Cities, Development and

Economic Growth
Midlands State University
Department of Sociology
Urban Sociology (SOC 104)
Lecturer: Mr T. Moyo
Global capitalism and metropolis

► The patterns of everyday life that we observe in the contemporary metropolis are the consequence
of the complicated and continuing interaction of economic, political, and cultural forces that have
not always been studied in urban sociology.
► In recent years, urbanists have come to appreciate just how important the link is between cities or
suburbs and changes in the economy.
► Prior to the 1970s, discussions about urban political economy assumed that the most critical
influence on urban growth and development was the behavior of local business people.
► A resident of a town might open up a store or factory. The owner would be known by others in the
area. Jobs would be created, and local residents would apply for and fill them.
► Now economic activity in metropolitan communities is increasingly controlled by decisions made at
the global level. Businesses are owned and managed by people from distant locations.
► The local television repair shop, for example, may represent a manufacturer, such as Sony, whose
headquarters are in another country, say Japan.
► The television sets themselves may be assembled in Korea or Malaysia.
► Finally, the selling and repair of the company’s product may be supervised by foreign
representatives of the manufacturer living in the United States.
► The global perspective has important implications for the study of metropolitan
regions.
► Prior to the 1970s, urban sociologists saw changes in the city as emerging from the
interaction of many local interests in a shared and common space.
► The ecological approach, as it is called, meant that the organization of the city was
not caused by “the planned or artificial contrivance of anyone” but emerged
full-grown out of the “many independent personal decisions based on moral,
political, ecological, and economic considerations” (Suttles, 1972:8).
► Today we possess a different understanding of urban organization as being caused by
the actions of powerful interests, many of which have their home bases in places far
removed from local communities.
► Their decisions, for example, to open a plant in one location, close one down in
another, buy up farms to build houses, or tear down existing housing to create
mini-malls or apartment buildings are all so important that they affect the
well-being of the entire community.
► The global perspective, however, does not suggest that all important influences on
metropolitan development derive from the global level.
► Important economic and political forces also arise from within local communities
that can account for change.
► Since the 1970s, urban scholars have paid increasing attention to the relationship
between capitalism and the metropolis.
► Competition among businesses that may not have a direct effect on urban space has
been overshadowed by the competition among different places for their share of
global investment.
► Local populations and community well-being are also affected by changes in
employment, the level of economic activity, and growing lifestyle disparities
between low-skilled or semiskilled workers and professionals living in the
metropolis.
► All of these aspects constitute a new dimension to the study of urban sociology.
Supply-side in urban development

► Prior to the 1970s, urban scholars looked at city and suburban growth as an expression of individual
desires.
► For example, people moved from the city to the suburbs, it was believed, because they preferred
the lifestyle in the suburbs. Or investors picked a particular plot of land to develop because they
liked its size and location.
► Individual actions based on individually held beliefs or needs might be termed the demand side of
market activity because they express the ways in which people and business act on their own
desires.
► Urban sociology prior to the 1970s viewed growth almost exclusively in this manner.
► At present, we are aware of several factors that operate to promote development in specific ways
and thereby mold individual desires through incentives.
► These factors represent the supply side of market activity resulting from individual choice.
► Powerful social forces can create opportunities that persuade people to follow courses of action that
they otherwise might not.
► Two important supply-side sources of incentives in the development of metropolitan regions are
government and the real estate industry.
The role of government in Urban
development
► The abstract model of capitalism represents economic systems as involving
limited government intervention.
► This is not the case for modern economies.
► For instance, the United States, like other industrialized nations, has an
economy that is influenced not only by government regulations but also by
the direct spending of government tax dollars on particular public projects.
► The combined action of laws or regulations and direct investment provides
incentives for both businesses and individual consumers to behave in certain
ways.
► When city dwellers who are renters decide that they want to move to the suburbs, they are expressing their
personal preference.
► This decision may be occasioned by demand-side factors such as problems with the public schools and high
rents that in effect push them out of the city.
► Our suburban movers likely have chosen a suburb with single-family homes that are affordable within their
household budget.
► Because of government tax incentives on mortgage payments, it pays to own your home rather than rent.
► Government programs provide an enticement that pulls people in the direction of homeownership in the
suburbs.
► In every case the decision to move to the suburbs is a complex one that is prompted by both demand- and
supply-side factors.
► For years urban sociologists focused on individual decisions and neglected the supply-side factors.
► The housing crisis of the past decade has focused attention on the way government at the local, state, and
federal levels has operated to create opportunities and incentives that channel behavior in specific ways.
► In subsequent chapters we will see how this “political economy,” the linked actions of business and government
in urban development, promotes the growth of the multinucleated metropolitan region.
The role of Real Estate in Urban
development
► With some notable exceptions (Hoyt, 1933; Hughes, 1928; Form, 1954), early urban
sociologists neglected the critical role the real estate industry plays in metropolitan
development.
► Previously, urban organization was viewed not as the product of any particular
interest but as the interplay of many separate interests (the ecological approach).
Presently, we understand that the opposite is often the case.
► Special interests such as global corporations or even investment firms can make or
break a town depending on where they decide to invest new capital.
► But the single most important source of special interests in the development of the
metropolis is the real estate industry.
► The real estate sector includes corporations and banks, as well as land developers
and construction companies, that invest in the development of land use and
housing, including the land and the built environment themselves.
► The construction of new spaces proceeds through the actions of all those individuals,
financial conduits, and corporations that make money from the change (or turnover) in land
use.
► Because a great deal of money can be made through this type of activity, real estate
interests are powerful special actors in the development of the metropolis, and their
influence is greatly felt.
► At any given time and on any piece of land, real estate forces can converge to turn over the
existing use and engage in development that changes the utilization of local space.
► All of this is done in the pursuit of profit that comes as a consequence of development.
► In recent decades, mortgages have been bought and sold as investments on national and
even international markets as speculative investments, and the resulting collapse of the
derivative markets has led to the collapse of funding mechanisms for the auto industry, of
international banking institutions, and the investment funds of many towns and cities across
the United States.
Urban Growth Machine theory

► The theory was propounded by Harvey Molotch in his famous 1976 essay “City as a Growth
Machine”
► Molotch’s central point was the role of landowners and what he called ‘land related
interests’, which included real estate agents, lawyers and the metropolitan newspaper, in
promoting, through local government, the growth of the city.
► Molotch argued that it was land owners and land-related interests and their pursuit of rent
that was the key to understanding urban politics.
► There are companies that do little more than assembling land in what are anticipated to be
strategic locations; there are developers who then buy that land, subdivide it, insert the
highways, waterlines and sewers and then sell it on or rent it out to companies specializing
in shopping centres, housing, industrial parks or whatever; and then there are those who
rent out developed property to others or manage it.
► It is not just that renting speeds up the rotation of capital and therefore the ability to
expand and enlarge revenue streams.
Cities as engines for economic growth

► Urbanization has been an essential part of most nations’ development

towards a stronger and more stable economy.
► The countries in the South that urbanized most rapidly in the last 10–20 years
are generally those with the most rapid economic growth.
► Most of the world’s largest cities are in the world’s largest economies, which
is further evidence of this link between economic wealth and cities.