Romes without empires: Urban concentration,political competition,and economic development |
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| Institution: | 1. Department of Economics, Florida International University, FL, 33199, USA;2. Department of Economics, Deakin University, Victoria, 3125, Australia;1. Department of Environmental Economics and Management, The Hebrew University of Jerusalem, Israel;2. Department of Environmental Economics and Management and the Center for Agricultural Economic Research, The Hebrew University of Jerusalem, Israel;1. Etla Economic Research, Finland;2. Ministry of Economic Affairs and Employment, Finland;3. University of Helsinki, Finland;1. Swiss Coordination Centre for Research in Education, Switzerland;2. ifo Institute, University of Munich, Germany;3. CESifo, Germany;4. University of Konstanz, Germany;5. IZA, Germany;6. ROA, The Netherlands;7. University of Bern, Switzerland;1. CERGE-EI, a joint workplace of Charles University and the Economics Institute of the Czech Academy of Sciences, Politickych veznu 7, 111 21 Prague, Czech Republic;2. IAE-CSIC and Barcelona GSE, Campus UAB, Bellaterra, Barcelona, 08193, Spain |
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| Abstract: | Many developing economies are characterized by the dominance of a super metropolis. Taking historical Rome as the archetype of a city that centralizes political power to extract resources from the rest of the country, we present evidence that urban concentration, as proxied by the limited number of cities with national soccer league titles in a country, negatively affects long-run economic development. Utilizing cross-country data from 103 countries observed over half a century (1960–2009), we show that there is a strong and robust negative relationship between concentration of economic wealth and political power across urban nodes and long-run economic outcomes, including log per capita income and average years of schooling. The explanation that best seems to fit the evidence runs from centralization of economic power to lack of inter-elite political competition across space to inferior economic outcomes in the long-run. To establish causality we use identification through heteroskedasticity, which does not rely on standard exclusion restrictions. |
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