Monday, February 21, 2011

Cities, Thick Markets, and Egypt’s Development

The economics of this applies later in the semester, so it is not required for Exam 2. But it is current right now.

David Leonhardt’s February 16th New York Times piece entitled “For Egypt, a Fresh Start with Cities” cites this astonishing fact:

It is the only large country to have become less urban in the last 30 years …

That’s amazing. We bitch and moan a lot about cities, and in the US it’s becoming easier not to live in them. But in a developing country, they are the places that have the thick markets that lead to development.

We’ll spend a good chunk of March and April talking about the economic insights of this guy:

“Being around other people,” says Paul Romer, the economist and growth expert, “helps make us smarter.”

And, both the revolutions occurring this year, and the terrorism of the last couple of decades, is being driven by educated people who feel that their skills are stifled:

A 35-year-old urban Egyptian man with a high school education who moves to the United States can expect an incredible eightfold increase in living standards, the researchers found. Immigrants from only two countries, Yemen and Nigeria, receive a larger boost. In effect, these are the countries with the biggest gap between what their workers can produce in a different environment and what they are actually producing at home.

BTW: Leondardt links to the huge database of development indicators available through the World Bank.

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