Agglomeration Economies in Developing Countries: A Meta-Analysis

Arti Goswami Grover, Somik V. Lall and Jonathan Timmis ()

No 9730, Policy Research Working Paper Series from The World Bank

Abstract: Recent empirical work suggests that there are large agglomeration gains from working and living in developing country cities. These estimates find that doubling city size is associated with an increase in productivity by 19 percent in China, 12 percent in India, and 17 percent in Africa. These agglomeration benefits are considerably higher relative to developed country cities, which are in the range of 4 to 6 percent. However, many developing country cities are costly, crowded, and disconnected, and face slow structural transformation. To understand the true productivity advantages of cities in developing countries, this paper systematically evaluates more than 1,200 elasticity estimates from 70 studies in 33 countries. Using a frontier methodology for conducting meta-analysis, it finds that the elasticity estimates in developing countries are at most 1 percentage point higher than in advanced economies, but not significantly so. The paper provides novel estimates of the elasticity of pollution, homicide, and congestion, using a large sample of developing and developed country cities. No evidence is found for productivity gains in light of the high and increasing costs of working in developing country cities.

Keywords: Crime and Society; Food&Beverage Industry; General Manufacturing; Business Cycles and Stabilization Policies; Textiles; Apparel&Leather Industry; Pulp&Paper Industry; Common Carriers Industry; Construction Industry; Plastics&Rubber Industry; Labor Markets (search for similar items in EconPapers)
Date: 2021-07-19
New Economics Papers: this item is included in nep-geo and nep-ure
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Citations: View citations in EconPapers (2)

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