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The paper uses a computable general equilibrium (CGE) model for a small city to examine how expansions in export and local sectors, changes in total factor productivity (TFP), and growth in population impact an economy. We examine the effects of each source of growth and find that the level and distribution of economic activity vary considerably. We also evaluate each source of growth in the context of a variety of policy metrics, which provide guidelines to policy makers, including the types of firms to be recruited in specific regions. *We would like to thank three referees and the editor of this journal for many insightful comments at various stages of this paper. All remaining errors are the responsibility of the authors.

Population P1 P2 P3 P4 P5 Notes: P1 = minimum city size, P2 = lowest-cost city size, P3 = city size giving maximum welfare to existing citizens, P4 = optimal city size, AB = average net benefits, AC = average costs. Source: Derived from Alonso (1971); Richardson (1978); reproduced from Webster and Lai (2003).

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