In many countries, rates of urbanization exceed the capacity of governments at national and local levels to plan and organize this demographic transition, and to provide for infrastructure, services and employment. As a result, new forms of urban poverty have emerged, manifested through poor housing conditions, insecure land tenure, homelessness and unemployment.
Many urban areas of developing countries are cities in a demographic sense, but not in terms of the activities which they house. The economies of these urban centres are deficient in their arrangement of interrelated and mutually reinforcing economic components. Urbanization is increasing at a faster rate than industrialization, resulting in the creation of a large service economy. Whereas in the developed countries, the sequence of employment has moved from an agricultural economy to an industrial economy and then to a service economy, the developing countries have moved directly to a service economy because of migration and the natural increase. Consequently, unemployment and under-employment are common features of cities. A large proportion of the urban population consists of odd-job men who live on the edge of starvation. Manufacturing has been unable to absorb the population increase and the size of the service sector is completely out of balance with the income and development level in cities of the developing world.