Want to Avoid Detroit's Fate? Diversify Your Economy
"The Motor City is an extreme example of a decline that has beset industrial cities across America’s Midwest and northern Europe," notes The Economist. "Nearly all the rich world’s industrial cities fell on hard times between 1950 and 1980, but some, including Boston, New York and London, rebounded soon after. Hardscrabble places like Baltimore, Pittsburgh and Liverpool have also enjoyed revivals."
"In a new paper [PDF] Gilles Duranton of the University of Pennsylvania and Diego Puga of the Centre for Monetary and Financial Studies in Madrid suggest that a pool of skilled workers and a diverse economy are among the best predictors of long-run success. Such characteristics offer cities the best hope of stumbling on new sources of increasing returns to scale."