Invest in megacities or bet on secondary cities?

Advocates balanced investment across megacities and secondary cities, conditioned on decentralization, hinterland infrastructure, and institutional reforms to level the regional playing field.

The World Bank Group's 1999 position advocates balanced urban development, emphasizing that while megacities benefit from agglomeration economies and serve as engines of growth—especially for modern services and foreign investment—over-concentration in primary cities risks inefficiency, congestion, and regional inequality. It stresses the need to invest in infrastructure and institutional capacity beyond megacities—including in secondary and smaller metropolitan areas—to enable them to compete effectively, exploit localization economies, and avoid urban poverty traps. Crucially, this requires decentralizing decision-making power and resources to subnational governments, coupled with national-level coordination and hinterland infrastructure (transport, telecom, electricity) to level the playing field and support industrial decentralization. Without such policies, small and medium-sized cities cannot attract manufacturing or sustain growth.

Favors balanced urban development: supports megacities early on but prioritizes reducing excessive concentration via decentralization and intercity infrastructure to empower secondary cities and hinterlands.

The World Bank Group's 2003 World Development Report acknowledges that urban concentration—including megacities—can generate scale economies and boost growth in early development stages, but warns that excessive concentration becomes costly due to congestion and worsens regional inequality. It advocates for policies that reduce excessive primacy, such as fiscal decentralization, democratization, and strategic investments in intercity infrastructure (roads, waterways, communications) to link secondary cities and rural areas to urban opportunities. The report emphasizes balanced spatial development—not privileging megacities alone—but enabling secondary cities and hinterlands to access markets, services, and investment returns through improved connectivity and governance.

Advocates balanced, area-based investment across the full urban hierarchy—not megacities vs. secondary cities—to maximize agglomeration economies and inclusive growth.

The World Bank Group's 2009 World Development Report does not advocate prioritizing investment in either megacities or secondary cities exclusively; instead, it emphasizes managing an integrated 'portfolio of places' within administrative areas (e.g., provinces), recognizing functional interdependence across the urban hierarchy—including villages, towns, and cities of all sizes. It stresses that policy should maximize agglomeration economies while addressing stage-specific constraints: in early urbanization, focus on building density via spatially blind institutions; in intermediate stages, add connectivity infrastructure to reduce economic distance; and in advanced stages, also tackle spatial inequality and fragmentation. The report cautions against overestimating megacity growth and warns that urban primacy debates ('too big or too small') are less productive than designing coordinated, area-based strategies that balance efficiency and inclusion across the entire settlement system.

Favors context-sensitive urban investment: supports concentration early on but prioritizes interurban connectivity and equity-focused infrastructure over blanket bets on megacities or secondary cities.

The World Bank Group's 2010 World Development Report acknowledges the concentration of population and risk in megacities—especially in low-elevation coastal zones—but does not advocate prioritizing investment in megacities over secondary cities. Instead, it emphasizes that effective urban investment must be context-sensitive: early-stage urbanization benefits from facilitating concentration and migration, while later stages require interurban connectivity and regional integration. It cautions against poorly designed decentralization efforts (e.g., failed satellite cities around Cairo) and stresses that infrastructure investments should aim to increase social equity and spatial integration—not merely shift focus between city sizes.

ADB 2019 advocates balanced urban investment across megacities and secondary cities, prioritizing connectivity, targeted support for mid-sized cities, and systemic planning—not exclusive bets on either.

In 2019, the ADB advocated for a balanced, system-wide approach to urban investment—neither exclusively favoring megacities nor betting solely on secondary cities—but emphasized strengthening the entire urban hierarchy. It recognized the productivity advantages and private investment potential of large cities, especially when supported by efficient infrastructure like metros, yet warned that over-concentration risks underinvestment in smaller and medium-sized cities (1–5 million population), which continue to attract migrants despite infrastructure deficits. The ADB stressed that public policy should deliberately counter 'big city bias' by targeting support to lagging secondary cities through improved connectivity, skills development, and sector-specific industrial promotion (e.g., agro-processing), while acknowledging that poorly designed interventions (e.g., blanket tax incentives) may fail without addressing underlying structural constraints.

EBRD 2018 favored context-specific urban investment—boosting megacities’ efficiency while revitalizing secondary cities—to balance agglomeration gains against congestion and decline.

The EBRD in 2018 advocated for strategic investment in both megacities and secondary cities, conditioned on addressing agglomeration benefits and congestion costs: in major urban centres (e.g., Cairo), investments focused on public transport and pollution reduction to harness productivity gains from density; in secondary cities (e.g., Batumi, Amman, Dushanbe), targeted infrastructure—such as electric buses, solid waste management, and water treatment—aimed to improve livability, mitigate dispersion forces, and prevent self-reinforcing decline in low-density or shrinking areas. The Bank emphasized that optimal urban investment must balance agglomeration economies with congestion externalities, tailoring interventions to local demographic and geographic dynamics.