From garments to grievances: the dynamics of urban growth and economic shocks in rapidly industrialising economies

In the face of rapid industrialisation, modern-day emergent economies are experiencing unprecedented urban growth driven by the ‘race to the bottom’ in trade. However, this urban expansion is not without its challenges. This paper causally identifies the impact of exogenous economic shocks on labour market demand and urban growth, while examining how these shocks uniquely alter the conditions for social stability and unrest during periods of externally imposed economic downturns. This work examines how labour demand shocks influence urban growth, investigates whether urbanisation independently leads to urban unrest, and analyses how rapid urban expansion combined with economic shocks can significantly escalate the risk of social instability. Utilising a robust methodological approach, including difference–indifferences and triple difference models, this paper analyses data from Bangladesh’s urban expansion via the growth of the ready-made garment industry and economic food price shocks to reveal how these factors converge to influence social grievances. The findings highlight that while urban growth presents opportunities, its interaction with economic downturns can exacerbate social inequalities and drive unrest. This research underscores the necessity for targeted urban planning and social safety measures to address the complexities of industrialisation and economic volatility in rapidly developing economies.