Development and Underdevelopment in the History of Economic Thought

Spilling Over: From Robert Lucas' Urbanization of Growth Theory to the Jacobs Spillover

Philadelphe Divry Cédric, PHARE, Paris 1 Panthéon-Sorbonne

Jane Jacobs (1916-2006) was an American writer and activist who rose to fame for the publication of her critique of 1950s urban planning "The Death and Life of Great American Cities" (1961). Her subsequent work is focused on theorizing economic growth and development: "The Economy of Cities" (1969) and "Cities and the Wealth of Nations" (1984) elaborate on her central idea that economic development is an urban phenomenon on which ultimately depends economic growth. Although she wasn’t a trained economist, her writings on the subject of unequal economic growth and development has shaped the thought of some of the most influential theorists working on the subjects of economic growth, development, and urban economics--among which Robert Lucas, Edward Glaeser, and Richard Florida. In 1992, a seminal paper by Glaeser et al., "Growth in Cities," cemented Jacobs' contribution to economic theory by coining the "Jacobs spillover," a type of knowledge spillover occurring between industries in an urban and competitive setting. Since then, the concept has become a staple of urban economics. But the success of this interpretation definitely classifies Jacobs as an urban thinker and obscures her contributions in the realms of economic growth and development. Going back to Robert Lucas' mention of Jacobs in "On The Mechanics of Economic Development" (1988), I argue that endogenous growth theory was the framework within which Jacobs' thought began to appeal to economists, because it precisely led theorists to consider her argument of the urbanity of economic growth. Indeed, the adoption of the concept of externalities in macroeconomics led theories of growth to gain relevance in spatial analysis, as the idea of an externality entails the beneficial effects of spatial proximity. This in turn set the stage for applying some insights of endogenous growth theory to urban economic analysis where agglomeration economies (among which knowledge spillovers) had long been discussed.


Keywords: Jacobs, Urban, Growth, Development, Externality, Spillover