As countries move from poverty to affluence, the required growth in productivity involves a shift from heavy dependence on agriculture as a primary source of employment and income to nonagricultural activities that do not make intensive use of land. This is generally accompanied by a major shift in population from rural to urban areas (Roadmap, Figure 1) . Indeed, the most important socioeconomic and cultural transformation over the past 150 years has been the transformation of relatively closed, exclusive, custom-based rural societies into relatively open, inclusive, innovation-oriented urban societies.²⁸

Rural communities, especially in less accessible areas, have long adapted to their circumstances, developing vibrant, self-sufficient communities. As long as risks could be absorbed locally, these communities continued to learn and adapt. Dependence on local ecosystems, however, imposed limits on risk taking and innovation. This autonomous development path changes as rural areas become drawn into larger markets and strengthen their links with urban areas, making trade networks and distance from market centers more critical features of development opportunities and local resource pressures.

Increasing densities in towns and cities, and the greater connectivity between cities, as well as between urban and rural areas, increases the catchment area of markets and the returns to economic endeavor. If managed well, this transformation enables the emergence of new activities and productive job opportunities. Towns, as market centers for a rural hinterland, start the process of creating economies of scale for nonagricultural activities. Urban society also permits the spreading of risks over larger numbers of people and activities. Knowledge flows more readily, through increased opportunities for face-to-face contacts among various actors. And the need to accommodate diverse views and meet rapidly changing challenges stimulates innovation and new applications of technology. As a result, larger cities become incubators of new values-among them, risk taking and innovation.

Creativity, knowledge flow, the increasing scale of activities, and larger catchment areas are central to specialization and productivity growth. This is true not just for the production of goods, but also for the provision of services. A village or neighborhood can support a primary school or basic clinic, and the local teacher or doctor can be a generalist. But providing higher, more sophisticated, and more differentiated education and health care requires more specialized skills. Because of the fixed costs of supporting these specialized skills, a larger catchment area (a town or a subsection of a city) is required. The higher population densities, lower transport costs, and lower communications costs in towns and cities make the more specialized operations possible. In moving further up the hierarchy of required specialization, the required catchment area also increases. So, the transition from villages to towns, and from cities to metropolitan areas, corresponds to the different functional capabilities of larger, higher-density conurbations. The potential benefits of higher densities and greater connectivity can be more easily realized if the investment climate is improved through better enabling rules and frameworks, and better physical infrastructure. Stimulating and attracting investments-in particular, by the small and medium-size enterprises that provide most of the jobs for growing urban populations-is the key to accommodating the expected growth in urban populations and ensuring their ability to pay for needed urban services and amenities.