Policy Package 1. Level the Playing Field and the Opportunity for Human Development in Lagging Areas
dictatorship does not increase urban population—which makes sense if an effect of dictatorship is to attract people from secondary cities to the center of power in the main city. Finally, the relationship between governance indicators and the World Bank’s (2009a) agglomeration index was estimated for a worldwide sample of 182 countries. The governance indicators in question were the index of political rights from Freedom House (2009) and the index of political stability of Kaufman, Kraay, and Mastruzzi (2009). The exercise also took account of a number of other factors known or thought to be related to agglomeration: GDP per capita, population size, land area, trade openness, road quality, and the share of the population employed in agriculture. A dummy variable for MENA economies was also added. The variables explained 75 percent of the variation in the agglomeration index. The coefficients on GDP represent the strong link between agglomeration and growth. The MENA dummy variable was not statistically significant, suggesting that the other variables in the equation captured all of MENA’s special characteristics. The key finding was the extremely strong negative correlation between political rights and the agglomeration index, significant at the 1 percent level. In other words, more political rights meant less agglomeration. This correlation was significant for all the specifications tested. This matters for the MENA13, which has a lower average political rights score (0.18) than non-MENA lower-middle-income economies (0.26), other developing countries (0.31), and the rest of the world (0.40). The impact of MENA’s low political rights on agglomeration, though not massive, is very clear. If MENA13 economies’ political rights indicator increased to that of the average country in the world, this would be accompanied by a 4–percentage point reduction in the agglomeration index. What is happening here? One can think of political rights as spreading political accountability not only across the population but also across places. Democratic processes and public service accountability give citizens across the territory a voice in policy making. But in the absence of formal mechanisms for sharing political accountability across the territory politicians and bureaucrats are disproportionately influenced by the people who are physically closest to them: their face-to-face contacts and the metropolitan population more generally. Contemporary drivers of spatial bias go back to MENA’s colonial history. The institutions responsible for spatial policies are themselves the product of earlier spatial policies (North 1990; Kuran 2004). Yesterday’s historical anti–poor area biases thus constrain the performance of today’s explicit pro–poor place policies. In the MENA region, these patterns
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