Urban Concentration and Economic Growth: The Role of Second‐Tier Cities

ABSTRACT Urban primacy has significantly increased in some advanced countries during the process of urbanization, potentially hindering economic growth. This paper empirically examines the relationships between urban concentration and economic growth. Using fixed effects (FE) estimations with OECD country panel data, we find that increased urban concentration within non‐primary cities can promote national economic growth, potentially by mitigating excessive urban primacy—the disproportionate concentration of economic activity in the largest city. These findings suggest that in countries with high urban primacy, policies focused on fostering the development of relatively large second‐tier cities can effectively address excessive urban primacy and support more balanced growth.