Trade Openness and Employment, Implications on Urbanisation in Sub-Saharan Africa

Adou, Niango Sika Antoine Brice (2020): Trade Openness and Employment, Implications on Urbanisation in Sub-Saharan Africa.

Abstract

Why are African countries urbanizing so fast? How do cities promote growth and why is it important to solve urban issues in Africa? In the context of higher push for trade liberalisation multilaterally, it is not trivial to ask these set of question. In this study the main objective is to check the influence of trade openness of African economies on their urbanisation rate. We also assess, how evolution of non-agricultural employment has also impacted this rate. We used panel data specifications, both in static and dynamic design. The data used are collected between 1990 and 2019 on 38 African countries. Although generally urbanisation has increased during recent years in Africa, regions have experienced different pathways in the process. The results show that both trade openness and non-agricultural employment have been motivation for people to urbanise over years, in Africa. When we consider countries with high amount of people living in slums, they are more driven by employment purpose. Other variables such as per capita GDP and the fertility rate have positive and significant influence, while FDI and national investment have mixed impact. It is important to collaborate in a continental level to take advantage of the rapid urbanisation.

• Item Type: MPRA Paper
• Language: English
• Keywords: Urbanisation, Trade Openness, Employment, Panel Data
• Subjects: F - International Economics > F1 - Trade > F14 - Empirical Studies of Trade; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O18 - Urban, Rural, Regional, and Transportation Analysis ; Housing ; Infrastructure; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R11 - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

References

Berry, B. 1961. City Size Distributions and Economic Development. Economic Development and Cultural Change 9: 573–587

Borck, R., & Pflüger, M. (2019). Green cities? Urbanization, trade, and the environment. Journal of Regional Science, 49(0), 0–3. https://doi.org/10.1111/jors.12423

Catin, M., Hanchane, S., & Kamal, A. (2008). Urbanisation, primatie et étapes de développement : existe-t-il une courbe en cloche ? Region et Developpement, 27, 83–108.

Collier, P., & Venables, A. J. (2016). Urban infrastructure for development. Oxford Review of Economic Policy. https://doi.org/10.1093/oxrep/grw016

Davis, J. C., & Vernon Henderson, J. (2003). Evidence on the political economy of the urbanization process. Journal of Urban Economics. https://doi.org/10.1016/S0094-1190(02)00504-1

Duranton, G. (2015). Growing through cities in developing countries. World Bank Research Observer. https://doi.org/10.1093/wbro/lku006

Engin Duran, H., & Pelin Özkan, S. (2015). Trade openness, Urban concentration and city-size growth in Turkey. Regional Science Inquiry.

Fallis, A. ., Edward L. Glaeser, Joshua D. Gottlieb, Bosquet, C., Combes, P. P., Alonso-Villar, O., … Weinstein, D. E. (2019). Transportation Costs and the Spatial Organization of Economic Activity. Journal of Urban Economics, 5(1), 707–731. https://doi.org/10.1111/1467-9701.00160

Fujita, M., Krugman, P., & Venables, A. J. (1999). The spatial economy: Cities, regions, and international trade. In Southern Economic Journal (Vol. 67). https://doi.org/10.2307/1061487

Glaeser, E., & Kahn, M. (2008). The greenness of cities. Cambridge, MA.

Glaeser, E. L., & Gottlieb, J. D. (2008). The economics of place-making policies. Brookings Papers on Economic Activity.

Henderson, V. (2003). The urbanization process and economic growth: The so-what question. Journal of Economic Growth. https://doi.org/10.1023/A:1022860800744

Holmes, T. J., Lee, S., & Glaeser, E. L. (2010). Cities as Six- by- Six- Mile Squares Zipf ’ s Law ? In Agglomeration Economics.

Krugman, P. (1991). Increasing Returns and Economic Geography. Journal of Political Economy, 99(3), 483–499. https://doi.org/10.1086/261763

Lall, S. V., Henderson, J. V., & Venables, A. J. (2017). Africa’s Cities: Opening Doors to the World. In Africa’s Cities: Opening Doors to the World. https://doi.org/10.1596/978-1-4648-1044-2

Linsky, A. S. (1965). Some generalizations concerning primate cities. Annals of the Association of American Geographers. https://doi.org/10.1111/j.1467-8306.1965.tb00531.x

Lu, Y., Wang, J., & Zhu, L. (2019). Place-Based Policies, Creation, and Agglomeration Economies: Evidence from China’s Economic Zone Program. American Economic Journal: Economic Policy. https://doi.org/10.1257/pol.20160272

Michaels, G., Rauch, F., & Redding, S. J. (2012). Urbanization and structural transformation. Quarterly Journal of Economics, 127(2), 535–586. https://doi.org/10.1093/qje/qjs003

Zhang, Y., & Wan, G. (2017). Exploring the Trade–Urbanization Nexus in Developing Economies: Evidence and Implications. Ssrn, (636). https://doi.org/10.2139/ssrn.2928701