Why Has Globalization Led to Bigger Cities?

Today's Economist

Edward L. Glaeser is an economics professor at Harvard.

If the world is so flat, then why are cities growing so quickly, especially in the third world?

One might have thought that striking declines in the costs of shipping goods and communicating knowledge across space would have led to a great dispersal of population. After all, it is at least technically possible to telecommute over great distances. Yet the share of the world living in urbanized areas increased from 40.9 percent in 1985 to more than 50 percent today.

In the developing world, urbanization has often taken the form of exploding populations in megacities. Mumbai’s population increased to 19 million in 2007 from 10.8 million in 1985. Bangalore, the urban symbol of the flat world, has had its population double over two decades, to 6.8 million today from 3.4 million in 1985.

The growth of these cities and the continuing strength of older urban areas — like New York, London and Paris — is no accident. Globalization and new technologies attract people to big cities, by increasing the returns to urban proximity. While it would be technically possible to sit and write software somewhere in the Vale of Kashmir (at least if you didn’t mind the bullets), the innovators in Indian information technology cluster around one another in Bangalore. America’s computer wizards likewise choose to cluster in Silicon Valley rather than disperse.

Why has information technology led to urban concentration rather than a great programmer diaspora?

Globalization and technological change have increased the returns to being smart; human beings are a social species that get smart by hanging around smart people. A programmer could work in the foothills of the Himalayas, but that programmer wouldn’t learn much. If she came to Bangalore, then she would figure out what skills were more valuable, and what companies were growing, and which venture capitalists were open to new ideas in her field.

The information flows that come from proximity might also help to build the relationships that would enable her to create her own start-up. A remarkable number of information-technology start-ups in India were formed by partners who connected in Bangalore.

Knowledge moves more quickly at close quarters, and as a result, cities are often the gateways between continents and civilizations.

More than 2,500 years ago, the knowledge of the Mediterranean world made its way to Greece through Athens. Twelve hundred years later, Greek and Indian knowledge entered the Islamic world through the Abbasid Caliphate’s House of Wisdom in Baghdad. Eastern wisdom came west again, through Venice and the cities of Spain. The circle continues today, as Western technology makes its way east, again through urban portals like Bangalore. Since there is so much for developing countries to gain economically by integrating with the developed world, the urban gateways to the West attract millions.

There is a great deal of concern today about whether the megacities of Asia are just too big.

After all, from a Western perspective, many developing cities have bad air, bad water, awful congestion and poor housing conditions. The crowded slums of Mumbai can seem pretty terrible, and rural villages maintain their quaint, romantic appeal, at least to people who don’t have to live in them. After all, Gandhi himself wrote that “If India is to attain true freedom and through India the world also, then sooner or later the fact must be recognized that people will have to live in villages, not in towns, in huts, not in palaces.”

But there is no future in rural poverty. Nehru, in his response to Gandhi, had it right: “a village, normally speaking, is backward intellectually and culturally and no progress can be made from a backward environment.” The slums of Mumbai attract hundreds of thousands of migrants because they offer more hope than the static, backward-looking world of rural India. The millions of poor people who choose to live in Mumbai, and Bangalore, reflect the strength of these cities, which offer economic opportunity not found in Gandhi’s beloved villages.

The right response to the problems of megacities is not to get misty-eyed about village life, but rather to work to improve the quality of infrastructure in those growing urban areas.

Abundant land hides many sins, including the failures of government. But when people crowd into cities, the costs of governmental failure become painful and obvious. The great challenge facing the growing cities of India is whether the public sector can take the difficult steps that would lead to clean water, better toilets, faster commutes and less crime. Restricting the growth of India’s cities would mean restricting the economic progress of India’s economy, and that would be a mistake. A better path is to figure out how to make those cities more livable even as they continue to grow.

Next week, I’ll discuss possible public policies for the megacities of India.

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Very insightful article. Look forward to reading the rest.

The article asks “Why has information technology led to urban concentration rather than a great programmer diaspora?” The reason is that most companies still want their employees, including programmers, to show up physically at a location where they can be seen by management. I work for a company that employs programmers around the world, and even in the US many managers just don’t feel comfortable unless they can lay eyes on the people they manage. There is also the matter of the availability and reliability of the infrastructure needed to support programmers. Do the thousands of small villages in India have the reliable electrical and networking capability needed to support geographically distributed teams of programmers? There is no use having skilled people in a location where they can’t be reliably productive. Some of my Indian colleagues are permitted to work from home, but are unable to do so because the electrical service in their neighborhood is not reliable.

To answer your question: John Deere.

Fewer people are needed in agriculture.

People go to where the opportunities are.

abundant opportunities in cities is all well and good, but let’s not forget that it would be impossible for people to live in the cities without a bunch living in the villages growing food and such. if we try and try and try to make the cities so attractive that nobody wants to live in villages anymore, we will see a shortage of labor in the farming industry, causing a shortage of food. food prices will go up, and that will only make things worse for the people living in the slums of mumbai. granted, this is a very abstract dooms day sort of scenario… but still, it’s possible.

working to improve living conditions in cities would be a mistake. rather, we should work to improve living standards across the board.

As the world becomes flat, efficient first-world farmers (or over-subsidized first-world farmers, depending on your politics) push down global commodity prices. Village economies driven by manual farm labor can’t compete, so rather than starve in the countryside, the more industrious or adventurous (young single men first, then others) take their chances moving to the city.

Displaced farmers have been the source of urban growth since the Enclosure Laws made renaissance London a boom town; the New England industrial city (Lowell, Providence, Springfield, Hartford…) coincided with the opening of Ohio farmland via the Erie Canal, which under-bid easterners, even in their own market.

The historical pattern also shows this effect can be global: 1800s immigration to the US from Eastern Europe began with sudden waves from each country, coinciding with the opening of markets to US grain.

Charleston Beaglesworth May 19, 2009 · 11:30 am

There’s a great piece from March issue of The Atlantic, “How the Crash Will Reshape America”. It comliments this article well.

This doesn’t seem terribly persuasive. What fraction of the people in Asian megacities have anything at all to do with the information economy? Did the children of poor rural farmers really move to these cities to write software? A little more evidence concerning the “economic opportunities” that are the “strengths of these cities” would be useful. Before moving on to public policy suggestions, might the author first spend a bit more time detailing how Mumbai’s 19 million people are Bangalore’s 6.8 million people are employed? And what kind of upward mobility they’re likely to experience?

I suspect that what’s happening is that people are moving from rural to urban poverty, with little prospect for moving out of misery. Nothing like classical capitalist development seems to be occurring. If this is true, the key question might then be, how is it that the movement off the land (classically associated with economic development) is tied to the rise of mass urban poverty in the current period?

In the countryside, you have a singular opportunity to convert your labor into food, if you have rights or can squat on land; have a means of food storage, and especially if the weather and vermin deigns to cooperate with your goals. If you fail, you are unlikely to be seen by the outside world; you can’t even beg. In a city, you have many more opportunites to convert your labor into money. If you fail you can be seen by others, and may be able to survive by begging. This is enough to drive millions from the countryside into cities.

Malolan R Cadambi, Bangalore, India May 19, 2009 · 1:50 pm

Despite what the author reasons that curtailing urban growth would mean curtailing economic growth, India’s political and economic managers still continue to praise the rural over the urban. Even a well meaning public intellectual and past president, like Dr A P J Abdul Kalam, still toys the idea of “providing urban amenities in rural areas” or PURA as he calls it.

The former President of Singapore, Lee Kuan Yew dismissed the rather simplistic idea of Dr Kalam.

India still cannot learn about the benefits of urbanisation even with it is so evident within the country. For example, the southern state of Tamil Nadu, which is the most urbanised is also one of the most industrialised and richer than compared to the northern state of Bihar, which is rural, impoverised and poor.

Unless the mindset of India’s triumvirate of politicians, bureaucrats and “public sector” intellectuals change, nothing else in India will.

IT hasn’t led to a diaspora as yet for a couple of reasons:

– bandwidth and connectivity costs continue to be a major limitation for most people; only in the large urban centers have high-bandwidth, low-latency connections become widespread.

– IT is a pretty constrained channel for many types of information flow between individuals; until our IT networks and the ‘ambient environment’ they create around the individual become much more pervasive and socially-geared, the types of human-to-human interactions that it supports are fairly rudimentary.

That’s not to suggest interactions necessarily need to be synchronous — we’re comfortable communicating asynchronously through various modalities already — perhaps delegating social interaction through virtual online agents will become a new form of social intercourse?

Emile Durkheim emphasized the importance of social density, division of labor and ‘moral density’ as key interrelated factors in human development.

These should be encouraged — but don’t need to necessarily correlate with physical density. We need to be more mindful to environmental carrying capacity.

High-density population centers also exert a gravitation effect in the construction of social networks — development accelerates when there is less resistance to exchange of information flows.

The trade-off is that physical infrastructure and environmentally-conscious practices tend to lag behind, which is why urbanization in places like India has led to serious environmental degradation.

Given that the current model is proving unsustainable, we really need to seriously consider the alternatives; for example:

– infrastructure investments to handle increasingly higher population densities in urban cores; I’m not sure the political will exists for this at the moment, but here’s where thinking out of the box will become critical (redefine the concept of carrying capacity, for example).

– commit to population redistribution such that humans do not overwhelm the carrying capacity (as we understand it today) of a given area; lowering network connectivity costs and boosting bandwidth can provide incentives for this (or at least, can counteract the centralizing tendency).

My preference is that we relocate folks to increasingly inhospitable environments — where we’re less likely to take the natural environment for granted and destroy it. Where the environment itself is more resistant to the damage that humans inflict upon it.

Force humans to live in deserts or undersea habitations so they become more thoughtful about stewardship of the planet.

I also felt this piece wasn’t very persuasive. It read more like a piece of pro-urban propaganda – “come to the cities! Give up your ignorant village way of life!” As a biologist, I’m often struck by economists trying too hard to find hard and fast rules of “economic behavior” that fail to exclude MANY other possible explanations for the observation at hand.

In this case, I can’t help thinking of many rural centers around the developed world that are peopled by highly educated, plugged in people and that are (partly because of that) major destinations for educated city dwellers (California wine country, for instance). This example would seem to suggest a very simple alternative explanation – where there is human will to create a high quality rural settlement, it shall be done. Gee, that wasn’t hard.

And, it’s also hard to overlook the simple but oh so central rule of modern human organization. After our first century of mass media, it has become quite clear that this media has disproportionately been used for one purpose – to create mass audiences for mass consumption leading to mass wealth (for those selling what the consumers buy). To enable this dynamic, mega cities are just the ticket, while villages are a non-starter.

This is exactly the same principle at work in most parts of the US economy today. Food companies don’t want us all to go to our local baker for fresh, high quality bread, they want everyone everywhere to consume Wonder bread, not because its good for us but for the massing of wealth effect that simply doesn’t happen in a model dependent on small local bakeries. Call it laziness, or call it optimization. But, with a lack of will to create good small living spaces in the country and an abundance of will to mass huge populations for consumption in the cities, it doesn’t seem hard to grasp current migratory trends. Human will underlies human affairs far more than magical “economic principles,” I’ll wager, and what drives human will today is neither new nor mysteriously complex

Let me see if i get this: smart people live in urban areas; dumb people live in rural areas. Therefore, dumb people are better off living in cities, even if the conditions there are desperate, because in cities the chances are greater that some intelligence might rub off on them. There is “no future in rural poverty” but (according to the author) there is a great future in urban poverty, of course.

Am I missing something? Not only is this not at all persuasive because it’s overly simplistic, it’s blatantly elitist and classist. It’s very easy from the vantage point of one’s Harvard/Chicago office to say a life of poverty in the countryside is worse than one in the city where, incidentally, there’s more crime, more violence, and more insecurity. Right Mr. Glaeser, very convincing.

Also, pitting “backward” rural life against examples of modern urban life like IT start-ups is not just offensive to people in rural areas, it’s incredibly divisive. Why would anybody want to be convinced of this “backwardforward” divide? Maybe precisely because we need to justify the $300 armchairs we sit in in our Harvard/Chicago offices?

I’m not sure who the author is trying to impress or what his interests are in making these claims, but this is very embarrassing.

This is an incredibly optimistic concept of a city. Walking around the streets of Dar es Salaam (that’s in Tanzania, East Africa) one does not get the feeling that people move to cities to be a part of the information economy. There are promises associated with cities, but more often them not, they fail to be realized. Rural to urban migration is happening as people are pushed off of rural land, but return migration is also happening as people in Sub-Saharan Africa (and even elsewhere) actually want to go back to villages and contribute to the livelihoods of people there.

And is rural life really so ‘backward’? How insulting is that? As if we who live in the developed cities of the West are so forward-looking and awesome because we contribute to this ‘backwardness’ through our politics and our consumption. Why don’t we call it ‘marginalized by the impacts of the global economy’, like it really is? The very processes idealized in this article cause this so-called backwardness.

We tend to see the purposes of cities (and villages) through a very Western lens, and do not see the wide variety of functions these places actually perform for people.

It is all about community. People get each other out trade ideas. Great genius is often a manifestations of a strong community of people discussing and trading ideas.

Still, cities need to be taken care of. the more people, the more care in keeping the place livable and comfortable.

Malolan R Cadambi, Bangalore, India May 20, 2009 · 2:04 am

One cannot provide adequate health care, housing in rural areas. How do we get doctors, paramedics to stay in a sparsely populated area without pay and quality of life?

For example, in my home state of Karnataka, India, the state’s health department finds it impossible to staff rural hospitals and primary health clinics. On the other hand, small and medium hospitals are booming in smaller cities of the state, which cater to the need of surrounding villages.

Economies of scale are created in cities which automatically lead to a much lower cost of living in cities.

What can perhaps make rural living better off is when it acts complementary to urban life. For this there should be adequate transportation between urban areas and rural areas. This facilitates the movement of food, labor and other services between rural and urban areas.

But why is Œconomics such a dismal science? And why nobody can loosen the Gordian Knot of not fat? Additionally, why the sadness of Splat? Tell me that, Fat Cat?

Ah! Marie Antoinette, you get what you get. The people are poor because they have no leaves of baby spinach with all of its vitamine A. They run out of green houses because of their slimy habits.

Why not feed them with birth patrol tablets?

Three words better explain this move to the cities – now and throughout much of modern history:

commercialization of agriculture

At least where my sister-in-law worked in northern Togo, the rural village life was good and desirable. The problem was there was a high birth rate and not enough farmland to go around. The social system was dominated by older men whose relatives got the best land, so the others moved to the cities (Kara especially) and filled slums. If rural emigration is the cause of atronomically growing cities (and Indian cities doubling in 20 years does not seem likely to be caused by local births), then family planning education in rural areas should be a top priority.

It seems to me that many people are confusing the push and pull factors of urban migration.

One aspect of urban migration is the push — poor rural farmers who can’t compete with Big Agribusiness, and end up taking their chances in the big city. I think that’s the kind of migration all the posters here seem to be most familiar with, and it forms the basis of their disagreement with the argument here. I would agree that the overwhelming majority of urban migrants in developing nations fit this profile.

However, the other urban migration aspect is the pull — cities that have strong and growing knowledge-based economies, with lots of smart and educated people, are attracting smart and educated people from all over. The world’s global cities in developed nations have benefitted from the pull, and now we’re seeing the same pattern emerging in large cities in developing nations.

I don’t see this transformation as being especially pro-urban; it’s an accurate depiction of how globalization is affecting us.

One thing I wonder about, though — if knowledge economy globalization is increasing the concentration of “knowledge” in cities, did the Industrial Revolution have the opposite effect? Did industrialization lead to a dispersion (and ultimately, isolation) of knowledge into far-flung manufacturing towns?

Although the country is one of the least urbanised in the world, Kigali, the capital of Rwanda is the world’s fastest growing city according to The Economist’s Pocket World in Figures 2008 edition.

This is no accident, it is a deliberate strategy, according to a conversation I had with the Mayor of Kigali in August 2007.

Why? Not because big agribusiness is driving farmers off the land. Rwanda is betting its future prosperity on a service (specifically ICT) driven economy.

So, it wants to gather the people in towns and cities where it will be most cost-efficient to provide fibre optic-enable connectivity for schooling, health-care and service oriented employment.

Kigali is also the cleanest city in East Africa! No plastic bags are allowed in the country and every last Saturday of the month between 8 and 12noon, the Rwandese engage in omuganda, a process of cleaning and environmental maintenance across the whole country.

We have to establish that Globalization led to bigger cities first, before we try to find out why.

Pablo Davies, Rio de Janeiro May 30, 2009 · 5:04 pm

Living in another emerging country, I could say city’s growth are inevitable. However, one shouldn’t forget the small villages or rural areas. For instance, take Brazil for example. Its developing patterns are different from India’s. Many rural inmigrants were expelled from their lands due to severe climatic issues, or had their land cheaply bought by mega farm developers. Worst, since the country’s law is not fair for all, these huge farm land owners forged many land licences in order to litellay expell the previous small land owners who were forced to move to our metropolis. Of course that urban Brazil also attracts many people for a promise of a better life.

What I want to say is that city’s attraction isn’t the only cause for massive inmigration… If the government invested in infra-structure and education, as well as social susteinability for smaller villages and farms, many people would prefer living a “slower” life than being urbanly packed. But they don’t seem to have a choice.

Just to notice, Brazilian metropolis were oncedeveloped cities, especially in life quality standards… but after the 60s boom and doubling their size, poverty distorted their reality. Not only big cities, but many smaller ones are atrtactive and well equiped, dispersing the economy like the US.

If only a more precise urban planning took place, as well as a regional planning trying to balance the attractiveness, maybe cityies wouldn’t burst. On the other hand, it is also a political matter. While you have in Rio a corrupt government that is susteined by investing all they can in maintaining the favela system (so the more development projects, the more inmigration and favelas), on the other hand, you have more serious citys managers who attracts development and plan their comute, housing, and green systems at the same time. (Unlike Bangalore, Rio was once very rich, balanced and social developed)

So I would say its not only a mattter of a lack of planning or having to run after a late development, as well as its not something of the present globalizaion scenario, but envolves political and land issues.

Prof. Glaeser
I agree with your hypothesis of globalization leading to larger cities but perhaps not with the reasons you cite.
My two cents on the blog:

Globalization may bring some baggage along with it and possible risk of economic downfall (Premsingh, 2007), but it is the next inevitable step, and necessary step for developing countries to take and pursue in order to build their domestic economy into a stronger world player. It provides for growth in many areas of the domestic economy from jobs, technological advances, more efficiency, and an increased consumer base.