Agglomeration Economies Quotes

Almost all official statistics and policy documents on wages, income, gross domestic product (GDP), crime, unemployment rates, innovation rates, cost of living indices, morbidity and mortality rates, and poverty rates are compiled by governmental agencies and international bodies worldwide in terms of both total aggregate and per capita metrics. Furthermore, well-known composite indices of urban performance and the quality of life, such as those assembled by the World Economic Forum and magazines like Fortune, Forbes, and The Economist, primarily rely on naive linear combinations of such measures.6 Because we have quantitative scaling curves for many of these urban characteristics and a theoretical framework for their underlying dynamics we can do much better in devising a scientific basis for assessing performance and ranking cities. The ubiquitous use of per capita indicators for ranking and comparing cities is particularly egregious because it implicitly assumes that the baseline, or null hypothesis, for any urban characteristic is that it scales linearly with population size. In other words, it presumes that an idealized city is just the linear sum of the activities of all of its citizens, thereby ignoring its most essential feature and the very point of its existence, namely, that it is a collective emergent agglomeration resulting from nonlinear social and organizational interactions. Cities are quintessentially complex adaptive systems and, as such, are significantly more than just the simple linear sum of their individual components and constituents, whether buildings, roads, people, or money. This is expressed by the superlinear scaling laws whose exponents are 1.15 rather than 1.00. This approximately 15 percent increase in all socioeconomic activity with every doubling of the population size happens almost independently of administrators, politicians, planners, history, geographical location, and culture.

Henrik Poulsen, who now advises an investment company, described how his firm recently bought a Danish company that makes control systems for wind farms: “Now we want to expand this company and we’re looking for companies that we could merge into this platform.” Naturally, they’re looking around the world. But the prospects they’ve found “are all located within a few hundred kilometers” of each other in Jutland. “Which is a bit crazy,” said Poulsen. Economic geographers like myself call this “clustering” or “economies of agglomeration.” It’s what happened for film in Hollywood in the 1920s and for tech in Silicon Valley in the mid–twentieth century. Jutland is now the Silicon Valley of wind energy—which is striking for a country whose population is just over half that of Los Angeles County.

is a collective emergent agglomeration resulting from nonlinear social and organizational interactions