1. Today’s Agenda Review Review Internal and External Economies Internal and External Economies Economic Base concept Economic Base concept Urban economic structure Urban economic structure Urban system Urban system

2. The City as an Economic Node Urbanization as a process Urbanization as a process Once a feature of development Once a feature of development Urbanization has come to an end, Urbanization has come to an end, Levelling off at about 80% urban Levelling off at about 80% urban Now a feature of underdevelopment Now a feature of underdevelopment Rapid urbanization is found in developing countries Rapid urbanization is found in developing countries Megacities found in LDCs (Table 4.10) Megacities found in LDCs (Table 4.10) Mexico City now largest at 27.6 million! Mexico City now largest at 27.6 million!

3. Why Do Cities Grow Large? Agglomeration Economies Contrast internal and external economies Urbanization Economies Localization economies Transfer economies

4. Why Do Cities Grow Large? Communication Economies Face-to-face interaction Negotiation Building relationships Document transfer Document transfer Social interaction potential Social interaction potential Conventions/trade shows Conventions/trade shows Collaborative/joint decision-making Collaborative/joint decision-makingBoards/committees

5. Why Do Cities Grow Large? Communication Economies Jazz as a form of musical communication ABC Person of the Week, October 22, 2004 Wynton Marsalis: “We all congregate here [NYC] because of the energy of the place and the diversity of the people” Pred’s Circular and Cumulative Causation (p. 50) “Enhanced possibility of Invention and Innovation”

6. Urban Economic Base Basic activity – ‘exports’ outside city Basic activity – ‘exports’ outside city City forming, growth inducing City forming, growth inducing Non-basic activity Non-basic activity City serving City serving Urban multiplier Urban multiplier

7. Hypothetical Problem New meat packing plant to locate in Lethbridge to serve California market New meat packing plant to locate in Lethbridge to serve California market 300 jobs to be created with prospect of second shift adding 200 additional jobs 300 jobs to be created with prospect of second shift adding 200 additional jobs What will be the total urban impact? What will be the total urban impact? What is the UM in Lethbridge? What is the UM in Lethbridge?

8. Hypothetical Urban Multiplier BA = 10,000 and NBA=10,000 BA = 10,000 and NBA=10,000 UM? UM? Total new employment: Total new employment: Phase 1 300*2=600 Phase 1 300*2=600 Phase 2 200*2=400 Phase 2 200*2=400

9. Economic Base Concept Foundation for classification of cities Foundation for classification of cities A crude basis for predicting growth A crude basis for predicting growth Acknowledges urban interdependency and location of markets Acknowledges urban interdependency and location of markets (skip minimum requirements pp.142-143) (skip minimum requirements pp.142-143)

10. Chasing Smoke stacks Basic activity is NOT just manufacturing! Basic activity is NOT just manufacturing! But manufacturing has a relatively high multiplier effect (interindustry) But manufacturing has a relatively high multiplier effect (interindustry) But leakages can be huge But leakages can be huge In and out! In and out! Empresa Brasileira de Aeronáutica S.A. Empresa Brasileira de Aeronáutica S.A.