Determinants of city growth in Brazil

Abstract

In this paper, we examine the determinants of Brazilian city growth between 1970 and 2000. We consider a model of a city, which combines aspects of standard urban economics and the new economic geography literature. For the empirical analysis, we constructed a dataset of 123 Brazilian agglomerations, and estimate aspects of the demand and supply side as well as a reduced form specification that describes city sizes and their growth. Our main findings are that decreases in rural income opportunities, increases in market potential for goods and labor force quality and reduction in intercity-transport costs have strong impacts on city growth. We also find that local crime and violence, measured by homicide rates impinge on growth.

Market Potential and City Growth: Spain 1860-1960

“…Their results are much more modest indicating that a 1% increase in market potential leads to a 0.16% increase in value added for the city. Finally, da Mata et al (2007) analyze the determinants of city growth for Brazilian cities from 1970 to 2000 and report smaller values than the two studies discussed above.…”

Agglomeration, Congestion, and U.S. Regional Disparities in Employment Growth

“…To derive the employment growth model, consider first the following labor demand function (da Mata et al, 2007): 5 For instance, doubling population increases the cost of living in U.S. cities by 16 percent. 6 Because of identification problems, some articles (e.g., Gibbons and Overman, 2012;McMillen, 2012) raise concerns on the use of spatial econometrics to fix the unknown misspecification of the models.…”

“…Suppose capital rental rate is the same across counties (da Mata et al, 2007). Substituting equation (2) into (1), taking log on both sides, and differentiating it with respect to time, we obtain the growth rate of labor demand in county c:…”

Addressing key ecological questions to support policy-making in Brazil

“…Nowadays, 90% of Brazil's gross domestic product (GDP) is created in cities (da Mata et al, 2007). In response to the urbanisation process, natural areas were and are being increasingly occupied and degraded (Amaral et al, 2012), promoting a scenario of illegal occupations and financial speculation.…”