Early Urbanization and the Persistence of Regional Disparities within Countries
61 Pages Posted: 3 Feb 2017
Date Written: January 31, 2017
We explore the extent to which present day economic development at the sub-national level, captured by GDP per capita, urbanization, and night-time light density, is correlated to regional economic development in the year 1850. Drawing on historical city data, we construct a measure of urban population density and other features of urbanization in 1850 for as many as 2,054 sub-national regions covering 135 countries. In our baseline estimates, a one standard deviation increase in 1850 urban density raises 2005 GDP per capita by almost 10%. Further, presence of the largest national city in 1850 confers significant advantages to the region even 150 years later. Though our findings are robust to a large range of geographic and spatial controls, proximity to the coast and rivers continues to have a significant effect. While persistence is generally true, there is also considerable heterogeneity, with it being strongest in Asia and West Europe. Early urbanization is also associated with human capital and infrastructure differences across regions. Finally, for a limited sample of countries that were not subject to European colonization, we find that even urbanization in the year 1500 is significantly associated with modern development.
Keywords: Regional Economic Development, Persistence, Physical Geography, Urbanization
JEL Classification: N10, N90, O18, O47, R1
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