Growth in Cities
01 Dec 1992-Journal of Political Economy (University of Chicago Press)-Vol. 100, Iss: 6, pp 1126-1152
TL;DR: In this paper, the authors used a new data set on the growth of large industries in 170 U.S. cities between 1956 and 1987 and found that local competition and urban variety, but not regional specialization, encourage employment growth in industries.
Abstract: Recent theories of economic growth, including those of Romer, Porter, and Jacobs, have stressed the role of technological spillovers in generating growth. Because such knowledge spillovers are particularly effective in cities, where communication between people is more extensive, data on the growth of industries in different cities allow us to test some of these theories. Using a new data set on the growth of large industries in 170 U.S. cities between 1956 and 1987, we find that local competition and urban variety, but not regional specialization, encourage employment growth in industries. The evidence suggests that important knowledge spillovers might occur between rather than within industries, consistent with the theories of Jacobs.
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TL;DR: The authors found that agglomeration more than offsets congestion effects in denser areas, which explains more than 50% of the observed state productivity differences, given the large differences in density.
Abstract: Two different models - one based on local geographical externalities and the other on the variety of only locally available intermediate services - are shown to give rise to a simple, estimable relation between employment density and productivity. Using data on gross state output for the U.S., we find that agglomeration more than offsets congestion effects in denser areas. While our estimate of the elasticity of productivity with respect to density is small, it explains more than 50% of the observed state productivity differences, given the large differences in density.
2,294 citations
TL;DR: In this article, the authors argue that the cluster concept should carry a public policy health warning: there is much about it that is problematic, and the rush to employ cluster ideas has run ahead of many fundamental conceptual, theoretical and empirical questions.
Abstract: Over the past decade, there has been growing interest in local industrial agglomeration and specialization, not only by economic geographers but also by economists and by policy-makers. Of the many ideas and concepts to have emerged from this new-found focus, Michael Porter's work on ‘clusters’ has proved by far the most influential. His ‘cluster theory’ has become the standard concept in the field, and policy-makers the world over have seized upon Porter's cluster model as a tool for promoting national, regional, and local competitiveness, innovation and growth. But the mere popularity of a construct is by no means a guarantee of its profundity. Seductive though the cluster concept is, there is much about it that is problematic, and the rush to employ ‘cluster ideas’ has run ahead of many fundamental conceptual, theoretical and empirical questions. Our aim is to deconstruct the cluster concept in order to reveal and highlight these issues. Our concerns relate to the definition of the cluster concept, its theorization, its empirics, the claims made for its benefits and advantages, and its use in policy-making. Whilst we do not wish to debunk the cluster idea outright, we do argue for a much more cautious and circumspect use of the notion, especially within a policy context: the cluster concept should carry a public policy health warning.
2,251 citations
Cites background from "Growth in Cities"
...…a long-running and unresolved debate on whether localisation economies are conducive to higher productivity and employment growth, firm entry and innovation; or whether in fact urbanisation economies are more important and beneficial ( Henderson et al, 1995; Glaeser et al, 1992; Feldman, 28 2000)....
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...For example, there has been a long-running and unresolved debate on whether localization economies are conducive to higher productivity and employment growth, firm entry and innovation; or whether in fact urbanization economies are more important and beneficial (Glaeser et al., 1992; Henderson et al., 1995; Feldman, 2000)....
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TL;DR: In this paper, the authors consider the empirical literature on the nature and sources of urban increasing returns, also known as agglomeration economies, and show that the effects of aggoglomeration extend over at least three different dimensions.
Abstract: This paper considers the empirical literature on the nature and sources of urban increasing returns, also known as agglomeration economies. An important aspect of these externalities that has not been previously emphasized is that the effects of agglomeration extend over at least three different dimensions. These are the industrial, geographic, and temporal scope of economic agglomeration economies. In each case, the literature suggests that agglomeration economies attenuate with distance. Recently, the literature has also begun to provide evidence on the microfoundations of external economies of scale. The best known of these sources are those attributed to Marshall (1920): labor market pooling, input sharing, and knowledge spillovers. Evidence to date supports the presence of all three of these forces. In addition, there is also evidence that natural advantage, home market effects, consumption opportunities, and rent-seeking all contribute to agglomeration.
2,027 citations
Posted Content•
TL;DR: In this article, the authors present an empirical examination of the determinants of country-level production of international patents and introduce a novel framework based on the concept of national innovative capacity, the ability of a country to produce and commercialize a flow of innovative technology over the long term.
Abstract: Motivated by differences in R&D productivity across advanced economies, this paper presents an empirical examination of the determinants of country-level production of international patents. We introduce a novel framework based on the concept of national innovative capacity. National innovative capacity is the ability of a country to produce and commercialize a flow of innovative technology over the long term. National innovative capacity depends on the strength of a nation's common innovation infrastructure (cross-cutting factors which contribute broadly to innovativeness throughout the economy), the environment for innovation in its leading industrial clusters, and the strength of linkages between these two areas. We use this framework to guide our empirical exploration into the determinants of country-level R&D productivity, specifically examining the relationship between international patenting (patenting by foreign countries in the United States) and variables associated with the national innovative capacity framework. While acknowledging important measurement issues arising from the use of patent data, we provide evidence for several findings. First, the production function for international patents is surprisingly well-characterized by a small but relatively nuanced set of observable factors, including R&D manpower and spending, aggregate policy choices such as the extent of IP protection and openness to international trade, and the share of research performed by the academic sector and funded by the private sector. As well, international patenting productivity depends on each individual country's knowledge stock.' Further, the predicted level of national innovative capacity has an important impact on more downstream commercialization and diffusion activities (such as achieving a high market share of high-technology export markets). Finally, there has been convergence among OECD countries in terms of the estimated level of innovative capacity over the past quarter century.
2,006 citations
Cites background from "Growth in Cities"
...While individual R&D and engineering efforts will tend to be specialized in particular technical and scientific areas, the outputs of R&D impact a variety of economic sectors via direct application or as a basis for future efforts (Rosenberg, 1963; Glaeser et al., 1992)....
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TL;DR: In this article, the role of social learning in the diffusion of a new agri cultural technology in Ghana is investigated, using unique data on farmers' communication patterns to define each individual's information neighborhood, finding evidence that farmers adjust their inputs to align with those of their information neighbors who were surpris ingly successful in previous periods.
Abstract: This paper investigates the role of social learning in the diffusion of a new agri cultural technology in Ghana. We use unique data on farmers' communication patterns to define each individual's information neighborhood. Conditional on many potentially confounding variables, we find evidence that farmers adjust their inputs to align with those of their information neighbors who were surpris ingly successful in previous periods. The relationship of these input adjustments to experience further indicates the presence of social learning. In addition, applying the same method to input choices for another crop, of known technol ogy, correctly indicates an absence of social learning effects. (JEL D83, 013, 033, Q16)
1,954 citations
Cites background from "Growth in Cities"
...…Federico Bandi, Dirk Bergemann, Larry Blume, Adeline Delavande, Steven Durlauf, Ana Fernandez, Garth Frazer, Lars Hansen, Ethan Ligon, Charles Manski, Francesca Molinari, Stephen Morris, Jeff Russell, Chris Taber, Otto Toivanen, Giorgio Topa, and seminar participants at a number of seminars....
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References
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Book•
01 Jan 1990
TL;DR: The Need for a New Paradigm as discussed by the authors is the need for a new paradigm for the competitive advantage of companies in global industries, as well as the dynamics of national competitive advantage.
Abstract: The Need for a New Paradigm - PART I: FOUNDATIONS - The Competitive Advantage of Firms in Global Industries - Determinants of National Competitive Advantage - The Dynamics of National Advantage - PART II: INDUSTRIES - Four Studies in National Competitive Advantage - National Competitive Advantage in Services - PART III: NATIONS - Patterns of National Competitive Advantage: The Early Postwar Winners - Emerging Nations in the 1970s and 1980s - Shifting National Advantage - The Competitive Development of National Economies - PART IV: IMPLICATIONS - Company Strategy - Government Policy - National Agendas - Epilogue - Appendices - References
22,660 citations
TL;DR: In this paper, the authors present a fully specified model of long-run growth in which knowledge is assumed to be an input in production that has increasing marginal productivity, which is essentially a competitive equilibrium model with endogenous technological change.
Abstract: This paper presents a fully specified model of long-run growth in which knowledge is assumed to be an input in production that has increasing marginal productivity. It is essentially a competitive equilibrium model with endogenous technological change. In contrast to models based on diminishing returns, growth rates can be increasing over time, the effects of small disturbances can be amplified by the actions of private agents, and large countries may always grow faster than small countries. Long-run evidence is offered in support of the empirical relevance of these possibilities.
18,200 citations
"Growth in Cities" refers background in this paper
...Romer (1986) and Lucas (1988) support the argument that human capital is a significant determinant of growth in that they state that knowledge spillover is the “engine of growth”....
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TL;DR: In this article, the authors consider the prospects for constructing a neoclassical theory of growth and international trade that is consistent with some of the main features of economic development, and compare three models and compared to evidence.
16,965 citations
Book•
01 Jan 1890
TL;DR: In this article, the authors present a survey of the general relations of demand, supply, and value in terms of land, labour, capital, and industrial organization, with an emphasis on the fertility of land.
Abstract: BOOK I: PRELIMINARY SURVEY 1. Introduction 2. The Substance of Economics 3. Economic Generalizations or Laws 4. The Order and Aims of Economic Studies BOOK II: SOME FUNDAMENTAL NOTIONS 1. Introductory 2. Wealth 3. Production, Consumption, Labour, Necessaries 4. Income. Capital. BOOK III: ON WANTS AND THEIR SATISFACTION 1. Introductory 2. Wants in Relation to Activities 3. Gradations of consumers' demand 4. The elasticity of wants 5. Choice between different uses of the same thing. Immediate and deferred uses. 6. Value and utility BOOK IV: THE AGENTS OF PRODUCTION. LAND, LABOUR, CAPITAL AND ORGANIZATION T 1. Introductory 2. The Fertility of Land 3. The Fertility of Land, continued. The Tendency to Diminishing Return. 4. The Growth of Population 5. The Health and Strength of the Population 6. Industrial Training. 7. The Growth of Wealth 8. Industrial Organization 9. Industrial Organization, continued. Division of Labour. The Influence of Machinery 10. Industrial Organization, continued. The Concentration of the Specialized Industries in Particular Localities. 11. Industrial Organization, continued. Production on a Large Scale 12. Industrial Organization, continued. Business Management. 13. Conclusion. Correlation of the Tendencies to Increasing and to Diminishing Return BOOK V: GENERAL RELATIONS OF DEMAND, SUPPLY, AND VALUE 1. Introductory. On Markets. 2. Temporary Equilibrium of Demand and Supply 3. Equilibrium of Normal Demand and Supply 4. The Investment and Distribution of Resources 5. Equilibrium of Normal Demand and Supply, continued, with reference to long and short periods 6. Joint and Composite Demand. Joint and Composite Supply 7. Prime and total cost in relation to joint products. Cost of marketing. Insurance against risk. Cost of Reproduction. 8. Marginal costs in relation to values. General Principles. 9. Marginal costs in relation to values. General Principles, continued 10. Marginal costs in relation to agricultural values 11. Marginal costs in relation to urban values 12. Equilibrium of normal demand and supply, continued, with reference to the law of increasing return 13. Theory of changes of normal demand and supply, in relation to the doctrine of maximum satisfaction 14. The theory of monopolies 15. Summary of the general theory of equilibrium of demand and supply BOOK VI: THE DISTRIBUTION OF THE NATIONAL INCOME 1. Preliminary survey of distribution 2. Preliminary survey of distribution, continued 3. Earnings of labour 4. Earnings of labour, continued 5. Earnings of labour, continued 6. Interest of capital 7. Profits of capital and business power 8. Profits of capital and business power, continued 9. Rent of land 10. Land tenure 11. General view of distribution 12. General influences of progress on value 13. Progress in relation to standards of life
11,519 citations
TL;DR: It is by now incontrovertible that increases in per capita income cannot be explained simply by increases in the capital-labor ratio as mentioned in this paper, and that knowledge is growing in time.
Abstract: It is by now incontrovertible that increases in per capita income cannot be explained simply by increases in the capital-labor ratio. Though doubtless no economist would ever have denied the role of technological change in economic growth, its overwhelming importance relative to capital formation has perhaps only been fully realized with the important empirical studies of Abramovitz [1] and Solow [l 1]. These results do not directly contradict the neo-classical view of the production function as an expression of technological knowledge. All that has to be added is the obvious fact that knowledge is growing in time. Nevertheless a view of economic growth that depends so heavily on an exogenous variable, let alone one so difficult to measure as the quantity of knowledge, is hardly intellectually satisfactory. From a quantitative, empirical point of view, we are left with time as an explanatory variable. Now trend projections, however necessary they may be in practice, are basically a confession of ignorance, and, what is worse from a practical viewpoint, are not policy variables.
7,108 citations