Trade Openness and City Interaction

The New Economic Geography framework supports the idea that international economic integration plays an important role in second nature geography such as the size of cities. By using Fujita et al. (1999) as a theoretical motivation, information on the most important cities of 84 countries from 1970 to 2000, and spatial econometric of secondary cities increase, as a result of more exposure to external trade. Similar outcomes are observed for cities with a population over a million. However, cities that represent a large fraction of the urban population grow independently of their position in the urban ranking. Such results are in general consistent for different definitions of trade openness. Furthermore, an implication of international trade openness is higher levels of internal trade among secondary cities.