there  are lot of interesting studies which suggests that too much of clustering of economies in urban areas can leads to dis-agglomeration of economies. please read "Critical commentary. Informality in space :Understanding Agglomeration economies duuring economic development", by Ann Moreno Murray. Available on website.   

Maybe the paper Population Distribution, Urbanization, Internal Migration and Development: An International Perspective published by the UN could help you. Is available on internet. 

Dear Vishal and Juan,

Much thanks to both of you for the research leads!

Hi

This question can be considered based on the following three readings which you may find useful. 

Storper, M. (2010) “Why Does City Grow? Specialisation, Human Capital or Institutions?”. Urban Studies, 47(10): 2027-2050.

Tolley, G.S., and Thomas, V. (1987) The Economics of Urbanisation and Urban Policies in Developing Countries. Washington.DC: The World Bank.

Porter, M.E. (1997) “ New Strategy for Inner-City Economic Development”. Economic Development Quarterly, Vol.11, No.1, pp.11-27.

Dear M. Satish Kumar,

Thanks for the research leads, particularly Porter (1997)- did not realize he did work on urbanism as well, more familiar with his books and HBR articles.

Best Regards,

Bernard

Dear Shian-Loong Bernard Lew

You are welcome. Porter's work on the urban issues are interesting and so is Storper.

Best

Satish

Dear Juan,

Thanks for the lead on the UN article, the notion of internal migration may provide a formal model for "crowding out" 

Best Regards,

Bernard