Economic effects of increasing concentration of population and economic activity on different geographical scales

Abstract

The paper discusses development problems and challenges posed by the increasing concentration of population and economic activity on the international, national, regional and local scale. The processes of urbanization and concentration of population and economic activity in development centers and, especially, large cities progress dynamically until the moment that the income per head reaches the level of about USD 3,500. Then, they slow down and spread into the neighboring areas. Demographic concentration is faster than economic concentration and the pace and scale of convergence processes vary. The convergence of consumption indicators takes place faster than the convergence of any other economic development indicators, and the convergence of the standards of living as well as the concentration of economic activity occur most swiftly on the local scale. In step with economic growth location becomes less crucial for households but more and more important for businesses. A suitable instrument for measuring demographic and economic densities is the agglomeration index.