Agglomeration without diffusion: market access and persistence

Source abstract

This paper examines whether economic growth diffuses within a strongly monocentric regional system. Focusing on the Warsaw metropolitan region, it investigates whether market access supports spatial diffusion or instead reinforces existing spatial hierarchies. Using a balanced panel of 314 municipalities over the period 2007–2024, the analysis estimates dynamic Spatial Durbin Models with municipality and time fixed effects and derives short- and long-run direct and indirect effects. The results reveal a clear asymmetry between municipal revenue growth and the persistence of municipal own revenue levels. Municipal revenue growth exhibits strong mean reversion, while municipal own revenue levels remain highly persistent, indicating stable spatial hierarchies. Market access does not appear to generate sustained local growth; instead, its effects are primarily associated with spatial interactions that are weak or negative in the growth equation. These findings suggest that within the studied metropolitan region, agglomeration advantages may remain spatially bounded and do not necessarily translate into cumulative diffusion across surrounding areas. This has important implications for regional planning and spatial policies, indicating that metropolitan growth alone may be insufficient to reduce territorial disparities without targeted interventions.