Economic development of any country is associated with structural transformation, i.e. a decline in the relative importance of agriculture and an increasing importance of manufacturing and services. Firms and industries concentrate in specific locations to take advantage of lower transportation costs and benefit from agglomeration economies that arise through knowledge spillovers, more efficient supply chains, and specialised labour pooling.
People migrate to these locations to reduce job search costs and be close to their workplaces. This process of urbanisation creates densely populated centres of non-agricultural economic activity. The modern global economy is dominated by large metropolitan regions that are centres of economic growth and prosperity. The economic power of metropolitan regions derives from the productive environments they offer firms – lower transportation costs, shared pools of labour and infrastructure, a vibrant knowledge economy, and ease of collaboration.
