ABSTRACT
SUMMARY: This chapter seeks to explain urban growth by looking at the effects of traditional, geographical externality and socio-political variables on productivity, capital and labour growth, respectively, using data sets constructed at the city-industry level for a cross section of European cities. The conjecture that geographic externality and socio-political factors all vary significantly with aggregate growth (though in very specific ways) is empirically explored. For example, the size of a city (a measure of the degree of urbanisation) is uncorrelated with output growth, positively correlated with labour growth, and negatively correlated with capital growth. No one extant theory of growth accounts simultaneously for all the observed phenomena. More importantly, significant interactions are found between the variables that have not been addressed within the theoretical literature that drive the impact of these sources on growth. The paper concludes that a better understanding of the empirical relationships between various growth sources is needed and that, to be complete, theories of urban growth need to respect and understand the importance of such interactions.
