Pakistan has the highest rate of urbanization in South Asia. According to the 2017 Population Census, 36.4 percent of the population lives in urban areas. In 1998, this gure stood at 32.5 percent. Other estimates, based on a modified definition of urban settlements, suggest that the ratio of urban to rural population could be 40.5 percent and even higher. The United Nations Population Division estimates that, by 2025, nearly half the country’s population will be living in cities.

Urbanization is generally considered to be closely related to economic growth, particularly in developed countries where they have often occurred in tandem. Globally, it is estimated that cities generate more than 80 percent of the global Gross Domestic Product (GDP). The more urbanized areas indicate higher per capita income and more employment opportunities. Cities are also hubs of innovation and entrepreneurship. Urbanization has positive impacts on technological innovation and economic progress.