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Book Reviews

Are Center Cities the Engines of Growth for
their Suburbs?

A Re-Evaluation Of The Economic Relationship Using Evidence From Virginia’s Metropolitan Areas

By Xiaobing Shuai

Xiaobing Shuai is a senior economist with Chmura Economics & Analytics in Richmond, VA. His interest rate forecasts are published in the “Blue Chip Financial Forecasts” and his real estate forecasts are published in the “Housing Market Report.” He is a native of China, and graduated from Fudan University in Shanghai. His M.A. in agricultural economics and Ph.D. in economics are from the University of Wisconsin-Madison. His thesis, “Foreign Direct Investment in Developing Countries: Motives, Structures, and Impacts” was awarded the Henry Taylor Doctoral Dissertation Award.

For decades, center cities of metropolitan areas were regarded as the growth engines of their suburbs. However, this paradigm has been shifting in the past twenty years in Virginia, where suburbs have been growing faster than center cities. Consequently, there is a need in economic development communities to re-evaluate the economic relationship between center cities and their suburbs. This paper develops a statistical test to determine the cause-effect ties between these two economies and concludes that Virginia’s cities are no longer the growth engines of their suburbs. The opposite is almost true: suburbs are on the verge of becoming the leaders for city economic growth. To further the understanding of what drives the city/suburban economy, the study also tests the cause-effect relationship between population growth and employment growth and finds that population growth still exerts a strong influence on employment growth. This knowledge can be useful in designing policies to promote the economic growth of both cities and suburbs.

This paper won a NABE Award for an outstanding paper contributed by a NABE member. Standard & Poor’s sponsored the award. The paper was presented at the NABE Annual Meeting on September 26, 2005.

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