Monday, December 9, 2013

Now, where did I put that metropolis, again?

The theory of path dependence is still looking for a place to call home;
The world is urbanising rapidly (World Urbanization Prospects, the 2011 Revision). Some of its rapidly growing cities, however, seem to be misplaced. They are located in places hampered by poor access to world markets, shortages of water, or vulnerability to flooding, earthquakes, and volcanoes.
This outcome – cities being stuck in the wrong places – has dire economic and social consequences. When thinking about policy responses, a key research question is whether historical events can leave towns trapped in suboptimal places.
That keeps Guy Michaels and Ferdinand Rauch awake at night, we guess;
Our findings suggest lessons for today’s policymakers. The conclusion that cities and towns may be misplaced still matters today, as the world's population becomes ever more concentrated in cities. For example, parts of Africa, including some of its cities, are hampered by poor access to the world's markets due to their landlocked position and poor land-transport infrastructure. And across the world, many cities lie close to areas that are susceptible to flooding, earthquakes, volcanic eruptions, and other natural disasters.
Our paper suggests that path-dependence in city locations can still have important welfare costs today.
We wonder if they've heard of Detroit.

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