Decision Making as Output and Bounded Rationality

  The classical economics theories proceed on the assumption of rational agents. Rationality implies the economic agents undertake actions or exercise choices based on the cost-benefit analysis they undertake. The assumption further posits that there exists no information asymmetry and thus the agent is aware of all the costs and benefits associated with the choice he or she has exercised. The behavioral school contested the decision stating the decisions in practice are often irrational. Implied there is a continuous departure from rationality. Rationality in the views of the behavioral school is more an exception to the norm rather a rule. The past posts have discussed the limitations of this view by the behavioral school. Economics has often posited rationality in the context in which the choices are exercised rather than theoretical abstract view of rational action. Rational action in theory seems to be grounded in zero restraint situation yet in practice, there are numerous restra

Characterizing the Global City


Three major urban trends are being observed was we head into the third decade of the present century. Antagonistic to most estimates, population growth rates slowed down for many cities in developing countries. The largest cities in the emerging countries experienced a slower rate of growth since 1980s relative to previous two decades. The world is now less dominated by very large cities than predicted earlier. Less than five per cent of the world's population lived in megacities in 1990. The prediction that cities such as Calcutta and Mexico City would evolve into gigantic metropolises of 30 to 40 million inhabitants, is unlikely to fructify.

Linkages between urban change and economic, social, political and cultural change remain somewhat ambiguous. Some large and rapidly growing cities have been well-managed and serviced perhaps contrary to assertion that size exhibits diminishing returns with respect to city management. In fact, some of the worst physical conditions have beset small towns.

Several predispositions are likely to shape the urban future going forward. Indubitably, the progressive urbanization of the globe is certain despite visible signs of retreat. Assessments suggest more than half of the world’s population will live in urban settlements within the first two decades of the twenty-first century. It is inevitable to detect close interactions between urbanization and globalization. Globalization rather a product is more of a process. It evolves through theoretical integration of countries, cities and people through accumulative flows of goods, services, capital, technology and ideas. Despite certain retreat of globalization to the forces of nationalism, cities have come to the fore because they perform special functions in the new global economy. In all likelihood, the continuing devolution of powers and responsibilities to local authorities and civil society will gain momentum. This process was logical resolution to inadequacies of customary modes of urban governance in handling the emergent urban problems.

In a globalizing world, countries and cities are increasingly linked in interdependent and interlocking relationships. Cities command dominant position in global order underscored by failure of national boundaries to stop cross-border flows of capital, people and ideas.

Accompanying the same, somewhat paradoxically, sub-regional economic entities have emerged. Called growth triangles, some neighboring territories involving several countries have sought creative economic co-operative development. Spatial manifestations of rapid economic development in the global economy are the urban corridors emerging in many parts of the world, developed and developing alike.

Globalization impacts different cities in different ways. To many, globalization created new opportunities and wealth, yet there are many cities who find themselves at the margins. The marginalized city is more perceptible in African continent than other topographies. It is external to the cyberspace, lacks the essential information set-up and is usually unable to plug into the global economy.

Certain features typify cities across the globe.  First, urban unemployment remains high, leading to its own set of externalities. Urban infrastructure is often inadequately maintained even in developed countries, classic mismatch of demand and supply. Water and sewer systems fail in Chicago and Washington, and electricity on the Eastern seaboard. In developing countries the problems are often worse. Poor infrastructure causes problems in water supply, urban sanitation and transport. The urban poor invariably suffer most.  Environmental problems, especially air, water and noise pollution have increased in intensity in many cities of the developing world.  To add, mounting social conflicts, such as homelessness and crime, distress many cities. These are the result partially of growing competition for jobs and partly of the increasing migration of lesser privileged towns and villages to relatively better off urban neighborhoods.

In the next century, the city will be the pertinent unit of economic production, social organization and knowledge generation. Cities will be progressively significant in determining the development of the global economy. Technological advances and easy access to information will enable cities to develop more effectual ways of production, capitalizing on the cheapest sources of materials.

In an information era, cities act as generators, processors and depositories of knowledge, thus emerging as hubs and nodes for research, discovery and innovation. Given the production, distribution and consumption will be knowledge centric, cities will seek to outperform each other in manufacturing and harnessing knowledge. The knowledge industry, science parks, technological development zones, technopolies and others will be further developed in the cities of the future.

Cities of the future, in all probability will experience greater freedom of choice and autonomy. Electronically networked individuals and institutions facilitate the enjoyment of freedom of choice and autonomy. Wired interactions complement face-to-face contacts. Urban lifestyles might undergo significant transformations as people can work at home, shop by computers and travel with credit cards. In all probability, there will be an increased clamor for greater participation and democracy. Thus, more attention and resources might be devoted to non-governmental, community-based organizations. The outcome in all likelihood would be rapid makeover both socially and institutionally. Intersections of inherited knowledge and wisdom on one hand and expansion of technological resources on the other present a rare opportunity for the cities to being the fulcrum of economic prosperity. Yet there seem to be easy steps which makes it the more challenging to handle the emergent scenario.

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