55th Congress of the European Regional Science Association: "World Renaissance: Changing roles for people and places", 25-28 August 2015, Lisbon, Portugal
This paper sheds light on the potential effect that Information and Communication Technologies (ICT) might generate on cities and spatial structure. The extensive theoretical discussion and speculation on how cities and geography might be affected by digital technologies, which took place before the actual adoption of such technologies, have not been coupled by in depth empirical analysis to verify early predictions. The few examples of such studies, which approached such research questions both analytically and empirically, were insightful, but their results were to a certain extend contradictory. Most importantly, these studies took place before digital technologies such as the Internet had matured. Nowadays, these technologies have been adopted widely and we are thus in a better position to approach empirically such a research question and quantify the relation between ICTs and spatial structure. The preliminary empirical analysis presented in this paper suggests significant causal effects that ICT penetration generates on spatial structure. Internet and mobile phone penetration in non-EU/NAFTA countries have led to more spatially dispersed population and more uniform city size distribution. However, such effects are not present in non-EU/NAFTA countries, a phenomenon which might be related to the maturity of urban systems and advanced state of technological adoption in those countries. The proposed methodology, which relies on extensive econometric investigations with a number of models includes 2SLS regressions with instrumented variables, resulted to estimations which are robust against potential endogeneity problems.