Political economist Barry Bluestone spoke as part of the Distinguished Lecture Series sponsored by the Office of the Vice President for Research at UB this past Wednesday.
Bluestone, who is dean of the School of Social Sciences, Urban Affairs and Public Policy at Northeastern University, discussed the New Growth Theory, globalization and the economic prosperity of US cities.
One of the most prominent concerns for residents of economically prosperous cities in America is the cost of living, according to Bluestone.
"The cost of living is increasing so sharply that the prosperous US cities are in danger of pricing themselves out of the market for new firms and working families," he said.
Bluestone discussed the range of economic conditions across the country. An annual income of $44,532 in Buffalo, NY will adequately support a family of four. On the other hand, if the same family were to relocate to Boston, Mass., an annual income of $64,656 would be needed for the same standard of living.
"These regions may be digging their own graves," Bluestone said.
Studies conducted on housing, employment and population revealed that the cities with the highest cost of living are suffering extremely low employment growth.
Bluestone explained that young adults, 25 to 32 years of age, are discouraged from residing in these areas.
During the lecture, Bluestone described meeting a 30-year-old resident surgeon from a Boston hospital who had to leave her previous residence of three years to start a family because the area was unaffordable.
Cities that have had a high concentration of universities and medical centers are known as "eds and meds." Bluestone explained that powerful international and domestic transportation centers tend to be most prosperous in the US. According to Bluestone, a US city needs to be a leader in technological innovation to prosper in the current global economy. For a city like Buffalo with several universities, this could mean keeping graduates in the area.
"It is really critical for cities, towns and regions to hold on to creative, smart and innovative people," Bluestone said. "A new hierarchy of metro areas is arising as a result of the increased technological innovation and globalization."
This follows suit with the New Growth Theory, adapted by Paul Romer, Richard Nelson, and Sidney White, Bluestone explained.
"It requires constant vigilance and adapting because things change so quickly, making it hard to tell what the breakthrough and...the speed of reaction will be," Bluestone said.
Economic growth is not possible without technology innovation, according to Bluestone. Today, the domestic leaders of technological innovation within the US are Boston, Mass., Austin, Texas and Raleigh, Durham and Chapel Hill, NC.
"Technological progress becomes the centerpiece for growth," he said. "It provides incentives for increased capital investment and although it is subject to a change in the need for human capital, it is what really moves an economy."
The standard theory, on the other hand, attests to a different outlook, Bluestone explained. This theory states that the rate at which physical capital is formed is the most critical for a nation's prosperity and that progress equates to advances in knowledge.
The key factors for economic success are physical capital, technology, human capital, transportation and communication, revolution, and globalization. To gain these necessities, the population must be skilled, educated, and properly trained, Bluestone said.
Photo: Courtesy of Laron Fomby
