Abstract:
The link between urban concentration (primacy) and economic growth at country level is not straightforward, as there are benefits as well as costs associated with urban primacy. Recent empirical evidence suggests a differential negative effect of concentration in Sub-Saharan Africa compared to the rest of the world. This paper revisits the literature on urban concentration and economic growth to shed some light on these recent results. The main contribution of the paper is to show how differentiated effects of urban primacy on economic growth can be accounted for by considering a role for the quality of the urban environment (in terms of urban infrastructure). The role of urban infrastructure is found to be robust to a long list of controls, different specifications, different estimation techniques, and potential bias from simultaneity and measurement error.