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Trade openness and city interaction

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  • Ramírez Grajeda, Mauricio
  • Sheldon, Ian

Abstract

The New Economic Geography framework supports the idea that economic integration plays an important role in explaining urban concentration. By using Fujita et al. (1999) as a theoretical motivation, and information on the 5 most important cities of 84 countries, we find that the size of main cities declines and the size of secondary cities increases as a result of external trade. Similar results are obtained for cities with a population over a million. However, cities with a large fraction of the urban population grow independently of their position in the urban ranking. The implications for urban planners and development economists is that investment in infrastructure must take place in secondary cities when a country is involved in a process of trade liberalization, especially, those located near ports.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 18029.

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Date of creation: 01 May 2009
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Handle: RePEc:pra:mprapa:18029

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Keywords: New Economic Geography; Trade Openness; Agglomeration and Urban Economics.;

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Cited by:
  1. Ramírez Grajeda, Mauricio & de León Arias, Adrián, 2009. "Spatial implications of international trade under the new economic geography approach," MPRA Paper 18076, University Library of Munich, Germany.

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