Urban productivity in the developing world

That is a new NBER working paper from Ed Glaeser and Wentao Xiong.  Here are a few things I learned from it:

1. “As agglomeration size doubles, wages rise by approximately five percent in the U.S. and Brazil, but the link is much larger in India and China.”

2. “Soichiro Honda began his remarkable career as a car mechanic.”

3. Per capita gdp is three times higher in Shenzhen than in the rest of China.  Bangalore per capita gdp is 2.5 times higher than the rest of India.

4. In the United States, urbanites earn 30% more, and this gap does not disappear with controls for human capital attributes.

5. The urban to rural earnings gap is 45% in China, 122% in India, and 176% (!) in Brazil.

6. In the U.S….”as area size or density doubles, wages increase by…about five percent.”  But agglomeration economies are much stronger for India or China than for the U.S. or Brazil.  Brazil is a city vs. countryside effect, not so much about size of the city per se, Sao Paulo aside.

7. “In 1961, Benjamin Chinitz argued that New York City was more resilient than Pittsburgh during the 1950s, because New York City had a culture of entrepreneurship that meant that its business leaders were good at adapting to industrial decline.  In modern language, we might describe New York as having a healthy endowment of entrepreneurial capital because its dominant industry, garment production, had limited-scale economies and few barriers to entry.  In contrast, Pittsburgh had U.S. Steel, and the steel industry had large-scale economies, which meant that Pittsburgh trained company men instead of entrepreneurs.”

Overall I found this a very good paper for stimulating thought.  There is also a new paper by Joan Hamory Hicks, Marieke Kleemans, Nicholas Y. Li, and Edward Miguel on agricultural productivity gaps, it is receiving high praise on Twitter.  I have not yet had a chance to look at it.


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