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Urbanization can be a positive force for human development, socially and economically. Cities are places of opportunity. They promote interaction between people from a wide diversity of backgrounds and skills, providing fertile ground for creativity and innovation. The cultural freedom offered by cities, where residents are less restrained by traditional ways of life, promotes openness and the chance to experiment. The sheer density of people and ideas results in a constantly evolving dynamic. Cities are at the forefront of social change: places where new values, beliefs and imagination can forge a different kind of growth that promotes new opportunities.
The innovative and energetic character of cities also means that they act as the engines of national economies, driving wealth creation, social development and employment. The urban environment acts as the primary locus for industrial and technological progress, entrepreneurship and creativity. Furthermore, the concentration of people and productive activities in cities generates economies of scale and proximity that stimulate growth and reduce the costs of production, including the delivery of collective basic services such as piped water, sewers and drains, electricity, solid waste collection, public transport, health care and schools. The clustering of cities into large areas operating as single economic entities sets in motion self-reinforcing, cumulative growth patterns. High urban densities reduce transaction costs, make public spending on infrastructure and services more economically viable, and facilitate generation and diffusion of knowledge, all of which are important for growth.
Countries that are highly urbanized tend to have higher incomes, more stable economies, stronger institutions and are better able to withstand the volatility of the global economy. In both developed and developing countries, cities generate a disproportionate share of gross domestic product and provide extensive opportunities for employment and investment. Hand in hand with economic growth, urbanization has helped reduce overall poverty by providing new opportunities, raising incomes and increasing the numbers of livelihood options for both rural and urban populations. Urban populations are generally better off than those living in villages: they tend to enjoy more access to services and generally perform well on a range of human development indicators, including life expectancy and literacy. Urbanization, therefore, does indeed play a positive role in overall poverty reduction, particularly where supported by well-adapted policies.
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