Ideas for growth session 1: Urbanisation

Chaired by Enrico Moretti (Berkeley and IGC), this session discussed urbanisation and, more specifically, various ways in which the agglomeration of production can speed up industrial development and increase productivity. The first presentation by Richard Dobbs (Principal, McKinsey Global Institute) introduced urbanisation as the major economic force of our times and described the contribution of large enterprises in shaping the economic landscape. Dobbs predicted that, by 2025, half the large corporations will be from emerging markets. Those trends will profoundly affect labour demand and will need to be accompanied by appropriate political and social responses.

The second presentation by Ana M. Fernandes (World Bank) pertained to the importance of agglomeration and entrepreneurship for growth. Fernandes presented the results of a study in which she finds that the presence of skilled labour is a very important determinant of firm location. Indeed, skilled labour appears to be the least substitutable input in the production process, and is therefore critical for firms’ location choices.

Our third presenter, David Atkin (Yale), talked about the adoption of technology, as well as the way in which technological knowledge flows between producers. Entitled “Spillovers in Technology Adoption”, his presentation described an experiment he conducted in Pakistan, during which he developed a cost-saving way to produce footballs and encouraged a small number of firms in Sialkot, Pakistan, to adopt the production method. He found that few firms adopted the technology despite the potential for savings. His hypothesis is that worker resistance due to adverse wage incentives is the main reason behind the low uptake. Atkin is planning to do more research in order to find out, among other things, whether it might be a good idea for governments to provide research and development grants for firms to upgrade their technology.

Finally, at the end of the session, Moretti made concluding remarks on the importance of clusters all around the world. He reassured the audience that, in the future, IGC experts would carry out even more innovative research related to urbanisation.

Audio is unavailable for this session.