ABSTRACT
City growth necessarily requires heavy investment in housing and infrastructure. Cities are places where characteristics of location and concentration provide a comparative advantage in the production of goods and services. An historical view of cities is usually discounted by modern analysts and policy-makers on the grounds that the Third World’s city problems and rates of population growth are unprecedented. Endogenous increases in congestion costs are the key limit to urban growth in Kelley and Williamson’s models. The way in which costs are reduced depends on a number of institutional and economic variables. The chapter argues that the Third World’s planners and policy-makers, few of whom have thought about the past at all, would do well to consider the lessons of the economic history of city growth. History shows a complex of factors – economic and institutional – which either allows cities to break free of, or be trapped in, the awfulness of dysfunctional environments.
