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Heterogeneous Agglomeration Economies in the Developing Countries : The Roles of FirmCharacteristics, Sector Tradability, and Urban Mobility

Author

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  • Burger,Martijn
  • Ianchovichina,Elena
  • Akbar,Prottoy Aman

Abstract

Using geo-coded, firm-level data on more than 51,000 establishments in 649 metropolitan areas in98 developing economies, from the World Bank’s Enterprise Surveys and a new global database on city-level mobility andcongestion, this paper estimates the “pure” firm productivity gains of urban density, net of negativeexternalities associated with limited mobility, crime, and pollution. The results suggest that the average size ofagglomeration economies in the developing world is comparable to the one observed in advanced countries, butthe magnitude of the benefits of density on firm productivity substantially varies across firms. Returns tourban density are higher for firms operating in the tradables sector, exporters, foreign-owned firms, largerfirms, and more experienced firms. Agglomeration economies are lost through both limited uncongested mobility andcongestion, but the latter has a stronger negative effect on agglomeration economies and reduces relatively more theagglomeration benefits of firms in the non-tradables sector than those producing tradables.

Suggested Citation

  • Burger,Martijn & Ianchovichina,Elena & Akbar,Prottoy Aman, 2022. "Heterogeneous Agglomeration Economies in the Developing Countries : The Roles of FirmCharacteristics, Sector Tradability, and Urban Mobility," Policy Research Working Paper Series 9954, The World Bank.
    • Handle: RePEc:wbk:wbrwps:9954
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