Cities And The Wealth Of Nations
book by Jane Jacobs ISBN:0394729110... this 1983 lecture covers a lot of the same ground and uses some of the same examples. Jacobs addresses economics on a regional scale, defining City Region in the sense of a specific area that gives rise to the dynamic exchange of goods, services, and people. She examines the factors essential to establish a sustainable economic entity. The five forces that shape and reshape all regional economies—city markets, city jobs, city technology, transplanted city work, and city capital—interact to create a pattern of exchange between city and hinterland that is complex and diverse. The key to an ongoing healthy economy is the ability of the city to replace imports from beyond the region with local production.
her basic argument
- Economic Development is really only driven by Urban Development (to the extent that she talks about City Regions, not just a city itself).
- ergo Rural Development (Economic Development targeted at rural areas outside a City Region) efforts are doomed to failure
lesson of the Marshall Plan for International Development: the success of varying economies differed significantly, ergo we should have learned that just throwing in money isn't going to turn a stagnant economy into a vibrant one.
Stagflation (high prices and low work) is the normal and ordinary condition to be found in poor and backward economies the world over. (We from the First World don't notice it that way because prices seem low to us.)
- it is a normal consequence of economic stagnation
- so seeing it in the First World should be scary
Cities succeeding at Import Substitution are replacing not only Finished Goods but also Producers Good (and services). (First you replace some finished good, still having to import many of the need components, but then over time local supplies of those components are developed to meet your demand.)
Import Substitution is a city-driven process because
- you have to have a settlement that is already versatile at production
- city markets are at once diverse (Diversity) and concentrated (Critical Mass)
Imports play 3 roles:
- they get used/consumed
- they represent previous exports (to pay for them)
- serve as candidates for Import Replacement
Expansion comes from 5 forms of growth:
- enlarged city markets for new and different imports
- increased number and kinds of jobs
- increased transplants of city work into non-urban areas as older enterprises are crowded out
- new uses for technology, esp to increase Rural production/productivity
- growth of city capital
- attempts at Economic Development (esp Rural Development) typically push on 1 force without the others being available, and thus dissipate (or cause nasty Side Effects - Prime Directive)
- example: agricultural labor-saving technologies just increase yield/productivity so much that huge portions of the population are driven out of work, and because of the lack of economic vitality, there's no possibility of creating new work (e.g. there are no markets for new goods/services).
Bad types of economies:
- Supply Economy: makes typically a single good for distant consumption. May be successful for some period, but demand changes or new competition emerges, or supply (e.g. of fish, Cheap Oil) gets used up. Monocultures are fragile.
- these are often Colony-s of Empires.
- Transplant Economy: where organization takes capital earned in a City Region and invests it in another place (e.g. building a car factory in Tennessee). Typically has to import everything to build the factory and supplies of components. So, other than relatively small number of direct new employment, there is little effect on the economy.
- economies fed by OCWs (Overseas Contract Workers). They send money home, but there's no way to use it other than for consumption so nothing changes.
One structural problem for City Regions is that they don't get clean FeedBack from other regions in the same country because they share a single Currency, and thus have no Currency Market/Exchange Rate. (Example: someone buys a Taxi, uses it to Make A Living for awhile, but when it breaks down there are no parts and no mechanical expertise to repair it because the local economy hasn't developed enough to support the Whole Product...)
When Robert McNamara changed the approach of the World Bank in 1968 (from building infrastructure like dams/roads to trying to improve Rural life), he just poured it into things which had no chance of returning investment, ergo just created debt burdens. There is no decent way to overcoming rural Poverty where people have no access to productive city jobs.
Instead of thinking of backward places as "natural", it is probably more realistic to think of them as the end-product of a long process of Decline. (At some point they were integrated into a city economy, but that integration went away at some point, and they slid downhill. Shades of Joseph Tainter.)
If you wanted to define Economic Development in a single word, that word would be "ImprovisatIon".
A city should try to do significant portions of its trade with other cities at similar stages of development.