Trade and Cities

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, cong...

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Bibliographic Details
Main Authors:	Karayalcin, Cem, Yilmazkuday, Hakan
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	AGGLOMERATION ECONOMIES AVERAGE TARIFF BENCHMARK BENCHMARKS CAPACITY BUILDING CAPITAL GOODS CHANGES IN TRADE CITIES COEFFICIENT ESTIMATE COMMUTERS COMPARATIVE ADVANTAGE COMPARATIVE ECONOMICS COMPETITIVE MARKETS CONGESTION CONGESTION COSTS CONSUMERS DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DOMESTIC MARKET ECONOMIC GEOGRAPHY ECONOMIC GROWTH ECONOMIC INTEGRATION ECONOMIC OUTCOMES ECONOMIC POLICIES ECONOMIES OF SCALE ENDOGENOUS VARIABLES FOREIGN FIRMS FOREIGN MARKETS GDP GDP PER CAPITA HIGH TARIFFS HUMAN CAPITAL INCOME LEVELS INCREASING RETURNS INFRASTRUCTURE COSTS INTERMEDIATE GOODS INTERMEDIATE INPUTS INTERNATIONAL MARKETS INTERNATIONAL TRADE LONG-DISTANCE LOW TARIFFS MACROECONOMICS MEASURE OF TRADE OPEN ECONOMIES PER CAPITA INCOME PERFECT COMPETITION POLITICAL ECONOMY POPULATION GROWTH PREFERENTIAL TREATMENT PRODUCTIVITY GROWTH PROPERTY RIGHTS PROTECTIONISM PROTECTIONIST POLICIES ROADS ROUTE SUBURBS TARIFF BARRIERS TARIFF DATA TARIFF RATE TARIFF RATES TARIFF REDUCTIONS TELECOMMUNICATIONS TOWNS TRADE COSTS TRADE LIBERALIZATION TRADE LIBERALIZATION INCREASES TRADE LIBERALIZATION PERIOD TRADE OPENNESS TRADE POLICIES TRADE POLICY TRADE VOLUMES TRAINS TRANSPORT TRANSPORTATION TRANSPORTATION COSTS TRANSPORTATION INFRASTRUCTURE URBAN URBAN AGGLOMERATIONS URBAN AREAS URBAN CENTERS URBAN CONCENTRATION URBAN CONGESTION URBAN ECONOMICS URBAN POPULATION URBANIZATION URBANIZATION PROCESS URUGUAY ROUND VOLUME OF TRADE WELFARE IMPACTS WORLD MARKETS WORLD TRADING SYSTEM WTO
Online Access:	http://documents.worldbank.org/curated/en/2014/06/19643058/trade-cities http://hdl.handle.net/10986/18765

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Summary:	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.

Trade and Cities

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