What Makes Cities More Competitive?

Entrepreneurship is vital to economic growth. While India has historically had low entrepreneurship rates, this weakness is improving and will be an important stepping stone to further development. This paper explores the spatial determinants of local entrepreneurship in India for both manufacturing and services. At the district level, our strongest evidence points to the roles that local education levels and physical infrastructure quality play in promoting entry. We also find evidence that strict labor regulations discourage formal sector entry, and better household banking environments encourage entry in the unorganized sector. Policy makers wishing to encourage entrepreneurship in their local areas have several policy levers that can be exploited.

Source: "What Makes Cities More Competitive? Spatial Determinants of Entrepreneurship in India," by Ghani, Kerr, and O’Connell (September 2012). 

It is interesting that the authors did not include crime as an explanatory variable.

The inverse relationship between poverty and city size

Is there an inverse relationship? A priori I could not tell. 

This paper provides evidence from eight developing countries of an inverse relationship between poverty and city size. Poverty is both more widespread and deeper in very small and small towns than in large or very large cities. This basic pattern is generally robust to the choice of poverty line. The paper shows, further, that for all eight countries, a majority of the urban poor live in medium, small or very small towns. Moreover, it is shown that the greater incidence and severity of consumption poverty in smaller towns is generally compounded by similarly greater deprivation in terms of access to basic infrastructure services, such as electricity, heating gas, sewerage and solid waste disposal. We illustrate for one country – Morocco – that inequality within large cities is not driven by a severe dichotomy between slum dwellers and others. Robustness checks are performed to assess whether the findings in the paper hinge on a specific definition of “urban area”; are driven by differences in the cost of living across city-size categories; by reliance on an income-based concept of well-being; or by the application of small-area estimation techniques for estimating poverty rates at the town and city level.

That is from a new published paper, "Is There a Metropolitan Bias? The Inverse Relationship between Poverty and City Size in Selected Developing Countries," (2012). (A draft - 2010 - is here) by Ferre, Ferreira, and Lanjouw.

Academics fads in urban development

Mostly Economics reviews the interesting article titled "Urban-Development Legends" by Mario Polese. The bottom line is:

The history of local economic development is a story of academic fads.

The article describes these fads that come and go. It explains how little we know about urban development. And it proposes a theory of why these theories have not worked. Probably the key is in Mostly Economic's final sentence:

Good governance and leadership is needed in anything you run. 

To understand the paradox of urban development one needs to understand the black boxes of governance and good leadership. And most likely, one of these boxes is inside the other one.