1. Urban Economics 1
Dr. Adnan A. Alshiha

2. The Nature And Function of Cities
City: is the permanent concentration of people in space.
Why people concentrate in space?
To attain higher standard of living.
This is possible for two reasons:
Concentration enhance productivity
Concentration allows a grater variety of goods & services.
The key characteristic of a city is access
Workers are accessible to firms.
Buyers are accessible to retailers

3. Negative Aspect of Concentration
Being too close to each other is the basis of many cost.
Congestion.
Pollution.

4. What is Urban Economics
All problems of cities (slums, crimes, poverty, concentration, pollution) have economic aspect.
Most of these problems can be minimized or solved by means of economic tools
As a discipline, urban economics attempt to explain and predict the allocation of resources and distribution of real income (good & services) within and among urban area.

5. The Nature of Economic analysis
Interurban analysis: among cities
Why city grow and develop?
Do cities compete with each other?
Why firms and people migrate to certain cities?
Interaurban analysis: Within a city
How are location and land-use decisions are made?
Do residents choose location on a rational basis?
How can efficient transportation system be developed within urban area?
What is the most efficient structure of government?
How poverty and pollution affect by heavy concentration of people in space?

6. Models of Urban Development
Ad hoc Models
Culture-Base Approach
Stages of Urban Development

7. Ad hoc Models
Special Cases provide valuable insight into overall urbanization process.
Initial – advantage
such as: being near a needed resources.
Threshold Effect: small village grow into cities when the demand from the surrounding population reaches certain level strong enough to induce citification.
External or agglomeration Economics: firms are attracted to cities that produce input for their products and also if buyers near by.
Cumulative Causation: any economic change would lead to other changes.

8. Culture-Base Approach
Urbanization has its beginning in specialization and the division of labor.
Specialization and the division of labor are extended by technical innovation in a dynamic and cumulative process
Spatial ordering of economic activities is a direct result of this process.
Production and distribution are now concentrated in cities

9. Stages of Urban Development
Economic development divided into five stages:
1- The traditional society
2- The precondition for takeoff
3- The takeoff
4- The drive to maturity
5- The age of high mass consumption

10. 1- The traditional society
People may be concentrated.
Few if any internal or external economies of scale.
Everyone is a farmer or craftsman.
Little manufacturing occurs.
The major constrain of this stage is that a ceiling exists on productivity.

11. 2- The precondition for takeoff
People not only concentrate on space, but also but also learn that specialization can reap rewards.
With the steady flow of innovation accompanying this stage, markets will expand.
Thus a free market system or efficient centralized government is a necessary condition for this stage.
During this stage the structure of the economy become export oriented.

12. 3- The takeoff Is characterized by growth
New industry appears linked to export sector.
Local services expand rapidly.
New technique in the export sector are induced by new suppliers.
The city is clearly an attractive force , thus urban agglomerates appear.

13. 4- The drive to maturity
Technology is expanded to the whole economic activity.
Cities begin to be self-sufficient and to serve the surrounding region.
self-sufficient means that the majority of employment in a city is used in the production of goods and services for that city.

14. 5- The age of high mass consumption
This is a period when per-capita income is high enough for many to purchase durable good beyond their basic needs.
Society begin to show care for something beside extending technology and growth.
Social welfare and security find their way into social utility function.