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Why investing more in the capital can lead to less growth

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  • Lewis Dijkstra

Abstract

This article argues that investing in a wide range of city sizes, or a portfolio of places, can be more conducive to growth than primarily investing in the largest city. A range of cities allows each firm to find its optimal city. This reduces the needed size of cities and thus congestion costs. Less-developed European Union Member States have large and growing productivity gaps between their capitals compared with the rest of the country. More-developed Member States have much smaller productivity gaps. Therefore, growth in the second-tier cities in less-developed Member States is likely to outpace growth in the capital in the medium term, yet public investment may be too focused on the capital city. Copyright 2013, Oxford University Press.

Suggested Citation

  • Lewis Dijkstra, 2013. "Why investing more in the capital can lead to less growth," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 6(2), pages 251-268.
    • Handle: RePEc:oup:cjrecs:v:6:y:2013:i:2:p:251-268
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    File URL: http://hdl.handle.net/10.1093/cjres/rst009
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    Cited by:

    1. Paul Hildreth & David Bailey, 2014. "Place-based economic development strategy in England: Filling the missing space," Local Economy, London South Bank University, vol. 29(4-5), pages 363-377, June.
    2. Pere Suau-Sanchez & Guillaume Burghouwt & Xavier Fageda, 2016. "Reinterpreting EU Air Transport Deregulation: A Disaggregated Analysis of the Spatial Distribution of Traffic in Europe, 1990–2009," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 107(1), pages 48-65, February.
    3. Sébastien BOURDIN, 2018. "Géographie de la résilience des régions européennes face à la crise (2008-2013)," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 48, pages 53-70.
    4. Seyed Peyman Asadi & Ahmad Jafari Samimi, 2019. "Lagging-behind Areas as a Challenge to the Regional Development Strategy: What Insights can New and Evolutionary Economic Geography Offer?," Papers in Evolutionary Economic Geography (PEEG) 1923, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Jul 2019.
    5. McCafferty Des, 2019. "Fifty years of urbanisation in Ireland: Structural and spatial evolution of the urban hierarchy since Buchanan," Administration, Sciendo, vol. 67(3), pages 65-89, August.
    6. Rodrigo V. Cardoso & Evert J. Meijers, 2016. "Contrasts between first-tier and second-tier cities in Europe: a functional perspective," European Planning Studies, Taylor & Francis Journals, vol. 24(5), pages 996-1015, May.

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