This paper explores rural to urban migration in the process of economic development.   The basic model describes the economic behavior in a closed country. A representative household provides more labor force for firms in the urban area if the wage rate is higher than the marginal products of agricultural labor. In the steady state they are equivalent and migration stops but industrial products are growing at a certain rate because of the positive externality. A small open economy version of the basic model is studied in the latter half of the paper. It is assumed that only the manufacturing commodity is tradable and the interest rate is exogenously given to the agents. Some disequilibrium phenomena happen because firms' labor demand is constant.