City Economics
Donna Goddard writes in The Love of Devotion, “The country does what the city cannot. It quietens the mind and brings simplicity into one’s life. The city does what the country cannot. It enlivens the mind and brings culture into one’s life.” Cities play an important role in economic growth. But, what is the meaning of the city economy as a discipline?
City economics is the discipline that lies at the crossways of geography and economics. Urban economics explores the location decisions of utility-maximizing households and profit-maximizing firms, and it shows how these decisions cause the formation of cities of different size and shape.
The discipline of urban economics is defined by the intersection of geography and economics. Economics explores the choices people make when resources are limited. Households make choices to maximize their utility, while firms maximize their profit. Geographers study how things are arranged across space, answering the question, “Where does human activity occur?”
Urban economics puts economics and geography together, exploring the geographical or location choices of utility-maximizing households and profit-maximizing firms. Urban economics also identifies inefficiencies in location choices and researches alternative public policies to promote efficient decisions.
According to Pickett, the urban transformation has become a major contributor to economic, demographic, social and environmental change. The models of urbanization were typically applied without full consideration of future outcomes and path dependencies, as the use of the private motor vehicle and urban sprawl became ruling trends. Nowadays, global urbanization will be shaped and managed so that cities fully achieve their potential to increase prosperity and social cohesion, bring about improved standards of environmental efficiency, citizen health and well-being, and strengthen international relations. If it is not managed, and if suitable local financing and investment tools are not achieved, rapid urbanization could prove a major threat to both modern society, and to the world’s environmental structure.
The future form, functionality, appearance and ambience of cities will have a direct impact on most people’s lives, whether they live in a city or not. The future city economy will not only impact on society but will also influence wider global environments and economies. In terms of economics, the largest city markets have already grown bigger than those of many countries. In the future, cities will bind their roles as key drivers of local, and sometimes even national economies.
