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Breaking into Tradables: urban form and urban function in a developing city

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  • Venables, Anthony J

Abstract

Many cities in developing economies, particularly in Africa, are experiencing "urbanisation without industrialisation". This paper conceptualizes this in a framework in which a city can produce non-tradable goods and - if it is sufficiently competitive - also internationally tradable goods, potentially subject to increasing returns to scale. The city may get locked into non-tradable production for three distinct reasons. One is high demand for non-tradables, arising if the city receives income from other sources (such as natural resource rents), creating an urban Dutch disease. A second is coordination failure amongst potential producers of tradable goods. A third arises from the way in which the city is built. In a two-period model with sunk construction costs, expectations about second period outcomes shape construction decisions, which in turn shape the competitiveness of the city. There may be two (perfect foresight) equilibria. One in which land values are relatively low, little is invested in buildings, and the city is too low density and too high cost to attract tradable production. The other in which land values are high, the city is built taller and denser and is able to accommodate more workers and attract tradable production; this, in turn, generates the employment and income to support high land values. The former configuration is consistent with the "urbanisation without industrialisation" experience of many African cities.

Suggested Citation

  • Venables, Anthony J, 2016. "Breaking into Tradables: urban form and urban function in a developing city," CEPR Discussion Papers 11212, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:11212
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    References listed on IDEAS

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    Cited by:

    1. Henderson, J. Vernon & Kriticos, Sebastian, 2017. "The development of the African system of cities," LSE Research Online Documents on Economics 86349, London School of Economics and Political Science, LSE Library.
    2. Patricia Jones & Taye Mengistae & Albert Zeufack, 2018. "Selection, Firm Turnover, and Productivity Growth: Do Emerging Cities Speed up the Process?," Working Papers id:12390, eSocialSciences.
    3. repec:oup:oxford:v:33:y:2017:i:3:p:355-372. is not listed on IDEAS

    More about this item

    Keywords

    city; economic development; structural transformation.; tradable goods; urban;

    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
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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