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Hinterlands, City Formation and Growth: Evidence from the U.S. Westward Expansion

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  • Dávid Krisztián Nagy

Abstract

I study how geography shaped city formation and aggregate development in the United States prior to the Civil War. To guide my analysis, I first present a conjecture that cities' farm hinterlands fostered both city development and aggregate growth: the hinterland hypothesis. The hinterland hypothesis has rich implications on how various elements of U.S. geography -railroads, changes in U.S. political borders, increasing U.S. population, and international trade - affected city formation and U.S. growth. To quantitatively evaluate the hinterland hypothesis and its implications, I assemble a novel historical dataset on population, trading routes and agricultural productivity at a high spatial resolution, and combine it with a dynamic quantitative model of economic geography. I find evidence for the hinterland hypothesis by showing that the model can quantitatively replicate the key patterns of U.S. urbanization and city formation. Finally, I conduct a series of counterfactuals in the model to quantify the effect of geography on cities and growth, guided by the implications of the hinterland hypothesis. Results indicate that railroads were responsible for 8.2% of urban population in 1860 and for 27% of real GDP growth between 1830 and 1860. The effect of international trade was similar in magnitude, while population growth slowed down urbanization and GDP growth. The effect of political border changes was small during the period.

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  • Dávid Krisztián Nagy, 2020. "Hinterlands, City Formation and Growth: Evidence from the U.S. Westward Expansion," Working Papers 1172, Barcelona School of Economics.
  • Handle: RePEc:bge:wpaper:1172
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    Cited by:

    1. Gianandrea Lanzara & Matteo Santacesaria, 2021. "Market areas in general equilibrium," Papers 2110.15849, arXiv.org.
    2. Hanlon, W.Walker & Heblich, Stephan, 2022. "History and urban economics," Regional Science and Urban Economics, Elsevier, vol. 94(C).
    3. Bosker, Maarten, 2022. "City origins," Regional Science and Urban Economics, Elsevier, vol. 94(C).
    4. Stephen J. Redding, 2020. "Trade and geography," CEP Discussion Papers dp1718, Centre for Economic Performance, LSE.
    5. Nagy, Dávid Krisztián, 2022. "Quantitative economic geography meets history: Questions, answers and challenges," Regional Science and Urban Economics, Elsevier, vol. 94(C).
    6. Kitamura, Shuhei & Lagerlöf, Nils-Petter, 2021. "Cities, Conflict, and Corridors," OSF Preprints cfrzs, Center for Open Science.
    7. Barsanetti, Bruno, 2021. "Cities on pre-Columbian paths," Journal of Urban Economics, Elsevier, vol. 122(C).
    8. Allen, Treb & Donaldson, Dave, 2022. "Persistence and path dependence: A primer," Regional Science and Urban Economics, Elsevier, vol. 94(C).
    9. Fenske, James & Kala, Namrata & Wei, Jinlin, 2021. "Railways and cities in India," The Warwick Economics Research Paper Series (TWERPS) 1349, University of Warwick, Department of Economics.
    10. Fenske, James & Kala, Namrata & Wei, Jinlin, 2021. "Railways and cities in India," CAGE Online Working Paper Series 559, Competitive Advantage in the Global Economy (CAGE).
    11. David Krisztián Nagy, 2020. "Quantitative economic geography meets history: Questions, answers and challenges," Economics Working Papers 1774, Department of Economics and Business, Universitat Pompeu Fabra, revised Mar 2021.
    12. Dávid Krisztián Nagy, 2022. "Trade and Urbanization: Evidence from Hungary," American Economic Journal: Microeconomics, American Economic Association, vol. 14(3), pages 733-790, August.

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    More about this item

    Keywords

    quantitative economic geography; economic growth and development; city formation; transport infrastructure;
    All these keywords.

    JEL classification:

    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies

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