Spatial Heterogeneity and Economic Dualism in European Neighbourhood Policy Countries

Abstract

This article studies how spatial heterogeneity (by urban concentration) and economic heterogeneity (by economic dualism), which are being affected by trade integration with the EU, influence the growth of European Neighbourhood Policy countries (ENPs). It is proved that urban concentration is not always related to growth. Furthermore, the eastern and southern areas of the ENPs represent two different cases of heterogeneity. In the eastern ENPs the pattern of heterogeneity seems to generate more benefits for the metropolitan region and the country in comparison with the southern ENPs in which population accumulations do not function as critical foundations of their development process.

Notes

¹ Primate cities are very large cities, the dominant role of which may result in a lack of cities of intermediate sizes (Berry 1961).

² The objectives of the EU are economic integration, financial support, technical and policy support, and easier travel within the EU. The promotion of political stability and social cohesion has a national rather than a spatial selective character resulting in fewer spatial asymmetries and inequalities than generated by market-oriented economic reforms.

³ Urban concentration and trade are also found to be correlated in different causality forms: urban concentration causes low levels of trade, while the concentration in a nation’s largest urban nucleus falls as both the total population and the percentage of the agrarian population fall (Ades & Glaeser 1995).

⁴ Which is to say that the extent of decline does not change as one moves inland from a coastal port but is constant.

⁵ Both supporters of a positive and a negative association of trade openness in urban concentration agree that the most effective element for combating excessive concentration is the provision of good internal transportation infrastructures (Ades & Glaeser 1995; Henderson 2003).

⁶ See also Brülhart (2011).

⁷ According to Chakravorty (2000), edge areas refer to suburban and peri-urban areas.

⁸ Equally important factors in urban concentration are the national population, infrastructure and public infrastructure investments (Ades & Glaeser 1995). However, urban entities emerge, develop, decline and disappear as a consequence of, first, economic, and, later, political processes (Henderson 2003). In this context, a different strand of the literature has focused on the political economy of urban concentration and the role of political institutions in the facilitation of concentration (Ades & Glaeser 1995), excessive concentration (Krugman & Elizondo 1996) or decentralisation (Wheaton & Shishido 1981; Henderson 1988).

⁹ Many cities in Africa are economically marginalised in the new global economy. African cities often grow in spite of poor macroeconomic performance (Cohen 2006).

¹⁰ In this particular case, the time period has been extended in relation to the period under study at the regional level due to the plethora of data available at the country level and because this better depicts any trends revealed.

¹¹ It would also be interesting to investigate the spatial effects of the population changes for each ENP country. However, in many cases the number of regions is very small and the compilation and estimation of a spatial econometric model of population growth would be inappropriate. In the case of analysing the ENPs as a whole area and not by country, the spatial effects of population agglomerations or changes have not been important, thereby indicating insignificant cross-country or cross-border interactions.

¹² It is conceptualised by several notions in the literature: firstly the modern sector fails to transform the rest of the traditional part of the economy; secondly the modern sector is characterised by advanced technology and capital-intensive enterprises, while the traditional sector is labour intensive with a small enterprise size, local technology and lack of formal education entry requirements; and thirdly the modern part of the market encompasses a group of firms with high investment ability and profits being differentiated from the ‘backward’ sector that remains stagnant and unhealthy, generating vicious circles of dualism (Berger & Piore 1980).

¹³ Trade integration with the EU is estimated as follows: , where X_EU is the exports of a country to the EU and X is the total exports of a country.

¹⁴ Ravallion and Datt (1996) show that, ceteris paribus, agricultural and services sector growth mattered more for poverty reduction than manufacturing sector growth.

¹⁵ As central cities have a comparative advantage in commerce and grow with the volume of trade (Ades & Glaeser 1995).