Cities: The engine of the American economy

by Ryan Streeter on March 14, 2013. Follow Ryan on Twitter.

Reihan Salam draws our attention to a few key data points in McKinsey Global’s report on urbanization:

[T]he economic weight of urban America is largely due not to its two megacities of New York and Los Angeles but rather to its broad swath of more than 250 middleweight cities, compared with just over 180 such cities in Western Europe…

The average per capita GDP of large US cities is almost 35 percent higher than in smaller cities and rural areas in the United States, versus a premium of about 30 percent in Western Europe. The higher US per capita GDP premium relative to Western Europe largely reflects differences in the mix of cities—a higher share of US population lives in very large metropolitan areas that tend to have higher average per capita GDP.

Taking the population and per capita GDP of US cities together, we find that they account for around three-quarters of the overall US per capita GDP lead over Western Europe.

Reihan follows up with some observations about the policy implications. Read the whole thing.