Gentrification is the social process of higher classed individuals gradually transforming less developed regions to higher socioeconomic status through relocation and renovation. In recent years, familial processes of Gentrification occur more frequently across the globe, where more nations and particular urban communities have seen changes in social class structures in suburban areas, as economic reforms scatter more widely. Gentrification has developed overwhelmingly with inclusions of multicultural infiltrations and other economically revolutionising effects, leading it to a more controversial and dualistic topic. Such insights delves extreme importance for governments, economists and many other geo-political stakeholders to include in consideration when providing policies and reference in their day to day jobs.
Positive effects
Strong indications of economic expansions are aligned with the occurrence of Gentrification of neighborhoods. Explicit increases in average property values, income, cost of rent and a decrease in poverty rate was commonly found in gentrified communities. As the inclusion of individuals who demonstrate higher socio-economic backgrounds deploys higher liquidity of fiat money, driving increases in propensity to consume and aggregate cost of the communities. Notably, scholars have also pointed out that previously lower cost amenities have a much higher chance to be replaced by higher cost amenities under gentrification, which is generally caused by a rise in rent cost as inherent in the process of gentrification. Correspondingly, increases in amenities value as a factor in attracting higher socially classed households, associates with a reduction in crime and poverty rates. Hence, gentrification has been seen to provide a strong indication of economic growth and value, providing a higher socially classed majority. This in turn reforms a more economically stable and flourishing environment, along with a minimisation of crime rates and financial hazards.
Gentrification may also serve as a good indication of an increase in employment opportunities and stronger investments, inciting urbanization of cities. With the increase in socioeconomic status across gentrified communities, a more urbanized community may incite more attractions of foreign investments, in turn ameliorating the quality and quantity of public and merit goods. Scholars have also pointed out that higher levels of education and literacy is associated with the transformation by gentrification, which may further establish a more well rounded urban community. Such attraction may be seen as an eventual loop with circulation of urbanization, attracting talents and talents pushing urbanization in communities. Therefore, Gentrification may be sought as the fuse of the commencement of major urbanization of cities and nations.
Negative effects
Conversely, Gentrification has sought to cause the indirect displacement of previously lower classed households away from their current residence. This is a key reason for scholars to negatively connotate the process of gentrification, as it endows discrimination against low-income households and generally for people of color. The displacement of minorities that once lived in the neighborhood is evidently argued by scholars in justifying the overall properties of gentrification. However, scholars tend to criticize and analyze cultural and moral consequences over its entirety on the economy of a nation. Towards the point of views of economic developments of a country, such impact is inherently inevitable in the urbanization of a communities’ economic growth and could be effectively mitigated through initiatives and policies, such as sources of financial rebate from governmental central welfare agency or a community land trust mainly for protecting cultural heritages of the neighborhood.
Conclusion
The controversy of Gentrification’s effect on the economy has sparked mass debate, with a strong polarization between its positive and negative effects. Overall, gentrification shows a strong positive effect on a nation’s wider economy, as economic expansions and increases in investments generally take place. However, with a more societal oriented perspective, the displacement of lower class individuals may be seen as a potential threat and damage to the reputation of a nation’s societal structure. Gentrification is able to further coarsely stratify the hierarchy of the socioeconomic status of classes. Hence, with a combinations of pros and cons to a nation’s economy, gentrification certainly is a “mixed bag” of modern day society.
Reference list
Brummet, Q. and Reed, D. (2019). The Effects of Gentrification on the Well-Being and Opportunity of Original Resident Adults and Children. Working paper (Federal Reserve Bank of Philadelphia). [online] doi:https://doi.org/10.21799/frbp.wp.2019.30.
Chong, E. (2017). Examining the Negative Impacts of Gentrification. [online] Georgetown Law. Available at: https://www.law.georgetown.edu/poverty-journal/blog/examining-the-negative-impacts-of-gentrification/.
Glaeser, E.L., Luca, M. and Moszkowski, E. (2020). Gentrification and Retail Churn: Theory and Evidence. [online] National Bureau of Economic Research. doi:https://doi.org/10.3386/w28271.
Maurer, J. (2009). The Effects of Foreign Direct Investment in Urban Development: The Case of Budapest. [online] Available at: https://www.ucl.ac.uk/bartlett/development/sites/bartlett/files/migrated-files/WP142_Julia_Maurer_Internet_copy_0.pdf.
Qiang, A., Timmins, C. and Wang, W. (2021). Displacement and the Consequences of Gentrification. [online] Available at: https://sites.duke.edu/christophertimmins/files/2021/11/displacement_paper_2021_11.pdf.
Sheppard, S. (2012). Why is Gentrification a Problem? [online] Available at: https://web.williams.edu/Economics/ArtsEcon/library/pdfs/WhyIsGentrificationAProbREFORM.pdf.
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