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Determinants of Urbanization

Author

Listed:
  • Hofmann, Anett

    (Asian Development Bank)

  • Wan, Guanghua

    (Asian Development Bank)

Abstract

In light of the United Nations' (UN) latest urbanization projections, par- ticularly with respect to India and the People's Republic of China, a good understanding is needed of what drives aggregate urbanization trends. Yet, previous literature has largely neglected the issue in favor of studying urban concentration. Taking advantage of the latest UN World Urbanization Prospects, we use an instrumental variables approach to identify and analyze key urbanization determinants. We estimate the impact of gross domestic product (GDP) growth on urbanization to be large and positive. In answer to Henderson's (2003) finding that urbanization does not seem to cause growth, we argue that the direction of causality runs from growth to urbanization. We also find positive and significant effects of industrialization and education on urbanization, consistent with the existence of localization economies and labor market pooling.

Suggested Citation

  • Hofmann, Anett & Wan, Guanghua, 2013. "Determinants of Urbanization," ADB Economics Working Paper Series 355, Asian Development Bank.
    • Handle: RePEc:ris:adbewp:0355
    Note: http://www.adb.org/sites/default/files/pub/2013/ewp-355.pdf
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    Citations

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    Cited by:

    1. James Payne & George Waters, 2007. "Have Equity REITs Experienced Periodically Collapsing Bubbles?," The Journal of Real Estate Finance and Economics, Springer, vol. 34(2), pages 207-224, February.
    2. Johansson, Anders C. & Wang, Xun, 2015. "Financial Liberalization and Urbanization," Stockholm School of Economics Asia Working Paper Series 2015-35, Stockholm School of Economics, Stockholm China Economic Research Institute.
    3. Rochna Arora & Baljit Kaur, 2022. "Is Urbanisation Sans Infrastructure A Myth? Evidence From India," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 67(232), pages 81-104, January –.
    4. Kassouri, Yacouba & Okunlola, Oluyemi Adewole, 2022. "Analysis of spatio-temporal drivers and convergence characteristics of urban development in Africa," Land Use Policy, Elsevier, vol. 112(C).
    5. Tuan Nguyen Tran, 2022. "Urbanization and land use change: A study in Vietnam," Environmental & Socio-economic Studies, Sciendo, vol. 10(2), pages 19-29, June.
    6. Erich Gundlach & Martin Paldam, 2016. "Socioeconomic transitions as common dynamic processes," Economics Working Papers 2016-06, Department of Economics and Business Economics, Aarhus University.
    7. Damodaran, Aswath & John, Kose & Liu, Crocker H., 2005. "What motivates managers?: Evidence from organizational form changes," Journal of Corporate Finance, Elsevier, vol. 12(1), pages 1-26, December.
    8. Angélica Valencia Torres & Chetan Tiwari & Samuel F. Atkinson, 2022. "Sustaining Human Nutrition in an Increasingly Urban World," Sustainability, MDPI, vol. 14(13), pages 1-16, June.
    9. Sabyasachi Tripathi, 2021. "How does urbanization affect the human development index? A cross-country analysis," Asia-Pacific Journal of Regional Science, Springer, vol. 5(3), pages 1053-1080, October.
    10. Robert Campbell & Nancy White-Huckins & C. Sirmans, 2006. "Domestic and International Equity REIT Joint Ventures: Structuring Corporate Options," The Journal of Real Estate Finance and Economics, Springer, vol. 32(3), pages 275-288, May.
    11. Zhang, Yuan & Wan, Guanghua, 2017. "Exploring the Trade–Urbanization Nexus in Developing Economies: Evidence and Implications," ADBI Working Papers 636, Asian Development Bank Institute.
    12. Abbas, Syed Ali & Selvanathan, Saroja & Selvanathan, Eliyathamby A., 2023. "Structural transformation, urbanization, and remittances in developing countries: A panel VAR analysis," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 55-69.
    13. Sabyasachi Tripathi, 2021. "Do macroeconomic factors promote urbanization? Evidence from BRICS countries," Asia-Pacific Journal of Regional Science, Springer, vol. 5(2), pages 397-426, June.
    14. Barclay, Michael J. & Heitzman, Shane M. & Smith, Clifford W., 2013. "Debt and taxes: Evidence from the real estate industry," Journal of Corporate Finance, Elsevier, vol. 20(C), pages 74-93.
    15. He, Xiaobo & Sim, Nicholas C.S., 2015. "Does economic growth affect urbanization? New evidence from China and the Chinese National Congress," Journal of Asian Economics, Elsevier, vol. 36(C), pages 62-71.
    16. Wan, Guanghua & Luo, Zhi & Zhang, Xun, 2017. "Urbanizing with Equity Consideration," ADBI Working Papers 642, Asian Development Bank Institute.
    17. Johnson, Daniel K.N. & Acri nee Lybecker, Kristina M. & Moore, Jeffrey, 2019. "Sure, but who has the energy? The importance of location for knowledge transfer in the energy sector," Energy Economics, Elsevier, vol. 80(C), pages 582-588.

    More about this item

    Keywords

    urbanization; economic growth; education; industrialization;
    All these keywords.

    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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