Consumption Cities vs. Production Cities: New Considerations and Evidence

Remi Jedwab, Elena Ianchovichina and Federico Haslop

Working Papers from The George Washington University, Institute for International Economic Policy

Abstract: Cities dramatically vary in their sectoral composition across the world, possibly lending credence to the theory that some cities are production cities with high employment shares of urban tradables while others are consumption cities with high employment shares of urban non-tradables. A model of structural change highlights three paths leading to the rise of consumption cities: resource rents from exporting fuels and mining products, agricultural exports, and premature deindustrialization. These findings appear to be corroborated using both country- and city-level data. Compared to cities in industrialized countries, cities of similar sizes in resource-rich and deindustrializing countries have lower shares of employment in manufacturing, tradable services and the formal sector, and higher shares of employment in non-tradables and the informal sector. Results on the construction of "vanitous" tall buildings provide additional evidence on the relationship between resource exports and consumption cities. Finally, the evidence suggests that having mostly consumption cities might have economic implications for a country.

Keywords: Structural Change; Urbanization; Consumption Cities; Macro-Development Economics; Industrialization; Natural Resources; Deindustrialization; Construction (search for similar items in EconPapers)
JEL-codes: E24 E26 O11 O13 O14 O18 R1 R12 (search for similar items in EconPapers)
Pages: 68 pages
Date: 2022-05
New Economics Papers: this item is included in nep-ene, nep-geo, nep-iue and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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