The economic development of New York City

¶ … economic development of a U.S. city

The Economic Development of New York City

New York City is one of the most important cities in the world, its importance being granted by its numerous population and history, and by its influence on global level. The influence of New York is exerted in various fields, like commerce, finance, media, culture, art, fashion, research, education, and entertainment. In addition to this, the United Nations Headquarters is located in New York, which allows the city to present itself as an important international affairs center.

The city is located in the state of New York, on the Atlantic Coast of the U.S. The city is also famous for its neighborhoods, depicted in numerous films and TV series. These neighborhoods include: Manhattan, Brooklyn, Queens, the Bronx, and Staten Island. One of the most important characteristics of New York is represented by its diversity. The city's history relies on the immigrants that built the city, developed it, and continue to transform it. The cultural diversity has a significant impact on the economic, social, and cultural environment.

The city is well-represented in the sports sector also. New York is the headquarters of important baseball and hockey teams. In addition to this, the U.S. Open, one the grand slam tennis tournaments, is held in Queens. Also, the largest marathon in the world is held in New York.

The city was established in 1624, and began its expansion. During the following century, the city's importance as a trading port significantly increased. Furthermore, in the 19th century New York experienced economic development and a series of modifications as a result of the increasing immigration and economic development.

Main Economic Development Problems, Challenges and Solutions

Regarding the economic situation, New York is one of the most important economic centers in the world, same as London and Tokyo. In addition to this, New York is the largest regional economy in the U.S. However, one of the most important aspects that prove the city's economic development is represented by the fact that New York is responsible for controlling 40% of the world's financial resources. This means that the city is the largest financial city in the world.

The most important business sectors in the New York economy are: finance, real estate, manufacturing, trade, information technology, health systems and biotechnology, and media.

However, with great economic development comes a series of problems and challenges that affect the people of New York, the authorities of the city, and the business activity in New York, which further affects the economic situation in numerous areas across the world. For example, one of the most important problems that the city is facing is represented by the declining fiscal revenues.

As a result of economic and financial crisis, the fiscal revenues of New York have decreased. This is because the incomes of most people have been reduced, leading to reduced level of taxes paid the by the population. Also as a result of the crisis, population's consumption has decreased, given the fact that people had to allocate their financial resources in other ways in comparison with the period before the crisis. This affected the local businesses that reported smaller profits, which also leads to reduced level of taxes paid by these companies.

Another problem that characterizes the economy of New York is represented by the fact that the economic environment in the city can be considered stall. The environment in the city is mainly comprised of mature industries. It is a well-known fact that such industries do not encourage and support innovations as much as developing industries do.

These industries, through their representing companies, prefer to focus on producing the products and services they initially produced, because they have practically become experts in producing those goods, and are able to make economies of scale. In addition to this, these companies have built a reliable customer base and a supply chain model that ensure them their profitability (Redlich, 2010).

By introducing innovative products on the market, they would require important financial resources to invest in the research and development process, their production process would cost more, which means the price of these products could be higher than usual customers can pay. The introduction of innovative products on the market requires a series of modifications in the structure of these companies, of the market, and of the customers' purchase behavior.

This further requires significant investments from these companies and the emergence of a series of risks that many of these companies are not willing to take. The authorities of New York should focus on developing strategies aimed at encouraging investments in the growth of new business sectors in order to influence the economic development of the city. However, this situation is likely to not be able to be controlled by the government.

The city has faced several challenges regarding its economy and the manner it affects New York and its population. For example, the adverse economic shocks that determined changes in the world's economy were counteracted by the workforce of New York's metropolitan area. The economic challenges were counteracted with the help of the skilled and well-educated workforce that allowed the city to adapt to a services industry (Orr & Topa, 2006).

The most important challenges that specialists in the field consider to affect the city's economic situation include:

Attracting new companies

Maintaining immigration flows

Competitor cities

The economy of the city is characterized by extremes: the city's has proven to be adaptable to new technologies, markets, and economic behaviors, but it was also resilient in certain periods and in certain business sectors. The city's economy is the leader in certain sectors, while it refuses to invest in the development of new products and services.

The city's workforce seems to be more adaptable from this point-of-view. The employees working in New York in various domains made it easier for the city to transit from an economy based on the manufacturing sector to an economy based on the services sector. The success of this transition can be mainly attributed to the workforce of the city, its adaptability, and to human resources management.

Furthermore, specialists consider that the economic resilience of New York is generated by the skilled and higher educated workers that somewhat prevented the city's economy to develop in the direction that other cities developed. In order to change this situation, specialists consider it is important to encourage and support the continuous expansion of the human capital. They also state that the current situation of the region's economy ensures companies' strong position on the market, but makes it less likely for them to develop, while competition from other regions is increasing.

The economic development of New York is reflected in the evolution of population and of employment. The metropolitan area was characterized by significant population growth in the first half of the 20th century. Since then, the population growth rate decreased. The areas surrounding New York are characterized by the opposite situation. In these areas, population has significantly increased in the second half of the 20th century.

The influence of human capital on the city's economy is reflected in:

Highly skilled workers influence consumption value

Economic growth is related to production value

New York Policies

The authorities of New York City have thoroughly analyzed the situation and have developed a series of directions that the policies regarding the city's economic development should follow. The main aspect that the policies of the city's authorities intend to follow are represented by increasing revenues, given the fact that the budget is not able to cover the expenditures of the city, same as in the case of the budget of individuals.

Authorities' efforts regarding this issue are directed towards Wall Street and increasing its taxes (Parrott, 2010). In order to achieve this objective, the city's authorities intend to develop and implement policies that would temporarily tax Wall Street. These policies are intended to be based on:

Bonus tax paid by firms

Windfall profits tax

Disallow use of prior year losses to offset tax liability

Reduction in rebate on stock transfer tax

Raise top tax rate on millionaires

Bonus tax modeled on London tax

In addition to this, the Mayor of New York City has developed a series of propositions that are intended to help the city counteract the effects of the crisis. Therefore, the Mayor has decided that the following budget cuts are required: school funding, Police, human services, transportation, parks, libraries, arts, most city agencies, and others.

Effects of Policies

The effects of the policies developed and implement by the city's authorities are on medium term and on long-term. This means that it will be a while before their effects can be observed and felt by the population. Although these effects require certain periods to be produced, the measures will be felt immediately. This is because the budget reductions will significantly affect the services that the authorities provide the city's citizens.

However, the most important effects that are pursued by the authorities through these policies are represented by increasing revenues, increasing the number of jobs, and increasing the companies that do business in New York. Some of the policies that the authorities of the city intend to implement in this region have been successfully implemented by authorities in other cities, like London.

As a consequence, one cannot assess at the moment whether the policies developed and implement by the authorities in New York have been successful. It is necessary to analyze future budgets and to determine whether the revenues have increased.

Reference list:

1. Redlich, W. (2010). Economic Development Questions. Retrieved December 2, 2010 from http://wredlich.com/ny/2010/09/economic-development-questions/.

2. Orr, J. & Topa, G. (2006). Challenges Facing the New York Metropolitan Area Economy. Federal Reserve Bank of New York. Retrieved December 2, 2010 from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=886519&http://www.google.ro/search?q=new+york+economic+challenges&btnG=C%C4%83uta%C5%A3i&hl=ro&source=hp&aq=f&aqi=&aql=&oq=&gs_rfai=.

3. Parrott, J. (2010). New York City: Economic and Budget Challenges. Fiscal Policy Institute. Retrieved December 7, 2010 from http://www.fiscalpolicy.org/FPI_Presentation_NYC_BudgetEconomicChallenges_20100520.pdf.