Hi,I often find myself musing about why a particular city is the way it is, from an economic point of view.Take for example, Minneapolis. I ask myself, what drives the economic engine of this city. Why the people living in the city live there? What creates GDP of this city?I get more confused when I see some cities without any major industry, but only government offices, schools and collages. Govt. offices and schools can’t be the growth engine of a city. With that background, what are the aspects I should consider to fully understand why a city is the way it is?Thanks,MG.

That's a very interesting question. Three phenomena seem to define the economic engines of a city beyond the natural engines such as mineral wealth, a natural sea port, or some large industry.First, many cities act as a nexus for the economic activities for the surrounding countryside. Concentrations of buyers or sellers tend to self-organize at the nearest larger town or city. Thresholds on economies of scale may mean that something such as a college can only make economic sense in a larger population center. Thus, agriculture, mining, and recreation might be a significant part of the GDP of the rural state but a significant fraction of that GDP becomes aggregated at, filtered through, or handed by companies located in the nearest town or city. Schools, colleges, and government may well be a "growth engine" in the sense of providing services to a larger surrounding population with more primary industrial economic activities.Second, there's also the matter of random SMBs (Small & Medium sized Business) whose formations and purposes may be entirely incidental to the city, it's geographic location, or natural resources. Some person has an idea for a company, happens to live in some random city by birth or choosing, and makes that city a source of national or global GDP generation. For example, my grandmother worked for a small company that made decorations for parade floats (in Minneapolis, no less). This is a company that few people would ever hear of and it certainly wouldn't make national headlines if it had a great (or terrible) year. Needless to say, Minneapolis doesn't have enough parades to support such a company and this company made most it's sales to other larger cities on the East and West coasts. Now multiply that example by the thousands of SMBs and a city can have such a diffuse "engine of growth" as to be invisible. In this case the engine of growth is defined by the tendency for people to want to live in a particular place (and, yes, some people would pick Minneapolis over other locations) , the ability to create a company in that location, and the logistical infrastructure required to get materials from suppliers and goods to customers.Third, economics contains some reversionary phenomena that mean that a city's growth or shrinkage are self-limiting. A booming city may become too expense and repel newcomers and new ventures. A declining city may offer comparatively cheap land and labor which attracts business and population. Once established by other economic phenomena, a city wlil tend to grow at the rate of population growth even if the original economic rationale for that city disappears.

I think that's a really interesting question.I agree most towns and cities need one or more key drivers to start their existence and initial growth. Some of these drivers may be historical opportunities that are no longer apparent, but they are replaced by other smaller industries that developed alongside they allow the population to continue to remain static rather than retract. I suppose comparative advantage comes to play here because no country/ town/ city has to be the most efficient at what they produce to justify their existance, as long as they are willing to trade and import what they are least efficient at producing, (Even North Korea - Juche ) . As with most forms of social economics, economic efficiency won't be the only deciding factor. There are political incentives, (Israeli settlements, governments not shutting army bases in small towns, ) and quality of life decisions, (some people (not me!) will tollerate powercuts, extreme weather conditions and lower incomes for a nice view and fresh air).I like documentories about lost cities in South America, I wonder who the last people to leave were. I suppose war and disease play their part in finally killing most of these cities - (Perhaps Minneapolis had better watch out ) Ofcourse, lost cities never actually become lost cities at all, they are often inhabitted by monkeys and other jungle creatures who attempt to immitate man, create fire and sing and dance about it all.

Traden4Alpha and leehayes81,Thanks a lot.

A late remark.Economy, budgets and attractiveness?If you segment a country by a system of fences, so that each citizen lives within one fences area, say Ci, economic power and the budgetary situation of Ci do not need to be strongly dependent. Tax management: in my county (Austria) tax created in Ci flows to the government and returns to Ci are NOT weighted by the economic power but by population.This is completely different in Switzerland, where Ci would be quite tax autonomous.p.s. I once worked a year for the city administration of my home town, Austria's industrial center. Our Bürgermeister asked me to start up a new department for economic development. Our heavy industries covers 1/3 of the fenced area at the danube, with really beautiful places. So, after a few month's I took him to a few beers and "recommended": either buy major shares of our industry or settle it away and use its area by clean working-and-living parks, turning the sleep-out-and-work-in to sleep-and-work-in situations for significant population growth. It never happened, because we are industrial-minded. We feel rich if we see the fire and the smog. p.s2. isn't Minneapolis also a kind of an industrial-minded city?

This indeed is a very interesting question. There is an old Chinese saying "trading makes a city prosper". I tend to agree Traden4Alpha's first point as the most important historical factor (i.e. many cities act as a nexus for the economic activities). This probably explains many most economically advanced cities in many countries are historically (sea)ports.

Here is a link that discusses measuring an economy using the Economic base theory.http://mailer.fsu.edu/~tchapin/garnet-t ... onbase.htm

Cities are not independent element in a nation. Government plan and bind them according an socio-economic strategy, so that if A becomes heavily industrialized based on natural potential of mines, water, port etc, city B gets development through resources which do not depend on A's resource types. This would be government offices, free trade zones(money wise), IT hubs, etc...