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Trade and Cities

Author

Listed:
  • Cem Karayalcin

    (Department of Economics, Florida International University)

  • Hakan Yilmazkuday

    (Department of Economics, Florida International University)

Abstract
Many developing countries display remarkably high degrees of urban concentration, 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 in 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 in 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 so far been weak: in the existing literature, trade policies are poorly measured (or not measured as when trade volumes are used spuriously). Here, we use new disaggregated tariff measures to empirically test the hypothesis. We also employ a treatment-and-control analysis of pre- versus post-liberalization performance of the cities in liberalizing and non-liberalizing countries. We find evidence that, controlling for, among others, largest cities that have ports and, thus, have better access to external markets, liberalizing trade does lead to a reduction in urban concentration. Finally, by using a cross-country level of analysis we provide some external validity to the more careful empirical studies that rely on single country data.

Suggested Citation

  • Cem Karayalcin & Hakan Yilmazkuday, 2014. "Trade and Cities," Working Papers 1408, Florida International University, Department of Economics.
  • Handle: RePEc:fiu:wpaper:1408
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    References listed on IDEAS

    as
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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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    4. 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.
    5. 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.
    6. 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.
    7. 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.

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