In 2010, half the world’s population lives in cities; by 2030, it will be 60 percent. (Population Reference Bureau, 2010) Today, around three‐quarters of the poor in developing countries live in rural areas; by 2030, 50 percent will likely live in cities. (Ravallion et al., 2007) The number of slum dwellers is projected to double from 1 billion to 2 billion over the next 25 years (CARE, 2006). The number of mega‐cities (with populations over 10 million) will have risen from 19 in 2007 to 27 in 2025, most of them in developing countries. (United Nations, 2008) This phenomenal urbanization process will create many challenges for the developing countries. The problems of cities are well known: cities are congested, polluted, energy‐intensive, ridden by crime, corruption and poverty, and difficult to manage. The financing needs to meet the investment requirements of public infrastructure in cities are enormous: To achieve the modest slum improvement target under the MDGs, the UN estimates that about $4 billion per year are needed. (U.N. High‐Level Panel on Financing for Development, 2001). More generally, meeting the investment requirements of overall urban infrastructure needs in developing countries could be as much as $120 billion a year. (Kharas et al., 2010)<sup>1</sup> And yet, cities are the hubs of economic growth and development opportunities, as the report of the Growth Commission (Commission on Growth and Development, 2008) and _World Development Report 2009: Reshaping Economic Geography_ (World Bank, 2009a) have demonstrated convincingly. Kharas et al. summarize the core argument as follows: “Cities are recognized for their capacity to provide scale economies, efficiencies in logistics and in the provision of public services, dense labor markets that foster training and skills acquisition, innovation and creativity, diversification of production, lower environmental footprint through densification, and ultimately greater freedom for the individuals who inhabit them.” (Kharas et al., 2010, p. 1) Whether the urbanization glass is seen as half empty or half full, there is universal agreement among those who deal with urbanization in developing countries that it presents a set of issues that development practitioners and researchers need to grapple with urgently, if an inevitable and key development challenge/opportunity is to be met in the coming decades. At the same time, there is a pervasive sense among urban experts that not enough attention has been paid to the urbanization process by policy makers in developing countries and by the international aid agencies. (Kharas, et al., 2010; Linn, 2010) Recent efforts by the International Housing Coalition to call for recognition of the importance of urbanization in

> 1 This number may well be conservative. The Growth Commission has estimated that countries that wish to grow rapidly need to invest about 5% of GDP in infrastructure. If one were to assume that only one fifth of this requirement would be for urban infrastructure, based on 2008 GDP for lower and middle income countries (World Development Indicators Online puts it at $17.3 trillion) the requirement would be roughly $173 billion.

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