Munich Personal RePEc Archive

Which comes first—urbanization or economic growth? Evidence from heterogeneous panel causality tests

Liddle, Brantley and Messinis, George (2013): Which comes first—urbanization or economic growth? Evidence from heterogeneous panel causality tests.

WarningThere is a more recent version of this item available.
[img]
Preview
PDF
MPRA_paper_53983.pdf

Download (1MB) | Preview

Abstract

Heterogeneous panel causality tests are employed to consider the relationship between urbanization change and economic growth (i.e., differenced logged GDP per capita). Income- and geography-based panels demonstrated substantial variation in that relationship. Urbanization caused economic growth in high income countries, but non-causality could not be rejected for both middle-income and Latin American countries. A bi-directional, equilibrium relationship was uncovered for low-income, predominately African countries where economic growth had a positive, causal effect on urbanization, but where urbanization, in turn, had a negative, causal effect on economic growth. Hence, urbanization and economic growth either co-evolve, as they do for low income/African countries and (likely) for high income countries, or else the two processes are somewhat decoupled, as they are for middle income and Latin American countries, despite their high degree of correlation.

Available Versions of this Item

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.