| The purpose of this research is to identify both in theory and then empirically the relation between fundamental economic and geographic characteristics of a country and the optimal structure of city sizes and then to determine the effect of urban structure on a country's economic development.; First, in a stylized theoretical model, urban structure is modeled as the optimal ratio of secondary to primary city population. This approach contrasts with the previous literature in which the fraction urbanized, or urbanization ratio or the ratio of the primary city to total urban population, primacy, is related to differences in economic development. Based on the theory, the relation between observed ratios of secondary and primary city sizes (secondary ratio) and fundamental geographic characteristics of market economies are estimated in order to predict optimal secondary ratios.; Second, the deviation between actual and optimal secondary ratio is added as an explanatory variable to standard cross-country models of economic growth to determine what, if any, contribution the deviation of actual and optimal urban structure may have to lower rates of economic growth. The results generally agree with expectations that deviation of the actual from the optimal ratio has negative, although often non-significant, effects on GDP/capita and its rate of growth. |
