The Global City

At the end of this module, you are expected to:

1. Understand the global city thesis;
2. Identify the attributes of a global city;
3. Analyze how cities serve as engines of globalization.

The Global City

At its core, the term “global city” is rooted in economics. Beginning in the
fifteenth century globalization took root and the world’s disparate regional
economies began to converge. As a result, economic hubs began to emerg e in
key cities around the world. It is to this phenomenon that the term “global city”
refers to (Washington, 2018). A global city is an urban centre that enjoys
significant competitive advantages and that serves as a hub within a globalized
economic system (Charnock, n.d.). A global city is a significant production
point of specialized financial and producer services that make the globalized
economy run (Renn, 2012).

The rise of global cities has been linked with two globalization-related trends:
first, the expansion of the role of transnational corporations (TNCs) in global
production patterns and, second, the decline of mass production along Fordist
lines and the concomitant rise of flexible production centred within urban
areas. These two trends explain the emergence of networks of certain cities
serving the financial and service requirements of TNCs while other cities
suffer the consequences of deindustrialization and fail to become “global.”
Global cities are those that therefore become effective command-and-
coordination posts for TNCs within a globalizing world economy. Such cities
have also assumed a governance role at the local scale and within wider
configurations of what some commentators have termed the “glocalization” of
state institutions. This refers to processes in which certain national state
functions of organization and administration have been devolved to the local
scale. An example of this would be London. Since the 1980s London has
consolidated its position as a global banking and financial centre, de-linked
from the national economy (Charnock, n.d.).

Functions of Global Cities (Longworth, 2015)

1. As highly concentrated command points in the organization of the world
economy.
2. As key locations of finance and specialized service firms, which have
replaced manufacturing as the leading economic sectors.
3. As sites of production, including innovation, in these leading sectors.
4. As markets for the products and innovations produced.

Attributes of a Global City

According to Longworth (2015), a true global city is balanced between four
pillars of urban life. The first is civic: an effective city government supported

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by institutions of civil society, such as think tanks and foundations, especially
those embedded in the global society; the second is commercial: a powerful
business community with global connections; the third is educational: both
higher education and K-12; the fourth is cultural: the arts and entertainment
that give the city its soul. Longworth also adds that a myriad of attributes
support these pillars:

1. Economic attributes: First and foremost, global cities are the hubs of the
global economy. No city is a global city unless it is economic powerhouse,
dominant in finance, trade, manufacturing, or business services. Some
cities, such as London or New York, command several economic sectors.
Others dominate only one sector but, if that sector is globally important, so
is the city — Los Angeles, for instance, and its entertainment industry.
Other attributes, such as good schools and culture, are vital components of
a global city, but the economy pays for it all.

2. Size: For the most part, no city under a million people need apply. San
Francisco and Zurich, with their specialized clout, are included in some
listings, but they’re exceptions. Otherwise, all global cities are big cities—
three million people or more. It takes size to offer all the attributes needed
to be a global city. But note: size isn’t enough. Some of the world’s biggest
cities—Manila, Cairo, Mexico City, Lagos, Kolkata, and Lima—are nobody’s
idea of a global city, and may never be widely accepted.

3. Human capital: This means having a storehouse of smart, educated,

creative people. The percentage of the population with a college degree
counts. So does the number of universities and their quality. So does the
international student population, along with the number of foreign
professors and researchers. Any global city must understand the outside
world and have links to it, so its ability to attract brains from around the
world is vital.

4. K-12 education: At the upper-wage end of the socioeconomic scale, this

means good schools for the children of global citizens. Entrepreneurs and
investors will shun a city where their children get a bad education. At the
lower-wage level, this means a solid education for the army of workers—
truckers, cooks, small manufacturing employees, clerical workers, retail
workers—whom a global city needs as much as it needs its global stars.

5. Foreign-born residents: Tied to human capital is the sheer number of

foreign-born residents. Some are expatriate professionals, living abroad
for a job for a few years. Like bees flitting from flower to flower, they are a
mobile source of knowledge of best practices from around the world. Large
immigrant populations are more often poorer and less educated, but they
are both cause and effect of urban vitality. They go to global cities because
that’s where the jobs are and, once there, add their new blood and verve to
that vitality.
 6. Culture: Culture is also a cause and effect of a global city. A strong economy
pays for the museums, universities, symphonies, and theaters that make a
city more than a labor pool. This is also a draw for global citizens who have
a palette of places to live, work, and do business. And high culture is only a
small part. Good restaurants are crucial. So are recreation and sporting
events. So are night clubs and wine bars and rock concerts. Global citizens
will go to the place where their brains and education can be best used, but
they also want to have fun.

7. Tourism: Because global cities are so big, so vibrant, so much fun, they are
magnets for tourists. Tourists themselves are a major export industry: they
come from outside to buy what a city has to offer. Then, having seen the
global city firsthand, they take their impressions home with them, helping
to create the buzz that any global city needs.

8. Political engagement: This is the interaction between the city’s political

structure and the rest of the world. Obviously, national capitals have an
advantage—they have the embassies and international organizations.
When foreign leaders travel abroad, they are more likely to go to
Washington than Chicago, or to Paris than Lyon. But a non-capital global
city will have many consulates and should have major think tanks and a
calendar of international conferences.

9. Connectivity: For the most part, this means air and digital connections to
the rest of the world. If global cities are where global citizens meet, then a
major airport with a full schedule of nonstop flights to other global cities is
crucial. So is topflight broadband connectivity.

10. Globally attuned local leadership: City officials must understand their
cities’ place in the global economy. Then they must sell this global focus to
voters for whom all politics may be local. This is hard: pro-business policies
that draw in global corporations and global citizens can conflict with
policies needed to provide decent lives for those whom the global economy
has left behind. In addition, cities need to spend heavily to keep their global
status. Global investors can afford these costs, but everyone else — middle
class and working class — may be priced out of town.

11. Quality of life: This includes public transit, the environment, safe streets,
good health care, and efficient and honest local government. A reputation
for corruption, pollution, or crime will damage a city’s competitive power.

12. National political and economic climate: Even global cities are affected by
their nations’ policies. Global corporations deal with national laws on visas,
trade, currency repatriation, export supports, infrastructure investment,
and other policies. For global investors seeking business-friendly
environments, these national negatives can outweigh local positives.

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 Countries that censor their media or limit digital communications make it
harder for global citizens to live and work there.

The Global City Model (Sassen, 2005)

1. The geographic dispersal of economic activities that marks globalization,
along with the simultaneous integration of such geographically dispersed
activities, is a key factor feeding the growth and importance of central
corporate functions. The more dispersed a firm’s operations across
different countries, the more complex and strategic its central functions —
that is, the work of managing, coordinating, servicing, financing a firm’s
network of operations.

2. These central functions become so complex that increasingly the

headquarters of large global firms outsource them: they buy a share of
their central functions from highly specialized service firms—accounting,
legal, public relations, programming, telecommunications, and other such
services. While even ten years ago the key site for the production of these
central headquarter functions was the headquarters of a fir m, today there
is a second key site: the specialized service firms contracted by
headquarters to produce some of these central functions or components of
them. This is especially the case with firms involved in global markets and
non-routine operations. But increasingly the headquarters of all large
firms are buying more of such inputs rather than producing them in-house.

3. Those specialized service firms engaged in the most complex and

globalized markets are subject to agglomeration economies. The
complexity of the services they need to produce, the uncertainty of the
markets they are involved with either directly or through the headquarters
for which they are producing the services, and the growing importance of
speed in all these transactions, is a mix of conditions that constitutes a new
agglomeration dynamic. The mix of firms, talents, and expertise from a
broad range of specialized fields makes a certain type of urban
environment function as an information center. Being in a city becomes
synonymous with being in an extremely intense and dense information
loop.

4. More headquarters outsource their most complex, unstandardized

functions, particularly those subject to uncertain and changing markets,
the freer they are to opt for any location, because less work actually done
in the headquarters is subject to agglomeration economies. This further
underlines that the key sector specifying the distinctive production
advantages of global cities is the highly specialized and networked services
sector. In developing this hypothesis [I] was responding to a very common
notion that the number of headquarters is what specifies a global city.
Empirically it may still be the case in many countries that the leading
business center is also the leading concentration of headquarters but this
may well be because there is an absence of alternative locational options.
 But in countries with a well-developed infrastructure outside the leading
business center, there are likely to be multiple locational options for such
headquarters.

5. [These] specialized service firms need to provide a global service which

has mean a global network of affiliates or some other form of partnership,
and as a result we have seen a strengthening of cross border city-to-city
transactions and networks. At the limit, this may well be the beginning of
the formation of transnational urban systems. The growth of global
markets for finance and specialized services, the need for transnational
servicing networks due to sharp increases in international investment, the
reduced role of the government in the regulation of international economic
activity, and the corresponding ascendance of other institutional arenas—
notably global markets and corporate headquarters—all point to the
existence of a series of transnational network of cities.

A related hypothesis for research is that the economic fortunes of these

cities become increasingly disconnected from their broader hinterlands or
even their national economies. We can see here the formation, at least
incipient, of transnational urban systems. To a large extent major business
centers in the world today draw their importance from these transnational
networks. There is no such thing as a single global city—and in this sense
there is a sharp contrast with the erstwhile capital of empires.

6. The growing numbers of high-level professionals and high profit making

specialized service firms have the effect of raising the degree of spatial and
socio-economic inequality evident in these cities. The strategic role of
these specialized services as inputs raises the value of top level
professionals and their numbers. Further, the fact that talent can matter
enormously for the quality of these strategic outputs and, given the
importance of speed, proven talent is an added value, the structure of
rewards is likely to experience rapid increases. Types of activities and
workers lacking these attributes, whether manufacturing or industrial
services, are likely to get caught in the opposite cycle.

7. The growing informalization of a range of economic activities which find

their effective demand in these cities, yet have profit rates that do not allow
them to compete for various resources with the high-profit making firms
at the top of the system. Informalizing part of or all production and
distribution activities, including services, is one way of surviving under
these conditions.

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Global Cities as ‘Magnets’

Image: Global Power City Index, Mori Memorial Foundation

Global cities encompass more than just their economic roots. The
opportunities these cities present act as magnets for people from all walks of
life and cultures, creating meeting points at which cultures may coexist and
mix together. Consequently, global cities are defined as much by their diversity
as they are by their economic importance (Washington, 2018). The Global
Power City Index (GPCI) ranks the world’s most important cities according to
their ‘magnetism’, that is, their perceived power to attract creative people and
businesses from across the globe, and to “mobilize their assets” to boost
economic, social and environmental development (Hutt, 2017).

Based on the GPCI 2017 (Mori Memorial Foundation, n.d.), the top 10 cities in
comprehensive ranking are:

1. London
2. New York
3. Tokyo
4. Paris
5. Singapore
6. Seoul
7. Amsterdam
8. Berlin
9. Hong Kong
10. Sydney

Key Findings: London, the No. 1 city in the comprehensive ranking for the sixth
year in a row, further extends its lead over the competition by improving its
scores for such indicators as GDP Growth Rate and Level of Political, Economic
and Business Risk in Economy, and for Attractiveness of Dining Options and
Number of Visitors from Abroad in Cultural Interaction. New York (No. 2)
increases its scores for the Economy indicators of Nominal GDP and GDP
Growth Rate, but fails to make any significant headway in comprehensive
 score, having returned weaker scores this year in Cultural Interaction
indicators such as Number of World-Class Cultural Events Held and Livability
indicators like Variety of Retail Shops. Tokyo claimed the No. 3 ranking for the
first time last year and closes the gap on New York (No. 2) this year. This is a
result of the American city’s score stalling while Tokyo continues to improve
every year in the Cultural Interaction indicators of Number of Visitors from
Abroad and Number of International Students. However, Japan’s capital city
slips from No. 1 to No. 4 in Economy due to weaker scores in “Market Size” and
“Market Attractiveness.”

References
Charnock, G. (n.d.). Global City. Retrieved from https://www.britannica.com
Hutt, R. (2017, April 05). These are the 10 Most Magnetic Cities in the World. Retrieved
from https://www.weforum.org
Longworth, R. (2015, May 21). On Global Cities. Retrieved from
https://www.thechicagocouncil.org
Mori Memorial Foundation, The (n.d.). Global Power City Index 2017. Retrieved from
http://mori-m-foundation.or.jp
Renn, A. (2012, December 07). What is a Global City? Retrieved from
www.newgeography.com
Sassen, S. (2005). The Global City: Introducing a Concept. Retrieved from
www.saskiasassen.com
Washington, L. (2018, May 12). The Global City: A Photo Essay. Retrieved from
https://www.diplomaticourier.com

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