Lecture VII

A brief introduction to
URBAN ECONOMICS

Naim Keruwala

Why do people move

to cities?
Why did you move to
a City?

Why do some cities grow

faster than others?

Why do some generate

more wealth? Why do
some decline?

Video
Urban Economics Erik Braun

Video
Why is Urban Economics an
interesting research field Matthew
E. Kahn

Mario Polse
conomie urbaine
dveloppement rgional,
localisation industrielle,
politiques rgionales
Centre Urbanisation Cult
ure Socit
385, rue Sherbrooke Est
Montral (Qubec) H2X 1E3
CANADA

Five Principles of Urban Economi

1.

Cities' size and location are key

determinants of wealth

ce: http://www.city-journal.org/2013/23_1_urban-economics.html

2.
When cities do experience
dramatic changes in their growth
paths, the reason is almost always
outside events or technological
change.
European postwar borders are an example of the way political
conditions can shape growth. After the Iron Curtain was drawn in
1947, cities in West Germany had access to the growing European
Economic Community, while cities in East Germany didnt. One of the
East German cities was Leipzig, which was Germanys fourth-largest
city before World War II but has fallen to 13th place today.

ce: http://www.city-journal.org/2013/23_1_urban-economics.html

No location advantage is
eternal, no matter how
seemingly indestructible.

ce: http://www.city-journal.org/2013/23_1_urban-economics.html

3.
Accessible, well-connected cities
exhibit higher growth.
The city that succeeds in positioning itself as the meeting place and
market center for a wider region has won a tremendously important
battle, since transportation and travel hubs have historically emerged
as dominant finance and business centers, attracting talent, money,
and brains.

ce: http://www.city-journal.org/2013/23_1_urban-economics.html

4.
Every industry leaves its imprint
on a city and it isnt always a
good one
When a single industry comes to dominate the local economy, the
long-term results can be devastating. The obvious example in the
United States is Detroit, the Silicon Valley of the early twentieth
century, which was one of the countrys fastest-growing cities until
the 1970s but now seems stuck in irreversible decline.

ce: http://www.city-journal.org/2013/23_1_urban-economics.html

5.
Though much remains
unexplained, good and bad policies
do matter.
Poorly governed cities with a reputation for corruption, violence, or
deficient institutions will pay a price.In open societies, good
governance is not only a matter of virtue but also a competitive
necessity.

ce: http://www.city-journal.org/2013/23_1_urban-economics.html

Seven Pillars of
Urban Agglomeration
Mario Polse

p://urbanizationproject.org/blog/mario-polese-seven-pillars-of-agglomeration#.U_t2R_mSz1A

1. Economies of scale in production

2. Economies of scale in trade and
transportation
3. Falling transportation and
communication costs
4. The need for proximity with other
firms in the same industry
5. The advantage of diversity
6. The quest for the center
7. Buzz and bright lights:

p://urbanizationproject.org/blog/mario-polese-seven-pillars-of-agglomeration#.U_t2R_mSz1A

Five key lessons for

city competitiveness

Razeen Sally
World Economics Forum

1. Think institutions
Its the decision-making framework
of the city. Lee Kuan Yew in
Singapore, Sheikh Mohammed in
Dubai, Sergio Fajardo in Medellin,
Colombia, and SR Rao in Surat,
India, are stellar examples.

mblog.org/2014/08/five-key-lessons-city-competitiveness/?utm_content=buffer4d981&utm_medium=social&utm_source=twitter.com&utm_camp

2. Think of the regulatory

framework for the citys
business climate
Getting the basics right stable
and prudent fiscal policies, including
low and simple taxation, a flexible
labour market, openness to trade
and foreign investment, simple and
transparent business regulation

mblog.org/2014/08/five-key-lessons-city-competitiveness/?utm_content=buffer4d981&utm_medium=social&utm_source=twitter.com&utm_camp

3. Think hard connectivity

The citys core physical
infrastructure. Cities need a mixture
of planning and organic growth,
which are complements, not
substitutes

mblog.org/2014/08/five-key-lessons-city-competitiveness/?utm_content=buffer4d981&utm_medium=social&utm_source=twitter.com&utm_camp

4. Think soft connectivity

The citys social capital. Education is
the ultimate form of this. Next, cities
need to facilitate digital infrastructure
to support human-computing
interfaces that empower individuals.
Also, making cities more liveable
improving the quality of urban life

mblog.org/2014/08/five-key-lessons-city-competitiveness/?utm_content=buffer4d981&utm_medium=social&utm_source=twitter.com&utm_camp

5. Reforms at the municipal level

Reforms at the municipal levelare usually

more feasible than at the national level,
even when they seem impossible in
national capitals. Urbanization trends
enlarge these possibilities. Cities should
grasp this opportunity, experiment with
new rules and put reforms on a fast track.

mblog.org/2014/08/five-key-lessons-city-competitiveness/?utm_content=buffer4d981&utm_medium=social&utm_source=twitter.com&utm_camp