Urbanization, urban concentration and economic growth in developing countries

Abstract

We investigate how urban concentration and urbanization affect economic growth in developing countries. Using semi-parametric estimation techniques on a cross-country panel of 39 countries for the years 1960-1990 we discover a U-shaped relationship for urban concentration. This suggests the existence of an 'urban-concentration trap' where marginal increases in urban concentration would reduce growth for about a third of our sample. Furthermore, there appears to be no systematic relationship between urbanization and economic growth.