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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 Business Administration - Norwegian School of Economics and Business Administration, CEPR - Center for Economic Policy Research - CEPR
Cecilia García-Peñalosa: AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université, CEPR - Center for Economic Policy Research - CEPR

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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)
Date: 2021-01
New Economics Papers: this item is included in nep-cwa, nep-geo, nep-gro, nep-his, nep-tid and nep-ure
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