The Economic Role of Cities

Silicon Valley is the canonical example of economic agglomeration. The knowledge of how to build, program, and operate computer components was a shared, scarce resource in the early 1960’s. Programmers and technicians often moved between companies, transferring best practices. This collaboration caused companies to release products with complementa... See more

In summary, dense cities agglomerate critical, often scarce resources that can be shared collectively. Utilizing these shared resources, firms are free to specialize and innovate on their small slice of the pie. This combination of shared resources and specialization is the magic that makes cities so productive.