IDEAS home Printed from https://ideas.repec.org/p/ajr/sodwps/2021-11.html
   My bibliography  Save this paper

The Political Geography of Cities

Author

Listed:
  • Richard Bluhm

    (Leibniz University Hannover)

  • Christian Lessmann

    (TU Dresden)

  • Paul Schaudt

    (University of St. Gallen)

Abstract

We study the link between subnational capital cities and urban development using a global data set of hundreds of first-order administrative and capital city reforms from 1987 until 2018. We show that gaining subnational capital status has a sizable effect on city growth in the medium run. We provide new evidence that the effect of these reforms depends on locational fundamentals, such as market access, and that the effect is greater in countries where urbanization and industrialization occurred later. Consistent with both an influx of public investments and a private response of individuals and firms, we document that urban built-up, population, foreign aid, infrastructure, and foreign direct investment in several sectors increase once cities become subnational capitals.

Suggested Citation

  • Richard Bluhm & Christian Lessmann & Paul Schaudt, 2021. "The Political Geography of Cities," SoDa Laboratories Working Paper Series 2021-11, Monash University, SoDa Laboratories.
    • Handle: RePEc:ajr:sodwps:2021-11
    as

    Download full text from publisher

    File URL: http://soda-wps.s3-website-ap-southeast-2.amazonaws.com/RePEc/ajr/sodwps/2021-11.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. repec:hal:spmain:info:hdl:2441/4tc33icveb94nokk2rd2ettg0k is not listed on IDEAS
    2. Jofre-Monseny, Jordi & Silva, José I. & Vázquez-Grenno, Javier, 2020. "Local labor market effects of public employment," Regional Science and Urban Economics, Elsevier, vol. 82(C).
    3. Nathan Nunn & Diego Puga, 2012. "Ruggedness: The Blessing of Bad Geography in Africa," The Review of Economics and Statistics, MIT Press, vol. 94(1), pages 20-36, February.
    4. Schmidheiny, Kurt & Siegloch, Sebastian, 2019. "On Event Study Designs and Distributed-Lag Models: Equivalence, Generalization and Practical Implications," IZA Discussion Papers 12079, Institute of Labor Economics (IZA).
    5. J. Vernon Henderson & Matthew A. Turner, 2020. "Urbanization in the Developing World: Too Early or Too Slow?," Journal of Economic Perspectives, American Economic Association, vol. 34(3), pages 150-173, Summer.
    6. Bluhm, Richard & Krause, Melanie, 2022. "Top lights: Bright cities and their contribution to economic development," Journal of Development Economics, Elsevier, vol. 157(C).
    7. Faggio, Giulia & Overman, Henry, 2014. "The effect of public sector employment on local labour markets," Journal of Urban Economics, Elsevier, vol. 79(C), pages 91-107.
    8. Stephen Coate & Brian Knight, 2007. "Socially Optimal Districting: A Theoretical and Empirical Exploration," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 122(4), pages 1409-1471.
    9. Bairoch, Paul & Braider, Christopher, 1991. "Cities and Economic Development," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226034669, December.
    10. Neumark, David & Simpson, Helen, 2015. "Place-Based Policies," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 1197-1287, Elsevier.
    11. Kurt Schmidheiny & Sebastian Siegloch, 2023. "On event studies and distributed‐lags in two‐way fixed effects models: Identification, equivalence, and generalization," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 38(5), pages 695-713, August.
    12. Dave Donaldson & Richard Hornbeck, 2016. "Railroads and American Economic Growth: A "Market Access" Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(2), pages 799-858.
    13. Pierre-Philippe Combes & Gilles Duranton & Laurent Gobillon & Sébastien Roux, 2010. "Estimating Agglomeration Economies with History, Geology, and Worker Effects," NBER Chapters, in: Agglomeration Economics, pages 15-66, National Bureau of Economic Research, Inc.
    14. Davis, James C. & Henderson, J. Vernon, 2003. "Evidence on the political economy of the urbanization process," Journal of Urban Economics, Elsevier, vol. 53(1), pages 98-125, January.
    15. J Vernon Henderson & Tim Squires & Adam Storeygard & David Weil, 2018. "The Global Distribution of Economic Activity: Nature, History, and the Role of Trade1," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(1), pages 357-406.
    16. Richard Bluhm & Axel Dreher & Andreas Fuchs & Bradley C. Parks & Austin M. Strange & Michael J. Tierney, 2020. "Connective Financing - Chinese Infrastructure Projects and the Diffusion of Economic Activity in Developing Countries," CESifo Working Paper Series 8344, CESifo.
    17. Ferdinand Rauch & Guy Michaels, 2013. "Resetting the Urban Network: 117-2012," Economics Series Working Papers 684, University of Oxford, Department of Economics.
    18. repec:hrv:faseco:4553034 is not listed on IDEAS
    19. Rémi Jedwab & Adam Storeygard, 2022. "The Average and Heterogeneous Effects of Transportation Investments: Evidence from Sub-Saharan Africa 1960–2010," Journal of the European Economic Association, European Economic Association, vol. 20(1), pages 1-38.
    20. Desmet, Klaus & Gomes, Joseph Flavian & Ortuño-Ortín, Ignacio, 2020. "The geography of linguistic diversity and the provision of public goods," Journal of Development Economics, Elsevier, vol. 143(C).
    21. Alberto Alesina & Reza Baqir & Caroline Hoxby, 2004. "Political Jurisdictions in Heterogeneous Communities," Journal of Political Economy, University of Chicago Press, vol. 112(2), pages 348-396, April.
    22. Filipe R. Campante & Quoc-Anh Do, 2014. "Isolated Capital Cities, Accountability, and Corruption: Evidence from US States," American Economic Review, American Economic Association, vol. 104(8), pages 2456-2481, August.
    23. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    24. Hernán D. Rozenfeld & Diego Rybski & Xavier Gabaix & Hernán A. Makse, 2011. "The Area and Population of Cities: New Insights from a Different Perspective on Cities," American Economic Review, American Economic Association, vol. 101(5), pages 2205-2225, August.
    25. Richard Bluhm & Roland Hodler & Paul Schaudt, 2021. "Ethnofederalism and Ethnic Voting," CESifo Working Paper Series 9314, CESifo.
    26. Brülhart, Marius & Desmet, Klaus & Klinke, Gian-Paolo, 2020. "The shrinking advantage of market potential," Journal of Development Economics, Elsevier, vol. 147(C).
    27. Edward L. Glaeser & Joshua D. Gottlieb, 2008. "The Economics of Place-Making Policies," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 39(1 (Spring), pages 155-253.
    28. Hoyt Bleakley & Jeffrey Lin, 2012. "Portage and Path Dependence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 127(2), pages 587-644.
    29. Ying Bai & Ruixue Jia, 2020. "The Economic Consequences of Political Hierarchy: Evidence from Regime Changes in China, AD1000-2000," NBER Working Papers 26652, National Bureau of Economic Research, Inc.
    30. Emilio Depetris†Chauvin & David N. Weil, 2018. "Malaria and Early African Development: Evidence from the Sickle Cell Trait," Economic Journal, Royal Economic Society, vol. 128(610), pages 1207-1234, May.
    31. Pierre-Philippe Combes & Gilles Duranton & Laurent Gobillon, 2011. "The identification of agglomeration economies," Journal of Economic Geography, Oxford University Press, vol. 11(2), pages 253-266, March.
    32. Douglas Gollin & Remi Jedwab & Dietrich Vollrath, 2016. "Urbanization with and without industrialization," Journal of Economic Growth, Springer, vol. 21(1), pages 35-70, March.
    33. Marcy Burchfield & Henry G. Overman & Diego Puga & Matthew A. Turner, 2006. "Causes of Sprawl: A Portrait from Space," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 121(2), pages 587-633.
    34. De Luca, Giacomo & Hodler, Roland & Raschky, Paul A. & Valsecchi, Michele, 2018. "Ethnic favoritism: An axiom of politics?," Journal of Development Economics, Elsevier, vol. 132(C), pages 115-129.
    35. Grossman, Guy & Lewis, Janet I., 2014. "Administrative Unit Proliferation," American Political Science Review, Cambridge University Press, vol. 108(1), pages 196-217, February.
    36. Faggio, G. & Schluter, T. & vom Berge, P., 2019. "Interaction of Public and Private Employment: Evidence from a German Government Move," Working Papers 19/09, Department of Economics, City University London.
    37. Patrick Kline, 2010. "Place Based Policies, Heterogeneity, and Agglomeration," American Economic Review, American Economic Association, vol. 100(2), pages 383-387, May.
    38. Treb Allen & Dave Donaldson, 2020. "Persistence and Path Dependence in the Spatial Economy," NBER Working Papers 28059, National Bureau of Economic Research, Inc.
    39. Miguel, Edward & Roland, Gérard, 2011. "The long-run impact of bombing Vietnam," Journal of Development Economics, Elsevier, vol. 96(1), pages 1-15, September.
    40. repec:hal:spmain:info:hdl:2441/nhjqqngq98lnqqrct2aj93qja is not listed on IDEAS
    41. Ulrich J. Eberle & J. Vernon Henderson & Dominic Rohner & Kurt Schmidheiny, 2020. "Ethnolinguistic diversity and urban agglomeration," Proceedings of the National Academy of Sciences, Proceedings of the National Academy of Sciences, vol. 117(28), pages 16250-16257, July.
    42. Henderson, Vernon, 2003. "The Urbanization Process and Economic Growth: The So-What Question," Journal of Economic Growth, Springer, vol. 8(1), pages 47-71, March.
    43. Blom-Hansen, Jens & Houlberg, Kurt & Serritzlew, Søren & Treisman, Daniel, 2016. "Jurisdiction Size and Local Government Policy Expenditure: Assessing the Effect of Municipal Amalgamation," American Political Science Review, Cambridge University Press, vol. 110(4), pages 812-831, November.
    44. Gollin, Douglas & Kirchberger, Martina & Lagakos, David, 2021. "Do urban wage premia reflect lower amenities? Evidence from Africa," Journal of Urban Economics, Elsevier, vol. 121(C).
    45. Alberto F. Ades & Edward L. Glaeser, 1995. "Trade and Circuses: Explaining Urban Giants," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(1), pages 195-227.
    46. José Luis Montiel Olea & Mikkel Plagborg‐Møller, 2019. "Simultaneous confidence bands: Theory, implementation, and an application to SVARs," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 34(1), pages 1-17, January.
    47. Donald R. Davis & David E. Weinstein, 2002. "Bones, Bombs, and Break Points: The Geography of Economic Activity," American Economic Review, American Economic Association, vol. 92(5), pages 1269-1289, December.
    48. Roland Hodler & Paul A. Raschky, 2014. "Regional Favoritism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(2), pages 995-1033.
    49. Rosenthal, Stuart S. & Strange, William C., 2004. "Evidence on the nature and sources of agglomeration economies," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 49, pages 2119-2171, Elsevier.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Roesel Felix, 2023. "The German Local Population Database (GPOP), 1871 to 2019," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 243(3-4), pages 415-430, June.
    2. Moritz Goldbeck & Valentin Lindlacher, 2024. "Digital Infrastructure and Local Economic Development: Early Internet in Sub-Saharan Africa," CESifo Working Paper Series 11308, CESifo.
    3. Smith, Cory B. & Kulka, Amrita, 2024. "When is Long-run Agglomeration Possible? Evidence from County Seat Wars," 2024 Annual Meeting, July 28-30, New Orleans, LA 343859, Agricultural and Applied Economics Association.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Andreas Eberhard-Ruiz & Alexander Moradi, 2018. "Regional Market Integration and City Growth in East Africa: Local but no Regional Effects?," CSAE Working Paper Series 2018-09, Centre for the Study of African Economies, University of Oxford.
    2. Dreher, Axel & Bluhm, Richard & Fuchs, Andreas & Parks, Bradley & Strange, Austin & Tierney, Michael, 2020. "Connective Financing - Chinese Infrastructure Projects and the Diffusion of Economic Activity in Developing Countries," CEPR Discussion Papers 14818, C.E.P.R. Discussion Papers.
    3. Fenske, James & Kala, Namrata & Wei, Jinlin, 2023. "Railways and cities in India," Journal of Development Economics, Elsevier, vol. 161(C).
    4. Christian Düben & Melanie Krause, 2021. "Population, light, and the size distribution of cities," Journal of Regional Science, Wiley Blackwell, vol. 61(1), pages 189-211, January.
    5. Bluhm, Richard & Krause, Melanie, 2022. "Top lights: Bright cities and their contribution to economic development," Journal of Development Economics, Elsevier, vol. 157(C).
    6. Stephen J. Redding & Esteban Rossi-Hansberg, 2017. "Quantitative Spatial Economics," Annual Review of Economics, Annual Reviews, vol. 9(1), pages 21-58, September.
    7. repec:esx:essedp:729 is not listed on IDEAS
    8. Breinlich, Holger & Ottaviano, Gianmarco I.P. & Temple, Jonathan R.W., 2014. "Regional Growth and Regional Decline," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 2, chapter 4, pages 683-779, Elsevier.
    9. Berger, Thor & Enflo, Kerstin, 2017. "Locomotives of local growth: The short- and long-term impact of railroads in Sweden," Journal of Urban Economics, Elsevier, vol. 98(C), pages 124-138.
    10. Juan Soto & Milena Vargas & Julio A. Berdegué, 2018. "How Large Are the Contributions of Cities to the Development of Rural Communities? A Market Access Approach for a Quarter Century of Evidence from Chile," Documentos de Trabajo 17060, The Latin American and Caribbean Economic Association (LACEA).
    11. Hanlon, W.Walker & Heblich, Stephan, 2022. "History and urban economics," Regional Science and Urban Economics, Elsevier, vol. 94(C).
    12. Stef Proost & Jacques-François Thisse, 2019. "What Can Be Learned from Spatial Economics?," Journal of Economic Literature, American Economic Association, vol. 57(3), pages 575-643, September.
    13. Gilles Duranton, 2008. "Viewpoint: From cities to productivity and growth in developing countries," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 41(3), pages 689-736, August.
    14. Lin, Jeffrey & Rauch, Ferdinand, 2022. "What future for history dependence in spatial economics?," Regional Science and Urban Economics, Elsevier, vol. 94(C).
    15. Ricardo Dahis & Christiane Szerman, 2023. "Decentralizing Development: Evidence from Government Splits," Monash Economics Working Papers 2023-18, Monash University, Department of Economics.
    16. Accetturo, Antonio & Cascarano, Michele & de Blasio, Guido, 2024. "Pirate attacks and the shape of the Italian urban system," Regional Science and Urban Economics, Elsevier, vol. 108(C).
    17. Behrens, Kristian & Robert-Nicoud, Frédéric, 2015. "Agglomeration Theory with Heterogeneous Agents," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 171-245, Elsevier.
    18. Frick, Susanne A. & Rodríguez-Pose, Andrés, 2018. "Change in urban concentration and economic growth," World Development, Elsevier, vol. 105(C), pages 156-170.
    19. Neeraj G Baruah & J Vernon Henderson & Cong Peng, 2021. "Colonial legacies: Shaping African cities," Journal of Economic Geography, Oxford University Press, vol. 21(1), pages 29-65.
    20. Ager, Philipp & Hansen, Casper Worm & Lønstrup, Lars, 2018. "Shaking Up the Equilibrium: Natural Disasters, Economic Activity, and Immigration," Discussion Papers on Economics 2/2018, University of Southern Denmark, Department of Economics.
    21. Giulio Cainelli & Carlo Ciccarelli & Roberto Ganau, 2021. "Administrative reforms, urban hierarchy, and local population growth. Lessons from Italian unification," Papers in Evolutionary Economic Geography (PEEG) 2109, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Feb 2021.

    More about this item

    Keywords

    capital cities; administrative reforms; economic geography; urban primacy;
    All these keywords.

    JEL classification:

    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ajr:sodwps:2021-11. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ashani Amarasinghe (email available below). General contact details of provider: https://edirc.repec.org/data/dxmonau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.