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Introduction
• Urban economics is broadly the economic study of urban areas; as such, it involves using the tools of economics to analyze urban issues such as crime, education, public transit, housing, and local government finance.
• It is a branch of microeconomics that studies urban spatial structure and the location of households and firms.
Scope of Urban Economics
• Market forces :
– relates to how the location decision of firms and households causes the development of cities.
– The nature and behavior of markets depends locations therefore market performance partly depends on geography.
– The location decisions of both firms and households create cities that differ in size and economic structure.
– The urban economist is able to address why cities develop where they do, why some cities are large and others small, what causes economic growth and decline, and how local governments affect urban growth
• Land use :
– to analyze the spatial organization of activities within cities. In attempts to explain observed patterns of land use, the urban economist examines the intra-city location choices of firms and households.
– Considering the spatial organization of activities within cities, urban economics addresses questions in terms of what determines the price of land and why those prices vary across space, the economic forces that caused the spread of employment from the central core of cities outward, identifying land-use controls, such as zoning, and interpreting how such controls affect the urban economy.
• Economic policy :
– is often implemented at the urban level thus economic policy is often tied to urban policy.
– Urban problems and public policy tie into urban economics as the theme relates urban problems, such as poverty or crime, to economics by seeking to answer questions with economic guidance.
• Government expenditures and taxes :
– analyzes the efficiency of the fragmented local governments presiding in metropolitan areas
• Transportation and economics :
– is a theme of urban economics because it affects land-use patterns as transportation affects the relative accessibility of different sites.
– Issues that tie urban transportation to urban economics include the deficit that most transit authorities have, and efficiency questions about proposed transportation developments such as light-rail
• Housing and public policy
– relate to urban economics as housing is a unique type of commodity.
– housing is immobile, when a household chooses a dwelling, it is also choosing a location.
– Urban economists analyze the location choices of households in conjunction with the market effects of housing policies.
– In analyzing housing policies, market structures are required.
– however problems encountered in making this analysis such as funding, uncertainty, space, etc.
Concept of Urbanization
• Urbanization refers to general increase in population and the amount of industrialization of a settlement.
• It includes increase in the number and extent of cities and symbolizes the movement of people from rural to urban areas.
• Urbanization happens because of the increase in the extent and density of urban areas.
• The density of population in urban areas increases because of the migration of people from less industrialized regions to more industrialized areas.
• Urbanization is closely linked to modernization, industrialization and the sociological process of rationalization.
• Urbanization can describe a specific condition at a set time, i.e. the proportion of total population or area in cities or towns, or the term can describe the increase of this proportion over time.
• So the term urbanization can represent the level of urban relative to overall population, or it can represent the rate at which the urban proportion is increasing
History of Urbanization
• The beginning of urbanization can be traced back to Renaissance times in 16th century.
• Turkish assaults resulted in movement of Christians from the east to western European countries.
• As a result, trade grew and European cities along the coasts developed greatly.
• A further boost for urbanization was created with the arrival of the “Industrial Revolution”.
• Populations of cities in Europe and USA started to increase significantly in the 18th and 19th centuries.
• However, urbanization started in Asia only in the first half of the 20th century and in the second half of the 20th century in Africa, when the countries obtained independence from colonial rule
Scope of Urbanization
• Movement :
– As more and more people leave villages and farms to live in cities, urban growth results.
– Urbanization rates vary between countries.
• Causes :
– Urbanization occurs naturally from individual and corporate efforts to reduce time and expense in commuting and transportation while improving opportunities for jobs, education, housing, and transportation.
– Living in cities permits individuals and families to take advantage of the opportunities of proximity, diversity, and marketplace competition
• Economic effects :
– include a dramatic increase and change in costs, often pricing the local working class out of the market, including such functionaries as employees of the local municipalities.
– Urbanization is often viewed as a negative trend, but can in fact, be perceived simply as a natural occurrence from individual and corporate efforts to reduce expense in commuting and transportation while improving opportunities for jobs, education, housing, and transportation.
– Living in cities permits individuals and families to take advantage of the opportunities of proximity, diversity, and marketplace competition. • Environmental effects – The urban heat island has become a growing concern and is increasing over the years. – The urban heat island is formed when industrial and urban areas are developed and heat becomes more abundant
• Changing forms
– Different forms of urbanization can be classified depending on the style of architecture and planning methods as well as historic growth of areas.
– Land use changes.
– Immigrations : peoples move from rural area to the cities.
Concept of Urban Growth
• as an economic phenomenon is inextricably linked with the process of urbanization.
• Urbanization itself has punctuated economic development.
• The spatial distribution of economic activity, measured in terms of population, output and income, is concentrated.
• The patterns of such concentrations and their relationship to measured economic and demographic variables constitute some of the most intriguing phenomena in urban economics
Urbanization and Urban Growth
• Size distribution of cities
– may increase either because agents migrate from rural to urban areas (urbanization) or because economies grow in terms of both population and output, which results in urban as well as rural growth.
• Efficiency of production in an economy
– Urban centres may not be sustained unless agricultural productivity has increased sufficiently to allow people to move away from the land and devote themselves to non-food producing activities.
• Economic growth – Most economic activity occurs in cities.
– links national and urban growth.
– An economy can grow only if cities, or the number of cities, grow.
Spatial Structure
• Spatial structure of sample points is represented by the weights of measured points as to the unmeasured point.
• A city spatial structure the geographical distribution of people and other land users across the metropolitan area, and the pattern of daily trips across the metropolitan area
Scope of Spatial Structure
• The Monocentric City :
– is a descriptive model of resource allocation in a city that was designed to explain precisely such phenomena.
– city model of a disc-shaped Central Business District (CBD) and surrounding residential region has served as a starting point for urban economic analysis.
– Monocentric City has become weaker over time due to changes in technology, particularly due to faster and cheaper transportation and communications.
– The city is envisaged as a circular residential area surrounding a CBD in which all jobs are located.
– The theory distinguishes between an open city with perfectly elastic population size and a closed city with fixed population.
• The Polycentric City :
– Polycentric city refers to the presence of several larger metropolitan areas contributing to a country’s economic performance, whereas a situation of dominance in terms of size and economic significance of one larger metropolitan region over several comparatively small metropolitan regions is referred to as monocentrism or urban concentration.
– It has been applied at the interurban scale to challenge the monocentric model which were used in the pioneering work of Ernest Burgess in his famous depiction of the city as a series of concentric circle.
– A polycentric city is defined as a city which consists of a centre and an organised system of concentrated sub centres.
Monocentric vs Polycentric
• No city is purely monocentric or purely polycentric.
• Some cities are dominantly monocentric or dominantly polycentric and other are in between.
• No city spatial structure is permanent
• Monocentric and polycentric cities are different and both type of structure have advantages and disadvantages
• Different municipal objectives might fit better the monocentric or the polycentric model
Spatial Structure and Urban Growth
• Urban spatial structure or urban structure refers to a cluster of concepts concerned with the arrangement of urban public space.
• The way that urban public space is arranged affects many aspects of how cities function and has implications for accessibility, environmental sustainability, safety, social equity, social capital, cultural creativity and economics
