Topic 2: The
Economy of
Urban Places
NABONG,JOHN LOUIS S.
B A L U Y U T, R I Z Z A LY N
DELA CRUZ, NICK ROBIN D.
Urban Economy
- Urban Economy refers to the economic activities and interactions within a city, including aspects
such as land use, transportation, housing, local public finance, and environmental quality (Arnott,
2012).
- monocentric city model
- The study of the economics of urban areas. This includes the factors making for the growth first
of towns and then of metropolitan/Urban areas, including complementarity between industries
and the attraction of proximity to markets. It also covers the special problems of urban places,
including crowding and pollution (Urban Economics, 2025).
Historical shifts in Urban
Economies
Industrial Revolution (18th–19th Century)
- Cities became centers of manufacturing and industry. Factories and mills
clustered in urban areas, drawing workers from rural regions and fueling
rapid urbanization.
- Migration
- Urban population growth
The Decline of Manufacturing
- Manufacturing, once the backbone of industrialized economies, has declined in relative
importance due to globalization, technology, and environmental regulations.
- Globalization made an impact on the decline of manufacturing. Manufacturing jobs have moved
to countries with lower labor costs, such as China, India, and Southeast Asian countries like here
in the Philippines. This has led to factory closures and job losses in developed economies.
- Advances in robotics, artificial intelligence, and other technologies have reduced the need for
human labor in factories. Machines can now perform many tasks more efficiently and at a lower
cost.
The Decline of Manufacturing
- Stricter environmental laws in developed countries have increased the cost of manufacturing,
prompting some industries to relocate to countries with less stringent regulations. industries to
relocate to countries with less stringent regulations.
Effects of the Decline:
The Rise of the Service Economy
- As manufacturing has declined, the service sector has grown to become the dominant force in
many economies. The service economy includes industries such as finance, healthcare,
education, tourism, retail, and information technology.
- Consumer demand is one of the main reasons why the economies in many countries shifted to
the service economy. As incomes have risen, people have spent more on services like healthcare,
education, entertainment, and dining, driving growth in these sectors.
- Due to technological advancements, the digital revolution (the transition from analog to digital
technology) has enabled the growth of service industries like IT, e-commerce, and business
process outsourcing (BPO).
Suburbanization
- Suburbanization involves the development of neighborhoods in the areas
surrounding urban centers. Key factors contributing to suburbanization
include government policies, the need for housing, available transportation
options, and aspirational marketing strategies. There are advantages and
disadvantages to suburbanization. Some of the positive aspects include
increased space and greater community involvement.
Multi-centered Region
-A "multi-centered region" describes a geographic or organizational area
characterized by the presence of various significant centers, rather than
being centered around just one. These centers could include cities, towns, or
other focal points that each contribute meaningfully to the region's social,
economic, or cultural dynamics.
Symbolic Economy
- A symbolic economy in culture and commerce refers to situations where the
value of goods or services is primarily based on their symbolic meaning
rather than their practical utility, with examples including luxury brands,
designer fashion, art, certain cultural experiences, and even social media
"likes" which represent social status or recognition, all contributing to a
symbolic exchange of value beyond the actual product itself.
