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Geography Matters

Apr 15, 2011 • Behavioral Economics, Demand, Supply, and Markets, Developing Economies, Households, Innovation, Macroeconomic Measurement • 117 Views    No Comments

According to Harvard economist Ed Glaeser, big US cities deserve our attention. Rather like a ripple, first, as ports, they attracted commerce. Commerce led to more affluence. The affluence brought more people. The people wanted better education. Better education generated more innovation. Combine people, income and education and they attract more people, income and education.

Statistical proof? Los Angeles, New York, and Chicago represent almost 20 percent of the US GDP. The 2000 and 2010 Census Reports also tell us that the trend continues. People are gravitating toward the US West and East Coast.

Such a wealth of data has immense significance for the budget debate. Among the many issues cited by Dr. Glaeser, he asks “whether attempts to bolster depressed areas are actually stopping people from migrating to areas where they might lead more productive, happier lives.” Your opinion?

The Economic Lesson

In a wonderful Teaching Company lecture, Macalester’s Dr. Timothy Taylor, explains why sub-Saharan African geography hindered their economic growth. Lacking port cities for international trade and rivers that connected to the interior, trade and development were constrained.

Apply the same variables to the US and you can see how geography matters.

 

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