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Trade and cities

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  • Karayalcin, Cem
  • Yilmazkuday, Hakan

Abstract

Many developing countries display remarkably high degrees of urban concentration that are incommensurate with their levels of urbanization. The cost of excessively high levels of urban concentration can be very high in terms of overpopulation, congestion, and productivity growth. One strand of the theoretical literature suggests that such high levels of concentration may be the result of restrictive trade policies that trigger forces of agglomeration. Another strand of the literature, however, points out that trade liberalization itself may exacerbate urban concentration by favoring the further growth of those large urban centers that have better access to international markets. The empirical basis for judging this question has been weak so far; in the existing literature, trade policies are poorly measured (or are not measured, as when trade volumes are used spuriously). Here, new disaggregated tariff measures are used to empirically test the hypothesis. A treatment-and-control analysis of pre- versus post-liberalization performance of the cities is also employed in liberalizing and non-liberalizing countries. It is found that (controlling for the largest cities that have ports and, thus, have better access to external markets) liberalizing trade leads to a reduction in urban concentration.

Suggested Citation

  • Karayalcin, Cem & Yilmazkuday, Hakan, 2014. "Trade and cities," Policy Research Working Paper Series 6913, The World Bank.
  • Handle: RePEc:wbk:wbrwps:6913
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Trade and Cities
      by Hakan Yilmazkuday in Hakan Yilmazkuday's Blog on 2016-12-13 21:53:00

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    Cited by:

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    2. Zhang, Yuan & Wan, Guanghua, 2017. "Exploring the Trade–Urbanization Nexus in Developing Economies: Evidence and Implications," ADBI Working Papers 636, Asian Development Bank Institute.
    3. Bianka Dettmer & Thomas Sauer, 2019. "Implementation of European Cohesion Policy at the sub‐national level: Evidence from beneficiary data in Eastern Germany," Papers in Regional Science, Wiley Blackwell, vol. 98(1), pages 167-189, February.
    4. Yunfeng Cen & Pengyan Zhang & Yuhang Yan & Wenlong Jing & Yu Zhang & Yanyan Li & Dan Yang & Xin Liu & Wenliang Geng & Tianqi Rong, 2019. "Spatial and Temporal Agglomeration Characteristics and Coupling Relationship of Urban Built-Up Land and Economic Hinterland—A Case Study of the Lower Yellow River, China," Sustainability, MDPI, Open Access Journal, vol. 11(19), pages 1-16, September.
    5. Candau, Fabien & Gbandi, Tchapo, 2019. "Trade and institutions: explaining urban giants," Journal of Institutional Economics, Cambridge University Press, vol. 15(6), pages 1017-1035, December.
    6. Salamat Ali & Richard Kneller & Chris Milner, 2018. "Differential effects of internal and external distances on trade flows: The case of Pakistan," Discussion Papers 2018-13, University of Nottingham, GEP.
    7. Waldo Krugell, 2014. "The Spatial Persistence of Population and Wealth During Apartheid: Comparing the 1911 and 2011 Censuses," Economic History of Developing Regions, Taylor & Francis Journals, vol. 29(2), pages 336-352, December.

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