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Change in urban concentration and economic growth

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  • Susanne Frick

    ()

  • Andres Rodriguez-Pose

    ()

Abstract

The paper investigates (1) the evolution of urban concentration from 1985 to 2010 in 68 countries around the world and (2) the extent to which the degree of urban concentration affects national economic growth. It aims to overcome the limitations of existing empirical literature by building a new urban population dataset that allows the construction of a set of Herfindahl-Hirschman-Indices which capture a country?s urban structure in a more nuanced way than the indicators used hitherto. We find that, contrary to the general perception, urban concentration levels have on average decreased or remained stable (depending on indicator). However, these averages camouflage diverging trends across countries. The results of the econometric analysis suggest that there is no uniform relationship between urban concentration and economic growth. Urban concentration is beneficial for economic growth in high-income countries, while this effect does not hold for developing countries. The results differ from previous analyses that generally underscore the benefits of urban concentration at low levels of economic development. The results are robust to accounting for reverse causality through IV analysis, using exogenous geographic factors as instruments.

Suggested Citation

  • Susanne Frick & Andres Rodriguez-Pose, 2018. "Change in urban concentration and economic growth," Papers in Evolutionary Economic Geography (PEEG) 1803, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Jan 2018.
  • Handle: RePEc:egu:wpaper:1803
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    File URL: http://econ.geo.uu.nl/peeg/peeg1803.pdf
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    2. Sivan Hisham Al Jarah & Bo Zhou & Rebaz Jalil Abdullah & Yawen Lu & Wenting Yu, 2019. "Urbanization and Urban Sprawl Issues in City Structure: A Case of the Sulaymaniah Iraqi Kurdistan Region," Sustainability, MDPI, Open Access Journal, vol. 11(2), pages 1-21, January.
    3. Guillaume Cléaud & Francisco de Castro Fernández & Jorge Durán Laguna & Lucia Granelli & Martin Hallet & Anne Jaubertie & Carlos Maravall Rodriguez & Diana Ognyanova & Balazs Palvolgyi & Tsvetan Tsali, 2019. "Cruising at Different Speeds: Similarities and Divergences between the German and the French Economies," European Economy - Discussion Papers 2015 - 103, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.

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    Keywords

    Agglomeration; urban primacy; economic growth; high-income countries; low-income countries;

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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