Visualizing the Shape of Cities and Economies
The Industrial Revolution changed the form and function of cities. New patterns of work resulted in massive wealth and distinct advantages for certain regions. Urbanization emerged as a defining characteristic of this age.
During the latter part of the Industrial Revolution, Cambridge School economist Alfred Marshall looked at a particular question: why did certain industries concentrate in specific places?
Marshall argued that the local concentration of industry created powerful economies promoting technical dynamism and innovation.
This Chart of the Week highlights the spatial patterns and business relationships created at the urban scale. Marshall’s insights from the past help us understand present-day tech and media economies and the massive growth of urban regions.
The Logic of Concentration
Marshall observed that industrial concentration led to long-term tendencies such as increasing returns on capital and compounding regional advantages.
The heart of this observation is that knowledge resides within the companies that make up a particular industry. Over time, these companies can accumulate even more information and direct the flow of new and innovative ideas. This creates local specialization and increasing profits, while also concentrating success, knowledge, and wealth into one key locale.
He defined this pattern as a Marshallian Industrial District.
An Evolving Landscape: Four Patterns
Marshall’s work would later influence the work of Ann Markusen, who created a typology of three additional industrial patterns. The patterns identify what makes a city attractive or repellent to income-generating activities.
|Marshallian Industrial District||This is a clustering of firms in a similar industry, operating within a certain geographic area.||Social media marketing companies in San Francisco|
|Satellite Platform District||A set of unconnected branches with links beyond regional boundaries, each part of its own globally oriented supply chain.||Suburban neighborhoods|
|Hub and Spoke District||An industrial sector with suppliers clustering around one, or several, dominant firms.||Airplane manufacturer Boeing and the region of Seattle.|
|State-anchored District||Industrial activities are anchored to a region by a public or non-profit entity, such as a military base, a university, or a concentration of public laboratories or government offices.||Madison, WI and Columbus, OH are examples of university towns, as are many cities with large defense installations such as Pearl Harbor in Hawaii.|
There are both benefits and problems—called “externalities”—associated with the spatial agglomeration of physical capital, companies, consumers, and workers:
Clusters for a Digital Age
In the past, the physical constraints of an area defined the structure of cities. Now that so many companies are free from the shackles of producing physical goods, does geography still matter?
Researcher Marlen Komorowski re-examined the concept of clustering with this question in mind. Here are five types of media clusters identified in her research.
|The Creative Region||A metropolitan region that provides advantages due to readily available infrastructures and institutions, and encourages the development of face-to-face interaction and collaboration networks.||Berlin, Singapore, Amsterdam|
|The Giant Anchor||A location defined by the activities of one or several large media institutions, which attract complementary firms to agglomerate. Similar to the hub-and-spoke cluster model.||Seattle, (Microsoft, Amazon), and Cambridge (Harvard, MIT)|
|The Specialized Area||A media cluster that is located either in a neighborhood within a big metropolitan area or in a small urbanized area. The Specialized Area is marked by a readily available, large pool of employees from a specialized field.||Soho (London), Silicon Valley|
|The Attracting Enabler||Determined by the location of certain facilities or resources that can be shared that enable media activities. Movie studios are a prime example.||Los Angeles, Vancouver|
|The Real Estate||This type of cluster is centered around office space, sometimes purpose-built for media and creative companies. This space can also include incubators / accelerators.||Dubai Media City, Dublin’s Digital Hub|
Four rationales drive these patterns: agglomeration, urbanization, localization economies. and artificial formation.
The Shadow of the Industrial Revolution
Alfred Marshall made the argument that local concentration of industry can offer powerful economies and technical dynamism and innovation.
We now see this pattern with the emergence of megacities that accrue the majority of the financial and knowledge returns. These megaregions set the perfect stage for dynamic economic exchanges between skilled labor, technology, and networks.
What does your city look like?
Pandemic Recovery: Have BEACH Stocks Bounced Back?
BEACH stocks—bookings, entertainment, airlines, cruises, and hotels—were pulverized at the beginning of the pandemic. Here’s how they’ve bounced back.
Pandemic Recovery: Have BEACH Stocks Bounced Back?
The travel and entertainment industries have had a volatile ride over the last year.
During the initial stages of the pandemic, when panic and uncertainty ran rife, BEACH stocks–booking, entertainment, airlines, cruises, and hotels—were left scrambling. Collectively, $332 billion in market cap washed away.
Now, it appears the tide might be turning for these companies, buoyed by vaccine breakthroughs and glimmers of hope for a return to normalcy.
This infographic looks at the growth in market cap value across BEACH stocks one year from when the WHO officially declared COVID-19 a pandemic.
Washing Back to Shore?
BEACH stocks have gained a collective $376 billion in market cap in the year since the pandemic was declared, with about half the companies trading at their respective all-time highs.
In fact, about 70% of BEACH stocks have actually outperformed the S&P 500, which returned 43.7% during the same period.
|Company||Ticker||Category||Market Cap: 03/11/20 ($B)||Market Cap: 03/11/21 ($B)||Change|
|Alaska Air Group||ALK||Airlines||5.7||8.1||42%|
|Delta Air Lines||DAL||Airlines||29.1||30.9||6%|
|Caesars Entertainment||CZR||Casino & Hotel||2.2||20.8||824%|
|Norwegian Cruise Lines||NCLH||Cruise & Casino||4.3||10.9||151%|
|Royal Caribbean Cruises||RCL||Cruise & Casino||10.8||22.4||108%|
|Carnival||CCL||Cruise & Casino||16.4||31.8||93%|
|Penn National Gaming||PENN||Entertainment & Live Events||2.6||20.4||661%|
|Six Flags||SIX||Entertainment & Live Events||1.7||4.1||142%|
|Live Nation||LYV||Entertainment & Live Events||10.8||19.3||79%|
|The Walt Disney Co||DIS||Entertainment & Live Events||201.2||357.1||77%|
|Cedar Fair||FUN||Entertainment & Live Events||1.8||2.8||57%|
|Choice Hotels International||CHH||Hotels||4.5||5.9||30%|
|Marriott Vacations Worldwide||VAC||Hotels & Resorts||3.8||7.7||103%|
|Vail Resorts||MTN||Hotels & Resorts||7.1||13.4||88%|
|Park Hotels & Resorts||PK||Hotels & Resorts||3.4||5.3||58%|
|Wyndham Hotels & Resorts||WH||Hotels & Resorts||4.2||6.4||51%|
|MGM Resorts International||MGM||Resorts & Casino||10.2||19.3||89%|
|Wynn Resorts||WYNN||Resorts & Casino||9.7||15.9||64%|
|Las Vegas Sands||LVS||Resorts & Casino||40.7||48.2||18%|
BEACH Stocks Leaders and Laggards
When dissecting this basket of stocks by industry, it’s clear that much of the recovery story is lopsided. One reason for this, despite the pandemic, is that there are more granular, idiosyncratic trends occurring within these sectors.
Let’s look at what’s propelling the leaders, and dragging down the laggards:
Leading: Online Betting
There’s reason to be bullish on gambling stocks. Since late 2018, some 20 states have legalized sports betting, with more expecting to follow. Relative to other areas, the pandemic has been kind to gambling stocks. Many of those with an online presence have witnessed a spike in traffic, as more people continue to flock towards online betting.
Within the BEACH stocks basket, Penn National Gaming and Caesars Entertainment are clear outliers, having grown an epic 661% and 823% respectively. In addition, the broader industry (measured by the BETZ ETF) has nearly doubled the performance of the S&P 500 since its inception.
The return to normalcy will be much more delayed for airlines. Global RPKs, an industry metric, are not expected to reach pre-pandemic levels until 2024.
Actions of insiders also seem to match this negative sentiment. Warren Buffett, once a staunch supporter of airlines, decided to call it quits during the pandemic—dumping his entire position.
U.S. airline executives have collectively been selling their stakes much more aggressively than in the last few years. To add insult to injury, there’s significant shorting of airline stocks as well. At a short interest of 11.6%, American Airlines is most heavily shorted BEACH stock.
In a year where social interactions and gatherings have largely disappeared, so too has much of the business activity for hotels. For instance, Hilton sales suffered a 58% decline year-over-year.
But even without the pandemic, the hotel industry had their work cut out for them, through a growing and formidable competitor in Airbnb. Airbnb can scale its network beyond what any hotel can. This is evident in its room count, which is greater than the largest hotels combined.
More Bumps On The Road Ahead?
The investing landscape today looks to be disconnected from reality, in part because of the forward-looking nature of markets. Even though things are dire today, there’s a belief that light exists at the end of the tunnel.
But the path to recovery isn’t quite so linear. When the dust settles, it’ll become more apparent which industries will “return to normal” and which have set out permanently on a new trajectory.
Mapped: The Top 10 Billionaire Cities
Where do the most billionaires live? For years, NYC has topped the list of billionaire cities, but 2020 marked a monumental shift.
Mapped: The Top 10 Billionaire Cities in 2020
In 2020, the world gained 493 new billionaires—that’s one every 17 hours.
For the last seven years, New York City has been home to more billionaires than any other city in the world. However, last year marked a monumental shift in the status quo.
Beijing has unseated the Big Apple, and is now home to 100 billionaires. That’s one more billionaire than the 99 living in New York City.
Today’s map uses data from Forbes to display the top 10 cities that house the most billionaires.
Where do the Most Billionaires Live?
The richest of the rich are quite concentrated in cities, but some cities seem to best suit the billionaire lifestyle. Here’s a breakdown of the top 10 billionaire capitals and the collective net worth of all the ultra wealthy that live there.
|Rank||City||Region||Number of Billionaires||Net Worth of the City's Billionaires|
|#2||New York City||🇺🇸 North America||99||$560.5B|
|#3||Hong Kong||🇨🇳 Asia||80||$448.4B|
|#9||San Fransisco||🇺🇸 North America||48||$190.0B|
Some cities have some obvious billionaires that come to mind. New York’s richest person and former mayor, Michael Bloomberg, is worth $59 billion. Beijing’s richest billionaire is the founder of TikTok (among other things), Zhang Yiming with a net worth of $35.6 billion.
In terms of the locations themselves, London, New York, and San Francisco are the only Western cities to make the list. Though New York was ousted from the top position last year, altogether the city’s billionaires are still worth more than Beijing’s.
One new city to make the top 10 list of billionaire cities was Hangzhou, the home of Jack Ma. It booted out Singapore from the 10th spot.
East Meets West
More than half of the top 10 cities are located in Asia, providing evidence of the shift eastwards when it comes to seats of wealth. Five of the six Asian cities listed are all in China.
What’s helped lead to this?
The country has seen an e-commerce boom, not in the least thanks to the pandemic. Additionally, the efficient handling of COVID-19 has allowed the economy to get back on track much more quickly than other countries. According to the BBC, 50% of China’s new billionaires have made their wealth either through tech or manufacturing.
Four of the Chinese cities on the list also had the biggest billionaire growth in 2020. Each of them gained more than 10 net new billionaires:
- 🇨🇳 Hangzhou: 21
- 🇨🇳 Shanghai: 18
- 🇨🇳 Shenzhen: 24
- 🇨🇳 Beijing: 33
The only other city to gain more than 10 new billionaires in 2020 was San Francisco with 11.
Now sitting at 698 billionaires, China is coming up on the 724 held by the United States. Beijing overtaking NYC could be the beginning of a larger tipping point.
Asia-Pacific’s collective 1,149 billionaires are worth $4.7 trillion, while U.S. billionaires are worth $4.4 trillion in total wealth.
Overall, it looks like the wealth tides may be turning as China continues to progress economically and more billionaires become based in the East over the West.
Money1 month ago
The Richest People in the World in 2021
Green2 months ago
Mapped: The Greenest Countries in the World
Markets2 months ago
World Beer Index 2021: What’s the Beer Price in Your Country?
Markets2 months ago
The Population of China in Perspective
Money2 months ago
Ranked: The World’s Black Billionaires in 2021
Sponsored2 months ago
The Carbon Footprint of Trucking: Driving Toward A Cleaner Future
Misc2 months ago
Slices of the Pie: Mapping Territorial Claims in Antarctica
Misc5 days ago
Visualized: Comparing the Titanic to a Modern Cruise Ship