Prof T.R. Lakshmanan- "Economic Evolution and Resurgence in the Metropolitan Knowledge Economies in the Megalopolis"

8/6/2019 Prof T.R. Lakshmanan- "Economic Evolution and Resurgence in the Metropolitan Knowledge Economies in the Megalopolis"

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Economic Evolution and Resurgence

in the Metropolitan Knowledge

Economies in the Megalopolis

T.R. Lakshmanan, William P. Anderson

and Yena Song

Special Panel Session on Urbanization

and Economic Development The

Global Economic Geography Conference,

Seoul, Korea,



Presentation Outline

1. Stages of Urban Evolution

2. Decline of traditional Manufacturing and Riseof Knowledge-intensive production.

3. Evolutionary Transition to the ServiceEconomy

4. Rise of Knowledge-Intensive services In

Megalopolis Metros5. Global and Local Patterns of Agglomeration

in the Megalopolis



Industrial Era Urban Centers in the BostonIndustrial Era Urban Centers in the Boston--

WashingtonWashington DC Corridor 1945DC Corridor 1945





THE NORTH-EAST MEGA REGION



�Compact Industrial Era Pattern (Circa 1945)

�Postwar Metropolitan Decentralized Pattern

�Contemporary Agglomeration, Clustering and

Dispersion of Economic / Demographic Patterns

Stages of Urban Evolution



Population Change in the U.S. and Five MSAs in IPopulation Change in the U.S. and Five MSAs in I--9595

-10

-5

0

5

10

15

20

25

1970-1979 1980-1989 1990-1999 2000-2005

Baltimore Boston New York Philadelphia Washington I-95 US



Decline of Megalopolis Manufacturing

� Two Broad trends:

A. Spatial Shift to the Sunbelt and Suburbs1. Auto and Interstate

2. Right to Work laws

3. Air Conditioning and Public Health Improvements

B. The Evolutionary Transition to the ServiceEconomy



Rise of Knowledge Intensive Production

� Relational interactions and Innovation

Networks

� Adaptive Costs and Learning Systems

Biotech, Instruments, Electronics, Computers



Evolutionary Transition to the Service Economy

� Consumer Preferences Towards Services

� Productivity Improvements

� Embedding Products within Service Functions



Evolution of the Service Economy

� New Knowledge Services

� Control of Globalization through Producer

Services in Major Cities

� Growing Role of Spatial Proximity



Evolution of Earnings from Various Producer Services in U.S.

(Year 2000 billion$)

Banki ng Communi cat i onsSecur i t y Insur ance car r i er sInsurance agent s, brokers, and servi ces Hol di ng and ot her i nvest ment of f i cesBusi ness servi ces Mot i on pi ct ures

Legal ser vi ces Engi neer i ng and management ser vi cesMi scel l aneous servi ces



Financial Services: Top 15 Metropolitan Areas by Employment, 2004

# Metropolitan Area Total

Employment

Share of

National

Employment

CAGR of

Employment

1990-2004

Average

Wages

CAGR of Average

Wages 1990-2004

1 New York-N. New Jersey- ong Island 427,296 13.0 0.44 $168,802 7.66

2 hicago-Naperville-Joliet 151,499 4.6 0.64 $2,540 6.49

3 os Angeles- ong each- anta Ana 142,337 4.3 0.55 $87,517 6.25

4 oston- ambridge-Quincy 133,342 4.0 3.48 $114,696 7.83

5 Philadelphia- amden-Wilmington 113,112 3.4 2.21 $73,158 6.12

6 Dallas-Fort Worth-Arlington 81,144 2.5 2.85 $68,859 5.25

7 an Francisco-Oakland-Fremont 70,702 2.1 0.98 $137,947 8.36

8 inneapolis- t. Paul- loomington 70,163 2.1 2.58 $96,653 7.82

9 art ord-West art ord- ast art ord 65,219 2.0 1.38 $86,851 6.52

10 Atlanta- andy prings- arietta 60,771 1.8 2.64 $77,065 6.22

11 iami-Fort auderdale- iami each 58,887 1.8 2.31 $67,918 5.15

12 Washington-Arlington-Alexandria 58,098 1.8 1.99 $76,880 5.64

13 ouston- aytown- ugar and 50,642 1.5 2.07 $74,517 5.74

14 Phoenix- esa- cottsdale 48,209 1.5 4.94 $56,881 5.03

15 Detroit-Warren- ivonia 47,485 1.4 0.61 $60,081 4.39



ocal Health Services: Top 15 Metropolitan Areas by Employment, 2004

# Metropolitan Area Total

Employment

% Share of

National

Employment

CAGR of

Employment

90-04

Average

Wages

CAGR of Average

Wages 90-04

1 New York-N. New Jersey- ong Island 1,113,374 7.6 1.91 $42,631 3.64

2 os Angeles- ong each- anta Ana 530,527 3.6 1.65 $41,621 2.8

3 hicago-Naperville-Joliet 462,741 3.2 1.77 $40,414 3.5

4 Philadelphia- amden-Wilmington 373,167 2.5 1.71 $38,436 3.17

5 oston- ambridge-Quincy 310,759 2.1 1.45 $42,180 3.95

6 iami-Fort auderdale- iami each 263,410 1.8 3.25 $39,398 2.64

7 Detroit-Warren- ivonia 234,167 1.6 1.1 $37,236 3.21

8 Dallas-Fort Worth-Arlington 233,626 1.6 3.81 $42,324 3.71

9 Washington-Arlington-Alexandria 221,485 1.5 2.29 $43,770 3.35

10 ouston- aytown- ugar and 218,560 1.5 3.3 $41,304 3.5611 Atlanta- andy prings- arietta 197,219 1.3 4.53 $41,368 3.01

12 inneapolis- t. Paul- loomington 190,956 1.3 2.68 $41,107 4.48

13 an Francisco-Oakland-Fremont 189,039 1.3 1.88 $49,720 4.18

14 Pittsburgh 164,144 1.1 1.74 $35,410 2.52

15 t. ouis 154,846 1.1 1.57 $36,003 3.39



Industrial Clusters, Global and Local

Patterns of Agglomeration Over Time

A. Spatial concentration at the corridor level

*Spatial Hirshman-Herfindahl Index

B. Local patterns of spatial concentration and dispersal

*LISA

*Hot and Cold spots



Spatial HHI

2

1

( )n

i i

i

g s x!

! §

where si is the share o the industry o interest¶s

employment in region i,

xi is the share o total employment in region i



I-95 Corridor (Spatial HHI) for Manuf acturing Sectors, 1977, 1987 and 2005

0.00E+00

5.00E-05

1.00E-04

1.50E-04

2.00E-04

2.50E-04

3.00E-04

3.50E-04

4.00E-04

4.50E-04

Apparel Electronics

Industry

S p a t i a l H

H I

1977

1987

2005



I-95 Corridor (Spatial HHI) for Service Sectors, 1977, 1987 and 2005

0.00 +00

5.00 -04

1.00 -03

1.50 -03

2.00 -03

2.50 -03

3.00 -03

3.50 -03

Finan e Bu ine ervi e Legal ervi e

Indu tr

p a t i a

l

I

1977

1987

2005



Local Indicator of Spatial Association

(LISA)

§

§

!

i

i

j

jiij

i

z z

z z z zw

I 2)(

))((

,

z

z is a variable of interest measured at zones i and j and w is a spatial

weight matrix with values 1 for contiguous zones, 0 otherwise.



LISA maps

� Spatial units are counties

� Variable of interest is the location quotient for

industryk

in countyi :

/

/ik i

ik

nk n

emp emp LQ

emp emp

y

y

!



Cluster Map for Finance Services, 1977, 1987,

2005

1977

2005

1987



Cluster Maps for Business Services 1977, 1987, 2005

1977

1987

2005



Cluster Maps for Legal Services 1977, 1987, 2005

1977

1987

2005

Documents

Prof T.R. Lakshmanan- "Economic Evolution and Resurgence in the Metropolitan Knowledge Economies in the Megalopolis"