It's pretty much a truism to say the global, interconnected economy benefits some cities more than others. Now a new paper by economists Ed Glaeser and Giacomo Ponsetto shows based on some fancy theory that our interconnected world benefits denser, idea oriented, creative centers like New York much more than industrial, "producer" cities like Detroit. Here's a snippet (via Arnold Kling).
This paper advances the hypothesis that improvements in transportation and communication technology can explain both the decline of Detroit and the reinvigoration of Manhattan. While we present some suggestive evidence, the main contribution of this paper is a model that illustrates how reductions in the costs of communication can cause manufacturing cities to decline and innovative cities to grow. Reductions in transport costs reduce the advantages associated with making goods in the Midwest, but they increase the returns to producing new ideas in New York.
True enough. But it's hard to argue that Silicon Valley is denser than say Detroit or for that matter Philadelphia, or Pittsburgh or Baltimore. Yes density matters, a lot. But other factors are at work as well. Globalization and technology are causing a simultaneous specialization of work across geography - I like to call this the Nashville effect - and also consolidation of the urban hierarchy (what regional scientists call the rank size rule) across the world. We are witnessing the evolution of a single, interconnected global city system. That means the big will get bigger, and the middle will consolidate. And, yes, Chris Anderson, when it comes to cities there will also be lots and lots of them moving around and jockeying for position in the long tail. For those so interested have a look at my paper with GMU modeling phenom Rob Axtell.