ABSTRACT This paper starts with a “primer” on what we know about the conceptual and empirical links between development and urbanization. While historical experience of developed countries is reviewed, today's rapid urbanization in developing countries offers an intense set of challenges. Rapid urbanization requires massive population movements and enormous local and inter-city infrastructure investments in a modern context of heavy government interventions in economies. This context raises under-researched issues, discussed in the second part of the paper. First concerns the spatial form of development. How much development should be focused in mega-cities, or huge urban clusters, as opposed to being more spatially dispersed, a critical question facing China and India today? How do we conceptualize and measure both the benefits and costs of increased urban concentration; and how are they linked to a country's evolving national industrial composition? Second, what is the evolution of spatial income inequality under massive rural-urban migration? Is inequality heightened today relative to the past by national government policies which “favor” certain cities and regions and by local government policies in those cities that may try to deflect migrants by offering them poor living conditions?