Growing Through Cities in Developing Countries

56 Pages Posted: 20 Apr 2016

See all articles by Gilles Duranton

Gilles Duranton

University of Pennsylvania - Real Estate Department

Date Written: March 1, 2014


This paper examines the effects of urbanization on development and growth. It begins with a labor market perspective and emphasizes the importance of agglomeration economies, both static and dynamic. It then argues that more productive jobs in cities do not exist in a void and underscores the importance of job and firm dynamics. In turn, these dynamics are shaped by the broader characteristics of urban systems. A number of conclusions are drawn. First, agglomeration effects are quantitatively important and pervasive. Second, the productive advantage of large cities is constantly eroded and must be sustained by new job creation and innovation. Third, this process of creative destruction in cities, which is fundamental for aggregate growth, is determined in part by the characteristics of urban systems and broader institutional features. The paper highlights important differences between developing countries and more advanced economies. A major challenge for developing countries is to reinforce the role of their urban systems as drivers of economic growth.

Keywords: City Development Strategies, Transport Economics Policy & Planning, Labor Policies, National Urban Development Policies & Strategies, Urban Housing and Land Settlements

Suggested Citation

Duranton, Gilles, Growing Through Cities in Developing Countries (March 1, 2014). World Bank Policy Research Working Paper No. 6818, Available at SSRN:

Gilles Duranton (Contact Author)

University of Pennsylvania - Real Estate Department ( email )

Philadelphia, PA 19104-6330
United States

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