The Economy of Cities

We might say of this way of launching a new exporting enterprise that the exporter adds an export to other people’s local work. The relevant local work consists of preexisting divisions of labor. To be sure, the new export work proliferates subsequent new divisions of labor of its own. But to begin with, it ordinarily depends heavily on local produ

When humble people, doing lowly work, are not also solving problems, nobody is apt to solve humble problems.

So what we have here, if this summary is correct, is another reciprocating system of growth, though more complex than the one described in the preceding chapter. Its workings can be stated this way: a city builds up its imports and thus becomes capable of replacing many of them. By doing so it becomes capable of generating more exports. It thus bui

If we were to measure the economic development rate of a city, we could not do so just by measuring its output in a year or any group of years. We would have to measure, rather, the additions of new work to its older output, over a period of time, and the ratio of the new work to the older work. Then, to speak of a low or a high development rate, w

At the time Washington was designated to be the capital of the young United States, Americans seem almost universally to have believed that because it was to be the capital, it was destined to become a great commercial and industrial city too, a London, Paris or Rome. But cities simply cannot be “explained” by their locations or other given resourc

A circumstance still more persuasive than comparative growth rates within a nation suggests that the process of import replacing may be the chief cause of economic expansion. Consider the fact that when cities rapidly replace imports, three direct results follow: 1. The sum total of economic activity expands rapidly. 2. Markets for rural goods incr

in the highly developed economies of the future, it is probable that cities will become huge, rich and diverse mines of raw materials. These mines will differ from any now to be found because they will become richer the more and the longer they are exploited. The law of diminishing returns applies to other mining operations: the richest veins, havi

the multiplier effect from import replacing is far more potent than the multiplier effect from growth of exports, because all shifted imports go to swell the local economy. An equivalent amount of imports earned by export growth do not. After a city has experienced an episode of import replacing and import shifting, its local economy is thus much l

In an economy where many new goods and services are being added, new divisions of labor multiply more rapidly than old divisions of labor become obsolete. In this way, kinds of work literally multiply, not by any economic “spontaneous generation” but rather as one thing leads explicitly to another. The greater the sheer numbers and varieties of div