Urban Growth in Germany – The Impact of Localization and Urbanization Economies

This study examines the impact of localization and urbanization economies as well as the impact of city size on urban growth in German cities from 2003 to 2007. Although, from a theoretical perspective, agglomeration economies are supposed to have positive impacts on regional growth, prior empirical studies do not show consistent results. Especially little is known about agglomeration economies in Germany, where interregional support policy and the characteristics of the federal system are further determinants of urban growth. The results of the econometric analysis show a Ushaped relationship between specialization and urban growth, which particularly holds for manufacturing industries. We do not find evidence for the impact of Jacobs-externalities; however, city size shows a positive (but decreasing) effect on urban growth.