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Trade Openness and Urban Concentration: New Evidence

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  • Nitsch, Volker

Abstract

In this paper, I reexamine the empirical relationship between trade openness and urban concentration. Using a panel data set of more than 110 countries for the period from 1970 through 2000, I find that previous results of a negative association between trade openness and the size of a country's largest city are not robust. More importantly, the openness-concentration link disappears completely, once reverse causality and the endogeneity of trade are accounted for. There is no evidence that trade liberalization significantly reduces urban concentration. Similarly, openness is insignificant if trade is instrumented by geographic characteristics.
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Suggested Citation

  • Nitsch, Volker, 2006. "Trade Openness and Urban Concentration: New Evidence," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 34470, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    • Handle: RePEc:dar:wpaper:34470
    Note: for complete metadata visit http://tubiblio.ulb.tu-darmstadt.de/34470/
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    Cited by:

    1. Giray Gozgor & Baris Kablamaci, 2015. "What happened to urbanization in the globalization era? An empirical examination for poor emerging countries," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 55(2), pages 533-553, December.
    2. Mauricio Ramírez Grajeda & Ian M. Sheldon, 2015. "Trade Openness and City Interaction," World Scientific Book Chapters, in: Amitrajeet A Batabyal & Peter Nijkamp (ed.), THE REGION AND TRADE New Analytical Directions, chapter 10, pages 267-318, World Scientific Publishing Co. Pte. Ltd..
    3. Atsumi, Toshihiro, 2010. "Silk, regional rivalry, and the impact of the port openings in nineteenth century Japan," Journal of the Japanese and International Economies, Elsevier, vol. 24(4), pages 519-539, December.
    4. Ernesto M. Pernia & Janine Elora M. Lazatin, 2016. "Do Regions Gain from an Open Economy?," UP School of Economics Discussion Papers 201602, University of the Philippines School of Economics.
    5. Zhang, Yuan & Wan, Guanghua, 2017. "Exploring the Trade–Urbanization Nexus in Developing Economies: Evidence and Implications," ADBI Working Papers 636, Asian Development Bank Institute.
    6. Andrés Rodríguez-Pose, 2012. "Trade and Regional Inequality," Economic Geography, Taylor & Francis Journals, vol. 88(2), pages 109-136, April.
    7. Sabyasachi Tripathi, 2019. "Do economic reforms promote urbanization in India?," Asia-Pacific Journal of Regional Science, Springer, vol. 3(3), pages 647-674, October.
    8. 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.
    9. Kandogan, Yener, 2014. "The effect of foreign trade and investment liberalization on spatial concentration of economic activity," International Business Review, Elsevier, vol. 23(3), pages 648-659.
    10. Gilles Duranton, 2008. "Viewpoint: From cities to productivity and growth in developing countries," Canadian Journal of Economics, Canadian Economics Association, vol. 41(3), pages 689-736, August.
    11. Frederick van der Ploeg & Steven Poelhekke, 2008. "Globalization and the rise of mega-cities in the developing world," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 1(3), pages 477-501.
    12. Toshihiro Atsumi, 2010. "Trade liberalization and the modern metropolis," Discussion Papers 10/02, University of Nottingham, GEP.
    13. Toshihiro Atsumi, 2009. "Silk, Regional Rivalry, and the Impact of the Port Openings in Nineteenth Century Japan," Discussion Papers 09/15, University of Nottingham, GEP.
    14. Ardeshiri, Mansour & Moghaddasi, Reza & Yazdani, Saeed & Mohamadinejad, Amir, 2019. "Trade Openness and Spatial Distribution of Manufacturing Industries: Iranian Provincial Evidence," Asian Journal of Applied Economics/ Applied Economics Journal, Kasetsart University, Faculty of Economics, Center for Applied Economic Research, vol. 26(1), pages 21-44, June.
    15. Gilles Duranton, 2007. "From cities to productivity and growth in developing countries," Working Papers tecipa-306, University of Toronto, Department of Economics.
    16. CRESPO, Nuno & FONTOURA, Maria Paula, 2013. "Regional Integration And Internal Economic Geography - An Empirical Evaluation With Portuguese Data," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 13(2), pages 99-116.
    17. Marius Brülhart, 2011. "The spatial effects of trade openness: a survey," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 147(1), pages 59-83, April.
    18. Roberto Ezcurra & Alba Villar, 2021. "Globalization and spatial inequality: Does economic integration affect regional disparities?," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 67(2), pages 335-358, October.
    19. Hasan ENGIN DURAN & Sevim PELIN OZKAN, 2015. "Trade Openness, Urban Concentration And City-Size Growth In Turkey," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(1), pages 35-46, June.

    More about this item

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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