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June 21, 2012

How Sky Cities and Robotic Cars will boost Productivity and GDP

Here I lay out the research which I believe shows that Sky City Skyscrapers (200-300 stories) and robotic cars (4 times the density of road traffic) will make certain megacities (future New York, Shanghai, Tokyo etc...) one third to one half of the overall world population and they would have 75% more GDP per capita than they do today. There would be rural, regular urban then super-urban. Research shows that doubling population and increased urban density boosts productivity by about 15%.

Serious study of the role of location and density in economic development probably owes its origins to Alfred
Marshall’s work on location and economic development in the early 1900s. Cities are economic drivers – the very core of economic growth and development. Higher earnings paid to urban workers and premiums paid by firms to be in urban areas are evidence of cities’ productive advantages. In the US, for example, earnings in cities are around 33% more than those in non urban areas (Glaeser and Mare, 2001). Even within Greater London, the urban premium is high: the average earnings for a worker in inner London (£49,400) was nearly double that of the average for outer London workers (£26,700) in 2007.

The ways in which density is linked to productivity has been developed in a wide array of research projects. Six key impacts are discussed in this section:
* density allows a higher degree of specialisation, increasing efficiency;
* reduced transport time and costs for products/goods/services from one stage to the next, or from producer to consumer, occurs in denser areas if the transport infrastructure is sufficient;
* increased density increases the prevalence of knowledge spillovers, increasing innovation
* density allows firms to have access to larger markets of suppliers (especially labour supply) and consumers, allowing competition to enhance the quality of inputs and outputs;
* efficiencies of scale are created in denser markets where suppliers are reaching more potential customers;
* reduced land take in denser areas allows more economic activity to take place on a fixed piece of land than less dense designs;

In addition to understanding the nature of the linkages between density and productivity, economic research estimates the scale of these linkages.

Seminal work by Ciccone and Hall (1996) assessed the impacts of density on productivity in the US, and found that doubling employment density, and keeping all other factors constant, increased average labour productivity by around 6%. Subsequent work by Ciccone (1999) found that in Europe, all other things being equal, doubling employment density increased productivity by 5%. A third paper (Harris and Ioannides, 2000) applies the logic directly to metropolitan areas and also finds a 6% increase in productivity with a doubling of density.

More recent work by Dan Graham (2005b, 2006) examines the relationship between increased effective density (which takes into account time travelled between business units) and increased productivity across different industries. Graham finds that across the whole economy, the urbanisation elasticity (that is, the response of productivity to changes in density) is 0.125. This means that a 10% increase in effective density, holding all other factors constant, is associated with a 1.25% increase in productivity for firms in that area. Doubling the density of an area would result in a 12.5% increase in productivity.

Economist Robin Hanson noted that doubling the population of any city requires only about an 85% increase in infrastructure, whether that be total road surface, length of electrical cables, water pipes or number of petrol stations. This systematic 15% savings happens because, in general, creating and operating the same infrastructure at higher densities is more efficient, more economically viable, and often leads to higher-quality services and solutions that are impossible in smaller places. Interestingly, there are similar savings in carbon footprints — most large, developed cities are ‘greener’ than their national average in terms of per capita carbon emission.

Google told the world it has developed computer driving tech that is basically within reach of doubling (or more) the capacity of a road lane to pass cars. Pundits don’t seem to realize just how big a deal this is – it could let cities be roughly twice as big, all else equal.



Factory mass produced Sky City will become the tallest building in the world and more importantly will impact urbanization in the developing world. Successful urbanization will lift people up to higher levels of per capita income, increase productivity and can reduce pollution.

I see the impact of Sky Cities and Broad Factory mass produced skyscrapers like the move from 3 to 4 story buildings to cities with 30 story buildings. Average skyscrapers are now 30 to 50 stories tall. This factory mass production will make 100 to 300 story buildings affordable and common.

Eight times the density would be a 45% boost to productivity.

Road capacity could be boosted by 4 times using robotic cars. This could be another 30% boost to productivity.

The Sky Cities are also designed to reduce pollution (99% less construction dust) and use 5 times less material than a regular skyscraper. They would also house homes, offices and stores which will enable more in building commuting. This will boost productivity and reduce commuting times.

Certain megacities (future New York, Shanghai, Tokyo etc...) could increase to being about one third to one half of the overall population and could have 75% more GDP per capita than they do today. There would be rural, regular urban then super-urban.

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