Agglomeration of population and employment in the urbanization - industrialization interaction: The case of Izmir

Abstract

As production and economic activities shaped the growth of cities during the pre-industrial era, they are still the most important factors explaining modern urbanization. Economic restructuring is being reshaped with agglomeration economies, bringing spatial restructuring with it. Regional economic growth, emergence of new centers and production foci are formed in the equilibria of positive and negative externalities of agglomeration. Positive externalities do not arise solely from internal economies of scale related to factors of production such as easy accessibility in the region. It also results from external economies of scale, including economies of localization and urbanization. On the other hand, as cities grow the attractiveness of large agglomeration and advantages of economies of scale decrease. Negative externalities in the larger agglomerations may eventually lead to decreasing returns to scale in cities. Economic view of regional science and geography considers cities maintaining equilibrium between two competing forces, i.e., centripetal forces (agglomeration) and centrifugal forces (dispersion). This study examines recent agglomeration and dispersion processes in the settlement pattern from the relationship between urbanization and economic growth. To do so, we take Izmir as a case and use general explanatory variables such as population and employment. Specifically, we investigate spatial agglomeration in the Izmir city region and metropolitan area by using population and employment data of 2009 and 2019. Based on empirical results, we discuss new sub-regions, urban centers, and clustering that emerged due to economies of scale as well as positive and negative externalities of agglomeration.