Agglomeration, Growth and Regional Equity: An Analysis of Agriculture- versus Urban-led Development in Uganda

Abstract

Traditional development models focus on the sector rather than location of growth. Advocates of agriculture-led strategies emphasise agriculture's strong growth linkages and potential to raise rural incomes. The new economic geography literature, however, provides theoretical support for urban industry-led development, which generates positive agglomeration effects of concentrating populations and economic activity. This debate is important for Sub-Saharan Africa, where agriculture dominates but where rapid urbanisation is occurring. We use an empirically calibrated economywide model with migration and agglomeration to estimate impacts of three investment strategies for Uganda—a fast growing country with wide rural–urban and regional disparities. First, our results indicate that a transport corridor connecting poorer northern regions to the rapidly growing south provides marginal benefits to northern households since northern producers are constrained by low productivity. Secondly...