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Agglomeration and Growth: Cross-Country Evidence

  • Brülhart, Marius
  • Sbergami, Federica

We investigate the impact of within-country spatial concentration of economic activity on country-level growth, using cross-section OLS and dynamic panel GMM estimation. Agglomeration is measured alternatively through measures of urbanization and through indices of spatial concentration based on data for sub-national regions. Across estimation techniques, data sets and variable definitions, we find evidence that supports the "Williamson hypothesis": agglomeration boosts GDP growth only up to a certain level of economic development. The critical level is estimated at some USD 10,000, corresponding roughly to the current per-capita income level of Brazil or Bulgaria. This implies that the tradeoff between national growth and inter-regional equality may gradually lose its relevance.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6941.

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Date of creation: Aug 2008
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Handle: RePEc:cpr:ceprdp:6941
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