weinstein-davis-2006-bones-bombs-and-break-points-the-geography-of-economic-activity

Bones, Bombs, and Break Points: The Geography of Economic Activity

Authors: Donald R. Davis and David E. Weinstein

Main Focus

The study investigates the distribution of economic activity within Japan across different historical eras. It emphasizes how this distribution has been influenced by three key theories of economic geography: increasing returns, random growth, and locational fundamentals.

Key Theories of Economic Geography

Increasing Returns:

• The theory posits that certain advantages can emerge from knowledge spillovers among businesses and labor-market pooling, where companies benefit from a close proximity to a skilled workforce.

• This affects the spatial patterns of city sizes, as technological advancements and competitive dynamics among locations create varied growth.

• It is closely associated with concepts such as multiple equilibria (where different growth paths are possible), path dependence (where past decisions influence present conditions), and spatial catastrophes (critical disruptions leading to significant shifts in economic activity).

Random Growth:

• Random growth is derived from stochastic processes that account for the distribution patterns of city sizes, which supports the empirical observation known as Zipf’s Law, asserting that the size of a city is inversely proportional to its rank in the size distribution.

• However, it lacks a robust explanation for the existence of increasing returns in city growth dynamics, limiting its applicability.

Locational Fundamentals:

• This theory states that growth is fundamentally based on assorted economic characteristics which, while exhibiting randomness, lead to predictable spatial concentrations.

• It suggests that regions with strong economic fundamentals are more resilient to temporary shocks, maintaining a robust foundation for growth and sustainability over time.

Historical Context and Data Overview

• Data Range: The research is based on an extensive analysis covering 8,000 years of Japanese regional population data, documenting developments from prehistoric epochs through to contemporary times.

• Historical Population Estimates:

  • Jomon Period (6000 to 300 BCE): Characterized by hunter-gatherer communities, the population was around 125,000 individuals.

  • Yayoi Period (300 BCE to 300 CE): Marked by the advent of agriculture and metal tools, the population surged to approximately 595,000.

  • Feudal Era: Population growth accelerated due to the establishment of agricultural practices and a taxation system, laying the foundation for urbanization.

  • Modern Era (1998): The population peaked at approximately 120 million, reflecting significant societal and economic transformations.

Research Methodology:

• Regional analysis is employed because of the significant fluctuations in the definitions and characteristics of cities throughout history.

• The study focuses on measuring population density per square kilometer while adjusting data for variations in regional sizes, yielding a more accurate representation of spatial population dynamics.

Findings on Population Density and Persistence

• The research indicates a high degree of variation in regional population densities throughout history, confirming the reliability of Zipf’s Law across multiple historical epochs.

• Persistence is notable in regions that have historically maintained high population densities, exemplifying the concept of path dependence where past conditions and developments influence current economic landscapes.

• These findings demonstrate that fundamental economic characteristics, encapsulated through geographical features, provide explanations for sustainable population distributions over time.

Impact of WWII Bombing on City Sizes

The Nature of Shocks:

• The study investigates the large-scale shocks induced by WWII, particularly focusing on the bombing of 66 targeted cities across Japan.

• This resulted in widespread destruction, including significant loss of infrastructure and dramatic declines in population numbers.

Recovery Analysis:

• The research reveals that cities typically reverted to their pre-war population rankings within approximately 15 years, illustrating a substantial resilience in urban dynamics.

• The findings challenge the random growth theory, suggesting that the heavy destruction and associated casualties did not lead to enduring changes in long-term city size dynamics.

• Instead, temporary shocks resulted in relatively rapid restoration of previous population levels and urban structure.

Implications for Economic Models

Increasing Returns Theories:

• The evidence supports the concept of spatial differentiation that arises through technological advancements during industrialization. However, contradictions emerge regarding the expected permanent urban transformations that such theories usually predict.

Random Growth Theory:

• This theory is largely dismissed based on findings that suggest temporary urban shocks do not instigate lasting changes in city sizes or structures.

Locational Fundamentals Theory:

• This theory is found to be the most robustly supported by empirical data, emphasizing the enduring influence of geographical and historical features on economic activity.

• It effectively explains enduring patterns in population density and the resilience of cities against various disruptions.

Policy Considerations

Stability of Spatial Structures:

• The findings suggest that historical data indicates less impact from temporary economic interventions than previously assumed.

• This emphasizes that underlying deep geographical factors significantly influence long-term economic development trajectories.

Conclusion

Overall, the study offers critical insights into the spatial distribution of economic activity in Japan, essential for understanding broader geographical economic patterns. It proposes a hybrid theoretical framework that combines locational fundamentals with increasing returns to elucidate the spatial differentiation observed throughout Japan's extensive economic history.