Economic Perspective: What Revived Cities?

MARY WALDEN:

“Today’s program asks what revived cities. Mike, when you and I were much younger in the 1960s most big cities in the country were in crisis. Many factories were closing, pollution was terrible, and affluent households were fleeing to the suburbs and exurbs. But today big cities are back. What changed?”

MIKE WALDEN:

“And indeed if we can use a little history here, one of the reasons I got into economics is that I was very interested in what was going on in the cities in the ‘60s and ‘70s when they were on decline. Now they have revived, and really if you look at the revival of big cities it’s not from any big government program. It’s not from urban renewal. Instead it’s been a change in the economic basis of cities.”

“If you look at most of the 1900s, big cities’ economic base was primarily manufacturing, and when manufacturing declined so did cities. But we’ve had the technological revolution in the last 20 years, and the creation of a whole new economic sector called information technology. This sector needs college graduates. They need those college graduates from the big universities, and often times we have seen these big universities, who are graduating well qualified people, in big cities.”

“So it’s really been the fact that information technology and big universities are often located in big cities, and a recent study showed that’s been the single biggest reason why we’ve had a revival of big cities because big cities have changed their economic base, and that economic base now rests on higher education and on information technology. And as cities have revived they’ve added amenities. They’ve added better housing. They’ve added entertainment, et cetera, and young people increasingly want to live in those big cities.”

Mike Walden is a William Neal Reynolds Distinguished Professor and Extension Economist in the Department of Agricultural and Resource Economics at North Carolina State University who teaches and writes on personal finance, economic outlook and public policy.