Tim Harford opines on the future of cities in his book The Logic of Life:
It's true that modern communications technology is allowing some forms of work that once had to be done in the city to be done in the countryside. But as we've seen, it also allows the most efficient suppliers-be they New York advertisers, London financiers, Milanese designers, or Bangalore's software engineers-to reach anywhere in the world. It makes cities more manageable, unlocking their diversity as a source of friendship and of business, and encourages global travel that links one city to another. Throw in the increasing importance of the service sector and the fact that services are more varied and high-quality in cities, and the rational conclustion is inescapable: Cities are likely to enter a new golden age.
While I think that in the long-run Harford is right, the financial crisis looks set to cause at least a brief reversal in the rise of cities. As an example, massive numbers of rural-to-urban migrants in China have lost their jobs and look set to return (or have already returned) to the countryside. As part of its response, the Chinese government has been directing subsidies to the agricultural sector. While this might help reduce unemployment in urban centers, a reversal of rural-to-urban migration suggests an overall reduction in productivity levels and missed out economies-of-scale.
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