Abstract |
Africa has recently experienced dramatic urbanization. Standard theories of structural transformation cannot explain this result, as it was not driven by a green revolution or an industrial revolution, but by natural resource exports. I explain how the Engel curve implies that resource windfalls are disproportionately spent on urban goods and services, which gives rise to "consumption cities". I illustrate this theory using both cross-country evidence and within-country evidence from Ivory Coast and Ghana using new data spanning one century and two identi- fication strategies (an instrumental variables strategy and a fixed effects approach). I find a strong causal effect of the production of cocoa, a ruralbased natural resource, on the growth of cities. I discuss the implications of urbanization without structural transformation for long-run growth. |