Richard Florida’s Insights on Cities, Communities, and Economic Growth
Richard Florida’s Analysis of Cities and Communities
Richard Florida summarizes recent advances in our understanding of cities and communities, providing statistics on people’s behaviors.
The Myth of Geography’s Demise
Florida argues that geography is not dead, as both people and the economy concentrate in specific places. He cites examples like Austin, Silicon Valley, New York City, and California. Places act as incubators for creativity, innovation, and new industries. Place, rather than being an “abstract space,” is essential to economic life. The economy takes shape around concentrations of people in real locations.
Agglomeration and Cluster Theory
Place remains important due to the tendency of firms to cluster. Companies group together for productive efficiencies, as economist Marshall suggests, or because certain activities require face-to-face contact. However, companies also cluster to take advantage of concentrations of talented people, which drives innovation and economic growth.
Social Capital Perspective
Robert Putnam’s theory suggests that regional economic growth is associated with tightly knit communities. However, Florida’s research shows a different trend: people seek “quasi-anonymity,” valuing community but not wanting it to be invasive. Weaker ties are now more effective, and newer communities are more effective in generating economic growth and attracting high technology. The ways in which economic growth was previously created have changed.
Places with close ties promote stability, while places with weaker networks are more open to newcomers and new ideas.
Human Capital and Urban-Regional Growth
The theory of human capital posits that people drive regional growth. Traditionally, places grew due to transport routes and natural resources. However, human capital theory argues that the key to regional growth is the endowment of highly educated and productive people. Robert Lucas believes that cities would be economically unviable without the productivity effects associated with human capital. According to Glaeser, this concentration of human capital is the ultimate source of regional agglomerations of companies.