Why Does a City Grow? Specialization, Human Capital, or Institutions?
GB : SAGE Publications
2027 - 2050 p.
Why does a certain metropolitan area grow more than another? The answer to this question has evaded much of the considerable body of scholarship on the topic. One problem may be that some of the frameworks that drive empirical research in this field tend be based on ad hoc combinations of explanatory factors, ranging from natural climate to business climate to land and labor costs. Theoretical approaches emphasize differences in economic specialization: some activities have higher rates of growth than others, and this translates into divergence in medium-term rates of inter-urban growth and income. But specialization itself needs to be explained. International economics has adopted theoretical frameworks for explaining different growth rates and income levels among countries involving multiple causes and their potentially recursive interactions. Three main forces are at the heart of this literature: specialization, labor force and human capital issues, and institutions. This framework can be fruitfully adapted to the analysis of metropolitan growth and change. The thorniest aspect of doing so is to consider recursive relationships among the three in a dynamic model, where specialization, human capital and institutions are endogenous to the explanation, and where causality can reverse over time in complex sequences. In this paper, we lay out the elements of such an approach and argue that it could serve as the basis for a new generation of research on differences in metropolitan growth processes.