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Concentration of Population in Capital Cities: Determinants and Economic Effects


  • Rodrigo Cifuentes S


This paper studies the impact and determinants of the concentration of population in capital cities across countries. Fast population growth in capital cities is a widespread phenomenon that does not seems to be explained by economic factors. In addition, this fact violates Zipf’s law, a strong empirical regularity in the distribution of city sizes. The paper addresses first the impact of this fact on economic growth. A model is built to study the consequences of distortions in the spatial allocation of resources in production. The empirical results show a negative correlation between this distortion and economic growth. The second part of the paper studies the determinants of this phenomenon. Three hypotheses advanced in the literature are tested. The results show that trade barriers do not explain concentration in capitals, nor does political instability. Both results are robust and oppose previous findings in the literature. This paper finds support to the hypothesis that concentration in capitals can be explained by weak political rights in the population.

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  • Rodrigo Cifuentes S, 2002. "Concentration of Population in Capital Cities: Determinants and Economic Effects," Working Papers Central Bank of Chile 144, Central Bank of Chile.
  • Handle: RePEc:chb:bcchwp:144

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    References listed on IDEAS

    1. Robert J. Barro, 2013. "Inflation and Economic Growth," Annals of Economics and Finance, Society for AEF, vol. 14(1), pages 121-144, May.
    2. Krugman, Paul & Elizondo, Raul Livas, 1996. "Trade policy and the Third World metropolis," Journal of Development Economics, Elsevier, vol. 49(1), pages 137-150, April.
    3. William Easterly & Ross Levine, 1997. "Africa's Growth Tragedy: Policies and Ethnic Divisions," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1203-1250.
    4. Krugman, Paul, 1993. "On the number and location of cities," European Economic Review, Elsevier, vol. 37(2-3), pages 293-298, April.
    5. Alberto F. Ades & Edward L. Glaeser, 1995. "Trade and Circuses: Explaining Urban Giants," The Quarterly Journal of Economics, Oxford University Press, vol. 110(1), pages 195-227.
    6. Xavier Gabaix, 1999. "Zipf's Law for Cities: An Explanation," The Quarterly Journal of Economics, Oxford University Press, vol. 114(3), pages 739-767.
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