Professor Paul Romer won the 2018 Nobel Prize in Economic Sciences for his work integrating technological innovations into long-run macroeconomic analysis. In May, Romer spoke to Monocle Radio on the margins of the UBS Asian Investment Conference in Hong Kong. In the latest in a series in which luminaries of economics share their unique perspectives, Romer explains the effect of human capital, innovation and knowledge on economic growth. See omnystudio.com/listener for privacy information.
Hello and welcome to the Bulletin with UBS on Monocle Radio.
Each week the sharpest minds and freshest thinkers in finance take you beyond the numbers and hype right to the heart of the big issues of the day.
This week we're once again bringing you some Nobel perspectives.
Insights from luminaries of economics who've been recognised for their contribution to the discipline with the award of the Nobel Prize in Economic Sciences.
We're hearing from legendary Professor Paul Romer who was a joint winner of the award in 2018 for his work in integrating technological innovations into long run macroeconomic analysis.
Roemer spoke to us live on Monocle Radio on the margins of the UBS Asian Investment Conference in Hong Kong back in May.
He joined us at our Monocle Pop Up Radio studio to talk about past, present and future places of progress.
So settle in to hear from the Nobel Prize winner and former chief economist at the World Bank, Paul Romer.
I began by talking to Professor Romer about exactly how cities of tomorrow can best position to grow and flourish.
Given his work on the impact of human capital, innovation and knowledge on economic growth.
Are these drivers that are also critical to the development of future proof cities?
Well, let me see if I can do my economist thing and turn cities into something that's boring.
So if you think of the demand for floor space in cities, it's going to be proportional to urban income.
You know, if you think about the rule about like you spend a certain fraction of your income on your mortgage, just scale that up.
So urban income will grow partly because more people will move into urban areas, also because the people who were there will benefit from growth in GDP per capita or output per capita.
So if you look around the world, total urban income, hence total desired spending on urban real estate is going to grow by 2, 3, 4% per year for kind of the indefinite future.
The problem we're facing is that cities aren't have great difficulty increasing their floor space by 2, 3, 4% per year.
It doesn't sound like much, but it's actually quite a lot.
And you project it forward over many years, it's very hard to sustain.
So what then results is this collision between more demand and limited supply and it shows up in higher prices instead of in more square feet.