Diseconomies of Scale in Urbanism

Can He Solve the Problem?

By Caspar Lundsgaard-Hansen

The Economist, a weekly news and international affairs publication from England, published an article on the limits of cities in Latin America. The article states that megacities in Latin America risk becoming a constraint on economic growth.

The author shows that until the 1970s, the continent’s biggest cities led their respective countries’ economic development. “The productivity gains that flow from bringing people together in cities have been one of the drivers of economic growth in Latin America over the past half century or more.”

However, a report from management consulting company McKinsey now draws a different picture: “(…) congestion, housing shortages, pollution and a lack of urban planning mean that Latin America’s biggest cities now risk dragging down their country’s economies (…).” To underline this conclusion, they point to the fact that in the decade to 2008 of the nine cities with the biggest economies, only Mexico City, Monterrey and Lima experienced economic growth that was above their countries’ norms.

Instead, some second level cities (e. g. Curitiba and Medellín) are starting to show more dynamism than their larger siblings. The megacities may now see diseconomies of scale “because their insitutional, social and environmental support structures have not kept up with their expanding populations.”

Read the whole article here. The McKinsey-report can be found here.

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