Role of rural-urban migration in explaining economic growth: Evidence from the least developed countries

Abstract

Rural-urban migration plays an important role in affecting population and labor
composition in a country. In the least developed countries, population moving from a
relatively low productive, rural, agricultural sector to a more productive, urban sector can
affect overall economic productivity.
This paper investigates the relationship between rural-urban migration and economic
growth in least developed counties. Using Dao's 2002 paper on determinants of internal
migration, the modified model for migration is formulated in this study. The result from the
modified migration model is then used in the GDP growth model to study the effect of ruralurban
migration on GDP growth.
The first section of this study analyzes the Dao's 2000 model using panel data from
least developed countries from 1960-2010 (various years). Results from Dao's model
improved substantially when panel data was used. The modified migration model includes an
internal armed conflict variable, an economic structural change variable, an agricultural value
added variable, and a density variable. All variables are significant in explaining migration
growth rate in least developed countries.
The second section investigates the effect of rural-urban migration on economic
growth. The second model includes the following variables: gross fixed capital formation,
education, trade openness, rural-urban migration, and polity variables. Except for gross fixed
capital formation and openness growth rate, all other variables are highly significant in
explaining GDP growth. The result supports the hypothesis that rural-urban migration is
important in explaining economic growth in the least developed countries.

Date of Award	2012
Original language	American English
Awarding Institution	Eastern Illinois University
Supervisor	Minh Dao (Supervisor)