Change in urban concentration and economic growth

Frick, Susanne A. and Rodríguez-Pose, Andrés ORCID: 0000-0002-8041-0856 (2018) Change in urban concentration and economic growth. World Development, 105. 156 - 170. ISSN 0305-750X

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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.

Item Type:	Article
Official URL:	https://www.journals.elsevier.com/world-developmen...
Additional Information:	© 2018 Elsevier © CC-BY-NC-ND
Divisions:	Geography & Environment
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HD Industries. Land use. Labor
JEL classification:	R - Urban, Rural, and Regional Economics > R1 - General Regional Economics > R11 - Regional Economic Activity: Growth, Development, and Changes R - Urban, Rural, and Regional Economics > R1 - General Regional Economics > R12 - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade
Date Deposited:	23 Jan 2018 13:59
Last Modified:	05 Oct 2024 17:48
URI:	http://eprints.lse.ac.uk/id/eprint/86500

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