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NBER Working Papers and Publications
|April 1994||Evidence on Growth, Increasing Returns and the Extent of the Market|
with Edward L. Glaeser: w4714
We examine two sets of economies, (19th century U.S. states and 20th century less developed countries) where growth rates are positively correlated with initial levels of development to document how these dynamic increasing returns operate. We find that open economies do not display a positive connection between initial levels and later growth; instead, closed economies do display this positive correlation (i.e. divergence). This evidence suggests that increasing returns operate by expanding the extent of the market (as in the big push theories of Murphy, Shleifer and Vishny (1989)). For U.S. states, we also find that larger markets enhance growth by increasing the division of labor. Among LDCs, while more diversified production increases growth, diversification is negatively associate...
Published: Quarterly Journal of Economics, Vol. 114, no. 3 (August 1999): 1025-1045. citation courtesy of
|Trade and Circuses: Explaining Urban Giants|
with Edward L. Glaeser: w4715
Using theory, case studies, and cross-country evidence, we investigate the factors behind the concentration of a nation's urban population in a single city. High tariffs, high costs of internal trade, and low levels of international trade increase the degree of concentration. Even more clearly, politics (such as the degree of instability) determines urban primacy. Dictatorships have central cities that are, on average, 50 percent larger than their democratic counterparts. Using information about the timing of city growth, and a series of instruments, we conclude that the predominant causality is from political factors to urban concentration, not from concentration to political change.
Published: Quarterly Journal of Economics, Vol. 110, no. 1 (1995): 195-227. citation courtesy of