Urban Structure and Economic Growth

Adam Smith was one of the first to call attention to economic growth differences among nations. He described how the workings of markets, specifically the extent of specialization in production, offer a plausible explanation of these differentials. This idea has been enriched over the years with the insights of Joseph Schumpeter, F.A. Hayek, Douglass North, and many others. Schumpeter highlighted the notion of the entrepreneur as the prime mover in markets. Acts of successful discovery underlie the dynamics of economic growth. Hayek elaborated that a market that generates opportunity cost signals makes it possible for large numbers of strangers to coordinate all the efforts that implement the entrepreneur‟s vision.