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Change in urban concentration and economic growth

Susanne Frick () and Andrés Rodríguez-Pose ()

No 1803, Papers in Evolutionary Economic Geography (PEEG) from Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography

Abstract: The paper investigates (1) the evolution of urban concentration from 1985 to 2010 in 68 countries around the world and (2) the extent to which the degree of urban concentration affects national economic growth. It aims to overcome the limitations of existing empirical literature by building a new urban population dataset that allows the construction of a set of Herfindahl-Hirschman-Indices which capture a country?s urban structure in a more nuanced way than the indicators used hitherto. We find that, contrary to the general perception, urban concentration levels have on average decreased or remained stable (depending on indicator). However, these averages camouflage diverging trends across countries. The results of the econometric analysis suggest that there is no uniform relationship between urban concentration and economic growth. Urban concentration is beneficial for economic growth in high-income countries, while this effect does not hold for developing countries. The results differ from previous analyses that generally underscore the benefits of urban concentration at low levels of economic development. The results are robust to accounting for reverse causality through IV analysis, using exogenous geographic factors as instruments.

Keywords: Agglomeration; urban primacy; economic growth; high-income countries; low-income countries (search for similar items in EconPapers)
JEL-codes: R11 R12 (search for similar items in EconPapers)
Date: 2018-01, Revised 2018-01
New Economics Papers: this item is included in nep-geo and nep-ure
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Citations: View citations in EconPapers (4) Track citations by RSS feed

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http://econ.geo.uu.nl/peeg/peeg1803.pdf Version Januari 2018 (application/pdf)

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Journal Article: Change in urban concentration and economic growth (2018) Downloads
Working Paper: Change in urban concentration and economic growth (2018) Downloads
Working Paper: Change in urban concentration and economic growth (2018) Downloads
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