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Economic Resilience: Why Small-Scale Diversification Matters
“In the latter half of the 19th century, one of the fastest-growing industrial cities in the Western world emerged on the shores of the Great Lakes of North America: Detroit, Michigan. The city, known as the ‘Paris of the West’ because of its spectacular architecture and broad avenues lined with electric streetlights, was at the heart of an extensive commercial network linking Chicago to New York and the rest of the East Coast. In the early 20th century, Henry Ford established his immensely successful Ford Motor Company there, quickly attracting a wave of businessmen and transforming the city into the world’s automotive capital. Detroit peaked in the 1950s when its population reached 1.85 million, making it the fifth-largest city in the USA. Automobile workers earned higher wages than their counterparts in other industries, and car manufacturers employed a large contingent of managers and engineers whose higher incomes allowed them to build luxury homes in the suburbs, dine in fine restaurants, and attend theatre performances in the sumptuous theatres built in Detroit.
However, in the 1960s, the city’s fortunes began to change. Competition in the automotive industry intensified, and some manufacturers moved parts of their operations to Mexico, Canada, and southern states to save on labor costs. This caused an exodus from the city: entire…
