Urban spatial structure and economic growth in Spanish metropolitan areas

There is a large literature on the existence of agglomeration economies, as shown in the surveys by Moomaw (1983) or Gerking (1993). The benefits of these economies arise from multiple sources, but some negative externalities might also emerge. Within the hierarchical urban system, cities at different ranks (different size) take on different economic functions with variant 'efficient sizes' (Capello and Camagni, 2000) and, indeed, the distributions of cities' relative size have been stable in many countries (Black and Henderson, 1999; Eaton and Eckstein, 1997; Nitsch, 2005) and, in many cases they obey the Zipf's law (Gabaix, 1999). If a city is able to adjust its spatial structure to offset the negative exter- nalities due to its size, it will be able to keep growing. If that is not possible, it might be more convenient to transit from a monocentric to a polycentric structure, which is usually considered as a possible strategy to eliminate diseconomies in urban economics (Sasaki and Mun, 1996; Fujita et al., 1997). However, there is little empirical evidence on the links between urban spatial structure and growth---which are usually understood within the context of urban evolution. One notable exception is the study by Cervero (2001), where it is argued that more compact, centralized and accessible cities are usually associated with higher productivity levels. In this context, this paper explores the links between urban spatial structure and economic growth in metropolitan areas in Spain, where this type of analysis is virtually non-existent. However, it is a relevant policy issue due to a variety of reasons such as the increased urban sprawl and the different costs it brings about. The analysis will also enable to evaluate if there is any particular type of urban spatial structure which prevails on the grounds of its superior efficiency, together with evaluating if an efficient urban spatial structure hinges on the size and other attributes specific to each particular metropolitan area.