Is urbanization an economic sector?

One of my most ambitious academic articles is a 2018 piece in the journal Regional Studies. I’d long been frustrated with the way in which economics and economic theory deals with urbanization. The making and remaking of human settlements – building and maintaining them, providing them with food and water and energy, all the things that go into making a place livable – have been consistently ignored by most economic thought. These supposedly mundane things are often thought of as almost automatic by-products of proper industrial development. This is the idea of the multiplier effect – if you create X number of jobs in certain ‘productive’ industries, it will seemingly automatically produce the city around it.

But as anyone who is engaged in urban development know, 1) nothing is automatic, and 2) these industries which make urbanization possible are often larger than the supposed drivers of our economy. More of us work in these economies which make collective life possible than the supposed drivers of our economy. Food, real estate, energy, water, construction, culture and many other vital sectors are often dismissed as unproductive, and thus less important.

The root of this problem goes back to a very old ideas in economics, one that is so ingrained people often forget it is a theory. Developed during the Second World War, ‘three-sector theory’ popularized the notion of the ‘services’ sector. It has quietly underpinned understandings of economic structure ever since. The limitations and influence of this basic breakdown have led to many critiques and extensions, but no replacements. Inspired by Henri Lefebvre’s The Urban Revolution (1968), we develop a four-sector model that replaces services with sectors focused on urbanization and control. We argue that this model is a better reflection of material economic life, and a more useful way of approaching the 21st-century economy. It also offers scholars of urbanization and regional development a creative new way of seeing urbanization.

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