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HAWASSA UNIVERSITY
COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENET OF ECONOMICS

THE EFFECT OF URANZATION ON ECONOMIC GROWTH IN THE CASE

OF SHESHAMANE TOWN, WEST ARSI, OROMIA REGIONAL STATE,
ETHIOPIA
A PROPOSAL THESIS SUBMITTED TO DEPARTMENT OF ECONOMICS IN
PARTIAL FULFILLMENT OF THE REQUIRMENT FOR THE AWARDS OF
ARTS (BA) DEGREE IN ECONOMICS

Advisor Hiwot T

Prepared by Gemachu wako

December/2024

Hawassa,Ethiopia

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ACKNOWLEDGEMENT
First of all, the researchers praise God for giving us strength, courage, health, wisdom and
patience to finalize our study.
Next, the researcherslike to express our heartfelt thanks and honest appreciation to our major
research advisor Hiwot.T) for his all-round help, guidance, valuable comments and
encouragement which enabled us to complete the research work and thesis write up. The
researchers are also deeply indebted to Gemechu Wako(Our friend’s) for his useful and valuable
comments and kind treatment starting from the early design of the research proposal to the final
write up of the thesis.
Finally, the researchers also owe our deepest gratitude to our family for their encouragement,
inspiration and help without which we could not have completed the study on time. The
researchers sincerely thank Hawassa University, especially the School of Graduate Studies for
their unstinted support and follow up until the completion of the research.

Acronyms
CSA= central statistical Agency

EEA= Ethiopian economics association

GDP= Gross Domestic product

LDC=Least Developed countries

UN=united Nation

Table of contents

ACKNOWLEDGEMENT...............................................................................................................2

Acronyms.........................................................................................................................................3

Table of contents..............................................................................................................................4

ABSTRACT......................................................................................................................................8

CHAPTER ONE..............................................................................................................................9

1. INTRODUCTION.......................................................................................................................9

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1.1 Background of the study.......................................................................................................................9

1.2 Statement of the problem...................................................................................................................11
1.3 Objective of the study.........................................................................................................................12
1.3.1 General objective....................................................................12
1.3.2 Specific objectives..................................................................12
1.5 Significance of the study....................................................................................................................12
1.6 Scope of the study...............................................................................................................................12
CHAPTER TWO...........................................................................................................................13

2. LITERATURE REVIEW...........................................................................................................13

2.1 Theoretical literatures Review...........................................................................................................13

2.1.1. What is urbanization?............................................................13
2.1.2 The role of urbanization for economic growth...........................14
2.3 Major problems associated with urbanization..................................................................................16
2.4 Urbanization for national economic growth in Ethiopia...................................................................17
2.4.1 Ethiopian’s cities advantage....................................................18
2.4.2 Challenges of Ethiopian urban center.......................................18
2.5 Empirical studies...............................................................................................................................19
2.6 conceptual Framework of the study...................................................................................................20
Water Scarcity................................................................................21
Environmental degradation.............................................................21
CHAPTER THREE.......................................................................................................................21

3. RESEARCH METHODOLOGY.............................................................................................21

3.1 Description of the study area.............................................................................................................21

Figure 3.1 Study area......................................................................22
3.2. Research Design................................................................................................................................22
3.3 Research Approach............................................................................................................................23
3.4. Types and Sources of Data...............................................................................................................23
3.5 Instruments and Methods of Data Collection....................................................................................23
3.6 Population, Sampling Procedure and Sample Size determination.....................................................23
3.6.1. Target Population of the Study...............................................23
3.6.2. Sampling Procedure...............................................................24
3.6.3. Sample Size determination.....................................................24

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3.7 Methods of Data Analysis..................................................................................................................25

3.7.1. Descriptive statistics.............................................................25
3.7.2. Econometric models...............................................................25
3.8. Model Specification..................................................................25
REFERENCE................................................................................................................................31

APPENDIX....................................................................................................................................33

ABSTRACT
Urbanization is the improved possibilities of using information and facilities available to the
urban communities easily and without time lag in any part of the society polity and economy.
The general objective of this study is to examine the effect of urbanization on economic growth
of shashemene town. This study was employed a descriptive and explanatory research design.
This study used mixed (both qualitative and quantitative) research approach. For the purpose of
this study, data was collected from both primary and secondary data sources. The primary data
was collected from 263 respondents by using questionnaires and interview. Multistage sampling
procedure was employed to select specific respondents for the study. Generally in this study
descriptive statistics and explanatory was used for analyzing the collected data. In this study the
effect of urbanization on economic growth in shashamene town were analyzed using multiple
regression model. The econometric result shows that the explanatory variables water scarcity,
environmental degradation, high rate of unemployment and land use and management problem
were found to have negative and significant influence on on economic growth in shashamene
town. The study recommended that Government and concerned body should improve the level of
employment at different place through investment expansion, should overlooked environmental
protection, improve water supply, apply better land use and management practice.

Key wards: Urbanization, economic growth, shashemene town

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CHAPTER ONE

1. INTRODUCTION
1.1 Background of the study
In Ethiopia, cities (towns) had been organized as administrative service and commercial centers
since the days of Axumite Empire. That means the history of urbanization in Ethiopia goes back
to the period of Axumite kingdom. However, the establishment of modern urban centers will did
not start until 19th century, which coincides with the creation of the modern state but it is still
under urbanize by comparison with other least developed countries (LDCs) of Africa and the rest
of the world (Abebe,2006).

Ethiopia is one of the sub-Saharan countries with a population of more than 100 million
(USAID, 2017) next to Nigeria in Africa. The country’s urban population share is one of
the lowest in the world estimated at only 21.2% in 2019 well below the sub Saharan Africa
average of 40.7% (UN DESA, 2019). However, the urban population of Ethiopia are
expanding rapidly (WB Group, 2015). For instance, the annual urban population growth rate
was between 4.7 to 5.2% from 2008 to 2020 which was above the sub Saharan African urban
growth rate of 3.98 to 4.26% during the same period (World Bank, 2021). The share of the
population living in cities has also increased from 16.5% in 2008 to 22% in 2020
(World Bank, 2021) and is expected to reach 39% by 2050 (UN DESA, 2019). The
trend in the growth of urban populations in Ethiopia is likely to continue more than expected

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given the shift in emphasis from agricultural to industrial-led development policy of the
country.

Moreover, public investments undertaken in the construction of industrial parks, airports,

railways, dry ports, and roads in many places of the country is contributing to fast
urbanization with a higher agglomeration of new people as settlers (SADC, 2017).

Urbanization has a great effect on economic growth. ’urban’ refers to towns or cities having
marked secondary and tertiary functions along with municipality on notified area community.
Urbanization on the other hand, means the process of whereby land and inhabitants become
urban oriented rather than engaged in primary occupations or it is a process by which a section of
people change from the way of agriculture operation in rural living to urban sub agriculture life
with the predominance in secondary and tertiary functions (Reddy, 2006).

The characteristics of urbanization in advanced countries differ from these in developing

countries; such as difference in the technological advancement, difference in basic outlook and
value system and level of living. Different research shows that Africa is considered the least
urbanized in comparison with the third world countries, but in the decade (1981-1991)
urbanization has taken place rapidly (ibid, 2006).

Although the process of urbanization may have started in 19th century in advance way, the
founding of many of the countries urban centers precedes on this era. While these early urban
centers were created and established as military, political administrative centers, the emergency
of the major town as economic centers, which come about in the wake of laying down of the
country’s first and only railway line in recent phenomenon. The level of urbanization in Ethiopia
would be seen as a manifestation of countries low level of development. That means the
development level of the countries has a direct relationship with the level of their urbanization
level which could be used as the measure of development level of countries (Abebe, 2006).

Urban centers contributes Engineering goods, pumping sets and specialized skills in a wide
Varity of situational which are necessary for national development in new industries including
the provisions of higher education, transport and communication line, Diversification of
occupation, commercialization of agriculture and change in consumption pattern and other
infrastructural facilities in a state and national level (Reddy,2006).

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While urban centers maintain the above role, there were times; however, their growth becomes a
source of social problems as nuisances to government and as hazards sprouting an unwanted of
their own occurred. On the other hand, however, urban center have managed to overcome such
challenges as an infrastructure development provision linking quarter to their populations, crimes
resulting from lacking of social fabrics, traffic congestion, environmental degradation, and
pollution, deterioration of town centers, increase and move of land price continuously and others
are the major negative spillover effects of urban centers (ibid, 2006).

1.2 Statement of the problem

It is true that urbanization will have a great effect on growth and transformation of an economy.
Urban centers really functions as center of modernization and economic change because cities
are the centers of educational, financial, industrial and other governmental bureaus. Cities are
also the center of political and economic activities. Urbanization has a number of meanings
attributed to it in terms of economic development. One meaning is it improves possibilities of
using information and facilities available to the urban community inexpensively and without
time lag any part of the society or the economy. Urban center also influence the rural
development effort in many ways. There would be an opportunity to the nearby rural areas as a
force of market for both supplying industrial output and observing agricultural product (Todaro,
2006).The growth of urban center swill leads to changing infrastructure facilities which on turn
affect development, industrialization, transport linkage and so on. Industries will also benefit
from concentration and transportation cost. Large cities also provide labor market and may help
to accelerate the pace of technological innovation. They also allow economic of scale for such
service as water supply and electric power to be exploited. The role of urbanization and urban
centers for the contribution of national product is high as 85% in developed countries and 50% in
developing countries (Abebe, 2006).In Ethiopia, urban center have contributed substantially to
the GDP at an increasing rate in each subsequent time period. For example urban center
contribute 33% GDP in 1997, 39% GDP in 2005 and 40.19% in 2009. This shows that
urbanization has a number of or a great effect in increasing the per capital income of the
population which lives to economic growth (ibid, 2006).Against the above benefits of
urbanization for economic growth, it has a number of negative spillover effects that hinder the
level of economic growth. Through a negative effect, urbanization may lead to urban poverty.
Urban centers are also a source of unemployment even if it is decreasing. (ibid, 2006)By

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understanding this, the study tries to investigate and examine the following major questions to
fill the gap (time and space).

What are the basic features of urbanization in Shashemene town?

What are the positive effects (contributions) of urbanization on economic growth in Shashemene
town?

What are the negative effects of urbanization on economic growth in case of Shashemene town?

How to examine the features of urbanization in Shashemene ?

How to assess the effects of urbanization on economic growth in case of Shashemene?
How to identify the major constraint that hinders the contribution of urbanization for economic
growth.?

1.3 Objective of the study

The study has following general and specific objective:

1.3.1 General objective

The general objective of the study is to examine the effect of urbanization on economic growth
in case of Shashemene town

1.3.2 Specific objectives

Under the umbrella of the general objective, the specific objective of the research was:

 To examine the features of urbanization in Shashemene

 To assess the effects of urbanization on economic growth in case of Shashemene
 To identify the major constraint that hinders the contribution of urbanization for
economic growth.

1.5 Significance of the study

The research has investigated the major effects of urbanization on economic growth in the study
area by examining the negative as well as the positive contribution of urbanization. So it
generates information that policy makers and administrators uses to design proper and effective
policies to increase the positive effects of urbanization and to remedy the negative one. The

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research can also serve any other body to conduct further study. In addition to the above, the
researchers get benefit from the study by acquiring knowledge on the issue.

1.6 Scope of the study

The study gives emphasis on the effects of urbanization on economic growth in Shashemene
town. In addition to this, the study has been cover major constraints that hinder the
contributionof urbanization on economic growth. The study tries to give possible policy
recommendations which are supposed to reduce the negative spillover effects. The study also
covers a time period from 2010E.C-2012 E.C

CHAPTER TWO

2. LITERATURE REVIEW
2.1 Theoretical literatures Review
2.1.1. What is urbanization?
The term “urban” refers to towns or cities having marked secondary and tertiary functions along
with a municipality or notified area community. And “urbanization” on the other hand is a
process of population increment in urban areas. Urbanization on the other hand indicates the
growth of secondary and tertiary activities like manufacturing, trade and etc. other defines
urbanization as a dynamic socio-economic force which involves urban element that suffer
considerable temporal and special variation(http://www.en.wikipidia,urban.com).

Urbanization has a number of meanings attributed to it in terms of economic development. One

meaning is “improved possibilities of using information and facilities available to the urban
communities easily and without time lag in any part of the society, polity or economy”. it also
means a change from farm process to an instrument of the process of changes. Thus use can look
up on urbanization both as an instrument of change and a criterion for regional economic
development (Reddy, 1998).

The transportation of rural services centers in both time and space, due to concentration of
commercial, transportation and professional service give rise to the development or urban

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centers. The development of urban center also leads to a change in infrastructure facilities which
in turn affect regional development, transportation linkage, population distribution, and the entire
rural-urban continuum (Knox et al., 1998).

The characteristics of urbanization differ in advance countries from those in developing

countries. Factor responsible for this difference are the following: (Reddy, 2006)

Difference in force making for urbanization.

Difference in the ratio of population to resource and level of living.

Difference on the basic outlook and value system.

Difference in the technology advancement

2.1.2 The role of urbanization for economic growth

All over the world cities really function as the center of modernization and economic change,
because of their lie the seats of government, and the main educational, financial and industrial
centers. Cities also act as a center of political and economic activities for the surrounding zone of
influence. Urbanization has a number of meanings attributed for economic growth as follows:

i. Rural urban interaction

In the buildup of the transaction between the rural urban areas, urban areas supply manufacture
goods, services and innovation of the rural areas. Such high as pay of modern inputs, fertilizers,
modern irrigation systems as well as a biochemical input for the agriculture sector (Todaro,
2006).

ii. Evolution of occupational structure

The natural course of economy will be one in which the labor progressively shift from primary to
secondary and finally tertiary sector. Meanwhile urban areas would generate move demand
which proper the entire economy forward (Todaro, 2006).

iii. Market center

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Urban places can be used as market and manufacturing sector functions because:

They act as the centers for the exchange of rural produced agricultural products for the
distribution of rural surplus and other commodities.

They are centers for distribution of urban produced manufactured products to rural areas.

The availability of the market centers helped in the rationalization of agriculture from substance
to commercial agriculture.

iv. Industrial district

An economic definition of a city is “an area with relatively high population density that contains
a set of closely related activities.” Firms often also prefer to be located where they can learn from
other firms doing similar work. Learning takes place in both formal relationships, such as joint
ventures, and informal ones, such as from tips learned in evening social clubs or over lunch.
These spillovers are also agglomeration economies, part of the benefits of what Alfred Marshall
called “industrial districts,” and they play a big role in Michael Porter’s “clusters” theory of
competitive advantage. Firms located in such industrial districts also benefit from the
opportunity to contract out work easily when an unusually large order materializes. Thus a firm
of modest size does not have to turn down a big job due to lack of capacity, an arrangement that
provides “flexible specialization.” Further, firms may wish to operate in well-known districts for
the marketing advantages of locating where company procurers and household consumers of
their goods know to shop to get the best selection. It may not matter so much where such
industrial districts are located as that they somehow got an early start there, perhaps because of a
historical accident. For example, in the United States, many innovative computer firms located in
Silicon Valley, California, simply because other such firms were al- ready located there. A
growing body of evidence shows that industrial clusters are increasingly common in developing
countries, at stages of industrial development ranging from cottage industry to advanced
manufacturing techniques, and appear to be significant factors in emerging industrial
competitiveness. (Todaro, 2012)

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v. Other changes

In addition to the above, urbanization enhances the magnitude of investment in social and
overhead capital and directly productive activities, increase the rate of capital formation
enhancing the potentialities and possibilities of saving by expanding the number of informal
sectors, which are pre-industrial activities, etc. (Reddy, 2006).

2.3 Major problems associated with urbanization

It is estimated that by 2050 more than two thirds of the world’s population will live in cities, up
from about 54 percent today. While the many benefits of organized and efficient cities are well
understood, we need to recognize that this rapid, often unplanned urbanization brings risks of
profound social instability, risks to critical infrastructure, potential water crises and the potential
for devastating spread of disease. These risks can only be further exacerbated as this
unprecedented transition from rural to urban areas continues (Lehmann, 2015).

Even if urban centers have a great a role for economic growth, there are also a number of
problems associated with urbanization. Some of these are the following:

Unemployment and under employment: urban unemployment rates underdeveloped countries

tend to be significantly higher than rural unemployment rates. This is a result of cities inabilities
to absorb the rapid population influx from the country side. Faced with poverty in over populated
rural urban areas, many people regard moving to a city much like a lottery. Unemployment
occurs when people work less than full time even though they would prefer to move more hours
because of the low productivity of the formal economic sector under developed countries
(Reddy, 2006).

Slums of hope, slums of despair: in situation, where urban growth has swamped the available
stock of cheap housing and outstripped the capacity of builders to create affordable new housing,
the inevitable outcome is make shift shanty housing that offers. This due to the increments of
unemployment and poverty mean overcrowding (Todaro, 2006)

Environmental degradation: with pressing problems of poverty, slum housing and inadequate
infrastructure, it is not surprising that peripheral urban center unable to devote many resources to
environmental problem. Because of the speed of population growth, these problems are

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escalating rapidly. Industrial and human wastes pile up in lakes and lagoons, and pollute long
stretches of rivers, estuaries and costal zones. Ground water is polluted through the leaching of
chemicals from uncontrolled dumpsites and the forest around many urban centers are being
denuded by the demand for cities for timber and domestic fuels and this environmental
degradation is, of course, directly linked with human health (Todaro, 2006).

Economic and social crisis: economic and social issues are the common problems of urban
centers in most developing countries due to alarming population increase and environmental
pollution (Reddy, 2006).

Other problems: such as

Increasing population

Problems of land reserves and land management

Poverty and urban misery

Influx of rural population

Juvenile

Delinquents threaten urban peach. Etc. (reddy,2006)

2.4 Urbanization for national economic growth in Ethiopia

There are evidences that town/cities had been organized as administrative commercial and
service centers since the Axumite Empire. However, the establishment of modern urban centers
did not start until 19th century, which cans insides with the creation of the modern state. The
growth of our cities is disproportional compared to the rate of the country’s economic growth, so
much so that, Ethiopia was considered as the list urbanized country (Abebe, 2006).

Ethiopia is the lowest urbanized country in the world average (50%), Asia and Africa (40%),
only 16.1% of the Ethiopian population live in urban area (CSA, 2007), but it is a country where
there is rapid urbanization growing at 4.2% per annum which is higher compared to average

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urbanization rate for Africa (3.2%), Asia (2.4%), Latin America (1.7%) and 2.8% for Arab states
(UN, 2011).

2.4.1 Ethiopian’s cities advantage

Some of The advantages of Ethiopian’s urban centers are the following:

The climate condition of the cities is salutary

They have the opportunity to attract investment if their other problems have been solved and
their peace security established.

If the other problems constraining development are taken care of, the cities are capable of
providing to be source of cheap labor.

The existing demand for housing creates favorable condition for those interesting in the
construction sector and real estate business.

The state of our city still not out of control: they still have the opportunity for further growth and
their administration and management is still not passed in big problem, all of which point to
situation that can be called auspicious (Abebe, 2006)

2.4.2 Challenges of Ethiopian urban center

The following can be regarded as the challenges our cities face in terms of their growth and
strengthening their roles in the country’s development:

Their infrastructure network still is a low level of development.

Unless the problem of unemployment and shortage of housings which pointed out as favorable
for investment, they could open the door for special ills and hazards.

The financial and management capacities of the municipalities are inadequate.

The slackening of social fabric lawlessness and environmental pollution (Abebe 2006)

2.5 Empirical studies

The empirical review of the literature includes the deeds of different researchers of the effects of
urbanization on economic growth and other related ideas so as to fill the gap.

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As argued by jean-Marie cur under his study of a demo-economic analysis of long term
structural changes in Ethiopia (2008) the productivities or per capital value added of the various
strata and are so much different between urban centers and rural villages. Urban productivity is
five times that of rural area. The disparity between urban and rural productivity has increased
from 4.4 in 1995 to 4.7 in 2005 and 4.92 in 2008.

A study of Tibebu (2007) on policy changes for urban growth balanced territorial development
shows that, concentration of unemployment and manufacturing activities in urban centers issue
much higher than other regions. Formal sector employment and number of establishments are
concentrated in and around major urban centers of Ethiopia accounts for 59% of medium and
large scale manufacturing employments and 67% of manufacturing establishment.

According to Minal in his study of urban management and development in Ethiopia (2007), The
city has become both resource centers and a power house of development and from the city has
come creativity, experimentation, production and growth even though urban centers high
unemployment, chronic poverty and environmental degradation.

The article by Giraud (2006) based on the experience the cotton production area of chad
illustrates the importance of urbanization even more than the development of rural infrastructure
in developing not only the income of farmers by creating the necessarily demand for their
products, but even more interestingly in its contribution to the technical improvement of
agriculture itself.

According to the study conducted by shumye (2008) about the socio economic condition of
urban centers in case of Addis Ababa and Shashemene, stated that given the pressure on land,
urban centers, creating markets and providing opportunities or diversification and nonfarm
employment are the critical link in the intensification of agriculture. This indicates that, without a
well-developed urban system linked to national and international markets and sustainable
agricultural development is impossible.

Even though the above researcher argues the important role of urbanization Belayneh (2009) in
his study on elasticity of urban poverty with respect to growth and distribution, urban centers are
highly affected by poverty hazards. But also argued that the growth of urban center will provide

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not only market function but they also provide social support (23.5%), health facility (7.2%),
employment opportunities (69%), and information technology (4%).

Further with Feleke (2008) under his study on migration urban-rural linkage and poverty in
Ethiopia depict that because of high rural-urban migration, urban pop inniulation increase at
alarming rate on average 3% which resulted overcrowded and cost of job opportunity which
directly leads to decrement of per capita income and poverty.

Literature gap

It is cited in the literature that urbanization has a number of meanings attributed for economic
growth. All over the world cities really function as the center of modernization and economic
change, because they are the main educational, financial and industrial centers. Ethiopia is one of
the fast urbanizing countries in the world, 4.2% per annum. Urbanization has an advantage in
climate condition, investment attraction, and other economic issue of Ethiopia. On the other hand
in Ethiopia urbanization has a negative effect on housing, unemployment and environmental
pollution of the country. By considering this the researchers focus on the effects of urbanization
on economic growth in the case of Shashemene town by collecting and analyzing the necessary
data.

2.6 conceptual Framework of the study

Urbanization occupies a central place in the analysis of Economics science. It is one of the
indicators of the well performance of the economy. There are different factors that are
responsible for urbanization. Hence, urbanization is a complex and dynamic socio-economic
phenomenon. The following conceptual framework gives a brief illustration about urbanization.

Figure 1- Conceptual Framework

Independent Variables dependent variable

Water Scarcity

Economic growth of
shashemene town
Environmental degradation
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High rate of unemployment

Land use and management

problem

Source: own construction based on literature review (2024)

CHAPTER THREE

3. RESEARCH METHODOLOGY
3.1 Description of the study area
The study was conducted in Shashamene town, which is located geographically in Oromia
region, west Arsi zone which is about 252 km away from Addis Ababa the capital city of
Ethiopia. geographically the town is located at 7.2-degree north latitude and 38.6-degree East
longitude. Elevation of the town varies between 1683m to 2742m above mean sea level.
According to the result of housing and population census May 2022 Shashemene town has
population of 208,368, out of these 104014 males and 104354 females with the annual
population growth rate about 4.5%

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Figure 3.1 Study area

.

3.2. Research Design

According to Kerlinger (2011) research design is defined as the planning of conditions from
collection and analysis of data in a manner that aims to combine relevance to the research
purpose with economy in procedure. A research design is the plan or the conceptual blueprint
within which a research is carried out. It consists of the outline of collection, measurement,
analysis of data. This study was employed a descriptive and explanatory research design. A
descriptive research design was used to describe the characteristics of the respondents based on
their responses by using frequency, percentages and descriptive statistics (mean and standard
divisions).

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The study was also used explanatory research design because it can help a researcher to increase
the understanding of a problem in depth by providing more information about the effect of
Urbanization on economic growth in the case of Sheshamane town. This study was cross
sectional in nature as data was collected from different respondents and was returned to
researcher at one time.

3.3 Research Approach

In order to achieve the objectives of this study, the researcher was used mixed (both qualitative
and quantitative) research approach. Qualitative approach was used to address research questions
that require explanation or understanding of social phenomenon. It was concerned with non-
numerical data. Quantitative method was used so as to collect and analyze numerical data for
statistics analysis that was collected through questionnaire.

3.4. Types and Sources of Data

This study used both primary and secondary data to analyze the effect of Urbanization on
economic growth in the case of Sheshamane town. The primary data, about the household’s
demographic and socio-economic features, were collected through questionnaires with
household heads, urban employees and city administrative staffs using a semi-structured
questionnaire. The secondary data were collected from governmental and non-governmental
organizations; brochures and annual reports.

3.5 Instruments and Methods of Data Collection

This study was used both primary and secondary data sources. The primary data was collected
using questionnaires and interview. The questionnaires were designed and formulated to
collect information about the effect of urbanization on the growth of shashemene city. In
addition, secondary data was obtained from records of administrative offices, publications,
and other sources.

3.6 Population, Sampling Procedure and Sample Size determination

3.6.1. Target Population of the Study

According to Malhotra (2007) target population is the collection of elements or objects that hold
the information required by the researcher and about which inferences are to be made. The term

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population means the collection of distinct elements under consideration that is of interest in a
particular study.

The target population of the study was all population in the study areas at the time of the data
collection. The population of the study contains a total of 208,368 in shashemene town. There
are a total of 834 residents in four selected kebeles.

The target population of the study was all shashemene residents at the time of the data collection.
There are a total of 834 residents in four selected kebeles.

3.6.2. Sampling Procedure

Multistage sampling and purposive sampling technique was used. At first stage the study
select shashemene towns by using Purposive sampling technique. At 2 nd stage, by employing
stratified sampling method four shashemene town kebeles such as Abosto, Awasho , Burka
gudina and kuyera was selected. At 3rd satge individual respondents were selected by using
simple random sampling method

3.6.3. Sample Size determination

At this stage, appropriate numbers of sample respondents from four kebeles selected by using
(Kothari, 2004) sample size determination formula. According to Kothari (2004) for finite
population the formula for calculating the minimum sample size is:
n = z2 p (1-p) N
e2 (N-1) +z2p (1-p)
where n= sample size
N= population
Z= z is 95% confidence level =1.96
p = 0.5
e = 0.05, the acceptable errors.

n = (1.96)2(0.5) (1-0.5) (834) = 263

((0.05)2(834-1)) + (1.96)2 (0.5) (1-0.5)
Accordingly, 382 respondents were selected from the total of 834 urban residents.

Table 3.1 sample size from each kebele

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Name of Kebele No urban population No of sample size

Burka gudina
218 68
Kuyara
182 59
,Awasho
245 77
Abosto
189 59
Total 834 263
Source: Shashemene town administrative,2024

3.7 Methods of Data Analysis

Generally in this study descriptive statistics and explanatory was used for analyzing the collected
data. To analyze the collected data statistical package for social sciences (SPSS) version-24 was
used as a major instrument of data analysis.

3.7.1. Descriptive statistics

The study employed descriptive method of data analysis using SPSS Version -24 to tabulate the
data and present it in tables. Descriptive statistics wa sused as tools for the analysis of the data.
In additions to this, the researchers were adopted multiple regression analysis so as to find out if
there exists direct association between the dependent and the independent variable.

3.7.2. Econometric models

The econometric analysis was used to identify the direct association between the effect of
urbanization on economic growth in the study area. The data was analyzed by using SPSS
version-24.

3.8. Model Specification

In this study, multiple regressions were used to determine the effect of urbanization on economic
growth. A multiple regression model is a mathematical model that characterizes the relationship
between a continuous dependent variable and two or more independent variables. Since the
dependent variable, economic growth is a continuous variable, OLS model was used and the
OLS regression is specified as:
Yi= α + β1X1 + β2X2 + β3X3 + β4X4 +Ui
Where Yi= economic growth

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α = constant
Β1-4= coefficient of the explanatory/independent variable
X1= Water Scarcity
X2= environmental degradation
X3=high rate of unemployment
X4= Land use and management problem
Ui = disturbance term

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APPENDIX
HAWASSA UNIVERSITY COLLEGE OF BUSINESS AND ECONOMICS
DEPARTEMENT OF ECOMICS

QUESTIONNAIRE

Dear respondent:

First of all I would like to extend my sincere gratitude for helping me by filling these questions
are. The purpose of this questionnaire is to collect data that will be used in first degree research
project attitude on the effect of urbanization on economic growth at Shashemene town. Then,
please fill free to provide your valuable response that will make this research project successful.
All information will be used for academic purposes only. Thank you in advance for your kind
cooperation and dedicating your time.

Instructions1. No need of writing your name and indicate your answers with a check mark (√) in
the appropriate space.

1 Sex; A. Male ⃝ B. Female ⃝

2 Age; 19-24 ⃝ 25-31 ⃝ 32-37 ⃝ Above ⃝

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3; Martial status; Married ⃝ unmarried ⃝ Divorce ⃝

4; Educational status; 9-10 ⃝ 11-12 ⃝ above 12 ⃝

5. Job position; Student Format private sector self employed

Public sector House wife unemployed

6. Residence time ;< 10 Years >10-20 >20

7. What are the population trend and the rural urban migration in Shashemene town?

8. In which economic covers the largest share in a town?

Agriculture ⃝ Industry ⃝ Service ⃝

9. What do you think the positive contribution of urbanization?

10. What is the negative effect of urbanization?

Unemployment problem ⃝ Social crime ⃝ Environmental problem ⃝

11. Is environmental problem is the negative effect of urbanization?

Yes ⃝ No ⃝

12 .Is your answer is yes for question number 11 what type of environmental problem?

Water pollution ⃝ Deforestation air pollution ⃝ noise pollution ⃝ others ⃝

13. Is there any tangible effort made to you from government to relieve you from such problem

Yes ⃝ No ⃝

14. If your answer the above question is yes how do you evaluate the effort being made in
creation of different job opportunity?

Very expanding ⃝ Expanding ⃝ Less expanding ⃝ Not at all ⃝

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15. What kind of measure do you personally recommend to reduce the negative effect of
urbanization?

16. What is the constraint that hinders the contribution of urbanization?

Limited capacity of municipality ⃝ Weakness in administration ⃝

Low attention for environment protection ⃝ High rate of unemployment ⃝

Inadequate utilization of resource ⃝ Limited community participation ⃝

Others ⃝

17. Is other factors that affect the responsible aggravator of urban problem?

Yes ⃝ No ⃝

18. If your answer is yes mention some of the problems you think as responsible?

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