Explaining the Phenomenon of Third World Urban Giants: The Effects of Trade Costs

Rasha Gustavsson ()
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Rasha Gustavsson: Lund University, Postal: Department of Economics, Lund University, Box 7082, S-, 220 07 Lund, Sweden

Journal of Economic Integration, 1999, vol. 14, 625-650

Abstract: Traditional push-and-pull factors offered partial explanations to the size of large urban areas in the third world. Moreover, the growing literature in eco - nomic geography identifies an additional factor exacerbating the phenomenon, namely trade costs. The present study tests econometrically the proposed hypoth - esis, whether higher trade barriers intensify the concentration forces in third world urban centers. That is, whether trade costs interact with the traditional push-and-pull effects and exacerbate the concentration effects. In particular, controlling for the traditional push-and-pull effects we incorporate two addi - tional variables in order to capture trade costs within and across borders, respectively. The results suggest mixed support for the traditional push-and-pull ef fects. Higher trade costs within borders seem to reduce the concentration forces in urban centers. In addition, we find no evidence that trade barriers across boarders encourage concentration. Finally, the evidence from sensitivity analysis suggests that the results need to be treated with caution.

Keywords: urban giants; metropolises; trade barriers; concentration; agglomeration (search for similar items in EconPapers)
JEL-codes: F12 F13 F15 R12 (search for similar items in EconPapers)
Date: 1999
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Persistent link: https://EconPapers.repec.org/RePEc:ris:integr:0120

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