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Can Kings Create Towns that Thrive? The long-run implications of new town foundations

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  • Cermeño, Alexandra
  • Enflo, Kerstin

Abstract

Town foundations have been at the core of urban planning since the onset of civilization. This paper describes the long-run impact of an urbanization place-based policy that was considered a failure by contemporary policymakers. We test the impact of founded towns using a series of town foundations that took place between 1570 and 1810, when the Swedish Crown conferred monopoly market rights to trade upon 31 previously rural ordinary parishes. We show that towns were founded in locations with little natural potential, evident in their limited impact on agricultural surplus in the surrounding hinterlands. However, the new foundations drove extensive growth in terms of population and created positive spillover effects up to 40-50 km around the settlements. Still, the founded towns remained extraordinarily small by the end of the policy period. It was not until the Industrial Revolution that these towns began to thrive. We suggest that trading rights and sunk investments initially served to coordinate expectations about future growth. Once the towns started to grow, agglomeration effects generated persistence in the long term.

Suggested Citation

  • Cermeño, Alexandra & Enflo, Kerstin, 2018. "Can Kings Create Towns that Thrive? The long-run implications of new town foundations," CEPR Discussion Papers 13392, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:13392
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    References listed on IDEAS

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    More about this item

    Keywords

    agricultural surplus; Economic Geography; economic history; path dependency; Urbanization;
    All these keywords.

    JEL classification:

    • N74 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Europe: 1913-
    • N93 - Economic History - - Regional and Urban History - - - Europe: Pre-1913
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R5 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis

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