Geography Reference
In-Depth Information
geographically close suppliers and customers. Moreover, this behaviour
is even evident in industries in which the product value-weight ratios are
extremely high and for which transport costs typically account for less
than 1 per cent of value (McCann and Fingleton 1996). In other words,
increasing localization behaviour is present even in the very industries
which proponents of the 'flat world' thesis would have deemed it to be
entirely unnecessary (McCann 2007, 2008).
The third set of indirect empirical evidence which suggests that spatial
transactions costs have in fact increased, again highlighting the comple-
mentarity of various forms of proximity, comes from observations of
urban growth. The role of urban scale and centrality appear to be becom-
ing ever more critical as sources of economic growth. Over the last three
decades, the increasing importance played by cities as engines of national,
regional and global economic growth is demonstrated by the fact that the
proportion of people living in urban areas has increased in all parts of the
global economy (Heitor 2004; Richardson and Bae 2005). The number of
cities in the world with a population of more than one million went from
115 in 1960 to 416 in 2000; for cities of more than 4 million the increase
was from 18 to 53, and for cities of more than 12 million it was from 1 to
11 (Venables 2006). By 2006, for the first time, more people worldwide
lived in urban areas than in non-urban areas (Mastercard 2007). This
unprecedented urban growth suggests that it is becoming increasingly
important for firms and people to be clustered together, and in particular,
for high skills and high knowledge workers and firms to be co-located.
Recent evidence suggests that not only is there an increasing share of
university educated human capital living and working in cities (Berry and
Glaeser 2005), but that this proportion of highly educated workers is also
correlated with the existing human capital stock (Berry and Glaeser 2005),
and both are correlated with the growth of the city (Glaeser et al. 1995;
Glaeser and Shapiro 2003; Berry and Glaeser 2005; Shapiro 2006). Cities
are increasingly being dominated by high human capital individuals as
more and more mobile workers respond to the rising wage premia associ-
ated with high value-added knowledge work in cities. After conditioning
on individual characteristics it is clear that wages are indeed higher in high
human capital cities (Shapiro 2006). Furthermore, US cities are found to
be becoming more dissimilar in terms of their human capital composi-
tion such that regional divergence appears to have superseded previous
decades of regional convergence (Berry and Glaeser 2005; Lazonick 2008).
Further evidence in support of the argument that access to cities is
becoming increasingly important comes from US counties (Partridge et al.
2007) and European sub-national regions (Caniëls and Verspagen 2003).
In both cases, local growth is found to be directly related to an area's
