A growing economy will tend to urbanise, with increasing shares of economic output and jobs taking place in towns and cities: correspondingly rural activity, although growing, declines relatively. There’s a simple reason for this as well: most activities that are not tied to land or some other natural resource, as is agriculture, are best carried out in urban areas. That is because agglomeration brings economies (Henderson et al. 2001, Henderson 2013, Quigley 2008). Not only does locating in cities tend to reduce transport costs for individual firms, but also, firms benefit collectively from economies in provision of power, water and other services, from being close to a large and diverse pool of labour, from technical advances that develop in one industry but have applications in others, from face-to-face communications with other firms in the supply chain, and from less variation in demand and supplies when located in large urban centres. Drawbacks of urbanisation in congestion, pollution and high rents for prime urban locations are, for most manufacturing and services, outweighed by the benefits or urban location. 

These economic and geographical changes are accompanied by demographic changes.