ABSTRACT
Some policy makers believe that major cities, especially capital cities, have grown too large and that they have become inefficient and unmanageable. Others argue that the largest cities have not yet reached optimum size from the productivity point of view. The question how large is too large or how large is large enough is important for national urbanization policy making. In the literature, there are two conflicting views on urban growth and urban concentration during the rapid development period. One group of scholars argues that urban growth and concentration are a result of 'urban bias' in government policies which set prices artificially low in favor of urban areas, resulting in misallocation of investment by manufacturing firms (Linn, 1983; Todaro, 1981). Todaro argues that artificial advantages of cities must be eliminated in order to reduce the urban growth rate (Todaro, 1981). Politically, urban concentration is considered undesirable, because it creates political tension and is detrimental to national unity.
