by David S. Waddell
I remember flying into Shanghai in 2007 over vast agricultural fields punctuated with six- to twelve-lane highway bridges spanning irrigation canals but without connected highways on either side! Confused as to their purpose, I asked a government official why these bridges existed. He explained that China’s development plan included moving the Chinese population into cities connected by vast networks of highways and high-speed rail. On course, China has now urbanized 56 percent of its total population, up from 26 percent in 1990, which prompts the question: What’s so great about cities?
Cities are simply defined as higher density population clusters, but something economically magical happens when populations congregate. For starters, the establishment and growth of urban clusters rapidly increases investment activity. Consider Nashville: Of the 190 development projects now under way in Nashville, 40 exceed $100 million according to the Nashville Business Journal. This capital deployment drives new business formations, lower unemployment, and higher personal incomes.
Overall, urban environments also greatly increase labor productivity. Reductions in transportation costs, higher specialization, and hive-like communication networks lead to vast improvements in per capita GDP levels compared with less dynamic rural environments.
Today, 25 percent of the world’s population lives in the 600 largest cities (populations of 1 million or more) that contribute more than 60 percent of global economic growth. The rapid economic growth across Asia corresponds to the largest urbanization migration in human history. Inelegantly stated, a worker in a factory adds much more economic value than a worker in a field, and a worker in an office adds much more economic value than a worker in a factory. This economic evolution simply does not occur without the structural advantages of city dwelling.
City life provides a host of non-economic benefits as well. Not only do urban areas provide more diverse academic options, 33 percent of urbanites hold bachelor’s degrees compared with just 19 percent for ruralites. Urban life expectancies also outpace rural life expectancies by more than two years. Most of this divergence comes from higher accident rates, higher lung cancer rates, more cardiovascular afflictions, and less access to healthcare services in rural areas.
Environmentally, cities are actually “greener” than suburbs. This may seem counterintuitive, but farms deforest much more than skyscrapers and relative environmental impacts per person decrease significantly as populations become more dense. Additionally, urban density also increases public transportation use, reducing vehicle emissions per capita. Lastly, while the criteria for happiness lends itself to variance and interpretation, there are numerous studies that associate more social engagement with higher levels of overall happiness. That being said, noisy and busy cities can also create higher levels of stress and anxiety. Try driving in Washington, DC, for example. Overall, however, the benefits of city dwelling must exceed the benefits of country living or 82 percent of Americans wouldn’t reside in cities.
The bottom line is that increasing the livability and density of Memphis’ inner city could improve economic, educational, and health outcomes for citizens within our MSA. Development strategies for our urban core should accompany growth strategies for the Memphis economy. The development of St. Jude, the inclusion of ServiceMaster, and the expansion of downtown residential and hospitality options bodes well for our inner city, which bodes well for Greater Memphis.
David S. Waddell is CEO of Waddell and Associates. He has appeared in The Wall Street Journal, Forbes, Business Week, and other local, national, and global resources.
Visit waddellandassociates.com for more.
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