What is a
global city?
Saskia
Sassen gave a powerful definition. In the age of globalization,
the activities of production are scattered on a global basis. These complex,
globalized production networks require new forms of financial and producer
services to manage them. These services are often complex and require highly
specialized skills. Thus they are subject to agglomeration economics, and tend
to cluster in a limited number of cities. Because specialized talent and firms
related to different specialties can cluster in different cities, this means that
there are actually a quite a few of these specialized production nodes, because
they don’t necessarily directly compete with each other, having different
groupings of specialties.
In this
world then, a global city is a significant production point of specialized
financial and producer services that make the globalized economy run. Sassen
covered specifically New York, London, and Tokyo in her book, but there are
many more global cities than this.
The question
then becomes how to identify these cities, and perhaps to determine to what
extent they function as global cities specifically, beyond all of the other
things that they do simply as cities.
Wikipedia
lists some of the general characteristics people tend to refer to when talking
about global cities. However, when you look at them, you see that the
definition of global city used is far broader than Sassen’s core version. Some
of them are:
- Home to
major stock exchanges and indexes
- Influential
in international political affairs
- Home to
world-renowned cultural institutions
- Service
a major media hub
- Large
mass transit networks
- Home to
a large international airport
- Having
a prominent skyline
In effect,
many of them seek to define cities only in term of global prominence rather
than functionally as related to the global economy. That’s certainly a valid
way to look at it, but it raises the point that we should probably clarify what
we are talking about when we talk about global cities.
To clarify
our thinking, let’s look at how various ranking studies have defined global
city for their purposes.
A 1999
research paper called A Roster of World Cities. The authors, Jon Beaverstock,
Richard G. Smith and Peter J. Taylor, explicitly reference Sassen’s work, seeking
to define global cities in terms of advanced producer services.
Taking our
cue from Sassen (1991, 126), we treat world cities as particular
‘postindustrial production sites’ where innovations in corporate services and
finance have been integral to the recent restructuring of the world-economy now
widely known as globalization. Services, both directly for consumers and for
firms producing other goods for consumers, are common to all cities of course,
what we are dealing with here are generally referred to as advanced producer
services or corporate services. The key point is that many of these services
are by no means so ubiquitous; for Sassen they provide a limited number of
leading cities with ‘a specific role in the current phase of the world economy’
(p. 126).
They took
lists of firms in four specific service industries – accounting, advertising,
banking, and law – and determined where those firms maintained branches and
such around the world in order to determine the importance of various cities as
production nodes of these services. This has some weaknesses in that it doesn’t
necessarily distinguish whether say a particular accounting firm is doing
routine type work of the sort accountants have always been doing, or performing
advanced work of a type specific to globalization, but it at least tries to
derive lists related to the production of services.
As the
global city concept grew in popularity, various other organizations entered the
fray. Most of these newer lists take a very different a much broader approach
closer to the Wikipedia type lists of characteristics rather than a Sassen-like
definition.
I sense that
these rankings attempt to look at global cities in four basic ways:
- Advanced
producer services production node. This is basically Sassen’s original
definition. I think this one remains particularly important. Because the
skills are specialized and subject to clustering economics, the cities
that concentrate in these functions have a Buffett-like “wide moat”
sustainable competitive advantage in particular very high value
activities. For cities with large concentrations of these, those cities
can generate significantly above average economic output and incomes per
worker.
- Economic
giants. Namely, this is a fairly simple but important view of that simply
measures how big cities are on some metrics like GDP.
- International
Gateway. Measures of the importance of a city in the international flows
of people and goods. Examples would be the airport and cargo gateway
figures.
- Political
and Cultural Hub. An important distinction should perhaps be made here between hubs
that may be large but of primarily national or regional importance, and
those of truly international significance. For example, there are many
media hubs around the world, but few of them are home to outlets like the
BBC that drive the global conversation.
There may
potentially be other ways to slice it as well. The fact that these various ways
of viewing cities can often overlap can confuse things I think. For example,
New York and London score highly on all of these. And there are surely
underlying reasons why they do. Yet trying to sum it all up into one overall
ranking or score, while making it easy to get press, can end up obscuring
important nuance.
So when
thinking about global cities, I think we need to do a couple of things:
- Clarify
what it is we are talking about at the time.
- Relative
to the definition we are using, seek to identify the specific parts of the
city in question that generate real above average value at the global
level.
