Economic growth — practice question

According to the Global Financial Centres Index, New York ranks as the world’s leading city for human capital. Together with economic freedom that makes it easier for new business start-ups, this has helped to produce rapid economic growth. In fact, the city’s growth rate is above the GDP growth rate for the whole of the USA. Overall, New York’s economy expanded by 3.4% in 2015, which was quicker than the 2.4% seen nationally. Even so, land is in short supply, particularly in Manhattan, where most economic activity is located. The financial sector is the city’s key economic sector - New York contains the first and second largest stock exchanges in the world and 3 of the top 10 largest banks in the USA have their headquarters in New York. Better education also supports New York’s strong growth rates, as the city keeps drawing students from many countries and from a wide range of subjects. Unemployment in the city keeps falling. Also, average weekly wages in New York are regularly higher than in the rest of the USA. Table 1.1 gives the average weekly hours worked and average weekly wages in New York from 2011 to 2017. The jobs being created now are mainly middle- and low-paid rather than high-paid. Finance industry workers make up 20% of the workforce in the city, yet they receive more than half of all wages paid in New York. The earnings gap between finance workers and the other 1.6 million workers in the city continues to grow. This is often because lower-paid workers lack skills and because the finance industry is male-dominated. Alongside income inequality, the city’s ongoing economic development has also damaged the environment. The continually growing finance industry is also raising the danger of another 2007-08 Global Recession, including the risk of bank failures. Growing trade protection by the US government may harm American cities such as New York, particularly while Asian cities such as Singapore, Hong Kong, and Shanghai continue to move towards free trade.