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Economic development and industrial concentration: An inverted U-curve

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  • Junius, Karsten

Abstract

This paper sets up an economic geography model to show the endogenous forces that determine the degree of industry concentration in the course of economic development. The model includes centrifugal forces, such as home market effects and access to intermediate suppliers, and centripetal forces, such as demand pull of dispersed resources and congestion effects. Economic development increases the size of the industrial sector in terms of employment relative to the size of the agricultural sector. The relative strength of centripetal and centrifugal forces depends on the initial industry distribution, transport costs, and the level of economic development. These parameters lead to an inverted U-curve pattern of industry concentration, which is first increasing and then decreasing with per capita GDP. The model shows why the curve is more pronounced in newly industrializing economies than in industrialized countries, thereby explaining exceptionally high primacy ratios in today's developing countries.

Suggested Citation

  • Junius, Karsten, 1996. "Economic development and industrial concentration: An inverted U-curve," Kiel Working Papers 770, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:770
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    Cited by:

    1. Nunnenkamp, Peter, 1997. "Aufhol- und Abkopplungsprozesse im europäischen Binnenmarkt," Open Access Publications from Kiel Institute for the World Economy 1715, Kiel Institute for the World Economy (IfW Kiel).
    2. Knaap, T., 1998. "A survey of complementaries in growth and location theories," Research Report 98C44, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    3. repec:dgr:rugsom:98c44 is not listed on IDEAS
    4. Junius, Karsten, 1997. "The determinants of urban concentration," Kiel Working Papers 835, Kiel Institute for the World Economy (IfW Kiel).

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    More about this item

    Keywords

    Economic Geography; Agglomeration; Industrialization; Development;
    All these keywords.

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • 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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