Book Review of the Rise and Fall of Urban Economies by Michael Storper, Thomas Kemeny, Naji Makarem, and Taner Osman, Stanford University Press, 2015

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Book Reviews 287
Arizona Public Service, to switch their office supply con-
tracts to Wist.
Another example of the “economics of collaboration,”
Respect for the Earth and All People, is a network of envi-
ronmentally conscious local businesses in Calgary that
pools resources for collective marketing and advertising.
Similarly, Edmonton’s Original Fare, a group of local food
restaurants in partnership, maximizes economies of scale in
marketing and advertising through a group rewards pro-
gram in which participants gain benefits for eating at any
network restaurant. Tucson Originals, with the motto “butts
in the seats and less money spent,” has extended its collab-
orative efforts beyond increasing foot traffic in member
businesses to joint procurement. Although not formally a
producer cooperative, Tucson Originals buys in bulk and is
able to negotiate price as a result. Maximizing business
activity through shared location is another form of collabo-
ration, known all too well in the shopping mall phenome-
non. In a localized version of this, about 30 cities in the
United States have encouraged businesses to partner to cre-
ate a “local business destination” to attract both residents
and tourists. Pike Place Market in Seattle and Reading
Terminal Market in Philadelphia are two well-established
and highly successful examples.
An evangelist of sorts for the local economy movement,
throughout the book Shuman backs his rhetoric with real-
world facts, data, and anecdotes. Written by a practitioner,
the approach and style of The Local Economy Solution
reflects this. The book channels Shuman’s keen interest in
providing practical guidance, tools, and resources for other
practitioners, including an annotated appendix listing exam-
ples of the various kinds of pollinators. What the book lacks
in academic tone and nuance, it easily makes up for in grass-
roots credibility, integrating the values of community devel-
opment with the assumptions and parameters of economic
development. Increasing participation and local control in
economic development has justifiably been a rallying cry for
community organizers and developers at least since the deba-
cle of urban renewal. By pragmatically arguing for a more
decentralized, democratic notion of economy, Michael
Shuman effectively puts the community back in community
economic development.
References
Shuman, M. (1998). Going local: Creating self-reliant communities
in a global age. New York, NY: Free Press.
Shuman, M. (2007). The small-mart revolution: How local busi-
nesses are beating the global competition. Oakland, CA:
Berrett-Koehler.
Shuman, M. (2012). Local dollars, local sense: How to shift your
money from Wall Street to Main Street and achieve real pros-
perity. White River Junction, VT: Chelsea Green.
Author Biography
Margie DeWeese-Boyd is an associate professor in the Department
of Sociology and Social Work at Gordon College, Wenham, MA.
Her research interests are in sustainable community-based develop-
ment and community organizing.
Storper, M., Kemeny, T., Makarem, N. P., & Osman, T. (2015).
The Rise and Fall of Urban Economies: Lessons From San Francisco
and Los Angeles. Stanford, CA: Stanford University Press. 328 pp.
ISBN: 978-0-8047-8940-0
Reviewed by: Gordon F. Mulligan
The University of Arizona, USA
DOI: 10.1177/0891242416654593
This thoughtful and eclectic volume addresses one issue:
Given that the two urban regions recently enjoyed the same
level of economic development, why did San Francisco
surge so far ahead of Los Angeles? After all, both cities pros-
pered in resource- and amenity-rich California, both nurtured
a variety of light manufacturing and service industries, both
attracted extensive military contracts, and both enjoyed the
advantages of having well-educated workforces and world-
class universities. Drawing on ideas from urban economics,
regional science, planning, and sociology, and sifting through
evidence from a variety of sources, the authors weave a fas-
cinating story of the smart choices made by one city and the
poor choices made by the other.
The book opens by illustrating the remarkable divergence
in wealth that has taken place in the metropolitan areas since
1970. In one figure, the evolution of per capita income is
traced for the nation’s eight largest metropolitan areas: The
income growth in the 10-county Bay Area (including San
Jose) is shown to be the nation’s highest, while the income
growth in five-county Greater Los Angeles is shown to
resemble the pattern for beleaguered Detroit. In fact, by 2010
real median household income (adjusted for differences in
the regional costs of living) was 50% higher in the Bay Area
than it was in Los Angeles! A second figure for the nation’s
30 largest metropolitan areas—where population growth is
plotted on one axis and per capita income growth on the
other—gives a somewhat different perspective on the matter.
Here Los Angeles, with its steady population growth, resem-
bles amenity-rich Sunbelt cities like Miami and stable
Rustbelt cities like Chicago, while San Francisco, with its
steady income growth, resembles slow-growing Boston and
fast-growing Houston. Since 1970 both quantitative and
qualitative development gaps have opened up between
California’s two most important metropolitan economies.
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288 Economic Development Quarterly 30(3)
Chapter 2 outlines some of the theoretical perspectives
that might shed light on this remarkable divergence. Rather
quickly, the authors dismiss the convergence themes that
typify both mainstream development theory and the compen-
sating differentials perspective of regional science. They are
also suspicious of the universality of the New Economic
Geography—in large part because Los Angeles failed to sus-
tain its early agglomerative advantages in engineering jobs.
Instead, they prefer an institutional approach that examines
the key roles played by entrepreneurship and worker skills,
that recognizes the importance of robust business and social
networks, and that appreciates how the beliefs of a region’s
citizens can shape the path of development.
Much of the discussion is based on the very different clus-
ters of major tradable (export) industries that can be identi-
fied for the two cities (see below). Wages in tradables are
generally known to be much higher than wages in nontrad-
ables, so it makes sense to focus on the performances of each
city’s largest export industries during recent times. Moreover,
persuasive evidence has been provided by Moretti (2012)
that the employment and income multipliers for high-tech
tradables substantially exceed those for other tradables. In
San Francisco, the job share in information technology grew
from 2.7% in 1970 to 10.2% in 2010, while in Los Angeles
the job share in aerospace and defense fell from 3.4% to
0.9% during the same time period. So San Francisco signifi-
cantly deepened its specialization in one high-wage tradable
industry, while Los Angeles lost considerable ground in
another high-wage tradable industry. When the results were
compiled across all the most important tradables in 2010,
Los Angeles was found to be specializing in low-wage export
industries like warehousing and apparel wholesaling, while
San Francisco was seen to be specializing in high-wage
export industries like software publishing and designing
computer systems. By 2010, 8 of the 10 most important trad-
able sectors in the Bay Area enjoyed average wages higher
than $100,000, although in Greater Los Angeles not one of
its most important tradable sectors had passed this wage
threshold. Further analysis targeting specific occupations
shows how the two regions have placed very different
demands on abstract cognitive tasks.
Evidence is also given that San Francisco’s occupational
structure reflects the presence of more nonroutine thinking
than is the case for Greater Los Angeles. In fact, after account-
ing for significant intraregion heterogeneity, the Bay Area’s
score today on this dimension is some 17% above the national
average, while the score for Los Angeles is some 4% below
that average. In fact, the authors claim that San Francisco has
been so successful because it has focused on acquiring and
maintaining a variety of the growing knowledge-based indus-
tries, whereas Los Angeles, on the other hand, has been unsuc-
cessful because it largely failed to target or nurture any of the
growing industries of the New Economy. Evidently this gap in
perceived opportunity has also shaped both the migration and
immigration streams of workers coming to California in recent
years. Educated, productive workers have chosen San
Francisco over Los Angeles despite the similarities between
the cities in human-created and natural amenities and the
higher real estate prices seen in the Bay Area. The authors
close this part of the book by admitting that some of this wage
divergence seen in the two regional labor markets might be
due to different on-the-job learning experiences where, possi-
bly, San Franciscans have widened and deepened their skills in
the workplace faster than Angelenos.
Informed in part by AnnaLee Saxenian (1994) and Allen
Scott (1993, 2005), chapter 5 provides some of the most inter-
esting material in the book. Here the authors discuss in histori-
cal detail the rise of the aviation and aerospace cluster in Los
Angeles and, somewhat later, the rise of the information tech-
nology (IT) cluster in the Bay Area. Special mention is made
of the pivotal roles played by Harry Chandler, Donald Douglas,
and Robert Millikan in the one place and Sherman Fairchild,
William Shockley, and Frederick Terman in the other. The
relative failure of IT in Los Angeles (given that city’s early
lead in semiconductors) is attributed to the shifts that took
place in the aviation industry back in the Cold War days of the
1950s, when organizational practices became increasingly
attuned to defense procurement. So, instead of a regional sys-
tem of open contracts and subcontracts evolving in Los
Angeles, the increased emphasis on weapons development led
to a policy of concurrency, or simultaneous completion, which
in turn required centralized planning and consultancy. In con-
trast, Silicon Valley was able to break away from this restric-
tive system and develop an alternative mode having open
networks, aggressive risk-takers and dealmakers, and high
levels of mobility between competing firms. In short, the Bay
Region created a civilian production ecosystem that aligned
the interests and incentives of its various actors (Engel, 2014).
The chapter concludes by observing that a similar narrative
unfolded later in the biotech sector where the Bay Area rose to
dominance in large part because of the understanding and
cooperation between the region’s universities and venture cap-
italists, thereby leading to use of the term “science-based capi-
talism.” In fact, business incubators have emerged in Los
Angeles over the extreme frustration of seeing homegrown
talent and new companies migrate to the Bay Area in search of
better opportunities for personal and corporate success. The
point is also made that Hollywood—which directly and indi-
rectly accounts for perhaps 5% of the Greater Los Angeles
economy—does resemble the IT sector in some ways, but the
wages paid to entertainment workers are 30% to 50% below
those given to people engaged in the same occupations in the
IT sector of the Bay Area.
Chapters 6 and 7 examine the different economic devel-
opment policies and distinctive world views of the two com-
peting regions. Here a lot of the discussion focuses on the
role played by physical infrastructure where the authors are
skeptical of the “build it and they will come” attitude
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Book Reviews 289
advocated by many city leaders. While Los Angeles made a
series of conscious decisions (involving land use, transporta-
tion, etc.) to consolidate its position as the nation’s West
Coast port-logistics hub, this chosen direction eventually has
led to significant specialization in the low-wage handling
and warehousing industries. Unfortunately, no business
externalities arose that might have attracted the high-wage
earners of the New Economy to the region. On the other
hand, the business and civic leaders of the Bay Area made
more than a gestural response to the changes emerging in the
national economy and, beginning in the 1980s, attempted to
create the social and institutional underpinnings for sustained
growth in the various knowledge-based industries. Moreover,
the municipal budgets for the two regions, which are exam-
ined in some detail for the time period 1990 to 2010, reveal
another interesting facet about the different directions taken
by the competing regional governments. Very clearly the
data show that Bay Area residents have been willing to pay
higher taxes so that residents can enjoy better public trans-
portation, superior health care, and more urban ambience.
When taken along with the very different voting patterns of
the two regions, the conclusion is reached that the Bay Area
has a more constructivist approach to human action where
citizens generally share the same beliefs regarding abstract
issues like quality of life and the nature of progress.
The book concludes with a short chapter on regional dif-
ferences in social capital and relational networks. Levels of
social capital, or general trust, have been much higher in the
Bay Area than in Los Angeles for quite some time: recent
surveys suggest that trust is now somewhere between 45%
and 70% higher in Greater San Francisco. Compared to other
places though, neither region really enjoys high levels of
civic participation or interpersonal trust, but these broad
social qualities are particularly weak in Los Angeles.
Evidence is also given that the Bay Area has forged much
stronger cross-industry personal linkages, thereby creating
“invisible colleges of actors” that allow information to flow
much more freely between private and public players. The
chapter closes with the Myrdal-like observation that small
differences between the two cities in social and political atti-
tudes were slowly magnified into much larger differences in
beliefs and lifestyles over the passage of four decades.
Although modest in scope, this is a very enlightening
book. In many ways it complements Edward Glaeser’s (2011)
recent volume celebrating our great cities, and together, the
two books would comprise a good introduction to a seminar
on urban development. The four authors show a solid grasp of
a wide literature and they support their overarching theme of
regional divergence with plenty of data and numerous case
studies—there are 2 maps, 18 figures, and 31 tables. The
book is sprinkled with valuable insights and many important
critics and thinkers respected by my generation—including
Benjamin Chinitz, Albert Hirschman, and Theodore
Roszak—are cited at appropriate junctures. (But there is no
mention of Joan Didion.) My only real concern deals with the
lack of clarity shown in how the tradable industries are identi-
fied in the two cities: The method used here combines loca-
tion quotients with a national input-output table and then
selectively adjusts the proportions, making it nearly impossi-
ble to replicate the results. In any case, this tale of different
fortunes for California’s two leading cities certainly probes
much deeper than the comparative study of Albuquerque and
Seattle recently provided by Moretti (2012).
References
Engel, J. (Ed.). (2014). Global clusters of innovation. Cheltenham,
England: Edward Elgar.
Glaeser, E. (2011). Triumph of the city. New York, NY: Penguin.
Moretti, E. (2012). The new geography of jobs. New York, NY:
Houghton Mifflin Harcourt.
Saxenian, A. (1994). Regional advantage: Culture and competi-
tion in Silicon Valley and Route 128. Cambridge, MA: Harvard
University Press.
Scott, A. (1993). Technopolis: High-technology industry and
regional development in southern California. Berkeley:
University of California Press.
Scott, A. (2005). On Hollywood: The place, the industry. Princeton,
NJ: Princeton University Press.
Author Biography
Gordon F. Mulligan is professor emeritus in the School of
Geography and Development at the University of Arizona. His
research interests include regional science, economic geography,
quality of life, labor markets, and urbanization.
Robinson, D. J. (2015). The Energy Economy: Practical Insight
to Public Policy and Current Affairs. New York, NY: Palgrave
Macmillan. 276 pp. ISBN 978-1-137-47169-7
Reviewed by: Alexandra Tsvetkova, Ohio State University, USA
DOI: 10.1177/0891242416629017
Based on the assumptions that “all energy is good” (p. xi)
and “[t]he twenty-first century is the Age of Energy” (p. 37),
David J. Robinson’s The Energy Economy: Practical Insight
to Public Policy and Current Affairs promises “a practical
discussion” of the ways regions and states may build
“successful economies around the energy sector” (p. xi). The
book is a very uneven coverage of topics that are directly
(in some cases) or loosely (in other cases) related to energy
and economic development (ED) policy. Each topic is usu-
ally presented in isolation, leaving it to the reader to under-
stand complex interdependencies, which in practice may
invalidate some of the claims made in the book.
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