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The urbanization process and economic growth: the so-what question

Henderson, Vernon (2003) The urbanization process and economic growth: the so-what question. Journal of Economic Growth, 8 (1). pp. 47-71. ISSN 1381-4338

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Identification Number: 10.1023/A:1022860800744

Abstract

There is an extensive literature on the urbanization process looking at both urbanization and urban concentration, asking whether and when there is under or over-urbanization or under or over urban concentration. Writers argue that national government policies and non-democratic institutions promote excessive concentration—the extent to which the urban population of a country is concentrated in one or two major metropolitan areas—except in former planned economies where migration restrictions are enforced. These literatures assume that there is an optimal level of urbanization or an optimal level of urban concentration, but no research to date has quantitatively examined the assumption and asked the basic “so-what” question—how great are the economic losses from significant deviations from any optimal degrees of urban concentration or rates of urbanization? This paper shows that (1) there is a best degree of urban concentration, in terms of maximizing productivity growth (2) that best degree varies with the level of development and country size, and (3) over or under-concentration can be very costly in terms of productivity growth. The paper shows also that productivity growth is not strongly affected by urbanization per se. Rapid urbanization has often occurred in the face of low or negative economic growth over some decades. Moreover, urbanization is a transitory phenomenon where many countries are now fully urbanized.

Item Type: Article
Official URL: http://link.springer.com/journal/10887
Additional Information: © 2003 Kluwer Academic Publishers
Divisions: Geography & Environment
Subjects: G Geography. Anthropology. Recreation > G Geography (General)
H Social Sciences > HB Economic Theory
JEL classification: R - Urban, Rural, and Regional Economics > R1 - General Regional Economics > R11 - Regional Economic Activity: Growth, Development, and Changes
Sets: Departments > Geography and Environment
Collections > Economists Online
Date Deposited: 11 Sep 2013 09:12
Last Modified: 20 Feb 2019 07:59
URI: http://eprints.lse.ac.uk/id/eprint/52081

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