Spatial Economics Soon to Rock Your World

This article originally appeared on Shanghai Daily.

Spatial economics, or the declining cost of distance, is about to shatter some long-standing economic assumptions. It will transform urbanization patterns and redefine cities in advanced economies by shaking up established models of global growth, while positioning the US and Europe for a period of sustained expansion.

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The cost of moving goods, people and information is declining, with some items already in a steep and rapid descent. The catalyst for change is an array of new platform technologies that have pushed the cost of distance to the tipping point. By 2025, spatial economics will alter the way we live and work—faster and more broadly than many can imagine.

Advances in service robotics, 3D printing and logistics will allow companies to operate economically at smaller scale, increasing local production and jobs dramatically. That will set individuals free from long-standing constraints to live and work in cities. At the same time, automation of many tasks will enable a much greater availability of goods, services, education and healthcare in communities 50 miles or more from city centers. For many middle-class families, the lure of space at low cost with many of the amenities of urban life will be irresistible.

In fact, the last large-scale spatial economic shift, the industrial revolution, led to the breakneck growth of cities as manufacturers and other large employers concentrated workforce to support large-scale production. Now, 200 years later, advanced economies are primarily service-based, but living patterns in these advanced economies remain highly concentrated and ripe for disruption.

Some cities will continue to grow, but migration to the exurbs—areas 50 miles or more from a city center—will surge. By 2025, the US exurban population could outstrip the urban center population, ushering in a post-urban economy.

Read the full article at Shanghai Daily.

Orit Gadiesh is chairwoman of Bain & Company and the former Chair of the International Business Leaders’ Advisory Council.