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Closing in on problems

URBANISATION AND ECONOMIC GROWTH·Vibhooti Shukla· Oxford University Press, Delhi · 1996

By Abhijit Mukhopadhyay
Published: Saturday 04 July 2015

-- the term 'agglomeration economies' is often used to describe the opportunities and informational benefits that accrue to denser markets, to firms located in close spatial proximity with a large number of its customers, suppliers and competitors. The 'agglomeration effect' is the cornerstone of this book. The simple logic or idea behind the concept of agglomeration effect is that firms, producers or even consumers can gain considerably if they are located in a city with a large population rather than in a sparsely populated area. But too large a population can create a negative impact called 'negative agglomeration effect'.

The author has analysed the implications and consequences of positive and negative agglomeration effect on the size of cities. The author's argument is that firms tend to ignore social benefit while taking into account their profit. The agglomeration effect tends to make cities small in size. It follows that the natural growth of a city based on calculations of firms and potential migrants cannot be 'socially optimal'. The author's hypothesis is based on certain empirical studies. She suggests that if the size of an average city is doubled, the productivity of each firm can increase by upto nine per cent. Her book also deals with the issue of migration at length. She has done well in trying to address the issue of pollution and arguing that appropriate governmental intervention and the right policies can reduce the pollution of cities, apart from achieving an increase in growth and productivity.

The book, is a collection of articles by the author who died at the young age of 33. It is a pioneering study in the field of development which can prove useful to decision and policy-makers in developing countries like India.

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