One of the first extensions of new theory was to the growth of cities. What makes a city grow. A graduate student at the University of Chicago, Edward Glaeser, took a fresh look at what makes cities grow and work. There were three ideas that Glaeser looked at. The first was concentration. Cities that fall into this category are places where there is one or two dominant firms in the city. Such as Detroit or Pittsburgh. The Second idea was one of competition within industries. This suggested that cities where many firms in the same industry would compete and would be more likely to foster growth. The third idea was that diversity was the main cause of growth and strength to a cities economy. This was shown through the example of Manchester and Birmingham in the nineteen century Manchester was a city that had a large industrial economy but it wasn't very diversified. Birmingham however, was very diversified and had many small industries. Late in the twentieth century only two cities remained vibrant in England, Birmingham and the even more diversified London.
Glaeser used the Standard Industrial Classification (SIC) system to see whether or not any of these theories was true. He found that instead of growing faster, cities where big companies were overrepresented grew at a somewhat slower pace than the rest. He also found that diversification seemed to be a key in growth in a city.
C for Will, for a couple of spelling mistakes.
ReplyDeleteGlaeser is a big name these days. He's very influential in how government thinks about policies towards cities and real estate.
Unfortunately, for places like Cedar City, his work shows that cities get richer, in part, because they're big. So St. George is only going to get bigger and richer.