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Urbanization in
Latin America July 2017
Urbanization in Latin America
1. Urbanization trends
Urbanization in Latin America: main messages
2
2. Urbanization and income
3. Urbanization and digitization
Urbanization levels have
increased significantly in Latin
America since 1950.
Urbanization is now around 80%
in Latin American countries, more
than in most of the other regions.
After a sharp growth, urbanization
in Latin America exhibits signs of
moderation. Over the next
decades it will expand below the
world average.
Urbanization is positively
correlated with income per capita,
as well as with capital, labor and
productivity (TFP) measures.
However, in spite of displaying
high urbanization rates, Latin
American countries show relatively
low levels of income, capital, labor
and productivity.
Prospects of milder expansion of
urbanization ahead represent a
challenge in terms of growth for
the region.
Urbanization is also positively
associated with digitization.
Latin America countries should try
to leverage on their high
urbanization levels to boost
digitization.
Urbanization in Latin America
1. Urbanization
trends
Urbanization in Latin America
Urbanization took place earlier and at faster pace than in other
emerging markets in Latam and is now at advanced economies’ levels
Share of urban population by regions (1950, 2015 and 2050)* (% of total population)
Source: BBVA Research and UN. * Share of population residing in
urban areas for each year.
13% of world’s
urban population
80% of
population living
in urban areas
93% growth of
urbanization rate
since 1950
Urbanization to
reach 86% by
2050
Latin America & Caribbean
0 10 20 30 40 50 60 70 80 90 100
Latin America & Caribbean
Asia
Africa
Eastern Europe
Australia/New Zealand
North America
Western Europe
Japan and South Korea
De
ve
lop
ing w
orld
De
ve
lop
ed w
orld
1950 2014 2050 (f)
World 1950 World 2015 World 2050
Urbanization in Latin America
Urbanization in Latam to expand less than the world average in the
future, which represents a challenge in terms of growth for the region
Urbanization rates (% of total population)
Source: BBVA Research and UN
Urbanization growth (average rate of urbanization growth, %)
25
35
45
55
65
75
85
95
19
50
19
55
19
60
19
65
19
70
19
75
19
80
19
85
19
90
19
95
20
00
20
05
20
10
20
15
20
20
20
25
20
30
20
35
20
40
20
45
20
50
Argentina Brazil Chile
Colombia Mexico Paraguay
Peru Uruguay Venezuela
World
0
0.2
0.4
0.6
0.8
1
1.2
1.4
Average urbanization growth 1950-2015
Average urbanization growth 2015-2050
World
1950-2015
World
2015-2050
WLD
PAR
COL PER
BRA
VEN
CHL ARG
URU
MEX
Urbanization in Latin America
Urbanization levels vary significantly within each country in Latam
Regional urbanization within Latin American countries * (maximum, minimum and average urbanization at state level for each country)
Source: BBVA Research and national statistics. * Only one specific year has been considered for each
period (ARG: 1960 and 2010; BRA: 1960 and 2001; CHL: 1960 and 2015; COL: 1970 and 2002; MEX:
1960 and 2000; PAR: 1962 and 2002; PER: 1960 and 2007; URU: 1963 and 2004 and VEN: 1961 and
2001) varying according to the availability of national demographic statistics.
0
10
20
30
40
50
60
70
80
90
100
19
50-1
970
20
00-2
010
19
50-1
970
20
00-2
010
19
50-1
970
20
00-2
010
19
50-1
970
20
00-2
010
19
50-1
970
20
00-2
010
19
50-1
970
20
00-2
010
19
50-1
970
20
00-2
010
19
50-1
970
20
00-2
010
19
50-1
970
20
00-2
010
Argentina Brazil Chile Colombia Mexico Paraguay Peru Uruguay Venezuela
Maximum Minimum Simple average
Urbanization in Latin America
Source: BBVA Research and United Nations. * The number of cities with a population of at least 1million is
equal to 105 in China, 8 in Turkey, 58 in India, 11 in Indonesia, 6 in South Africa, 13 in the Russian
Federation and 1 in Poland.
Number of big cities across Latam* (2014)
Share of urban population in big cities (% of total urban population; 2015)
Practically half of the total urban population in Latam lives in (few) big
cities, a larger share than in other regions
0
10
20
30
40
50
60
% of urban population in cities from 1 to 5 million
% of urban population in cities from 5 to 10 million
% of urban population in cities with 10 million or more
0
2
4
6
8
10
12
14
16
18
20
22
ARG BRA CHL COL MEX PAR PER URU VEN
Number of cities with population from 1 to 5 million
Number of cities with population from 5 to 10 million
Number of cities with population equal to 10 million or more
Urbanization in Latin America
2. Income and
urbanization
Urbanization in Latin America
Income and urbanization are highly correlated; Latam countries have
relatively high urbanization given their income levels
Source: BBVA Research, World Bank and World Penn Tables.
* For information at regional level within each Latam country see
the Annex.
GDP per capita and urbanization * (1975 ,1995 and 2014)
ARG BRA
CHL
COL MEX
PAR
PER
URU
R² = 0.4703
6
7
8
9
10
11
12
0 20 40 60 80 100
GD
P p
er
capita in 2
014
(logarith
m o
f re
al G
DP
in U
SD
)
Share of urban population in 2014
ARG
BRA
CHL
COL
MEX
PAR PER
URU
R² = 0.5664
6
7
8
9
10
11
12
0 20 40 60 80 100
GD
P p
er
capita in 1
995
(logarith
m o
f re
al G
DP
in U
SD
)
Share of urban population in 1995
ARG
BRA
CHL COL
MEX
PAR
PER URU
R² = 0.6984
6
7
8
9
10
11
12
0 20 40 60 80 100
GD
P p
er
capita in 1
975
(logarith
m o
f re
al G
DP
in U
SD
)
Share of urban population in 1975
Urbanization in Latin America
Countries with higher urbanization levels exhibit greater levels of
capital and better infrastructure; all Latam countries underperform
Source: BBVA Research, World Bank, Penn World Table and World
Economic Forum
Capital per worker and urbanization (2014)
Global Quality of infrastructure (2015, scale ranges from 1 (worst) to 7 (best))
BRA
ARG
CHL
COL
MEX
PAR
PER
URU
R² = 0.2501
1
2
3
4
5
6
7
0 20 40 60 80 100
Qualit
y of
overa
ll in
frastr
uctu
re, 1
-7 (
best)
Urban population (% of total)
ARG BRA
CHL
COL
MEX
PER PAR
URU
R² = 0.4964
6
7
8
9
10
11
12
13
14
0 20 40 60 80 100
Log C
apital per
work
er
Urban population (% of total)
Urbanization in Latin America
In spite of exhibiting high urbanization rates, human capital levels are
relatively low in Latam
Source: BBVA Research, World Bank and Penn World Table. *
Human capital index based on years of schooling and returns to
education; see PWT9 for more information.
Employment-to-population ratio and urbanization (2014)
Human capital index and urbanization* (2014)
ARG
BRA
CHL
COL
MEX
PER PAR URU
R² = 0.1707
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
20 40 60 80 100
Em
plo
yment-
to-p
opula
tio
n r
atio
Urban population (% of total)
ARG BRA
CHL
COL MEX
PER
PAR URU
R² = 0.4079
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
20 40 60 80 100
Hum
an c
apital in
dex
Urban population (% of total)
Urbanization in Latin America
Productivity is larger in more urban countries, but comparatively
small in Latam
Source: BBVA Research, World Bank and Penn World Table.
* Total factor productivity at current PPPs (USA=1)
Total factor productivity and urbanization* (2014)
ARG
BRA
CHL
COL MEX PER
PAR
URU
R² = 0.4159
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
0 10 20 30 40 50 60 70 80 90 100
Tota
l F
acto
r P
roductivity (
TF
P)
Urban population (% of total)
Urbanization in Latin America
3. Digitization and
urbanization
Urbanization in Latin America
Urbanization entails greater opportunity for digitization; in particular in
Latam where technology adoption lags behind
BBVA Research Digitization Index and urbanization* (2015, scale ranges from 0 (worst) to 1 (best))
Source: BBVA Research, We forum and World Bank. *The index
contains 21 indicators that are divided in 6 dimensions or sub
indices
CHL
URU
BRA
COL MEX
ARG PER
PAR
R² = 0.4042
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
0 20 40 60 80 100
BB
VA
Researc
h D
igitaliz
atio
n I
ndex
Urban population (% of total)
Technology adoption and urbanization (2015, scale ranges from 1 (worst) to 7 (best))
PAR ARG
URU
CHL
MEX
COL PER
BRA
R² = 0.3037
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
20 40 60 80 100
Technolo
gic
al adoption
Urban population (% of total)
Urbanization in Latin America
Urbanization correlates positively with each dimension of the BBVA
Digitization Index; Latam underperforms in most of them
CHL URU
BRA
COL
MEX
ARG PER
PAR
R² = 0.3371 0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
20 40 60 80 100
Co
nte
nt:
Bro
adba
nd I
nte
rnet
tari
ffs a
nd inte
rnet
com
petition
Urban population (% of total)
CHL
URU
BRA COL
MEX
ARG
PER
PAR
R² = 0.2302 0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
20 40 60 80 100
En
terp
ris
e a
do
pti
on
: B
2B
, B
2C
and f
irm
-level te
chnolo
gy
Urban population (% of total)
Performance in the different dimensions of the BBVA Research Digitalization index and urbanization (2015, scale range from 0-worst- to 1-best )
CHL URU
BRA COL
MEX ARG PER
PAR
R² = 0.2866 0
0.1
0.2
0.3
0.4
0.5
0.6
40 60 80 100
Infr
astr
uc
ture
: In
tern
et
covera
ge
Urban population (% of total)
CHL URU
BRA
COL
MEX
ARG
PER
PAR
R² = 0.264
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
20 40 60 80 100
Reg
ula
tio
n:
ICT
law
s
Urban population (% of total)
ARG URU
BRA
COL MEX
CHL
PER PAR
R² = 0.534 0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
20 40 60 80 100
Users
ad
op
tio
n:
access
inte
rnet
and m
obile
subscriptions
Urban population (% of total) Source: BBVA Research and World Bank.
Urbanization in Latin America
Urbanization plays an important role at explaining demand for
digital products and services, according to our models
Main drivers of digital banking (From more important (1) to less important (0); based on the results of BBVA Research digital banking model)
Oth
er
va
ria
ble
s
Urb
an
iza
tio
n
Inco
me
0.0 0.2 0.4 0.6 0.8 1.0
Affluent (High income population)
High/Medium middle classes
Low middle classes
Other GDP effects
Density of rural areas
Urban population in small cities
Urban population in big cities
Density of Urban areas
Urban population in medium cities
Regulatory Quality
Tertiary Education
Population Median Age
Household Size
Credit
Gini
Inco
me
Va
ria
ble
sU
rba
niz
atio
nO
the
r im
port
an
tva
ria
ble
s
More important
Source: BBVA Research.
Urbanization in Latin America
Urbanization-related variables are among the few drivers of digitization
in which Latam performs better than developed countries
Main drivers of digital banking (2015)
Source: BBVA Research and United Nations. Aggregation by region using a simple average .
*Argentina, Brazil, Chile, Colombia, Mexico, Paraguay, Peru, Uruguay and Venezuela
0
10
20
30
40
50
60
70
80
90
100
Affluent(High incomepopulation)
High/Mediummiddleclasses
Low middleclasses
Urbanpopulation insmall cities
Urbanpopulation in
big cities
Urbanpopulation in
mediumcities
PopulationMedian Age
Credit Gini
0
0.5
1
1.5
2
2.5
3
3.5
4
RegulatoryQuality
TertiaryEducation
HouseholdSize
0
200
400
600
800
1000
1200
1400
1600
1800
Density ofrural areas
Density ofUrbanareas
Latam* Developed World Emerging markets excluding Latam
0
5
10
15
20
25
30
35
40
45
50
Other effects(GDP PPP inthousands)
Th
ou
san
ds
Urbanization in Latin America
1. Urbanization trends
Urbanization in Latin America: main messages
18
2. Urbanization and income
3. Urbanization and digitization
Urbanization levels have
increased significantly in Latin
America since 1950.
Urbanization is now around 80%
in Latin American countries, more
than in most of the other regions.
After a sharp growth, urbanization
in Latin America exhibits signs of
moderation. Over the next
decades it will expand below the
world average.
Urbanization is positively
correlated with income per capita,
as well as with capital, labor and
productivity (TFP) measures.
However, in spite of displaying
high urbanization rates, Latin
American countries show relatively
low levels of income, capital, labor
and productivity.
Prospects of milder expansion of
urbanization ahead represent a
challenge in terms of growth for
the region.
Urbanization is also positively
associated with digitization.
Latin America countries should try
to leverage on their high
urbanization levels to boost
digitization.
Urbanization in Latin America
ANNEX
Urbanization in Latin America
RIO NEGRO
BUENOS AIRES
SAN LUIS
NEUQUEN
SANTA CRUZ
SANTIAGO DEL ESTERO
TIERRA DEL FUEGO
R² = 0.5861
0
1
2
3
4
5
6
60 70 80 90 100
GD
P p
er
capita in 2
008 (
logarith
m)
Urban population (% total) in 2010
GDP per capita and urbanization are also positively correlated
within Latam countries
Argentina (GDP per capita in 2008 and urbanization rates in 2010)
Brazil (GDP per capita in 2014 and urbanization rates in 2010)
Chile (GDP per capita and urbanization rates in 2012)
Source: BBVA Research, CEPAL and National Demographic
statistics..
AMAPÁ
MARANHÃO
SANTA CATARINA
FEDERAL DISTRICT
ALAGOAS
RIO DE JANEIRO
SAO PAULO
R² = 0.7457
1
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
50 60 70 80 90 100
GD
P p
er
capita in 2
014 (
logarith
m)
Urban population (% total) in 2010
REGION VIII
REGION II
REGION VI
REGION XI
REGION OF SANTIAGO
REGION III
R² = 0.5785
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
60 70 80 90 100
GD
P p
er
capita in 2
012 (
logarith
m)
Urban population (% total) in 2012
Urbanization in Latin America
Source: BBVA Research, CEPAL and National Demographic
statistics.
Mexico (GDP per capita in 2015 and urbanization rates in 2010)
Colombia (GDP per capita and urbanization rates in 2015)
Peru (GDP per capita and urbanization rates in 2007)
GDP per capita and urbanization are also positively correlated
within Latam countries
PASCO
MOQUEGUA
HUANUCO
LIMA
TUMBES
R² = 0.3866
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
20 30 40 50 60 70 80 90 100
GD
P p
er
capita in 2
007 (
logarith
m)
Urban population (% total) in 2007
SANTANDER BOGOTA D.C.
META
BOYACA
QUINDIO
CASANARE
VAUPÉS
GUAINÍA
R² = 0.3674
3.5
3.7
3.9
4.1
4.3
4.5
4.7
30 50 70 90 110
GD
P p
er
capita in 2
015 (
logarith
m)
Urban population (% total) in 2015
CAMPECHE
MEXICO CITY
CHIAPAS
HIDALGO
TLAXCALA
TABASCO R² = 0.244
1.5
1.7
1.9
2.1
2.3
2.5
2.7
2.9
35 45 55 65 75 85 95
GD
P p
er
capita in 2
015
(lo
garith
m)
Urban population (% total) in 2010