Latin America is a bright spot in the postrecession global economy, with growth rebounding strongly in much of the region. But to lengthen today’s strides toward recovery into a sustained period of rising prosperity, it must take full advantage of its cities’ economic potential.
The region is more urban than any other in developing markets, with 80 percent of its population living in cities, compared with about 50 percent in China. The shift from country to town has contributed much to Latin America’s growth, as economies of scale have raised the productivity of expanding cities and reduced the cost of delivering their basic services.1 Cities are critical to Latin America’s overall economy.2 The region’s 198 large ones—defined as having populations of 200,000 or more—together contribute more than 60 percent of GDP. The 10 largest alone generate half of that output. Such a concentration of urban economic activity in the largest cities makes Latin America comparable to the United States and Western Europe in this respect but not to many other emerging regions. China’s top ten cities, for instance, contribute around 20 percent of the nation’s GDP.