Working Paper
Agglomeration Index

A common challenge in analyzing urbanization is the data. The United Nations (UN) compiles information on urbanization (urban population and its share of total national population) that is reported by various countries but there is no standardized definition of ‘urban’, resulting in inconsistencies. This situation is particularly troublesome if one wishes to conduct a cross-country analysis or determine the aggregate urbanization status of the regions (such as Asia or Latin America) and the world. This paper proposes an alternative to the UN measure of urban concentration that we call an agglomeration index. It is based on three factors: • Population density • The population of a ‘large’ city centre • Travel time to that large city centre. The main objective in constructing this new measure is to provide a globally consistent definition of settlement concentration in order to conduct cross-country comparative and aggregated analyses. As an accessible measure of economic density, the agglomeration index lends itself to the study of concepts such as agglomeration rents in urban areas, the ‘thickness’ of a market, and the travel distance to such a market with many workers and consumers. With anticipated advances in remote sensing technology and geo-coded data analysis tools, the agglomeration index can be further refined to address some of the caveats currently associated with it.