Code history and emphasis does have an impact on what requirements are established within a jurisdiction. Kentucky has some codes (plumbing, for example) that are uniform state wide, but some can be tailored to local conditions/concerns. I am unfamiliar with Chicago's code history, but I imagine the great fire had some impact on their code adoption process. Of course, the great fire was an impetus, in general, for the creation of building codes in general and happened prior to the development of electric systems.
Whatever the case, individual jurisdictions can create more or less stringent codes, up to a point. In the example of the economic decline of a city after the fire department began stringent inspection and enforcement of a fire code, I can only say that there are too many variables that could possibly effect economic prosperity to tell if code enforcement is the bad guy there. After all, I could take you to plenty of place in Kentucky that have no codes of any kind in place and they are desperately poor and run down.
Codes and regulations, then, are a balancing act and are continually scrutinized and revised from the perspective of technological advances (GFCI, etc), identified problems in existing systems (aluminum wiring correlated with increased fire risk) and local conditions (the example of two FD personnel KIA in a fire, for example).
Tragedies like this definitely effect code requirements. Haven't seem aluminum wiring approved for much of anything since this happened.
http://www.courier-journal.com/article/20090314/NEWS01/903140392/1008/NEWS01
