Henderson believes that urbanization is an essential part of development for a state (country). With new technologies introduced, there has been a shift from an agricultural based economy to a more industrialized economy. To him industrialization occurs disproportionately in urban places because of the increased opportune to exploit the scale of economies of local agglomeration. The scale economies are the cost advantages that businesses obtain due to size, output, and costs of operation. As the entity grows and its production increases, it will have greater opportune to decrease its cost advantage. He then uses a graph to show the log linear relationship for 1990 through the variations of GDP per capita cross-country (90-91). From this variation, he concludes that economic activities in cities cluster (amass) because of the other businesses nearby, which heightens the neighboring business productivity. This occurs partly due to proximity of buyers and sellers that reduce the transport costs of trade and search cost i...
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...opment as part of regional disparities, and decreases in later stages of development as part of regional disparities. He operationalized his variables with the independent being, economic development and the dependent variable being regional disparities. His research design included statistical data to show the trends of urbanization and productivity in Korea, China, and the U.S. And based off the data collected, his hypothesis stood correct.
Also, this article has a similar characteristic to Chapter 8 of the Climate Change book that I presented. Alan Moran noted that we should not be worried about the impact of climate change right now because its effects are not nearly as detrimental as our infrastructures that are underpriced. In contrast, Henderson states that the cost of infrastructures are underpriced in major cities, and overly priced in those smaller.
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