Why do larger cities produce outsized economic benefits? A new study, from MIT, suggests that global connections between cities may play a key role. Examining 255 urban areas across the EU, the U.S., and China, researchers propose that inter-city organizational links—such as those between firms or universities—might explain the superlinear scaling of urban economic indicators like GDP.
Historically, urban scaling models have emphasized social interactions within cities. These models assume that denser networks of local connections drive economic output, but this study challenges that view. The researchers found that inter-city connections could account for increasing returns to scale just as well, if not better, than intra-city interactions. However, the findings raise questions about causality: Do stronger connections between cities make them wealthier, or does wealth enable better connections?
A connecting role
Organizations, the researchers argue, play a crucial role in connecting cities globally and shaping interactions within them. For instance, a university or corporation not only facilitates local collaboration but also links its members to peers in other cities. These nested networks of local and global ties might underpin the innovations and outputs attributed to urban centers.
The study also sheds light on inequality. While larger cities generate greater economic outputs, these benefits often accrue disproportionately to those linked to resource-rich, globally connected organizations, leaving others behind. This observation underscores the importance of understanding how inter-city connections contribute to uneven economic gains within urban areas.
The findings challenge traditional theories that prioritize local social ties by highlighting the economic value of global networks. They also reveal that different urban outcomes, such as GDP growth and crime rates, may be shaped by distinct mechanisms. For instance, while economic performance correlates with inter-city connections, phenomena like homicides are more influenced by internal dynamics.
Future work
Future urban scaling models must integrate these insights, accounting for both intra-city and inter-city interactions. The researchers suggest distinguishing between social connections of varying economic value—such as informal ties between individuals versus formal organizational links—and exploring how local and global processes interact. Expanding datasets to include smaller cities and developing predictive theories of these nested interactions could offer a more nuanced understanding of urban systems.
This research invites a reconsideration of urban economics, emphasizing that the prosperity of cities depends not only on their internal social fabric but also on their position in the global network of connections.
