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Urbanisation and the onset of modern economic growth

Liam Brunt () and Cecilia García-Peñalosa ()
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Liam Brunt: Norwegian School of Economics and CEPR,
Cecilia García-Peñalosa: Aix-Marseille University, CNRS, EHESS, AMSE and CEPR,

No 2101, AMSE Working Papers from Aix-Marseille School of Economics, France

Abstract: A large literature characterizes urbanisation as the result of productivity growth attracting rural workers to cities. We incorporate economic geography elements into a growth model and suggest that causation runs the other way: when rural workers move to cities, the resulting urbanisation produces technological change and productivity growth. Urban density leads to knowledge exchange and innovation, thus creating a positive feedback loop between city size and productivity that sets off sustained economic growth. The model is consistent with the fact that urbanisation rates in Western Europe, and notably in England, reached unprecedented levels by the mid-18 th century, the eve of the Industrial Revolution.

Keywords: industrialization; urbanisation; innovation; long-run growth (search for similar items in EconPapers)
JEL-codes: N13 O14 O41 (search for similar items in EconPapers)
Pages: 58 pages
Date: 2021-01
New Economics Papers: this item is included in nep-gro, nep-his, nep-ino, nep-sbm, nep-tid and nep-ure
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