Cities and Economies

Yeong-Hyun Kim, John Rennie Short

• Publisher: Routledge
• Year: 2007
• ISBN:
  9781134214518
• Edition: 1
• Topic: Physical Sciences
• Subtopic: Geography
• Index: Geography

Cities and Economies explores the complex and subtle connections between cities and economies. The rise of the merchant city, the development of the industrial city and the creation of the service-dominated urban economy are all explored, along with economic globalization and its effects on cities in both developed and developing economies. This book provides a thorough examination of the role of the city in shaping economic processes and explains the different effects that economies have on cities. It provides an invaluable and unrivaled guide to the relationship between urban structure and economic processes as they compare and contrast across the world.

The authors examine the complex relationships between the city and the economy in historical and global contexts, as well as evaluating the role of world cities, the economic impacts of megacities and the role of the state in shaping urban economic policies. They focus on the ways in which cities have led, and at the same time adapted to, economic shifts. Large cities are viewed as the centres of regional and national economies, while a small number are defined by their centrality in the global economy.

The book:

• examines key ideas and concepts on the economic aspects of urban change
• explores the changing nature of urban economies and their relationships with changes at the national and global levels
• compares current economic issues and policies of large cities around the world
• explores the links between globalization and economic changes in cities and the growing competitions between them.

Cities and Economies uses case studies, photographs and maps expanding across the US, Western Europe and Asia. Written in a clear and accessible style, the book answers some fundamental questions about the economic role of cities. It is an essential text for students of geography, economics, sociology, urban studies and urban planning.

1
Cities and economies

Learning objectives

To look at urban growth/decline in the historical and global contexts

To think about the causes and outcomes of urban growth/decline

To understand the significance of large urban agglomerations in the national and global economies

To describe the difference between world cities and third world cities

The relationship between cities and economies has been examined by many disciplines at various sites using different research methods. Most of the studies revolve around these fundamental questions:

Why do cities exist?

How did early cities emerge?

Why do some cities grow while others stagnate or decay?

How can government policies help urban economies develop, or prevent their decline?

Who benefits the most, and the least, from urban economic growth?

What roles do cities, particularly large ones, play in regional and national economic development?

What impact does economic globalization have on cities?

Different disciplines traditionally ask, and answer, the questions differently. Urban economists tend to look for the underlying causes of the spatial concentration of economic activities. In contrast, urban geographers tend to focus more on the outcomes of such concentration that include population growth, residential segregation and suburbanization. Finally, urban policy-makers concentrate more on problems caused by agglomeration, such as traffic congestion and crime.

In this book we focus on three interrelated topics, which will echo throughout the rest of the text: urban growth and decline; large cities in the national and global economies; and urban economic changes in the era of globalization.

Urban growth and decline

Cities grow or decline for different reasons at different times. What causes certain cities to grow at particular times, or in general, remains one of the most frequently asked questions in urban studies. Changes in urban fortune are easy to explain for some cities, say, if their economies have been established around one or two very prominent industries, such as mining. The same is true for cities that owe much of their economic growth to geographical location, transportation routes, abundant natural resources, political functions or tourist sites. Yet, sometimes, urban economy appears arbitrary, as some cities flourish, and other cities in similar situations suffer economic decline.

How do we explain different development paths that different cities have taken? Is geographical location still key to a city’s growth or decline? Or its government’s economic policies? How do local traditions – such as the relative value placed on the entrepreneurial spirit – affect it? And what about the human and cultural capital that cities have built? Finally, do pure luck and happenstance play a role in urban growth and decline? Urban scholars have attempted to identify major sources of urban economic change that could apply to a wide range of cities across times, cultures and the world. They start by asking why cities exist.

The concept of “increasing returns” to the scale is commonly used to explain the geographical agglomeration of economic activities in cities (Fujita et al., 1999; Henderson, 1988). Simply put, cities emerge and grow when increasing returns exceed transportation costs. However, modeling the increasing returns to spatial concentration has proved problematic for “perfect competition.” Most urban geographers would agree on the notion that spatial concentration itself creates a favorable economic environment by providing the technological spillovers and socio-cultural networks that support continued concentration. Meanwhile, many urban economists like to dissect the initial conditions that break the spatial equilibrium in the first place and lead to agglomeration. In other words, some examine the effects of “linkages,” “externalities,” “multiplier effects” and “circular cumulative causations” in urban economy and space, while others focus on the initial causes of these economic processes.

Those who consider increasing returns to be the most critical factor in the emergence of cities may find little to agree on within traditional theories of urban origin. Such theories point towards rather non-economic factors, such as religious causes or defensive needs (Childe, 1950; Mumford, 1961). In his seminal book The City in History, Mumford (1961: 10) links the first germ of the city to “the ceremonial meeting place that serves as the goal for pilgrimage: a site to which family or clan groups are drawn back, at seasonable intervals, because it concentrates, in addition to any natural advantages it may have, certain ‘spiritual’ or supernatural powers, powers of higher potency and greater duration, of wider cosmic significance, than the ordinary processes of life.”

Not all those who see economic factors as critical to the emergence of early cities use highly sophisticated equations and complex graphs to prove their point. Jane Jacobs’ works utilize a descriptive method to explain economic changes in cities. In The Economy of Cities (1969), she uses an imaginary city, named New Obsidian and located on the Anatolian plateau of Turkey, to develop a theory in which early cities support their surrounding rural areas. This disputes the commonly accepted notion that cities build upon a rural economic base. Urban economic growth, notes Jacobs (1969: 49), takes place by “adding new kinds of work to the existing.” In the case of New Obsidian, animal domestication was added to the obsidian trading, while many modern cities, such as Los Angeles and Tokyo, have been successful in adding new export works to their local economies.

This book does not attempt to resolve how the returns to spatial concentration should be modeled or under what conditions small differences among locations snowball into larger differences over time. We gladly leave that task to urban economists, particularly those in agglomeration economics or geographical economics (Brakman et al., 2001; Fujita and Thisse, 2002). Nor do we seek to build a new theory of urban origin. Outstanding scholarship has already been established on the dawn of cities. Instead, we aim to examine the economic factors that have caused, and been caused by, the growth and decline of large cities over time.

During the mercantile era, urban economic growth was closely linked to international trade, as port cities at junctures of profitable trade routes grew in size and prominence. After the Industrial Revolution, manufacturing centers gained populations rapidly and subsequently positioned themselves on the leading edge of social and economic change. In the past few decades, however, many such great old cities have experienced significant decline. Some industrial cities have successfully diversified their economic base by promoting the growth of high-value added service sectors, yet some have not. Plate 1.1 presents a good example of those unfortunate ones. The Over-the-Rhine area in Cincinnati, Ohio, was a densely populated, economically vibrant immigrant neighborhood in the mid-nineteenth century, when Cincinnati was a leading manufacturing city and trading center in the US. With the decline of canal transportation and manufacturing, this once vibrant community has suffered all the ill effects of urban decline. The city government’s Over-the-Rhine Comprehensive Plan might help turn around the economic fortune of this area in the future, but it continues to lose population. This book seeks to look at both causes and consequences of changed urban fortunes and government policies to spark and sustain economic growth.

Large cities in the national and global economies

Large cities are viewed as a mixed blessing to human society. Given the extent of urban problems in the developed and developing worlds alike, we routinely associate large cities with some distressing and even horrifying images. Literary portrayals of the urban experience by writers such as Charles Dickens and Franz Kafka have bolstered the problematic image of modern cities, particularly large

Plate 1.1 Changed economic fortune: Main Street, Over-the-Rhine, Cincinnati, Ohio

industrial ones (Alter, 2005; Williams, 1973). A reader of their novels might conclude that modern cities overflow with poverty, crime and traffic congestion, while lacking in meaningful interaction, a sense of community and sanity. This tilt toward troubled city depictions, rather than vibrant and cheerful ones, is even more pronounced in scholarly works. The urban poor receive far more academic attention than the urban rich. While there is nothing inherently “wrong” with social scientists investigating socio-economic problems in poor neighborhoods, the fact remains that far less academic research has been conducted on urban wealth than on urban poverty.

As such, cities with a host of social and economic problems, as most large ones have, are often seen not as generators of, but as impediments to, the economic growth of their nations (Kasarda and Parnell, 1993). Indeed, many large cities in low-income countries unmistakably demonstrate serious diseconomies of large-scale urbanization. Such countries may discuss limiting urban growth to promote national economic development, although the practicality of such a policy remains debatable (Laquian, 2005).

We argue that in large cities, the good outweighs the bad – even in developing countries. According to Scott (2006: 99), the long-term benefits to urban growth in less developed countries appear to outweigh the costs in almost every case. Polarization reversal policies, once vigorously advocated as a measure for national economic development, are no longer recommended by either international development agencies or development scholars. In City Economics, O’Flaherty (2005: 2) notes that urban difficulties “arise out of the same geographical propinquity that makes cities work. You can’t have one without at least encountering the other – just as you can’t water ski without getting wet.” Despite the diseconomies and other problems of urban growth, large cities are growth machines for the national economy and, in recent decades, the global economy.

Technological advancement in telecommunications is anoth...

Table of contents

• Routledge critical introductions to urbanism and the city
• Contents
• Illustrations
• Case studies
• Acknowledgements
• 1 Cities and economies
• Part One Urban growth and decline in economic shifts
• Part Two The global economy and world cities in developed countries
• Part Three The national economy and capital cities in developing countries
• References
• Index