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Why Does a City Grow? Specialisation, Human Capital or Institutions? Michael Storper
Abstract
Why are there persistent differences in income between metropolitan areas? The
answer to this question has evaded much of the scholarship on the topic. Some of the
frameworks that drive empirical research in this field are based on ad hoc combinations
of explanatory factors, ranging from natural climate, to business climate, to land and
labour costs. Theoretical approaches emphasise economic specialisation: some activities
have higher rates of growth than others and this translates into divergence in interurban
growth and income. Yet specialisation itself needs to be explained. International
economics explains different growth rates and income levels among countries by
emphasising specialisation, human capital and institutions. This framework can be
adapted to the analysis of metropolitan growth. The thorniest aspect of doing so is to
consider recursive relationships among the three, as well as decisive events that might
introduce irreversible path-dependent outcomes that differentiate cities.
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