View Full Version : The City as Economic Engine

Nicholas Carey
04-18-2007, 06:55 PM
But you knew this at some level...


April 17, 2007
If You Can Make it There… Cities Are the Greatest Generators of Innovation and Wealth
Study finds increased social interaction of urban life fuels leads to a more productive populace

Are you one of those people who think of big cities as little more than hotbeds of pollution, crime and social inequalities? Well, think again. A new report in this week's Proceedings of the National Academy of Sciences USA confirms what many city dwellers, who account for the bulk of people on Earth, have claimed for years: Cities have an almost magical ability, spurred by increased human interaction, to stimulate innovation and increase wealth. The report also pooh-poohs the popular comparison of the growth of cities with biological organisms. An animal slows as it balloons in size ; in contrast, the researchers note, cities speed up as population and everything from crime to per capita income grow.

Cities create a sort of "urban economic miracle," says study co-author Luis Bettencourt, a research scientist in Los Alamos National Laboratory's Theoretical Division. "When you integrate all these people and all these activities and the struggle to make a living, total productivity increases," he says.

Bettencourt and his colleagues at Arizona State University (A.S.U.), Dresden University of Technology in Germany and New Mexico's Santa Fe Institute, modeled the growth of a city according to three categories of factors: material infrastructure (road surfaces, electrical cable, etc.), human needs (such as total energy consumption and housing) and patterns of social activity, including total bank deposits, research and development, new cases of AIDS and new patents filed. The researchers sifted through an extensive amount of data on many urban systems—mostly big American cities, but also European (primarily German) and Chinese urban areas.

The researchers mathematically modeled these factors according to population growth to see how each respond when more people move to a city. They found that human needs, such as employment, utility consumption and housing, correspond directly with the population: As the number of people doubles so does the need for housing, jobs and electricity infrastructure, which encompasses the number of roads, gasoline stations and the like already in place and does not necessarily keep pace with individual growth—the ratio of user to facility simply rises. (And so, for example, there are simply more customers at the available gas stations.) At the other extreme, researchers found that increases in social activity and production outpace population growth. In other words, if the number of city denizens doubles, these factors—both negative (crime) and positive (wealth creation, total wages and gross domestic product)—will more than double.

"These scaling laws give you some suggestion of …[how] … your city will behave as it grows," in terms of economic activity, resource consumption, etc., Bettencourt says, adding that smaller cities, like Portland, Ore., and huge epicenters, like New York City, fall along the same continuum and are subject to the same multipliers.

"The practical application of this work is that the problem is not large cities, the problem is the conditions in which some people live in large cities," says study co-author Jose Lobo, an economist at A.S.U.'s School of Sustainability in Tempe. "Policies should be directed to making large cities more livable"—for instance, enacting legislation or spending money to alleviate poverty and crime, the negative effects of growth.

Thomas Parris, director of sustainability programs at iSciences, a Burlington, VT, research company dedicated to improving understanding of sustainability, agrees that the main message of the paper is a recharacterization of cities so that better decisions can be made as urban areas continue to grow. "This is a fascinating paper that quantitatively explores the complex interactions between urbanization, sustainability and social innovation," he says. "Insights, such as those presented in this paper, will help guide our collective choices as the pace of socioecological change accelerates."

04-18-2007, 07:00 PM
Was it Plato? who said: 'Man moves to the city to find work, and stays for the good life.'

Bruce Hooke
04-18-2007, 07:12 PM
Very interesting and a bit depressing. I've been looking for ways to get out of the city, but it was becoming clear that doing so would not be the best move for my career, simply based on having to start over with building my network of contacts.

This study is saying that moving out of the city would not just be a temporary brake on my career, but would like be a more permanent choice to slow down my career.

04-18-2007, 07:14 PM
Not rocket science ... more people, more consumption, demand.

Easier delivery and logistics ...

Dan McCosh
04-18-2007, 08:06 PM
That's why people are flocking to Mexico City.

Bruce Hooke
04-18-2007, 08:10 PM
But if it was just more people, more consumption, more demand, then you'd think that in a rural areas or small cities, with fewer businesses to meet the demand, each individual business would still have the same number of customers as their urban counterparts, at least until we factor in "delivery." We should also include in "delivery" things like driving to meet with a customer about a project, and we should also include the customer driving to your location. You need more bank branches in a rural area to have a branch within a reasonable driving distance, even if that reasonable driving distance is farther than a city person would consider reasonable.

Still, I don't think delivery alone can explain it, especially when you start comparing mid-sized cities with large cities. In that comparison the whole delivery issue becomes moot for most businesses. In fact delivery may be easier in a mid-sized city where extremely congested traffic is less common.

For the rare businesses where there is only likely to be one even in a very large city, that larger city clearly represents a better marketplace to be in, but that is a tiny percentage of the businesses in most cities.

Dan McCosh
04-18-2007, 08:21 PM
Large cities at their best allow highly specialized activities to flourish--ranging from the creative arts to things like antique button shops. At their worst, they concentrate the effects of poverty and social anarchy. Mainly, the ones that attract the young as a destination are the ones that flourish.

04-18-2007, 08:24 PM
I think I've had just about enough of this so called innovation, and magical income improving social interaction. If there were no cities at all, I think the world might just be a better place. But then again, I have been called a contrary kinda guy.......

04-18-2007, 08:59 PM
When you have the only business of its kind in town, there's not much pressure to get more efficient. When you have a competitor next door, you have to strive harder. And that happens to every business in the city, they are all more efficient. I've seen it in the book business, and I'm sure it happens in every business.