Primacy and the Role of Secondary Cities

1
Primacy and the Role of Secondary Cities

• The Economics and Politics City Size

2
Introduction Costa Rica

• How is urbanization changing the case of Costa
  Rica?
• Latin America growth of periphery cities and
  secondary cities

3
Costa Rica by Numbers

• Growth of the peripheral cities of San Jose
• Costa Ricas emerging smaller cities

4
Thesis

• Urbanization Is an Economic Decision, but
  Governments Have Exacerbated Problems of Urban
  Concentration. Although Undoing Primacy Through
  Political Means Has Been More Difficult, Smaller
  Cities Are Growing Faster Because of Their
  Comparative Advantages.

5
Evidence of Urbanization in Latin America

• Latin America one of the most highly urbanized
  areas of the world
• Home to disproportionately large cities
• Examples Santiago, Chile and Lima, Peru
• But the trend is changing

6
Latin Americas Largest Cities

• Primate Cities vs. Mega Cities
• Example Lima vs. Sao Paolo
• The historic relationship of economic growth and
  city size

7
Roots of Latin American Primacy

• There are no rules for primate city
  development. Primacy must be considered on a
  case-by-case basis.
• Causes of primacy in some countries include
• Colonial infrastructure
• Colonial government
• Ethnicity
• Urban bias
• Strategies to control social revolution
• Strategies to control investment

8
Economic Efficiency of Cities

• Economies of scale
• Benefits of a central location
• Advantages of agglomeration - the diffusion of
  knowledge and complementary industries
• Productivity increases with city size
• A typical firm sees productivity grow 5 to 10

9
Problems of Primacy

• Polarization of urban rural divide
• Creates problems that threatened profitability.
• Comparative advantage of urbanization economies
  decreases.
• Rents increase and compromise value of
  agglomeration.
• Resources strained by human use. Public goods
  are indeed, rival goods.

10
Example Strained Infrastructure

• Population concentrations produce
• Competition for space and the spread of the city
  onto marginal lands
• Numerous people fighting for resources tied to
  space (water, roads, etc)
• Public services strained as well. Police cannot
  control crime, hospitals are overrun etc

11
Traffic Problems of Mega Cities

• Traffic deceases economic efficiency
• Challenge to economies of scale you cannot
  reach all potential clients

12
Traffic Solutions?

• Brazil has one of the largest civilian helicopter
  markets in the world.
• There may be an upper limit to the benefits of
  economic efficiency and urban concentration.

13
Services for the Poor

• The poor in the largest Latin American cities are
  faced have reduced access to basic services
• Water and urban poverty examples from Santiago
  and Rio de Janeiro

The poorest areas of Santiago have reduced access
to water
14
Disamenties of Scale

• Cost of avoiding the problems of urban life
• Barbed wire, walls, locks, watchmen, weapons etc
• Pollution
• Crime

Air Pollution over Shanghai
15
Economics of the Rise of the Secondary City in
Latin America

• Small and medium cities are growing nearly as
  fast, if not faster, than the largest cities in
  most Latin American countries and especially in
  Venezuela, Brazil and Mexico
• New role in national economies
• Advantages to secondary cities concentrated,
  urban dispersion

16
Labor and Intermediary Cities

• When labor becomes expensive, firms look for new
  locations
• Less organized labor in smaller cities
  microcosm of world trend?
• High-concentration of skilled labor in primate
  cities raises prices through the creation of
  unions

17
Infrastructure and Secondary Cities Evidence
from Mexico

• With few resources, capital is always invested in
  the primate city
• Recently, infrastructure has improved in
  secondary cities as well
• Capital is becoming lighter
• Transportation demands decrease as economies
  become more service-oriented

18
Localization Economies of Secondary Cities

• Specialization and standardization of
  manufacturing.
• High-density of like firms.
• Economies of scale with trade to larger areas.
• Diminished loss of efficiency due to disamenties
  of larger cities.

19
Political Considerations - ISI

• Emergence of Import Substitution
  Industrialization During the 1960s and 1970s
• Policy and Urban Changes Argentina
• State-owned Companies Located in Largest Cities
• Urban Concentration Shantytowns and Poverty

20
Politics, Migration and the New Economic Geography

• With the end of ISI, the economic advantages of
  secondary cities are not constrained by the urban
  bias towards mega-cities
• Movement to secondary cities as a market decision
• Two types of cities peripheral and intermediary

21
Migration and the New Economic Geography

• Political changes
• Maquiladoras
• Economies of scale of new economic zones

22
Migrations to Secondary Cities

• Many migrants are moving to the closest city
  not to the largest
• In-Situ migrations commuting from the house

23
The Role of Government What Latin America can
Learn from Asia

• Common feature Mega-Cities
• Problems of Primacy The governmental reaction
• Example Seoul Korea

24
Attempts at Controlling Urban Growth

• Stopping city growth and promoting rural
  economies
• Transmigration in Indonesia

25
The Role of Government What Latin America Can
Learn From Asia

• Diffusion of growth
• Investments for regional equality instead of
  preferential treatment
• Leveling the playing field by investing equally
  in infrastructure and allowing the market to
  allocate resources

26
Conclusions

• Although economics governs urbanization, politics
  influenced where it would take place until
  recently
• Secondary cities are growing because of
  comparative advantage and market forces
• Role of the state is to enable, but not command
  urbanization

27
References

• Aguilar, Adrián Guillermo. 1995. El Desarrollo
  Urbano de México a Fines de Siglo XX. INSEUR-NL
  Nuevo León, México.
•  
• Baer, Werner. 1972. Import Substitution and
  Industrialization in Latin America Experiences
  and Interpretations. Latin American Research
  Review. Spring, 7(1).
•  
• Becker, Charles. Andrew Hamer and Andrew
  Morrison, "African City Systems and Urban
  Growth", Chapter 3 of Beyond Urban Bias in
  Africa, by Charles Becker, Andrew Hamer and
  Andrew Morrison, Heinemann Publishers New
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•  
• Davis, Diane E. 1994. Urban Leviathan. Temple
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•  
• Gilbert, Alan. 1998. The Latin American City.
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•  
• Human Development Report(HDR). 1999-2000.
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• Lucchesi, Claudio. 2001. Fractional Ownership
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• http//www.aviationtoday.com/reports/rotorwing/pre
  vious/0301/0301fract.htm
•  
• Mutlu, Servet, "Urban Concentration and Primacy
  Revisited An Analysis and Some Policy
  Conclusions" Economic Development and Cultural
  Change, Vol. 37, No. 3 April 1989, pp. 611-613.
•  

28
References Continued

• Nieto, Mercedes Pedrero. 1997. Tendencias
  Recientes del Empleo en Ciudades Medianas. In
  Economía Global y Proceso Urbano en México
  Cambios y Tendencias Recientes. Ed. Adrián
  Guillermo Aguilar and Francisco Rodríguez
  Hernández. UNAM press Cuernavaca, Mexico.
•  
• Richardson, Harry W. "Efficiency and Welfare in
  LDC Mega Cities" in John D. Kasarda and Allan M.
  Parnall (editors), Third World Cities Problems,
  Policies and Prospects, Sage Publications,
  Newbury Park, California, 1993, Ch. 2, pp. 32-57.
•  
• Roberts, Bryan R. 1989. "Urbanization, Migration
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•  
• Rondinelli, Dennis. 1991. Asian Urban
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•  
• Wilkie, Richard W. 1984. Latin American
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•  
• Wilson, Patricia. 1993. Growth Potential of
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