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Against the prediction of developmental orthodoxy that urbanization is a necessary condition for economic development, since the mid-1990s Georgia and Armenia achieved sustained economic development without rural–urban migration. The experience of Georgia and Armenia is placed in the context of the relation between urbanization and development in other countries of Central Asia. This is followed by an in-depth analysis of Georgia, which shows that when the home consumption of rural smallholders is included in rural incomes, and when the increase in the urban cost-of-living relative to the rural cost-of-living is taken into consideration, the incentive to migrate from the countryside to the towns is greatly weakened.

Economic development without rural–urban migration in Georgia