From Neighborhoods to Nations: The Economics of Social Interactions

By Yannis M. Ioannides | Go to book overview

CHAPTER 9
Intercity Trade and Long-Run
Urban Growth

9.1 INTRODUCTION

In the study of urban growth, one direction has emphasized its historical aspects. Massive population movements from rural to urban areas fueled the initial stage of urban population growth and have been associated with sustained increases in living standards. Growth is typically associated with urbanization, but the reverse does not always hold, as the evidence from Africa suggests. Innovations are closely associated with urban concentrations. A related direction focuses on the physical infrastructure of cities and how it may change as cities grow. It also focuses on how changes in commuting costs, and in the industrial composition of national output and other technological changes, have affected the growth of cities. A third direction has focused on understanding the evolution of systems of cities, that is, how cities of different sizes interact, accommodate, and share different functions as the economy develops, and what the properties of the size distribution of urban areas are for economies at different stages of development. Why is it that the properties of the system of cities and of city size distribution largely persist while the national population is growing? There is considerable contemporary interest in the conceptual link between urban growth and economic growth and in whether policies that work in one place can be transplanted and work equally well elsewhere. What economic functions are carried by cities of different sizes in a growing economy? Of course, all these lines of inquiry are closely interrelated, and none of them may be fully understood, theoretically and empirically, entirely on its own.

The concentration of population and economic activity in urban areas may increase because individuals migrate from rural areas or from other urban areas or because the national population grows, creating a demand for new cities to house people and production. Urban centers can be sustained only if agricultural productivity has increased sufficiently to allow people to move away from the land and devote themselves to non-food-producing activities.1 Such “symmetry breaking” in the uniform distribution of economic activity is an important factor in understanding urban development (Matsuyama 1995, 1996; Papageorgiou and Smith 1983). Also important is recognizing

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