Economic Resilience in the New Urban Economy

Economic Resilience in the New Urban Economy By Delia Pena Gay

The world is changing, and the way people live and work is rapidly evolving. As cities become increasingly urbanized, the impact of the new urban economy is becoming more evident. This article will explore the concept of economic resilience and its impact on society’s lower and middle classes. You will get an overview of the urban economy, the benefits of economies of agglomeration, strategies to encourage economic resilience, and examples of successful economic resilience programs. You will also discover the challenges in achieving economic resilience and offer some concluding thoughts.

Economic Resilience

Economic resilience is the ability of an economy to withstand external hits and adjust to changing conditions. It can absorb and bounce back from economic recession, pandemics, and natural disasters while preserving the well-being of citizens. Economic resilience is vital for urban areas because it helps them prepare for, respond to, and recover from economic shocks.

The Urban Economy

The urban economy is a complex ecosystem of businesses, people, and services interacting to produce the goods and services necessary for urban living. The urban economy is composed of three sectors: 

  • the primary sector, which includes businesses involved in resource extraction and production
  • the secondary sector engages companies involved in manufacturing and construction 
  • the tertiary sector, which includes firms involved in services such as finance, healthcare, and retail

Urban economies are characterized by high levels of specialization and division of labor, which can lead to increased productivity and economic growth. The urban economy is also characterized by high levels of interdependence and competition, which can create economic opportunities for businesses but can also create challenges for companies and workers alike.

How the New Urban Economy Affects Lower and Middle Class

The new urban economy has significantly impacted the lower and middle classes. With the rise of technology and globalization, living costs have increased, and while the minimum wage has risen, it isn’t outpacing inflation. As a result, many workers in the lower and middle classes are still struggling to make ends meet.

The new urban economy has also led to increased competition for jobs, making it more difficult for workers in the lower and middle classes to find and keep stable employment. This has been compounded by the fact that many jobs in the new urban economy do not provide the level of security or benefits that many workers in the lower and middle classes need. 

Furthermore, the new urban economy has made it more difficult for the lower and middle classes to access the necessary services and opportunities for economic growth and stability. Many of the services, such as healthcare and education, available in the new urban economy are inaccessible due to high costs or lack of availability. Not to mention that Forbes reports that the AI economy is projected to increase by 13 trillion dollars by 2030.

The Benefits of Economies of Agglomeration

Economies of agglomeration are the economic benefits that arise from clustering businesses and activities nearby. The clustering can increase productivity and efficiency as companies can benefit from sharing resources, knowledge, and expertise. In the urban economy, agglomeration economies can lead to increased economic growth, development, and economic opportunity for businesses and workers.

The benefits of economies of agglomeration are significant for the lower and middle classes. Clustering businesses and activities close together speed the rate at which individuals can develop the skills needed to participate and gain from the new economy. Assembling these activities close can also lead to increased job opportunities, higher wages, and stability. 

Strategies for Encouraging Economic Resilience

The strategies to encourage economic resilience in the new urban economy include:

  • Investing in infrastructure and services that support economic growth and development, like transportation, education, healthcare, and other services, will stimulate the economy. 
  • Supporting entrepreneurs and small businesses by providing access to capital, mentorship, and other resources to help companies to grow and succeed.
  • Encourage collaboration between businesses, government, and civil society by developing policies and programs that encourage cooperation and opportunities for all.
  • Investing in workforce development to include training and education to help workers scale the skills necessary to succeed in the new urban economy.

Examples of Economic Resilience Programs

A study showed that cities participating in the 100 Resilient Cities Network (100RC) significantly improved their resources and increased visibility. 100RC is a network of cities that have come together to build in areas of development, financial guidance, and support in their resilience strategy. 100RC transitioned to The Resilient Cities Network (R – Cities) in 2020 to bring more funding, knowledge, and partnerships to communities. R – Cities has over 100 cities in 40 countries participating. 

Urban initiative programs like The “Neighborhood Business Development” in San Francisco support small businesses and affordable housing in underserved neighborhoods.

These programs demonstrate that cities can proactively promote economic resilience and create economic opportunities for all.


Economic resilience is an essential concept for cities to understand and embrace. The new urban economy has significantly impacted the lower and middle classes, making it difficult to access the goods and services needed for economic growth and stability. 

Economies of agglomeration can create economic opportunities for businesses and workers. Investing in infrastructures, encouraging enterprises to form clusters, and supporting entrepreneurs and small businesses help build economic resilience. Despite the challenges, cities can promote financial stability and develop economic opportunities.

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