Diversification is not just good for personal or corporate investment portfolios. Apparently it’s also very good for cities.
Researchers have found that greater professional diversity increases a city’s productivity, a pattern that is present across large and growing urban areas in the U.S.
That trend is also consistent globally, according to a WalletHub report, 2015’s Cities with the Most & Least Diversified Economies, by Richie Bernardo.
For example, the United Nations Industrial Development Organization says that “more diversified economies are less volatile in terms of outputs, and lower output volatility is associated with higher economic growth.”
In order to identify the most diversified local economies, WalletHub examined 350 of the largest U.S. cities across three key metrics, including industry diversity, occupational diversity and worker-class diversity.
“Economically diverse cities provide residents some insurance against major economic downturns, globalization, changing legislation, and natural technological progress, each of which is likely to have a differential effect on various industries and occupations,” says Andrew J. Hussey, associate professor of economics at the University of Memphis. “A varied economic composition in terms of jobs can also draw a diverse mix of residents, which could lead to cross-pollination of ideas -- or, at the very least, make life more interesting.”
Michael Ash, chair and professor of economics and public policy at the University of Massachusetts, Amherst, adds that economic diversity also “offers resilience in the face of economic change. An extreme case of economic monoculture is Detroit, which has suffered severely because of the decline of its all-eggs-in-one-basket automobile industry. A diverse economy permits less painful adjustment and creates greater possibility that the next big thing is already present.”
The complete list of cities is available in the report’s main findings. California has the most economically diverse cities, with eight locations in the top 10. Inglewood, California, ranks No. 1 and El Monte, California, is next at No. 2. Rounding out the bottom of the list at No. 350 is Cambridge, Massachusetts, and Sunnyvale, California, at No. 349.
Interesting data, but it also underscores how difficult it is for cities to overcome their geography, population patterns and history.
Image: Space Shuttle Endeavour Move through Inglewood, California, NASA HQ photo via Flickr cc