### **Box 1. Urbanization fostered by agricultural booms in Sub-Saharan Africa**

Can growth in agriculture foster urban growth absent the development of manufacturing and tradable business and financial services? Can urbanization be driven by consumer cities rather than producer cities? Jedwab (2012) examines the relationship between cocoa booms in Ghana and Côte d’Ivoire and the development of cities. SubSaharan Africa has yet to undergo a green revolution; fertilizer and irrigation use are low, and yields are low compared with other developing regions. Cocoa farmers in Ghana and Côte d’Ivoire operate on a 25-year cycle. New cocoa production areas arise in recently deforested areas and last for about 25 years before depletion. Then farmers move production to the next forested frontier. In both countries, production has moved successively from east to west. Jedwab uses this staged movement with district-level data for Ghana (1891–2000) and Côte d’Ivoire (1948–98) to show at the frontier how cash-crop production accounts for 60–75 percent of urbanization. This urbanization is not accompanied by increased production of manufacturing and tradable services in the frontier areas. Urban growth comes from farmers spending their incomes in local towns, trading with each other, and spending on products imported from outside the region. Towns become wholesale and retail centers, as well as producers of personal and farm services. Surprisingly, prior urbanization in earlier frontier areas is maintained even after cocoa production moves on, and these areas face income losses.

In unpublished work, Henderson and Storeygard provide corroborating evidence suggesting the effects of increased agricultural incomes on nearby cities. For 541 cities in 18 Sub-Saharan African countries, they show that positive rainfall shocks in a city’s hinterland raise city income. The idea is that rainfall increases agricultural yields and leads to enhanced urban incomes as farmers spend their incomes in cities. A one standard deviation increase in rainfall increases the intensity of “night lights” 14 percent. City lights are night lights measured daily for all points on the globe by U.S. satellites in the late evening (on the dark half of the lunar cycle for days without cloud cover). Henderson, Storeygard, and Weil (2012) show that changes in lights are a reasonable proxy for changes in income in places with weak or no income measures, and a 14 percent increase in lights suggests about a 4 percent increase in local GDP.

# **The emergent urban hierarchy**

In this section, we cover three topics. First is the urban hierarchy that emerges in fully urbanized economies and how and why the hierarchy differs somewhat in developing countries. Second is the role of a country’s largest cities. In developed countries, this role has changed with time, and in developing countries today, that evolution is playing out much faster. Third is the effect of transport infrastructure investments on the production patterns of the biggest cities and on regional development.

## **_Product and functional specialization_**

A number of studies of the United States covering 1950–70 note a high degree of sector specialization (or product specialization) in metropolitan areas, especially smaller and mediumsize ones.<sup>8</sup> In a city, about 60–75 percent of employment is in nontraded good activities (personal, trade, restaurant, housing, construction, and utility services), and 25–40 percent is in the production of goods for export (sold outside the city). Historically, exports were mostly manufactured products. For example, using cluster analysis of similarity in production patterns based on 299 industries and 243 metro areas for the United States in 1970, Henderson grouped cities into 15 types. A typical cluster type is automobiles, with 12 metropolitan areas in 1970 heavily engaged in producing automobiles and their parts and components. The median city in the group had 13 percent of its employment in automobile production, with the highest (Flint, 5