The basic driver of remarkable economic growth in China — and India, Vietnam, Thailand, Brazil and pretty much every other developing country — is pretty simple: Migration of people from rural areas, where they’re not very productive, to dense cities, where they are very productive. This is a tried-and-true strategy for making people and countries richer. But it’s not just for developing countries.
Over the past year, three terrific books have come out on the importance of cities in America's economy. In “Triumph of the City,”’ Harvard economist Ed Glaeser details how cities all over the world have supercharged human development and ingenuity. In “The Gated City,” Ryan Avent focuses more narrowly on the role cities play in making Americans better off. And in “The Rent is Too Damn High,” Matt Yglesias focuses on, well, why the rent is so damn high.
Cities attract migrants, from everywhere. Cities that struggle to attract migrants aren't as economically productive as those that do, density be damned. Packing in more people per square mile isn't going to magically spur innovation. However, attracting international migrants will. You don't need density to benefit from immigration.
Without migrants, cities lose the power of place. Isolated urban neighborhoods, no matter how dense, tend to be poor. Where there is churn, there is money. The concentrated wealth in New York City (where the rent is too damn high) is a spillover from migration. What cities do best is manage the problems that come with migration, such as the erosion of social capital. The basic driver of remarkable growth in China is pretty simple: Migration of people.