Why regional capital status only sometimes enhances the growth of cities: Comparison of 1975 and 1998 Polish reforms

Abstract

This article presents empirical tests comparing the impact of Polish reforms, implemented in 1975 and 1998, on the development of cities that gained or lost their regional capital functions. Several theories (e.g. new economic geography) claim a positive relationship between the administrative status of capital cities and their economic and population growth. The variation of the role of the capital status in the economic development of the city may depend on the national context, such as the political system (democratic versus non-democratic) and the role of the public sector in the economy (employment in public administration, public investments). Most empirical studies so far have concentrated either on national capitals or on federal states. This article analyses two regional reforms that changed the administrative status of regional capitals in a unitary state, and indicates differences in the impacts of both reforms, as well as attempting to explain those differences. Using statistical methods based on a quasi-experimental design (difference-in-differences, synthetic control), we conclude that the impact of gaining the status of regional capital on the development of cities as a result of the 1975 reform was more evident compared with the consequences of losing that status in 1998.