Urbanization and regional production: Evidence for Ecuador by instrumental variables and spatial econometrics

Abstract:

The objective of this research is to empirically examine the incidence of the urbanization rate on regional per capita production in Ecuador. In order to correct the bias of endogeneity and the omission of spatial dependence, we used the method of instrumental variables in spatial econometrics. Based on the theoretical approach of Krugman (1991) and Henderson (1997), we find that the rate of urbanization has a strong positive relationship with regional per capita production. The regional production depends on the production of the neighboring regions. One possible policy implication derived from this research is that public investment should encourage productive specialization based on the endowments of each region to accelerate development.

Año de publicación:

2019

Keywords:

Fuente:

scopus