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Explaining the Phenomenon of Third World Urban Giants: The Effects of Trade Costs

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  • Gustavsson, Rasha

    (Lund University)

Abstract

Traditional push-and-pull factors offered partial explanations to the size of large urban areas in the third world. Moreover, the growing literature in eco - nomic geography identifies an additional factor exacerbating the phenomenon, namely trade costs. The present study tests econometrically the proposed hypoth - esis, whether higher trade barriers intensify the concentration forces in third world urban centers. That is, whether trade costs interact with the traditional push-and-pull effects and exacerbate the concentration effects. In particular, controlling for the traditional push-and-pull effects we incorporate two addi - tional variables in order to capture trade costs within and across borders, respectively. The results suggest mixed support for the traditional push-and-pull ef fects. Higher trade costs within borders seem to reduce the concentration forces in urban centers. In addition, we find no evidence that trade barriers across boarders encourage concentration. Finally, the evidence from sensitivity analysis suggests that the results need to be treated with caution.

Suggested Citation

  • Gustavsson, Rasha, 1999. "Explaining the Phenomenon of Third World Urban Giants: The Effects of Trade Costs," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 14, pages 625-650.
  • Handle: RePEc:ris:integr:0120
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    More about this item

    Keywords

    urban giants; metropolises; trade barriers; concentration; agglomeration;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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