The Rise of Second-Rank Cities: What Role for Agglomeration Economies?

In the last 15 years, empirical evidence has emerged about the fact that European first-rank cities have not always led national economic performance, and when they did, the difference between first- and second-rank cities in explaining national growth has not been significant. A recent work [Dijkstra, L., Garcilazo, E. they are taken for granted in small- and medium-sized cities and only in large cities will the problem of a downturn in urban returns to scale emerge. In this paper, a more complex view is assumed, claiming that the oversimplified interpretation that urban economic performance simply depends on the exploitation of agglomeration economies and that these agglomeration economies merely depend on urban size alone should be abandoned. Some already existing theoretical frameworks in urban economics can help in recalling the role of possible bifurcations in the development path of cities, linked to the capability to attract or develop new and higher-order functions, increase internal efficiency and reach scale economies through cooperation networks with other cities (the city-network theory). All these elements work as conditions for fully exploiting agglomeration economies and ways to overcome urban decreasing returns.