Which factor is a significant contributor to the development of informal settlements?

Economic inequality is a significant contributor to the development of informal settlements because it often results in a large population that cannot afford formal housing. In areas where there is a stark divide between the wealthy and the poor, individuals with limited financial resources are unable to secure adequate housing through official channels. As a result, many are forced to establish informal settlements, which are typically characterized by substandard living conditions, lack of infrastructure, and insecure land tenure.

In contexts of economic inequality, basic needs such as affordable housing become inaccessible, pushing marginalized communities to occupy land unlawfully or build makeshift homes. This phenomenon is often exacerbated in urban areas where the demand for housing outstrips supply, and the market serves primarily the affluent, leaving lower-income individuals with few options other than to settle informally.

This contrast also highlights how the lack of economic opportunities can limit the potential for upward mobility, which in turn perpetuates cycles of poverty and contributes to the expansion of informal settlements.