ABSTRACT:This article examines the performance of large urban economies and addresses the question of what accounts for differences in economic performance among these areas. Areas are divided into good and poor performance on the basis of change in unemployment rate and rate of change of total employment between 1970 and 1980. Good performers are then compared to poor performers with respect to a series of characteristics: region, population size, industrial structure, sectoral performance, skill level and factor costs. In addition, a multivariate analysis permits generalizations about the relative importance of the various characteristics on each of the performance variables. Finally, the implications of the findings for economic development policy are discussed In particular, the results suggest that increasing labor force skills levels through improved education and training should be given a much higher priority as an economic development strategy.