07 December 2010

7 reasons why urban growth is a natural and normal phenomenon

The town of Dubai first conducted a census in 1968 (with approximately 59,971 inhabitants then) ... According to the Statistics Centre of Dubai, the population of the emirate is estimated to be over 1,800,000 as of 2010 ... Do the math!  
(HT: Our Word is Our Weapon).
OK. I make that an annual growth rate of 8%, not to be sniffed at. 108%. Dubai has more than doubled in population every year for the past 42 years.(Hey - this is a blog - there is very little editing and short deadlines, so occasionally there will be very stupid mistakes).

Rapid urban growth is not an inherently evil thing. In fact it is probably quite a good thing. Professor Mario Polèse offers 7 reasons why:
Seven Pillars of Agglomeration:
1. Economies of scale in production: For many industries, the average cost of producing goods declines as the scale of production expands. This can make it very profitable to concentrate production in a few large facilities and to locate those facilities close to lots of workers, namely near cities.
2. Economies of scale in trade and transportation: Delivery costs are lower when the trucks, planes, and ships going to and from transit hubs are fully loaded with goods. Filling trucks, planes, and ships is easier when they’re moving between urban areas with large ports, airports, and distribution centers.
3. Falling transportation and communication costs: Falling transport costs allow firms to exploit economies of scale, producing in one place and distributing to a large and geographically diverse market by road, air, or sea. Similarly, declining communications costs allow firms to concentrate productive activity in one place and distribute services to a wider market via airwaves, radio frequencies, and fiber optic cables.
4. The need for proximity with other firms in the same industry: Face to face interaction is important in industries where creativity, inspiration, imagination, or the cultivation of trust are key inputs. Proximity with other firms also lowers recruitment and training costs since a firm will have ready access to workers with industry-relevant skills.
5. The advantage of diversity: For firms, such as ad agencies, that need a workforce with a diverse skill set, will be better able to find and recruit workers from many different speciallized backgrounds if they locate near large cities where many different industries cluster.
6. The quest for the center: Firms that need direct access to customers will naturally locate in the geographic center of their markets. In many cases, this will mean locating in or near big cities. Polèse points to the example of Broadway. The concentration of performing arts in New York reflects access to the large local population but also theatergoers from other metropolitan areas that are linked to New York by rail, air, and road.
7. Buzz and bright lights: Cities with amenities like food, nightlife, museums, recreation, culture, and shopping tend to attract more people. Economists Ed Glaeser, Jed Kolko, and Albert Saiz find that high amenity cities grow faster than low amenity cities. They also observe that urban rents rise faster than urban wages, suggesting that people want to live in cities for reasons beyond rising wages. Even as information technology makes it possible for an increasing number of people to work from nearly anywhere in the world, the amenities associated with city life continue to attract and retain urban residents.


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