The Rise of Advanced Services: Some Implications for Economic Development in U.S. Cities

Abstract

The rise of services characterizing the recent transformation of the U.S. economy remains widely misunderstood. The postwar economy has been marked not only by shifts in final output but also by the growing importance of both services to producers and service-like activities performed within large corporations. Reporting on recent research, the author suggests that the rise of these advanced services has affected cities unevenly. The result is a four-tier urban system comprised of diversified advanced service centers, specialized advanced service centers, production centers, and consumer oriented centers. A review of principle characteristics of economic structure and recent experiences of transformation of these four urban types indicates that new intermetropolitan linkages are developing within the urban system. These linkages are based on the increasingly place specific trading of manufactured goods or consumer services as well as on advanced services. A major conclusion from this analysis is that lower ranking centers—primarily the production and the consumer oriented centers (which are very weak in the advanced service areas)—face enormous developmental problems that only a new urban policy may help alleviate.