Discussion paper

DP6941 Agglomeration and Growth: Cross-Country Evidence

We investigate the impact of within-country spatial concentration of economic activity on country-level growth, using cross-section OLS and dynamic panel GMM estimation. Agglomeration is measured alternatively through measures of urbanization and through indices of spatial concentration based on data for sub-national regions. Across estimation techniques, data sets and variable definitions, we find evidence that supports the "Williamson hypothesis": agglomeration boosts GDP growth only up to a certain level of economic development. The critical level is estimated at some USD 10,000, corresponding roughly to the current per-capita income level of Brazil or Bulgaria. This implies that the tradeoff between national growth and inter-regional equality may gradually lose its relevance.


Brülhart, M and F Sbergami (2008), ‘DP6941 Agglomeration and Growth: Cross-Country Evidence‘, CEPR Discussion Paper No. 6941. CEPR Press, Paris & London. https://cepr.org/publications/dp6941