Cities and National Economic Growth: A Reappraisal

Abstract

The idea that cities are sources of economic growth, generally associated with Jane Jacobs, has gained ground in the scholarly literature in recent years. This essay proposes a review of the arguments for and against the Jacobs hypothesis. Much of the debate centres on the existence of dynamic agglomeration economies. It is difficult, it is argued to rigorously test the relationship between agglomeration and economic growth. Part of the problem stems from the difficulty of distinguishing factors that allow cities to capture a greater share of national economic growth from those that allow cities to add to national economic growth. It is argued that the socioeconomic processes that explain economic growth operate primarily at the national/societal level and not at the city level.