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Adapting Schelling’s checker-board discrimination framework, we develop a  disequilibrium model to examine growth in two core-periphery settings:  global-South megacities and the Eurozone. Regarding megacities, informal  sector growth undercuts the government’s capacity to fund fully adequate  public services. Regarding the Eurozone, an increase in the relative size of  the periphery will - under the government’s balanced-budget constraint -  undercut the provision of public safety-net and infrastructure services. And  if low-wage production is initiated in the European periphery, the core is  likely to collapse. “Urbanization is decisive because it is so expensive. The  difference between the costs of urban development and rural development does  not turn on comparing the capital required for factories and that required  for farms. Each of these is a small part of total investment, and the  difference per head is not always in favor of industry. The difference turns  on infrastructure.” W. Arthur Lewis (1977, pp. 39-40)

The crisis of the core seen through the eyes of the periphery: A Schelling model of the global-south megacity and the European crisis