Question

write a review on the existence and growth of cities. Please be sure to think about how geography affects economic activity.

Answer 1

China is widely regarded as an example of how urbanization can drive industrialisation and change living standards. In 2011, China reached the historic milestone of 50% of its urban population, up from just 20% in 1980. The unparalleled pace of urbanization has represented the speed of urban job growth. In Chinese cities, average household incomes are now nearly three times higher than in rural areas, mainly because of higher productivity. The effort by the state to invest heavily in urban infrastructure has helped limit the socially destructive impact of this huge movement of people.

Two ideas underpin our view of economic concentration's benefits-the division of labor and economies of scale. The former explains the productivity gains from specialization, and hence production. Companies organize around specific products or tasks which yield efficiencies and enhanced skills. Specialization often occurs at the level of the community, meaning there are benefits of focusing on a function or group of functions for which places inherit or create a distinct gain. As international trade expands and competition intensifies, specialisation becomes more important.

Cities provide businesses with access to a broader range of public resources and facilities, due to the size of their operations. Cities give customers and suppliers improved external connectivity through more frequent transport links to more destinations and more effective logistics networks for handling imports and exports. They seem to provide higher-capacity electronic networking and marketing telecommunication systems. Larger technical experience, financial know-how and advanced analysis are required to help businesses remain up-to-date with technological shifts.

The presence of agglomeration economies doesn't mean that urbanization would automatically lead to increased economic production. Concentration benefits can be balanced by rising congestion, overcrowding, crowded facilities, environmental pressure (such as watercourses and air quality), higher housing costs and higher labor and property costs in towns. Such negative externalities tend to increase as cities grow, particularly when there is a haphazard urban growth and inadequate public investment to maintain and improve vital infrastructure.