New Horizons in Regional Science series
Edited by Charlie Karlsson, Börje Johansson and Roger R. Stough
Chapter 5: Spatial Policies, Planning and Urban Competitiveness: The Particular Case of London
Paul Cheshire INTRODUCTION 5.1 It is reasonable to argue that cities are the most fundamental human innovation contributing to welfare and economic productivity of the last 10 000 years. The agglomeration economies cities make possible directly lower the costs of production. In addition they stimulate innovation (Glaeser et al., 1992). Perhaps more importantly still, however, they contribute directly to welfare by allowing more choice in consumption, lower prices and more specialized neighbourhoods with specific and appropriate support systems, more and more interesting social interactions and more varied and better local services. Agglomeration economies and the extent to which cities allow the division of labour to be exploited increase total factor productivity directly: but amenities, local public goods and the direct consumption benefits derived from living in cities also reduce the real supply price of labour. It is obvious that there are costs as well as benefits associated with urban living and the growth of cities. No city is utopia. Space costs rise as people and firms bid for the benefits of accessibility and there are rising costs of crime, pollution and congestion to offset against the increased productivity of labour, more rapid exchange of ideas, greater competition leading to innovation, and the benefits of specialized neighbourhoods and more chances for human interactions. But people flock to cities voluntarily (Roback, 1982; Graves, 1983; Glaeser et al., 1995). Except in the most extreme circumstances people have not been forced to move to cities. For nearly the whole period during which cities have...
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