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Which comes first - urbanization or economic growth? Evidence from heterogeneous panel causality tests

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  • Brantley Liddle
  • George Messinis

Abstract

Heterogeneous panel causality tests are employed to consider the relationship between urbanization change and economic growth. Urbanization causes economic growth in high-income countries, but noncausality could not be rejected for both middle-income and Latin American countries. A bi-directional, equilibrium relationship is observed for low-income, predominately African countries where economic growth has a positive, causal effect on urbanization, but where urbanization has a negative, causal effect on economic growth. Hence, urbanization and economic growth either co-evolve in low-income/African and high-income countries, or else the two processes are decoupled for middle-income and Latin American countries.

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  • Brantley Liddle & George Messinis, 2015. "Which comes first - urbanization or economic growth? Evidence from heterogeneous panel causality tests," Applied Economics Letters, Taylor & Francis Journals, vol. 22(5), pages 349-355, March.
    • Handle: RePEc:taf:apeclt:v:22:y:2015:i:5:p:349-355
    DOI: 10.1080/13504851.2014.943877
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    More about this item

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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