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Urban decentralization
Urban Decentralization”’ NIGEL HARRIS INTRODUCTION One of the difficulties in planning cities in less developed countries is that there is no framework of generalizations about industrial and urban location within which it becomes possible to understand the forces of concentration and dispersa1.o) Without such guidelines, checked against experience, location policy becomes, as a member of the Indian Planning Commission once put it, ‘pure poetry’; or rather, rhetoric that conceals the working out of different interests.u) The problem is not restricted to less developed countries. In the industrialized, formulations may occasionally appear more sophisticated, fortified by an array of technical barricades, but the hiatus at the centre of policy is hardly different.c4’ The lord of the manor is absent from the castle. Whether disciplined by well-grounded generalizations or not, important decisions are made and resources used in pursuit of stated policies. Few governments today do not espouse policies of decentralization in some form or another, and, although practice is variable, still some investment is affected by such espousals. It is not enough to be neutral on the question, as some observers seem to want to be.o) The opportunity costs of refusing to choose are high. Theory may be lacking, but there is experience which can assist planners. The available evidence does not support the inference that, in general, urban concentration is economically more advantageous than decentralization; nor does it indicate that redistribution of economic activity and population will maximize output, employment or welfare. This is to leave aside the question of whether it is possible to decentralize activity at an acceptable cost. THE COSTS OF CONCENTRATION Much of the literature on urban growth stresses the increase in urban costs as population increases. Policy makers are directed to minimize costs, on the assumption that gross benefits do not increase commensurately. However, it is not possible to demonstrate the quantities involved, let alone their relationship to the factor of population size, within necessarily arbitrary administrative boundaries. In any case, the various costs-and their inter-relationshipschange so rapidly over short periods of time that a study of one city may provide little guidance for the future of that city, let alone other cities of the same size. In practice, the costs examined are usually not social costs, but the direct costs to public authorities of particular services (both because these are usually the concern of the public authorities and the costing details are available) .(6’Yet there are problems both because of 127
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the short-run variations in cost-the lumpiness of urban infrastructure investment, the difficulties in quantifying indirect costs-and also because, at the end, it is difficult to establish a relationship between these elements and population size. Costs per head of the urban population vary widely between cities of the same size. This is fairly obvious, since it is the composition rather than the size of population which is likely to determine both costs and product. A city of retired or dependent people is unlikely to present the same picture as one with a high proportion of its population in work. A city servicing a small country is unlikely to present the same costing pattern as one of the same population size trading with other international metropolitan areas. (‘)The net marginal product per head, rather than mere population size, seems more likely to offer a guide on optimal sizes than the movement of costs. However, even if we accept the unreality of the exercise, it is by no means clear that the marginal costs of public services per urban dweller increase significantly over a range of city size,@)nor that cities-on the analogy of the theory of a firm-face a U-shaped cost curve. In the United States for example, even where per capita mu’nicipal expenditure increases (without allowing for changes in standards), this is not clearly attributable to increasing population.‘9) With some exceptions, variations in per capita expenditure are not strongly associated with population size, but rather with some measure of per capita income-fiscal capacity, ‘available resources’ or per capita productivity. Per capita productivity and income both appear to increase with population size-four times faster in comparison with those examples where per capita local government expenditure increases with size. Similar conclusions have been reached elsewhere.(‘0) In India, some research suggests that the marginal productivity of labour increases with the size of settlement.“‘) If the quantification of costs poses so many difficulties, estimating the benefits is even more problematic. To quantify some of the relative advantages of locating activity in a large city-in comparison with more backward areas- is to be entirely arbitrary. The more general idea of ‘agglomeration economies’ or ‘urban externalities’ is stronger in conception than in measurable terms, and one of the important elements in the argument over concentration is precisely the relative immeasurability of many of the advantages.(u’ Despite the clear increases in productivity and income per head as city size increases, at the end of the judgement has to be a negative inference- ‘the only way to explain the continued growth of large cities is that the return to private agencies of labour and capital are sufficient to continue to attract capital’.“‘) OTHER
ARGUMENTS
AGAINST
CONCENTRATION
The advocates of decentralization argue that even if there are agglomeration economies, these accrue only to the benefit of private firms, whereas the additional costs are borne by public authorities. Private beneficiaries are subsidized with public revenue and do not bear the real costs of their activities. But it is not clear that per capita costs are higher in larger cities and, even if they are, this does not settle the question. If the tax system discriminates in favour of private businessmen, this is rather an argument for reforming either the tax system or the private ownership of business rather than seeking to subsidize businessmen to leave the city. If the municipal revenues do not increase commensurately with the increase in productivity that usually characterizes large cities, this is a politicaladministrative question rather than one of the location of economic activity.
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Some people argue that, compared to the manifest national interest, the locational decisions of businessmen and the choice made by rural-urban migrants are irrational. Even if this could be shown to be true, it does not support a policy for reversing the flow of resources unless it can be shown that they would be equally productive if employed elsewhere. Some businessmen may locate their plants because it allows them access to a particular club or shopping centre .(I41but in aggregate they are responding to a particular pattern of prices. Location is not equally important for all firms, nor at all times. In a boom, the range of possible locations is probably wider than in a slump, when competition and pressures on profit margins are fiercer. The marginal cost of a poor location can then become of great importance, even though it had not been hitherto even recognized.(15’ Towns, centres of investment, do decline on occasions, illustrating the effects of bad luck or bad judgement in locational decisions. In a boom, many of the factors held to have been important in location decisions-proximity to raw materials, cheap labour, and even transport costs”@--are relatively unimportant. And, in the long run, they appear of decreasing importance. But a short-term recession can hammer profits to the point where such factors become temporarily of importance in competition. Luttrell’s study of location in Britain (“1 stresses the relative inertia of location-firms tended to operate in the places where they were started, and continue despite increasing difficulties. The clustering of activity exists because existing clusters generate new investment which is located in the same place. For new firms, the pull of the market and the need for easily accessible knowledge strengthen the trend towards concentration. Luttrell also found that many firms set up additional capacity elsewhere rather than shifting their own activities; the new capacity was generally marginal to the firm’s output, and the first area to be cut back during a downturn in activity. Luttrell’s study takes for granted a small compact country with high employment and considerable wage pressure in the main centres, restrictions on the location of new investment and strong government encouragement to firms to move.
MIGRANT!3 So far as the movement of labour is concerned, much play has been made with the attractions of city life for young educated rural dwellers. Yet migration is not invariably the main component in the growth of a city’s population, and in India, for example, it is very often not as important as natural increase in the growth of the city population. On the other hand, what evidence is available suggests that migrant ‘streams’ are very sensitive to changes in employment opportunities in the destination area. The selection of migrants partly ensures this result, and while it is almost certainly true that some people move to the city for reasons quite independent of employment, in aggregate this is not important. In the calculation of relative advantage between the employment and income available in the source and destination areas, it is quite possible that relatively high rates of urban employment are consistent with continued immigration-without this implying irrational or shallow decisions by the migrant- concerned, (Ia)or that the unemployed would be better off in their place of origin. Only reducing the rate of growth of urban employment below the rural-and reversing the urban-rural wage differential-is likely to eliminate net migration.
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REGIONS Thus, given the existing organisation of economies, it is difficult to see how the general attempt to reverse clustering processes can be economically beneficial. There may be industries or companies whose activities, output and employment, can indeed be enhanced by relocation to a relatively backward area-just as there are cases of the irrational location of new investment or movement of people-but in general this is not true and seems to be increasingly untrue as the mix of industry changes. However, it is also argued that more backward areas hold resources which are unutilized or poorly utilized; gross returns can be raised by a redistribution of investment between advanced and backward areas .(19)The advocates of this position also suggest that other institutional factors-the distribution of political power, for example-prevent businessmen in the advanced areas recognizing the market situation, businessmen do not have perfect knowledge, there is not perfect mobility of factors, nor an inexhaustible supply of entrepreneurs, the transport system favours already advanced areas, monopoly and oligopoly ‘distort’ the distribution of resources, etc. The question of relative returns from the advanced and backward areas is precisely the point in dispute and is not settled by asserting that high returns are possible from backward areas. What evidence there is suggests no clear limit on the increasing returns available in existing developed areas and a differential between the returns from advanced and backward areas that would be exceedingly difficult to close-the scale of the gap is daunting. Opportunities may have been missed in some backward areas-occasional geological discoveries in areas already explored indicate this-sometimes because of institutional difficulties. Government research, exploration and business advisory services go some way to overcome the problems of imperfect knowledge. But, after all this, it is very difficult to believe that businessmen deliberately refuse to make high returns if it is possible. Very often in this kind of case, the notion of what is a ‘resource’ is a problem. Because raw materials are a relatively declining factor in modern industry, this perhaps encourages the relative neglect of some raw material sources-but this follows not from institutional factors, but from the poorer returns offered by the exploitation of raw materials. The availability of cheap labour is also a factor of declining importance in stimulating mobility.(20) The more modern an industry, the lower proportion of its costs likely to be attributable to labour in general and to unskilled labour-usually, the important labour ‘resource’ of a backward area-in particular. There are other important ‘resources’, for some industries-water for chemical plants, for example-but often relocation to a backward area raises the costs of the non-resource factors more rapidly than cheap resources reduce costs. The savings on water for a chemicals plant have to be set against the increased costs of scarce skilled labour, poor or absent services, increased transport costs for inputs and outputs, and so on. The argument from neglected resources provides no general case for decentralization.
EQUITY Others have argued that, even if there are economic costs in decentralizing, these must be met in the interests of equity. The contention might have more strength if we had a clearer idea of what the opportunity costs of such a policy are in terms of foregone jobs,
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output and income. Is it economically better to employ more rural migrants in a city or fewer in their place of origin? Even if we accept that this question is decided in favour of more backward areas, the argument for ‘equity’ obscures certain questions. It seems to imply moves towards greater income equality but it is clear that this need not be so and, in most situations, is unlikely to be so. Decreased regional income differentials are perfectly compatible with increased inequality of per capita income distribution.Qu Obversely, there are cases-and they may be the more common-of increasing urban concentration with .decreasing income differentials. It seems that advocates of more social equality shelter behind the case for greater equality of regional income because this relates directly to the sources of local political power. While it may be necessary for governments to bribe the leading members of backward districts to ensure political stability-though this increases income inequality within those districts-this should not be construed as either conducive to the most rapid rates of economic growth or increasing equality. It is no more than an additional cost of maintaining existing output. If there is no clear point at which decreasing returns set in as cities grow, nor clear evidence that backward areas are neglected when returns there could be higher than those in advanced areas, it becomes difficult to assign any clear operational meaning to the concept of ‘optimum size’ for a city. It is not possible to use population size-within arbitrary administrative boundaries- as a surrogate for the complex and unstable urban cost function. On the assumption that what is to be optimized is output and employment, there is no clear limit by population size. If there is no clear ‘optimum’, then it is difficult to see what meaning attaches to terms like ‘over-urbani~tion’ or what significance there is in the discussion of ‘primacy’ or the ‘unbalanced distribution’ of the urban population by size of settlement. THE LOCATION
OF INDUSTRY
Underlying the confusion about the role of cities is a confusion about the stable locational characteristics of different economic activities. It would be most convenient if different industries and services possessed a technical character such that they could be undertaken only in particular localities. The pace of change-both by industry and service, and by company and organisation- makes any such identification at best temporary. The attempts made so far to classify industries by locational character remain primitive and of limited value for planning purposes. In classical and neoclassical location economics, the crude distinction between ‘industries’ (identifying ‘an industry’ is itself a problem) provided the basis for generalization-clustering and dispersal were related to the source of raw materials, the weight of inputs and outputs and transport costs. On this basis, it was possible to understand some elements of the distribution of economic activity in Europe in the nineteenth century, but this understanding would not have been adequate for planning the future location of industry. In modern industry such factors are of declining significance. The service sector’s output is not subject to the classical constraints. Technical changes, the increasingly interdependent linkages of manufacturing units and the increased weight of manufacturing within industry, the development of synthetic and recycIed raw materials, the change in balance between imported and indigenous raw materials (itself partly a function of changing transport costs), together weaken the old locational dete~ination relative to
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first stage inputs. High growth resulted from the industrial mix of particular areas, not their proximity to raw materials. tZ2)As a result, clustering receives a powerful stimulus. The increasing scale of operations requires a concentrated supply of key inputs which are generally only available in already developed areas. The space requirements of such activity have dispersed industry round cities while regional concentration continues.“” There is a pattern in the changes. Cities increasingly specialize in technology-based industries, the key input of which comes from research and educational institutions. The inner core of the largest cities are increasingly specialized in financial activities-frequently dispersing the more labour-intensive parts of such work to the periphery of the city. Attached to this core are service trades, ‘knowledge industries’ (newspapers, publishing, printing) and commerce, in turn linked to warehousing, storage, marketing and transport facilities further out on the edge of the city. The main activities on the edge of the city and beyond it are large scale capital-intensive manufacturing plants. The city’s relationship to raw material resources is weakened, and it becomes less and less meaningful to talk of an urban ‘hinterland’. The links of the largest cities are rather with other cities.‘24)This inevitably weakens what used to be seen as the stimulating effect of urban centres upon the surrounding countryside, but the remedy is not to attempt to reintegrate the two, but rather use the productivity of the city deliberately as a source of funds to stimulate agricultural production directly. The idea of a ‘hinterland’ runs, for example, through much Indian planning, and was an additional factor in the incorporation of India’s major cities in particular States (rather than being directly supervised by the national government).‘2s’ CONCLUSION The transformation of industrial economies-whether industry encompasses the largest part of a country as in the industrial countries or not-has produced and is continuing to produce a particular configuration of the urban population. The changes in industry do not at all explain the whole distribution of the urban population-some studies suggest under half the world distribution (but 70% of the distribution in less-developed countries) is explained in this way. So far as economic development is concerned, it is the movement of the population in relationship to production and modern services which is of primary importance. The economic forces encouraging concentration appear to operate with unprecedented strength, and the more backward an area, apriori the stronger the force of concentration. Indeed, it has never been more true that to industrialize is to concentrate resources, both in an economic and geographical sense. REFERENCES
AND NOTES
I.
The argument presented here was included as Chapter 6, Theory and practice. in my Plannmg /he Future of Bombay (mimeo). Queen Elizabeth House, Oxford 1973, to be published as Ciries. Planning andEconomrc Development: the Case o/Bombay, Oxford University Press, Bombay.
2.
This is a continuing complaint in the literature on urbamzation and regional development-see, e.g., the UN document, Economics of Urban Development (Economic and Social Committee on Houstng, Building and Planning, (mimeo), New York 1971, p. 4): ‘At this stage of development, it cannot be said that there exists a valid theory and coherent body of knowledge upon which to base development policies or investment decisions which wtll have decisive long-term impact on urban growth.’ See also McCrone, Gavin, Regional Policy m Er~rarn, London 1969. p. 49.
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4.
5. 6.
I. 8.
9.
10.
II.
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William Alonso’s more prosaic comment is: ‘an abundance of opinion but a paucity of facts’, in ‘Urban and regional balances in economic development’, Economic Development and Cultural Change, 17/l) October 1968, p. 4. Lowden Wingo offers numerous examples of the Government of the US’ gestures of faith on domestic urbanization; see, e.g., the Report of the President’s National Goals Research Staff, July 1970, and the characteristic violence of language: ‘research suggests that trends towards megalopolis in some areas, and underpopulation in others, are reversible. It also suggests there is an opportunity for a different and more rewarding future for the Nation as a whole than the discouraging vision of gargantuan megalopolis and rural desolation’. -cited in ‘A national urban deveIopment strategy for the United States’, Urban Studies, 911, February 1972, p. 10. This seems to be the position expressed in Urbanization, Sector Working Paper, Washington 1972, p. 24. Alonso comments: ‘The minimization of a certain type of costs would be a valid approach only if all other costs and revenues (economic and psychological) remain constant. For instance, in the extreme case, a city could minimize its costs of friction by crowding all residences as tightly about the center of the city as is physically possible, and by forbidding ail commerce and industrial development thus reducing to zero al1 the costs of friction of this sector. Such a solution would be, of course, absurd,’ -in ~ocaf~on and Land Use, Tswurds a Generai Theory of Land Rent, Joint Center for Urban Studies, Cambridge, Mass., 1964, p. 105. A point made by Alonso in The Economics of Urban Size, Working Paper No. 138, Center for Planning and Development Research (Institute of Urban and Regional Development), Berkeley, November 1970. See the work of Schmandt, H. J. and Stephens, C. R., ‘Local government expenditure patterns in the United States’, Land Economics, 39/4, November 1%3, p. 397-406 (cf. also their ‘Measuring municipal output’, National Tux Journal, 13, 1960, pp. 369-375). Other work in the field has been done by- Scott, Stanley and Feder, E. L., Factors Associated With Variations in Municipal Expenditure Levels, Bureau of Public Administration, Berkeley 1957; Brazer, Harvey E., Cify Expenditure in the Uni?ed States, National Bureau of Economic Research, 1959; Bollens, C. (ed.) Ex~~oring the Metro~o~itan Community, Berkeley f%l; Sacks, S. and HeRmuth, W. F., Financing Government in a Me?ro~fitun Area, Glencoe, 111,1961; Hirsch, W. Z., ‘Expenditure implications of metropolitan growth and consolidation’, Review OfEconomics and Statistics, 41.1959, pp. 232-241; Shapiro, Harvey, ‘Economies of scale and local government finance’, Land Economics, 39, 1963, pp. 175-186; Hoch, I., ‘Income and city size’, Urban Studies, 913, 1972, p. 299; Fuchs, V. R., Differentials in Hourly Earnings by Region and City Size, Occasional Paper NO. 101, National Bureau of Economic Research, New York, 1966. ‘The common belief that bigger places are more costly appears the result of higher expectations rather than higher prices’ -Alonso. William and Fajans, Michael, Cost of Living and inrome by Urban Size, Working Paper No. 28. Center for Planning and Development Research, Institute of Urban and Regional Development, Berkeley, July 1970. Mera, K., On theconcentration of urbanisution andeconomicefficiency, IBRD Paper 74,f970, on Japanese material. But note some contrary examples from Australia, presented by Neutze, G. M., Economic Policy and theSizeof Cities, Canberra, 1965. Britton Harris, writing in India’s Urban Future, Turner, Roy (ed.), Berkeley 1962, p. 268. See also his observation that: ‘The viability of industrial growth is . . . directly correlated with the size of city or with the size of an adjacent metropolitan center, inversely correlated with the distance from a larger center, and possibly correlated with the size and self-contained character of the industrial establishment.’ But note in the same volume, Tangri, Shanti, ‘Urbanization, political stability and economic growth’, p. 192, claims, without presenting the evidence, that per unit costs of Sofia1 services increase in settlements over 4-500,000. The most ambitious study of costs in India is Costs of Urban Infrastructure for Industry US Relafed to City Size tn Developing Countries- India Case Study, a joint study by the Stanford Research Institute, Delhi School of Planning and Architecture, and the Hyderabad Small Industry Extension Training Institute, Agency for International Development (mimeo), 1%8. The study examines the direct costs of a number of services (roads, railways, water, sewage, power, telephones, housing and site development, education, hospitals, fire and police protection, refuse and garbage disposal, municipal administration) for new industries in 18 urban settlements of different sizes in Punjab and Uttar Pradesh, with an intensive study of 5 urban settlements, the largest being a little over one million population. A second part to the study compares the movement of costs in different localities as the industrial mix of new industry changes. Land costs are omitted, The study is impressive in scope and thoroughness, but SO far as policy is concerned, relatively inconclusive (except where costs in the largest city are heavily weighted by multi-storey housing costs) and with no bearing on cities larger than the largest in the study.
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13. 14.
15.
16.
17.
‘The external diseconomies of concentration are more usually seen than the economies; it is only necessary to drive on a crowded road to see evidence of the diseconomies. By contrast, it is necessary to have an intimate knowledge of particular industries and trades in order fully to appreciate the economies. When however the two are examined carefully and compared as far as they can be with one another, it is by no means obvious that the market mechanism produces a bias towards “too much” concentration.’ -Dunning. John H. and Morgan, Victor E., An EconomicStudy of the City oflondon, The Economist’s Advisory Group. London, 1971. p. 266. See aIso Mills, Edwin J., City Sizes in Developing Economies, Rehovot Conference papers, 1974, p. 6. Wingo, Lowden, ‘A national urban development strategy’, op. ctt. Andrews, P. W. S. and Brunner, E., make the useful point that: ‘The location of a particular factory may have been precisely determined because it suited the managing director’s desire for convenient access to a certain golf-course or because his wife wanted the week-end home to be in the Lake District. The question is not whether such a factor is, or is not, important in the individual case, but whether any particular factor of this kind has systematic effects upon economic variables.’ -‘Business profit and the quiet life’. Journal of IndustrialEconomics. 1%2/3, p. 72. See also the discussion in Florence, P. Sargant, Economics and Sociology of Industry, A Realistic Analysts of Development. London 1964, p. 63, and Greenhut, M. D., Plant Location in Theory and Pracfice, The Economics of Spaue, Chapel Hill, 1%3, p. 165. ‘Whereas (a) firm regards the search for new markets, better processes and even new products as an essential part of their life, changes of location or extension to new manufacturing locations are in adifferent category. Generally they take place only when there is a strong impetus, and this takes the form of a push rather (than) a pull’ -Luttrell, W. F., Factory Location and Industrial Movement, a Study of Recent Experience in Great Britain. National Institute of Economic and Social Research, London 1962 (2 volumes), p. 40. Report of the Committee of Inquiry into the Scortish Economy (Toothill Committee Report), Scottish Council for Development and industry, 1961-transport costs were under 2% of total costs for firms that had chosen a Scottish location. Luttrefl. op. cit., (cf. Ref. If).
18. On data for the United States, 1. S. Lowry found out-migration to be a function of age and socio-economic characteristics of the local population, and immigration a function of employment opportunities in the destination area-cf. Migration and Mefropohtun Growth: Two Analytical Models, San Francisco, 1966. On Indian data, Bogue, D. J. and Zachariah, K. C. identified urban unemployment as a factor in reducing rural-urban migration-’ Very possibly, unemployment in the cities rather than the restrictive effect of the cultural tradition in the villages, is the major brake upon rural-to-urban migration at the present time’‘Urbanisation and Migration in India’, in India’s Urban Future, op. cit., p. 45. 19. This is the argument of Caroline Bauer: ‘Cheap land, lower densities and shorter distances could mean simpler standards and technology for all kinds of social and civil facilities, utilizing rough impermanent materials, personal labor and capital otherwise untapped, and other resources from the more or less non-monetized sectors of the economy. From this viewpoint, decentralization in one form or another is essentially a resource-saving device.’ -The Nature Communities,
and Costs of Minimum
Acceptable
Living
Conditions
in Different
Types of Indian
Urban
Berkeley (mineo) 1958. A. E. Holmans comments on the lower cost argument used in Britain
that:
20.
‘The view that the existing capital of the areas of slow growth is being wasted as a result of a failure to slow down the rate of growth of the South East is one which is wtdeIy held even now, but on examination it can he seen to have little validity.’ -‘Restriction of industrial expansion: a reappraisat’, Oxford Economic Pupers. July 1964. p. 248: cf. the criticism by A. P. Thirlwalf, ibid, July 1965, p. 337. But this is not true for all industries. G. C. Cameron and B. D. Clark found that the search for Labour was the most imoortant influence in thedecision of a firm to relocate its activities to backward regions in Britain --Industrial Movement and the Regional Problem, University of Glasgow Department of Social and Economic Studies, Occasional Paper No. 5, Edinburgh. 1966. In the United States: ‘The most important redistribution (of industry) occurred in labor-oriented industries such as textiles and apparel, or in industries oriented to natural resources such as chemicals. lumber and paper. The single most important industry in the Southwest is probably attributable more to climate than to any other factor.’
-Fuchs,
V. R.. ‘Thedetermin~ts of the redistribution of manufacturing in the United States since 1929’, Statistics, May 1962,44. p. 177.
Review of Economic
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22. 23.
24.
25.
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Alonso notes that: ‘While regional averages may converge, it is perfectly possible that territorial inequalities in income within regions will be greatly increased and that even if regional averages are brought within a common range, no improvement may be obtained in the distribution of income among the population as a whole.’ -‘Urban and regional imbalances’, op. cit., p. 2. Vera Cao-Pinna also comments: ‘The aggregate measures of income differentials among the regions of a national economy do not provide any basis for seeking a rational approach to the problem of the location of public investment. Often, such aggregate measures of regional disequilibrium help only to exasperate public opinion and reinforce the claims for decentralizing policy decisions.’ --‘Problems of establishing and using regional input-output accounting’, in Isard, W. and Cumberland, J. H. (eds) RegionalEconomicP/anning: TechniquesofAnalysLs, OECD, Paris, 1961, p. 305. Holmans. op. cit., p. 235. This is formulated well by Cohn Clark and others. ‘A general description of what is happening in the modern industrial world is that the macrolocation of industry and population is tending towards an ever increasing concentration in a limited number of areas: their micro-location, on the other hand, is towards an ever-increasing “diffusion”or sprawl.’ -Clark, C., Wilson, F. and Bradley, J., ‘Industrial location and economic potential in western Europe’, RegionalStudies, 3, 1969, p. 197. ‘There is little support for a characterisation of the metropolis as a center for non-resource oriented industries whose markets are in its hinterland. Instead, it would be more consistent to hypothesize that other metropolises are the major markets for metropolitan industries classified as second stage resource users.’ -Duncan, Otis Dudley, Scott, W. R., Lieberson, S. and Duncan, Beverley, h4etropolis and Region, Baltimore 1960, p. 30. Some authors attribute the relative failure of India’s large cities to stimulate development in adjacent rural areas to a ‘poorly developed urban hierarchy’, (Berry, Brian J., ‘Policy implications of an urban location model for the Kanpur Region’, Indian Institute of Technology (mimeo), Kanpur, n.d.)-urban economics activity does not ‘trickle down’ through a system of urban settlements of declining size to the countryside. Johnson, E. A. J. The Organisation of Space in Developing Countries, Harvard University Press, Cambridge, Mass., 1970. attributes this failure to colonial rule which did not establish equitable economic exchanges between town and country, but used large cities simply to siphon resources off the countryside. Policy should therefore be directed to the development of market towns to connect city and country (this is quite different from Perroux’s notion of ‘growth poles’). However, if the same processes of concentration are apparent in countries which in the nineteenth century had the required ‘hierarchy’, this suggests a common explanation in the nature of modern economic activity (and changed transport costs) rather than a heritage of colonial rule.
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the short-run variations in cost-the lumpiness of urban infrastructure investment, the difficulties in quantifying indirect costs-and also because, at the end, it is difficult to establish a relationship between these elements and population size. Costs per head of the urban population vary widely between cities of the same size. This is fairly obvious, since it is the composition rather than the size of population which is likely to determine both costs and product. A city of retired or dependent people is unlikely to present the same picture as one with a high proportion of its population in work. A city servicing a small country is unlikely to present the same costing pattern as one of the same population size trading with other international metropolitan areas. (‘)The net marginal product per head, rather than mere population size, seems more likely to offer a guide on optimal sizes than the movement of costs. However, even if we accept the unreality of the exercise, it is by no means clear that the marginal costs of public services per urban dweller increase significantly over a range of city size,@)nor that cities-on the analogy of the theory of a firm-face a U-shaped cost curve. In the United States for example, even where per capita mu’nicipal expenditure increases (without allowing for changes in standards), this is not clearly attributable to increasing population.‘9) With some exceptions, variations in per capita expenditure are not strongly associated with population size, but rather with some measure of per capita income-fiscal capacity, ‘available resources’ or per capita productivity. Per capita productivity and income both appear to increase with population size-four times faster in comparison with those examples where per capita local government expenditure increases with size. Similar conclusions have been reached elsewhere.(‘0) In India, some research suggests that the marginal productivity of labour increases with the size of settlement.“‘) If the quantification of costs poses so many difficulties, estimating the benefits is even more problematic. To quantify some of the relative advantages of locating activity in a large city-in comparison with more backward areas- is to be entirely arbitrary. The more general idea of ‘agglomeration economies’ or ‘urban externalities’ is stronger in conception than in measurable terms, and one of the important elements in the argument over concentration is precisely the relative immeasurability of many of the advantages.(u’ Despite the clear increases in productivity and income per head as city size increases, at the end of the judgement has to be a negative inference- ‘the only way to explain the continued growth of large cities is that the return to private agencies of labour and capital are sufficient to continue to attract capital’.“‘) OTHER
ARGUMENTS
AGAINST
CONCENTRATION
The advocates of decentralization argue that even if there are agglomeration economies, these accrue only to the benefit of private firms, whereas the additional costs are borne by public authorities. Private beneficiaries are subsidized with public revenue and do not bear the real costs of their activities. But it is not clear that per capita costs are higher in larger cities and, even if they are, this does not settle the question. If the tax system discriminates in favour of private businessmen, this is rather an argument for reforming either the tax system or the private ownership of business rather than seeking to subsidize businessmen to leave the city. If the municipal revenues do not increase commensurately with the increase in productivity that usually characterizes large cities, this is a politicaladministrative question rather than one of the location of economic activity.
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Some people argue that, compared to the manifest national interest, the locational decisions of businessmen and the choice made by rural-urban migrants are irrational. Even if this could be shown to be true, it does not support a policy for reversing the flow of resources unless it can be shown that they would be equally productive if employed elsewhere. Some businessmen may locate their plants because it allows them access to a particular club or shopping centre .(I41but in aggregate they are responding to a particular pattern of prices. Location is not equally important for all firms, nor at all times. In a boom, the range of possible locations is probably wider than in a slump, when competition and pressures on profit margins are fiercer. The marginal cost of a poor location can then become of great importance, even though it had not been hitherto even recognized.(15’ Towns, centres of investment, do decline on occasions, illustrating the effects of bad luck or bad judgement in locational decisions. In a boom, many of the factors held to have been important in location decisions-proximity to raw materials, cheap labour, and even transport costs”@--are relatively unimportant. And, in the long run, they appear of decreasing importance. But a short-term recession can hammer profits to the point where such factors become temporarily of importance in competition. Luttrell’s study of location in Britain (“1 stresses the relative inertia of location-firms tended to operate in the places where they were started, and continue despite increasing difficulties. The clustering of activity exists because existing clusters generate new investment which is located in the same place. For new firms, the pull of the market and the need for easily accessible knowledge strengthen the trend towards concentration. Luttrell also found that many firms set up additional capacity elsewhere rather than shifting their own activities; the new capacity was generally marginal to the firm’s output, and the first area to be cut back during a downturn in activity. Luttrell’s study takes for granted a small compact country with high employment and considerable wage pressure in the main centres, restrictions on the location of new investment and strong government encouragement to firms to move.
MIGRANT!3 So far as the movement of labour is concerned, much play has been made with the attractions of city life for young educated rural dwellers. Yet migration is not invariably the main component in the growth of a city’s population, and in India, for example, it is very often not as important as natural increase in the growth of the city population. On the other hand, what evidence is available suggests that migrant ‘streams’ are very sensitive to changes in employment opportunities in the destination area. The selection of migrants partly ensures this result, and while it is almost certainly true that some people move to the city for reasons quite independent of employment, in aggregate this is not important. In the calculation of relative advantage between the employment and income available in the source and destination areas, it is quite possible that relatively high rates of urban employment are consistent with continued immigration-without this implying irrational or shallow decisions by the migrant- concerned, (Ia)or that the unemployed would be better off in their place of origin. Only reducing the rate of growth of urban employment below the rural-and reversing the urban-rural wage differential-is likely to eliminate net migration.
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REGIONS Thus, given the existing organisation of economies, it is difficult to see how the general attempt to reverse clustering processes can be economically beneficial. There may be industries or companies whose activities, output and employment, can indeed be enhanced by relocation to a relatively backward area-just as there are cases of the irrational location of new investment or movement of people-but in general this is not true and seems to be increasingly untrue as the mix of industry changes. However, it is also argued that more backward areas hold resources which are unutilized or poorly utilized; gross returns can be raised by a redistribution of investment between advanced and backward areas .(19)The advocates of this position also suggest that other institutional factors-the distribution of political power, for example-prevent businessmen in the advanced areas recognizing the market situation, businessmen do not have perfect knowledge, there is not perfect mobility of factors, nor an inexhaustible supply of entrepreneurs, the transport system favours already advanced areas, monopoly and oligopoly ‘distort’ the distribution of resources, etc. The question of relative returns from the advanced and backward areas is precisely the point in dispute and is not settled by asserting that high returns are possible from backward areas. What evidence there is suggests no clear limit on the increasing returns available in existing developed areas and a differential between the returns from advanced and backward areas that would be exceedingly difficult to close-the scale of the gap is daunting. Opportunities may have been missed in some backward areas-occasional geological discoveries in areas already explored indicate this-sometimes because of institutional difficulties. Government research, exploration and business advisory services go some way to overcome the problems of imperfect knowledge. But, after all this, it is very difficult to believe that businessmen deliberately refuse to make high returns if it is possible. Very often in this kind of case, the notion of what is a ‘resource’ is a problem. Because raw materials are a relatively declining factor in modern industry, this perhaps encourages the relative neglect of some raw material sources-but this follows not from institutional factors, but from the poorer returns offered by the exploitation of raw materials. The availability of cheap labour is also a factor of declining importance in stimulating mobility.(20) The more modern an industry, the lower proportion of its costs likely to be attributable to labour in general and to unskilled labour-usually, the important labour ‘resource’ of a backward area-in particular. There are other important ‘resources’, for some industries-water for chemical plants, for example-but often relocation to a backward area raises the costs of the non-resource factors more rapidly than cheap resources reduce costs. The savings on water for a chemicals plant have to be set against the increased costs of scarce skilled labour, poor or absent services, increased transport costs for inputs and outputs, and so on. The argument from neglected resources provides no general case for decentralization.
EQUITY Others have argued that, even if there are economic costs in decentralizing, these must be met in the interests of equity. The contention might have more strength if we had a clearer idea of what the opportunity costs of such a policy are in terms of foregone jobs,
Urban Ilecentrdizalion
I31
output and income. Is it economically better to employ more rural migrants in a city or fewer in their place of origin? Even if we accept that this question is decided in favour of more backward areas, the argument for ‘equity’ obscures certain questions. It seems to imply moves towards greater income equality but it is clear that this need not be so and, in most situations, is unlikely to be so. Decreased regional income differentials are perfectly compatible with increased inequality of per capita income distribution.Qu Obversely, there are cases-and they may be the more common-of increasing urban concentration with .decreasing income differentials. It seems that advocates of more social equality shelter behind the case for greater equality of regional income because this relates directly to the sources of local political power. While it may be necessary for governments to bribe the leading members of backward districts to ensure political stability-though this increases income inequality within those districts-this should not be construed as either conducive to the most rapid rates of economic growth or increasing equality. It is no more than an additional cost of maintaining existing output. If there is no clear point at which decreasing returns set in as cities grow, nor clear evidence that backward areas are neglected when returns there could be higher than those in advanced areas, it becomes difficult to assign any clear operational meaning to the concept of ‘optimum size’ for a city. It is not possible to use population size-within arbitrary administrative boundaries- as a surrogate for the complex and unstable urban cost function. On the assumption that what is to be optimized is output and employment, there is no clear limit by population size. If there is no clear ‘optimum’, then it is difficult to see what meaning attaches to terms like ‘over-urbani~tion’ or what significance there is in the discussion of ‘primacy’ or the ‘unbalanced distribution’ of the urban population by size of settlement. THE LOCATION
OF INDUSTRY
Underlying the confusion about the role of cities is a confusion about the stable locational characteristics of different economic activities. It would be most convenient if different industries and services possessed a technical character such that they could be undertaken only in particular localities. The pace of change-both by industry and service, and by company and organisation- makes any such identification at best temporary. The attempts made so far to classify industries by locational character remain primitive and of limited value for planning purposes. In classical and neoclassical location economics, the crude distinction between ‘industries’ (identifying ‘an industry’ is itself a problem) provided the basis for generalization-clustering and dispersal were related to the source of raw materials, the weight of inputs and outputs and transport costs. On this basis, it was possible to understand some elements of the distribution of economic activity in Europe in the nineteenth century, but this understanding would not have been adequate for planning the future location of industry. In modern industry such factors are of declining significance. The service sector’s output is not subject to the classical constraints. Technical changes, the increasingly interdependent linkages of manufacturing units and the increased weight of manufacturing within industry, the development of synthetic and recycIed raw materials, the change in balance between imported and indigenous raw materials (itself partly a function of changing transport costs), together weaken the old locational dete~ination relative to
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first stage inputs. High growth resulted from the industrial mix of particular areas, not their proximity to raw materials. tZ2)As a result, clustering receives a powerful stimulus. The increasing scale of operations requires a concentrated supply of key inputs which are generally only available in already developed areas. The space requirements of such activity have dispersed industry round cities while regional concentration continues.“” There is a pattern in the changes. Cities increasingly specialize in technology-based industries, the key input of which comes from research and educational institutions. The inner core of the largest cities are increasingly specialized in financial activities-frequently dispersing the more labour-intensive parts of such work to the periphery of the city. Attached to this core are service trades, ‘knowledge industries’ (newspapers, publishing, printing) and commerce, in turn linked to warehousing, storage, marketing and transport facilities further out on the edge of the city. The main activities on the edge of the city and beyond it are large scale capital-intensive manufacturing plants. The city’s relationship to raw material resources is weakened, and it becomes less and less meaningful to talk of an urban ‘hinterland’. The links of the largest cities are rather with other cities.‘24)This inevitably weakens what used to be seen as the stimulating effect of urban centres upon the surrounding countryside, but the remedy is not to attempt to reintegrate the two, but rather use the productivity of the city deliberately as a source of funds to stimulate agricultural production directly. The idea of a ‘hinterland’ runs, for example, through much Indian planning, and was an additional factor in the incorporation of India’s major cities in particular States (rather than being directly supervised by the national government).‘2s’ CONCLUSION The transformation of industrial economies-whether industry encompasses the largest part of a country as in the industrial countries or not-has produced and is continuing to produce a particular configuration of the urban population. The changes in industry do not at all explain the whole distribution of the urban population-some studies suggest under half the world distribution (but 70% of the distribution in less-developed countries) is explained in this way. So far as economic development is concerned, it is the movement of the population in relationship to production and modern services which is of primary importance. The economic forces encouraging concentration appear to operate with unprecedented strength, and the more backward an area, apriori the stronger the force of concentration. Indeed, it has never been more true that to industrialize is to concentrate resources, both in an economic and geographical sense. REFERENCES
AND NOTES
I.
The argument presented here was included as Chapter 6, Theory and practice. in my Plannmg /he Future of Bombay (mimeo). Queen Elizabeth House, Oxford 1973, to be published as Ciries. Planning andEconomrc Development: the Case o/Bombay, Oxford University Press, Bombay.
2.
This is a continuing complaint in the literature on urbamzation and regional development-see, e.g., the UN document, Economics of Urban Development (Economic and Social Committee on Houstng, Building and Planning, (mimeo), New York 1971, p. 4): ‘At this stage of development, it cannot be said that there exists a valid theory and coherent body of knowledge upon which to base development policies or investment decisions which wtll have decisive long-term impact on urban growth.’ See also McCrone, Gavin, Regional Policy m Er~rarn, London 1969. p. 49.
Urban Decentralization
3.
4.
5. 6.
I. 8.
9.
10.
II.
133
William Alonso’s more prosaic comment is: ‘an abundance of opinion but a paucity of facts’, in ‘Urban and regional balances in economic development’, Economic Development and Cultural Change, 17/l) October 1968, p. 4. Lowden Wingo offers numerous examples of the Government of the US’ gestures of faith on domestic urbanization; see, e.g., the Report of the President’s National Goals Research Staff, July 1970, and the characteristic violence of language: ‘research suggests that trends towards megalopolis in some areas, and underpopulation in others, are reversible. It also suggests there is an opportunity for a different and more rewarding future for the Nation as a whole than the discouraging vision of gargantuan megalopolis and rural desolation’. -cited in ‘A national urban deveIopment strategy for the United States’, Urban Studies, 911, February 1972, p. 10. This seems to be the position expressed in Urbanization, Sector Working Paper, Washington 1972, p. 24. Alonso comments: ‘The minimization of a certain type of costs would be a valid approach only if all other costs and revenues (economic and psychological) remain constant. For instance, in the extreme case, a city could minimize its costs of friction by crowding all residences as tightly about the center of the city as is physically possible, and by forbidding ail commerce and industrial development thus reducing to zero al1 the costs of friction of this sector. Such a solution would be, of course, absurd,’ -in ~ocaf~on and Land Use, Tswurds a Generai Theory of Land Rent, Joint Center for Urban Studies, Cambridge, Mass., 1964, p. 105. A point made by Alonso in The Economics of Urban Size, Working Paper No. 138, Center for Planning and Development Research (Institute of Urban and Regional Development), Berkeley, November 1970. See the work of Schmandt, H. J. and Stephens, C. R., ‘Local government expenditure patterns in the United States’, Land Economics, 39/4, November 1%3, p. 397-406 (cf. also their ‘Measuring municipal output’, National Tux Journal, 13, 1960, pp. 369-375). Other work in the field has been done by- Scott, Stanley and Feder, E. L., Factors Associated With Variations in Municipal Expenditure Levels, Bureau of Public Administration, Berkeley 1957; Brazer, Harvey E., Cify Expenditure in the Uni?ed States, National Bureau of Economic Research, 1959; Bollens, C. (ed.) Ex~~oring the Metro~o~itan Community, Berkeley f%l; Sacks, S. and HeRmuth, W. F., Financing Government in a Me?ro~fitun Area, Glencoe, 111,1961; Hirsch, W. Z., ‘Expenditure implications of metropolitan growth and consolidation’, Review OfEconomics and Statistics, 41.1959, pp. 232-241; Shapiro, Harvey, ‘Economies of scale and local government finance’, Land Economics, 39, 1963, pp. 175-186; Hoch, I., ‘Income and city size’, Urban Studies, 913, 1972, p. 299; Fuchs, V. R., Differentials in Hourly Earnings by Region and City Size, Occasional Paper NO. 101, National Bureau of Economic Research, New York, 1966. ‘The common belief that bigger places are more costly appears the result of higher expectations rather than higher prices’ -Alonso. William and Fajans, Michael, Cost of Living and inrome by Urban Size, Working Paper No. 28. Center for Planning and Development Research, Institute of Urban and Regional Development, Berkeley, July 1970. Mera, K., On theconcentration of urbanisution andeconomicefficiency, IBRD Paper 74,f970, on Japanese material. But note some contrary examples from Australia, presented by Neutze, G. M., Economic Policy and theSizeof Cities, Canberra, 1965. Britton Harris, writing in India’s Urban Future, Turner, Roy (ed.), Berkeley 1962, p. 268. See also his observation that: ‘The viability of industrial growth is . . . directly correlated with the size of city or with the size of an adjacent metropolitan center, inversely correlated with the distance from a larger center, and possibly correlated with the size and self-contained character of the industrial establishment.’ But note in the same volume, Tangri, Shanti, ‘Urbanization, political stability and economic growth’, p. 192, claims, without presenting the evidence, that per unit costs of Sofia1 services increase in settlements over 4-500,000. The most ambitious study of costs in India is Costs of Urban Infrastructure for Industry US Relafed to City Size tn Developing Countries- India Case Study, a joint study by the Stanford Research Institute, Delhi School of Planning and Architecture, and the Hyderabad Small Industry Extension Training Institute, Agency for International Development (mimeo), 1%8. The study examines the direct costs of a number of services (roads, railways, water, sewage, power, telephones, housing and site development, education, hospitals, fire and police protection, refuse and garbage disposal, municipal administration) for new industries in 18 urban settlements of different sizes in Punjab and Uttar Pradesh, with an intensive study of 5 urban settlements, the largest being a little over one million population. A second part to the study compares the movement of costs in different localities as the industrial mix of new industry changes. Land costs are omitted, The study is impressive in scope and thoroughness, but SO far as policy is concerned, relatively inconclusive (except where costs in the largest city are heavily weighted by multi-storey housing costs) and with no bearing on cities larger than the largest in the study.
Nigei Harris
134 12.
13. 14.
15.
16.
17.
‘The external diseconomies of concentration are more usually seen than the economies; it is only necessary to drive on a crowded road to see evidence of the diseconomies. By contrast, it is necessary to have an intimate knowledge of particular industries and trades in order fully to appreciate the economies. When however the two are examined carefully and compared as far as they can be with one another, it is by no means obvious that the market mechanism produces a bias towards “too much” concentration.’ -Dunning. John H. and Morgan, Victor E., An EconomicStudy of the City oflondon, The Economist’s Advisory Group. London, 1971. p. 266. See aIso Mills, Edwin J., City Sizes in Developing Economies, Rehovot Conference papers, 1974, p. 6. Wingo, Lowden, ‘A national urban development strategy’, op. ctt. Andrews, P. W. S. and Brunner, E., make the useful point that: ‘The location of a particular factory may have been precisely determined because it suited the managing director’s desire for convenient access to a certain golf-course or because his wife wanted the week-end home to be in the Lake District. The question is not whether such a factor is, or is not, important in the individual case, but whether any particular factor of this kind has systematic effects upon economic variables.’ -‘Business profit and the quiet life’. Journal of IndustrialEconomics. 1%2/3, p. 72. See also the discussion in Florence, P. Sargant, Economics and Sociology of Industry, A Realistic Analysts of Development. London 1964, p. 63, and Greenhut, M. D., Plant Location in Theory and Pracfice, The Economics of Spaue, Chapel Hill, 1%3, p. 165. ‘Whereas (a) firm regards the search for new markets, better processes and even new products as an essential part of their life, changes of location or extension to new manufacturing locations are in adifferent category. Generally they take place only when there is a strong impetus, and this takes the form of a push rather (than) a pull’ -Luttrell, W. F., Factory Location and Industrial Movement, a Study of Recent Experience in Great Britain. National Institute of Economic and Social Research, London 1962 (2 volumes), p. 40. Report of the Committee of Inquiry into the Scortish Economy (Toothill Committee Report), Scottish Council for Development and industry, 1961-transport costs were under 2% of total costs for firms that had chosen a Scottish location. Luttrefl. op. cit., (cf. Ref. If).
18. On data for the United States, 1. S. Lowry found out-migration to be a function of age and socio-economic characteristics of the local population, and immigration a function of employment opportunities in the destination area-cf. Migration and Mefropohtun Growth: Two Analytical Models, San Francisco, 1966. On Indian data, Bogue, D. J. and Zachariah, K. C. identified urban unemployment as a factor in reducing rural-urban migration-’ Very possibly, unemployment in the cities rather than the restrictive effect of the cultural tradition in the villages, is the major brake upon rural-to-urban migration at the present time’‘Urbanisation and Migration in India’, in India’s Urban Future, op. cit., p. 45. 19. This is the argument of Caroline Bauer: ‘Cheap land, lower densities and shorter distances could mean simpler standards and technology for all kinds of social and civil facilities, utilizing rough impermanent materials, personal labor and capital otherwise untapped, and other resources from the more or less non-monetized sectors of the economy. From this viewpoint, decentralization in one form or another is essentially a resource-saving device.’ -The Nature Communities,
and Costs of Minimum
Acceptable
Living
Conditions
in Different
Types of Indian
Urban
Berkeley (mineo) 1958. A. E. Holmans comments on the lower cost argument used in Britain
that:
20.
‘The view that the existing capital of the areas of slow growth is being wasted as a result of a failure to slow down the rate of growth of the South East is one which is wtdeIy held even now, but on examination it can he seen to have little validity.’ -‘Restriction of industrial expansion: a reappraisat’, Oxford Economic Pupers. July 1964. p. 248: cf. the criticism by A. P. Thirlwalf, ibid, July 1965, p. 337. But this is not true for all industries. G. C. Cameron and B. D. Clark found that the search for Labour was the most imoortant influence in thedecision of a firm to relocate its activities to backward regions in Britain --Industrial Movement and the Regional Problem, University of Glasgow Department of Social and Economic Studies, Occasional Paper No. 5, Edinburgh. 1966. In the United States: ‘The most important redistribution (of industry) occurred in labor-oriented industries such as textiles and apparel, or in industries oriented to natural resources such as chemicals. lumber and paper. The single most important industry in the Southwest is probably attributable more to climate than to any other factor.’
-Fuchs,
V. R.. ‘Thedetermin~ts of the redistribution of manufacturing in the United States since 1929’, Statistics, May 1962,44. p. 177.
Review of Economic
Urban Decentralization 21.
22. 23.
24.
25.
135
Alonso notes that: ‘While regional averages may converge, it is perfectly possible that territorial inequalities in income within regions will be greatly increased and that even if regional averages are brought within a common range, no improvement may be obtained in the distribution of income among the population as a whole.’ -‘Urban and regional imbalances’, op. cit., p. 2. Vera Cao-Pinna also comments: ‘The aggregate measures of income differentials among the regions of a national economy do not provide any basis for seeking a rational approach to the problem of the location of public investment. Often, such aggregate measures of regional disequilibrium help only to exasperate public opinion and reinforce the claims for decentralizing policy decisions.’ --‘Problems of establishing and using regional input-output accounting’, in Isard, W. and Cumberland, J. H. (eds) RegionalEconomicP/anning: TechniquesofAnalysLs, OECD, Paris, 1961, p. 305. Holmans. op. cit., p. 235. This is formulated well by Cohn Clark and others. ‘A general description of what is happening in the modern industrial world is that the macrolocation of industry and population is tending towards an ever increasing concentration in a limited number of areas: their micro-location, on the other hand, is towards an ever-increasing “diffusion”or sprawl.’ -Clark, C., Wilson, F. and Bradley, J., ‘Industrial location and economic potential in western Europe’, RegionalStudies, 3, 1969, p. 197. ‘There is little support for a characterisation of the metropolis as a center for non-resource oriented industries whose markets are in its hinterland. Instead, it would be more consistent to hypothesize that other metropolises are the major markets for metropolitan industries classified as second stage resource users.’ -Duncan, Otis Dudley, Scott, W. R., Lieberson, S. and Duncan, Beverley, h4etropolis and Region, Baltimore 1960, p. 30. Some authors attribute the relative failure of India’s large cities to stimulate development in adjacent rural areas to a ‘poorly developed urban hierarchy’, (Berry, Brian J., ‘Policy implications of an urban location model for the Kanpur Region’, Indian Institute of Technology (mimeo), Kanpur, n.d.)-urban economics activity does not ‘trickle down’ through a system of urban settlements of declining size to the countryside. Johnson, E. A. J. The Organisation of Space in Developing Countries, Harvard University Press, Cambridge, Mass., 1970. attributes this failure to colonial rule which did not establish equitable economic exchanges between town and country, but used large cities simply to siphon resources off the countryside. Policy should therefore be directed to the development of market towns to connect city and country (this is quite different from Perroux’s notion of ‘growth poles’). However, if the same processes of concentration are apparent in countries which in the nineteenth century had the required ‘hierarchy’, this suggests a common explanation in the nature of modern economic activity (and changed transport costs) rather than a heritage of colonial rule.