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Urban Economics:

Updated: Jul 16, 2019

There are different explanations or point of views on the existence of the cities we live in. For a sociologist, it may be social interactions which are then transformed into spatial connections. Planners then manage land use for an organised development or in other words a civilisation which is above the natural environment. Architects then give meaning to these spaces with their creative design interventions. Furthermore, social institutions like schools, colleges, shopping malls, hospitals, libraries, theatres, art galleries, museums play an active role in nurturing local communities. In addition to the collection of taxes, local authorities with the help of planning policies facilitate investors to invest into business, generating revenue for the city’s operation and maintenance. Certain economic forces cause employment to be concentrated in certain areas of the city and thus the cycle is complete and the city starts functioning. Every social actor within such planning system has its array of flagship programs, awards, showcase projects, and slogans that bring diversity in planning, which make cities vibrant in nature, strengthening capitalism, improving the design and quality of their products.

Cities are considered to be the powerhouse of the national development and they contribute immensely towards the improvement of our national wealth. Thus, cities are dominated by economic forces and they play an important role in their governance. Advancement in technology and introduction of the internet has changed the face of capitalism and is more fragmented than Marxist ideology which emphasised on highly structured centralised planning and division of labour. Developed nations like the UK and America have started to become more isolated from their own trade circles, rejecting customs union and existing single market economies. This would strengthen globalisation to some extent but the transition period collaborating with new countries in the market would be a cultural challenge. There is a sense of emptiness in time and space and there is an urgent need of an ideological base and common understanding between nations across the world, mutually respecting their diversity. The economic forces should be based on these new rationalities, where ‘purpose’ and not the ‘turnover’ should become the focus of development which will enable people to live mentally as well as physically prosperous life.

The economy of cities is not just in terms of the bank reserves, gold or real estate assets but also as human or social assets. The universities play a major role in developing these and we can illustrate so many examples where cities are prospering because of the quality of the education they get or the contribution they make where their students live. What makes human assets more productive is not just the knowledge or number of years of education in their subject but also the mannerism, and aim of education to become a better citizen. It is this credibility among young students which make cities stronger and better along with their economic growth. In the economics of cities of developing nations, it is also important to have a foreign direct investment with high-income levels in the country but the real achievement is only to benefit the local human assets. Foreign direct investment also helps in reducing the fiscal deficit, inflation and challenges the local market to improve the quality of the local brands and boosts capitalism. Such investment in human assets is important in the long term which avoids the cost of urban issues such as unemployment, homelessness, crime or drug addiction.

In conclusion, each country has its own system of economics, cultural, geographical, socio-political and historical advantages to their benefit and act cohesively towards the development of the nation. Research-based policies with regular monitoring and updating are required for a healthy economy of cities and nations in turn.

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