Dyson: Fostering Competition Among Cities

+ Brandon Fuller

In her recent Project Syndicate column, Esther Dyson suggests that all cities could stand to be a bit more innovative:

Cities still often operate in a pre-market way. They mostly build their infrastructures themselves, and innovations do not spread easily, owing to a lack of incentives and, for that matter, much of a market…other than when one city hires managers from another.

But Dyson also sees the coming wave of urbanization as an opportunity for well-run cities that actually are innovative to attract millions of new residents:

On the other hand, cities are increasingly behaving like companies, becoming intimately involved in their citizens’ quality of life, and, in an increasingly mobile world, competing for “customers.” Despite registration systems such as those in Russia and China that restrict movement, people can come and go from cities much more freely than they can cross national borders. Meanwhile, cities can be both more flexible and more arbitrary, and compete on terms not available to legislatively restricted national governments.

In an increasingly urban world, mobility of people combined with competition among cities for residents can potentially lead to better policy outcomes for everyone, as people abandon poorly governed areas for cities that offer a relatively high quality of life:

The goal is not perfection in a single city, but more effective innovation and competition, so that the best cities prosper and other cities emulate them. There are enough mobile people that one city’s success won’t harm others; on the contrary, it is more likely to encourage existing cities to change, just as new market entrants force incumbents to improve.

For Dyson, charter cities have a role to play in fostering strong competition for urban residents. Indeed, as she points out, charter cities will succeed only if they are profitable for investors and attractive places for residents to live and work.

At the moment, many people in the developing world want to be closer to the social and economic opportunities available in cities. Yet, because many cities are either unable or unwilling to plan for and accommodate new residents, many urban migrants end up in slums where they are excluded from formal city life. New cities could offer a much more inclusive option. A quote from Paul Romer near the end of Dyson’s piece suggests the enormous potential for mutually beneficial exchange that rapid urbanization could enable:

A new city can attract the working poor and still succeed as a large-scale real-estate development project. And a good thing too, because charity will never finance urban living space for 3-4 billion additional people. If new places enter the ‘city business,’ the working poor will find [affordable] urban housing and transport for the same reason that they now find food: because someone profits by offering it to them.

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