a Driving Force of Urbanization

Population migration is an important contributing factor in the structural transformation and urbanization in the process of economic development. Prior to the reform and opening-up, however, the pace of urbanization in China was stagnant and even dropped during the 10-year Cultural Revolution (Figure 4). The relative decline of urban share in the total population can be attributed to the following two factors: one is that the enforcement of hukou system placed tight restrictions on rural-urban migration. The other is that the natural growth rate of rural population was much higher than that of urban population. Since the reform and opening up, China has dramatically picked its pace of urbanization.

From 1978 to 2004, the urban share in total population increased from 17.9 percent to 41.8 percent, with an average annual growth rate of 0.92 percentage points. During the same time period, the average growth rate of urban population stood at 4.4 percent, significantly higher than the natural growth rate of population in China, which dropped from 1.2 to 0.59 percent.

Generally speaking, urban population growth comes from three channels: natural growth of urban residents, rural-urban migration and spatial jurisdiction change. According to an empirical study conducted by Todaro (1984) on 29 developing countries, migration and spatial jurisdiction change account for 41.4 percent of urban population growth from 1960 to 1979. Assuming the growth of urban population comes from the growth of urban residents and rural-urban net migration, we can calculate the contribution of migration to urban growth in China. We use the number of urban population in 1977 as the baseline and decompose the annual increase of urban population into growth of urban residents and net migration based on the information of natural growth rates of urban population from 1978 to 1999, natural growth rates of total population from 2000 to 20041 and annual number of urban population. Figure 5 shows that rural-urban net migration accounted for nearly 70 percent of urban growth in 1980s and went up to more than 80 percent of urban growth since 1990s, indicating that migration is becoming the most important force of Chinese urbanization.

The acceleration of China’s urbanization since reform is virtually a remedy for the long time lagged development and structural deviation. Under the planned economy, the formation of cities in China emerged with a different path than those in market economy. Cities were designed as economic zones to serve the specific purpose of satisfying the priority strategy of heavy industrial development. Although economic reform dismantled the traditional planning system, dual economy and urban-biased policies persists, which hinders the simultaneous development of urbanization through industrialization. The man-made institutional segregation between rural and urban areas deprives rural migration of the choice of permanently settling down in urban areas, and leads to the unique characteristics of under-urbanization development in China. Au and Henderson (2002) adopted a production function method to model and estimate urban agglomeration economies and the optimal city size for 206 cities in China. They found that the constraints of hukou system on labor mobility have also resulted in sub-optimal size and under-agglomeration in Chinese cities, leading to significant economic welfare losses. The that incre sing a city at 50 percent below optimal size to its efficient size will raise output per worker by a simi majority of Chinese cities are potentially undersized-below the lower bound on the 95 percent confidence interval of the size where their output per workers peaks. Estimates show about 40 percent, indicating that the net benefits of clustering and agglomeration are considerable (World Bank, 2005). The findings from the structuralist approach proposed by Chenery and Syrquin (1975) reached the similar conclusion. Based on the 2002 World Bank data of 71 countries with a population of over 50 million, Figure 6 illustrates the deviation of China’s urbanization level from the predictive trends by two methods. The Chenery-Syrquin structuralist method (1975) regresses the share of urban population on the value of logarithm per capita GDP (PPP) and its squares and produces a linear trend of prediction. The non-parametric mean adjusted smooth method shows a S-shaped curve relationship between urbanization and the changes in income level. Both methods illustrate a similar dramatic change in the spatial distribution of population with the growth of per capita income. According to the prediction, urbanization in China is way off the general trend and is at the stage of acceleration.

 

Apart from raising urbanization level, migration also affects the structure of urban population. On one hand, migration brings about demographical structural changes in age, gender and education level and so on. On the other hand, migration reduces urban population dependency ratio. Those impacts produce accumulative effects and agglomeration for the development of urban economy.

Migration is selective. A number of studies show that rural migrant workers are primarily youths, with an average education level higher than those who choose not to migrate. Because of the restrictions of hukou system, few migrants move along with their families. Such selectivity of migration strongly affects urban population age structure. As shown in Figure 7, in late 1980s when small amount of rural migrants began to flow into urban areas, they had little impacts on the age structure of urban population in 1990. With the fast growing amount of rural-urban migration in 1990s, however, the impacts of migration on urban population age structure become very significant. In Figure 7, the age structure pyramid illustrates the age distributions of urban local residents on the left and migrants on the right, respectively. In 2000, migrants reduce urban dependency ratio by 2.5 percentage points and aging population ratio by 0.8 percentage points through filling up the gap of age groups between 13 and 33.