World’s population became predominantly urban in the year 2007. The United Nations Organization predicts that the world will continue to urbanize faster than ever during this century, and the developing regions will account for 93 percent of this growth. The recently urbanized developing world, on the other hand, contains more than one third of its urban population in slums. This raises questions about the urbanization in the developing countries both from the growth as well as from the distribution point of view. Concern arises as to whether the process is actually affecting growth in a way that results in creating higher rate of slum population. Concern also arises as to whether the rising slum population rate is the outcome of distribution and equity issues, rather than the economic growth per se. Urbanization is a part of the development process; however, when the slum population rate continues to rise then the urbanization process in the developing world should be revisited.

There are three major theoretical perspectives that attempt to analyze the urbanization in the developing world, which are ‘urban-bias,’ ‘dependency,’ and ‘modernization.’ “Urban-bias” and “dependency” theories consider rapid urbanization ‘over-urbanization,’ which retards economic growth. Modernization theory, however, does not agree, and considers rapid urbanization as a temporary phenomenon that will limit itself through self-adjustment. Previous studies based on these three theoretical perspectives have focused on the rapid urbanization in the developing world, but did not consider the issue of slum population growth. This is an important phenomenon both from economic growth and distribution point of view. The slum population growth rate is important because it simultaneously shows the benefit and cost of urbanization in developing countries. If the slum population as a proportion of the urban population decreases, it shows the benefit of urbanization whereas if it increases, it shows the cost of rapid urbanization. Previous studies on urbanization have overlooked several factors important to the process of urbanization. This study attempts to identify several cross-national contributing factors to the urbanization in the developing nations that have been ignored in the previous studies. It also considers percent of slum population as a better indicator of the outcome of urbanization in the developing nations in terms of both growth and distribution perspectives as well as from cost and benefit standpoints.