Sunday, August 19th, 2012

What Is a Global City?

This is both a standalone general article and part of my “State of Chicago” series.

We hear a lot of talk these days about so-called “global cities.” But what is a global city?

Saskia Sassen literally wrote the book on global cities back in 2001 (though her global cities work dates back well over a decade prior to that book). She gave a definition that has long struck with me. In short form, 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. Naturally this lends itself to our modern desire to develop league tables.

A number of studies were undertaken to produce various rankings. However, when you look at them, you see that the definition of global city used is far broader than Sassen’s core version. Wikipedia lists some of the general characteristics people tend to refer to when talking about global cities. It cites a very lengthy list, but 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

As you can see, this is quite a hodge-podge of items, many of which are only tangentially related to globalization per se. 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.

One oft-cited such ranking was 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.

One example is AT Kearney’s list, developed in conjunction with the Chicago Council on Global Affairs. Their most recent version is the 2012 Global Cities Index. This study uses criteria across five dimensions:

  • Business Activity (headquarters, services firms, capital markets value, number of international conferences, value of goods through ports and airports)
  • Human Capital (size of foreign born population, quality of universities, number of international schools, international student population, number of residents with college degrees)
  • Information Exchange (accessibility of major TV news channels, Internet presence (basically number of search hits), number of international news bureaus, censorship, and broadband subscriber rate)
  • Cultural Experience (number of sporting event, museums, performing arts venues, culinary establishments, international visitors, and sister city relationships).
  • Political Engagement (number of embassies and consulates, think tanks, international organizations, political conferences)

The Institute for Urban Strategies at The Mori Memorial Foundation in Tokyo published another study called “The Global Power City Index 2011.” This report examined cities in terms of functions demanded by several “actor” types: Manager, Researcher, Artist, Visitor, and Resident. The functional areas were:

  • Economy (Market Attractiveness, Economic Vitality, Business Environment, Regulations and Risk)
  • Research and Development (Research Background, Readiness for Accepting and Supporting Researchers, Research Achievement)
  • Cultural Interaction (Trendsetting Potential, Accommodation Environment, Resources of Attracting Visitors, Dining and Shopping, Volume of Interaction)
  • Livability (Working Environment, Cost of Living, Security and Safety, Life Support Functions)
  • Environment (Ecology, Pollution, Natural Environment)
  • Accessibility (International Transportation Infrastructure, Inner City Transportation Infrastructure)

Another popular ranking is the Economist Intelligence Unit’s Global City Competitiveness Index. They rank cities on a number of domains:

  • Economic Strength (Nominal GDP, per capita GDP, % of households with economic consumption > $14,000/yr, real GDP growth rate, regional market integration)
  • Human Capital (population growth, working age population, entrepreneurship and risk taking mindset, quality of education, quality of healthcare, hiring of foreign nationals)
  • Institutional Effectiveness (electoral process and pluralism, local government fiscal autonomy, taxation, rule of law, government effectiveness)
  • Financial Maturity (breadth and depth of financial cluster)
  • Global Appeal (Fortune 500 companies, frequency of international flights, international conferences and conventions, leadership in higher education, renowned think tanks)
  • Physical Capital (physical nfrastructure quality, public transport quality, telecom quality)
  • Environment and Natural Hazards (risk of natural disaster, environmental governance)
  • Social and Cultural Character (freedom of expression and human rights, openness and diversity, crime, cultural vibrancy)

Note that these were not all equal weighted. Economic strength is paramount.

Yet another ranking comes from the Knight Frank/Citibank Wealth Report. This ranking is purely subjective and was based on surveying wealth advisors as to which cities they felt would be most important to their clients today and in the future based on four areas: economic activity, political power, knowledge and influence, and quality of life.

It’s worth noting that Sassen contributed to various of these surveys.

Looking at the newer surveys versus the Roster of World Cities, it’s clear that the game has changed. Rather than attempting to look at specific global economic functions, the global city game has become effectively a balanced scorecard attempt to determine, as I like to put it, the world’s “biggest and baddest” cities.

There are quite a few differences in methodologies, which is inevitable. But a few things jump out at me. First the focus on aggregate measures in these surveys. For example: total GDP, total foreign population, number of headquarters. There is a remarkable lack of attention to dynamism variables such as growth in various metrics, though the Economist survey includes a couple.

The focus on static totals versus dynamism tends to reward large, developed world cities versus rapidly growing or emerging market cities. (The AT Kearney survey has a separate emerging cities list). In a sense, these rankings are biased in favor of important legacy cities.

It’s also interesting to see what was included vs. not included in quality of life type ratings. For example, items like censorship, media access, the rule of law, and the environment are listed. But measures of upward social-economic mobility or income inequality or not.

Lastly, a number of the rankings suggest a self-consciously elite mindset, such as shopping and dining options. As with many quality of life surveys, these seem to orient them towards expatriate executive types rather than normal folks.

Looking at these, I can’t help but think that the criteria were the product of an iterative process where the results were refined over time. Thus in a sense the outcomes were likely somewhat pre-determined. That’s not to say that the game was rigged necessarily. But I suspect if anyone were doing a global city survey and London and New York did not rank at the top, the developers would question whether they got the criteria right. In a sense, a global city is like obscenity: we know one when we see it, but we don’t necessarily have a widely agreed upon objective set of criteria to measure it by.

I sense that these rankings attempt to look at global cities in four basic ways:

1. 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.

2. Economic giants. Namely, this is a fairly simple but important view of that simply measures how big cities are on some metrics like GDP.

3. 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.

4. 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:

1. Clarify what it is we are talking about at the time.
2. 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.

22 Comments
Topics: Globalization

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22 Responses to “What Is a Global City?”

  1. Ziggy says:

    This is a topic that has inspired a fair amount of debate and brain damage, but one that is more about semantics than metrics.

    Cities are (or are not) “global,” they are only “globally significant.” Of the globally significant cities, there are two kinds – perennials and annuals.

    Perennials are the economic and cultural powerhouses that exert influence because of finance, politics and cultural significance year after year – London, Tokyo, Beijing and, in the U.S., New York and Washington D.C., are prime examples.

    “Annuals” are those cities whose influence waxes and wanes based on power and influence of the perennials. Thus, Berlin, Paris, Madrid, Rome and Athens dominate global influence as a consequence the current E.U. crisis, and Brussels, especially, punches far above its weight right now.

    Similarly, in the Middle East, the decisions in Cairo, Tel Aviv, Damascus and Tehran will have a significant influence globally going forward. What happens in Silicone Valley may not matter much if missiles start flying in the Middle East.

    Obviously, if peace endures, technological innovation and the venture capital that backs it will continue to matter a great in Silicone Valley nearby and media centers such as L.A. in the near term for non-military or security state applications that appeal to consumer markets.

    The Midwest’s impact on events is about to be regrettably experienced at the global level because of the summer drought. I’m not certain whether this will have any affect on Chicago’s prominence as the “Capital of the Midwest,” but I do think that the companies that exercise an outsized influence on food production like Monsanto in St. Louis will have a dominate role in the discussion of “globally significant cities” going forward.

  2. Matthew Hall says:

    How many truly global cities are there? 3, 4, or 5 at most I’d say. The rest are large continential cities. That the U.S. is the only country with more than 1 is a measure of its greatness.

  3. Matt D says:

    I would agree with the two initial commenters in that the list of truly “global” cities is a short one. Probably only NYC and DC in the U.S. Maybe LA, and then, if we agree on LA, possibly Chicago and SF. Those last three are highly questionable, though.

    I also think that “having a prominent skyline” and “large rail system” has no relevance whatsoever in terms of global city status. Obviously these things are highly correlated with global city staus, but not directly relevant.

  4. Ron says:

    The only true global cities in the world are NYC, London, Tokyo and Paris. In the U.S, NYC is the only truly global city. Having said that, I think LA and Chicago are the closest to being true global cities in the U.S, follwed by DC and San Francisco.

  5. Paul says:

    Comparing a city to a list of criteria to determine if it qualifies as a “global city” is counter-intuitive to me. I can’t see elevating a place to “global city” status based on its collecting items from a list. The lists in any event seem to be drawn from attributes of those cities which are recognized as global (for example London, NYC). But any global city worthy of the title is sui generis. A global city should provide something so significant and unique (or at least “nearly” unique given some similarities between NYC and London) to civilization that its existence is seemingly essential to the character of civilization. London and New York are not measured against the proposed scales, they define the scales that other cities are measured against.

    NYC and London are global cities because of their unique stature in business law and finance. NYC adds the UN. London adds being the greatest international air transportation hub and has an aura polished by the cultural capital it accumulated as the capital of what was the largest empire in history. Of these two I’d suggest London as the preeminent global city given it has retained much of its position even after its empire has vanished suggesting staying power that NYC may or may not have.

    Beyond those two I’m not sure who makes it. Rome has a great cultural story (at least for those of us with a Western outlook). Washington is a political and intelligence power center for the time being. Berlin fails even as economic power in Europe flows to Germany because Frankfurt a.M. is the financial center. Tokyo, Beijing, and perhaps Rio, could break the list as power and wealth shifts out of European/North American hands.

  6. someperson says:

    Chicago is a large town, not a city. By the day, it’s turning into a large suburb.

    Global cities are London, Tokyo, NYC, SF, Shanghai, Sydney, Berlin, Lagos, Moscow, Cairo, Paris, Mumbai, Hong Kong, Sao Paulo and Mexico City.

  7. carlosdc says:

    It’s fun to make lists but…does anyone really think anyone in Rome cares if they are considered by various “experts” to be “global?”
    My point is that many truly great cities might not be considered “global” but anyone knows who has visited cities like Rome, Budapest or Buenos Aires that they are amazing, great cities. Even Paris doesn’t make some of these lists and I will take it any day over London or NYC.
    In any case living in Chicago I will be fine with considering it “real important.” And for an American city I still say it’s the most underrated of all.

  8. Civis Romanus Sum says:

    I sympathize with carlosdc. I don’t care what’s “global” or not; I care about livability, culture, and urban amenities. Some of my favorite cities aren’t too high on the global scale (Barcelona, Prague, Stockholm, Vienna, Edinburgh, Venice), but they have more of what I’m looking for in a city than most of the more overgrown “global” metropolises.

    Chicago has the advantage of “second-tier Alpha” cities, i.e. those just below the NYC/London level: lower prices and less stress, with a full menu of urban amenities to choose from, as well as whatever unique local elements they bring to the mix.

  9. Matt D says:

    Chicago isn’t “just below the NYC/London level”, Civis Romanus. Not even close.

    By most objective criteria, Chicago is maybe just below the Bay Area/DC/Boston level, and a ways below LA. Chicago is light years behind NYC/London.

  10. Civis Romanus Sum says:

    I’m going by the Alpha World Cities list, which you can find here:

    http://www.pocketinfo.net/2011/12/world-cities-2012.html

    Your criteria must be different; but Chicago does tend to do well in these types of rankings.

  11. Matt D says:

    Civis, I agree with that list you posted, but that’s not a list of global cities, at least not in the context of this thread.

    That’s the GaWC rankings, which come out of a British university, and basically rank cities according to their business stature. On that standard, Chicago is still #2 in the U.S., so I think it’s a fair ranking, if a bit Western-biased.

    But that’s very different than saying that Chicago is more important globally than DC, or LA, or the Bay Area. I think it’s tough to make that argument, especially compared to DC or LA. SF, perhaps, but highly debatable given Silicon Valley.

    In terms of global stature/recognition, it can’t really be argued that Chicago is on the level of LA or DC. LA, in particular, is far more prominent (Hollywood, Disney, Beverly Hills, etc.)

    In terms of corporate might, yes, I agree with you, as Chicago is a business town and the other two have differing strengths. NYC, of course, is on a different level, and not really comparable to any of these cities.

  12. Civis Romanus Sum says:

    Put that way, I don’t really disagree with you. I tend to think Chicago’s peer cities internationally are places like Milan, Hong Kong, or Toronto.

  13. Benjamin Hemric says:

    Hi Aaron!

    Sorry I haven’t had a chance to write-up an “economics of Jane Jacobs” inspired critique of your previous post on “calling card” industries and Chicago (or even had the time to give your interesting subsequent posts a serious read). But since you’ve mentioned Saskia Sassen and her writings on “global cities,” I thought you’d be interested to know that Sassen has an article in an anthology of Jacobs-inspired writings called “What We See: Advancing the Observations of Jane Jacobs” (2010). (Since it’s not mentioned, I’m assuming that you’re not aware of it — please excuse if you already know about it.)

    Her contribution is in Section 6 (“Economic Instincts”) and called “When Places Have Deep Economic Histories,” and it has a specific small subsection on Chicago. (“The case of Chicago helps to illustrate some of the issues discussed so far. It is common to see Chicago as a latecomer to the knowledge economy (and thus to global city status). Why did it happen so late — almost fifteen hears later than in New York and London? . . . “)

    Another article that might be of special interest to you is the one by Pierre Desrochers, an urban geographer, and Samuli Leppala, an economist. It’s entitled “Rethinking ‘Jacobs Spillovers’ or How Diverse Cities Actually Make individuals More Creative and Economically Successful.” In this article the authors focus their study on inventors in two inland North American cities, Quebec and Toronto. (Desrochers is Canadian.) Earlier in his career, Desrochers wrote an incredibly terrific analysis of the rise of the meat packing industry in, I believe, Chicago, which might also interest you.

    Haven’t carefully read any of these articles recently, so can’t say how much I agree or disagree — but thought I’d mention them to you in case you might find them interesting.

    Benjamin Hemric
    8/20/12, 10:20 p.m.

  14. DBR96A says:

    The biggest problem with global cities is that they’re douchebag magnets. Many people in those cities pretend that their personalities don’t suck simply because they live where they do.

  15. I plan to address Chicago specifically next week.

  16. Stephanie says:

    Rankings aside. The act of documenting any city’s global dimensions (even if they pale in comparison to other cities) has positive repercussions. That data can propel the economy, change perceptions about who is a “job creator” and who is a “job stealer,” initiate education reform, etc. within that community. Columbus, OH has tried to do that with its Global Report and Country Profiles: http://www.globalcolumbus.org

  17. uffy says:

    Ha, a post in which a bunch of ranking criteria/organizations are listed all showing Chicago to be quite impressive followed by a bunch of comments about how Chicago shouldn’t be considered to be impressive. How, exactly, does one look at these links and then state that Chicago can’t even compare to Boston or LA?

    The Japanese were pretty unkind to Chicago, so I guess none of the other organizations can be trusted?

  18. Ziggy says:

    “The biggest problem with global cities is that they’re douchebag magnets. Many people in those cities pretend that their personalities don’t suck simply because they live where they do.”

    I think I just snorted my martini through my nose. This may be the best single comment I’ve read on Urbanophile.

  19. Matt D says:

    Ziggy, probably because we’re talking about different types of rankings.

    The rankings you’re referring to (those that rank Chicago high, usually ahead of LA) are business rankings. I don’t think too many people would find fault with those rankings. LA isn’t really a town with a lot of traditional business clout. Not many F-500 companies, banks, and the like. Even the Hollywood firms are often branches of New York firms.

    In contrast, the rankings that rank Chicago below that of LA would be those concerned with global recognition, economic power, population, and the like. If you were to ask, say, an African bushman, or a Guatemalan villager, about Hollywood, or Disney, or even Beverly Hills, there would likely be recognition. If you were to ask about iconic Chicago landmarks (Willis Tower and the like), I think most Americans would have trouble identifying the structure, to say nothing of African bushmen.

  20. Matt D says:

    Sorry, I meant Uffy, not Ziggy (referring to the difference between GaWC rankings and other forms of comparative rankings, and why Chicago and LA rank differently on differing measures).

  21. Civis Romanus Sum says:

    Leaving aside African bushmen (who may not have access to movies), I do think the “iconicity” of Chicago is way out of date. Foreigners (and some Americans too) associate it too much with Al Capone, stockyards, and heavy industry, none of which have been current for decades.

  22. Stephanie says:

    Former Chicago mayor Richard M. Daley says in a recdent op-ed piece: “If there is a silver lining to the Great Recession, it is that the U.S. economy appears to be undergoing a fundamental shift from an inwardly focused, consumption-fueled growth model to one that is globally engaged and driven by production and innovation. Manufacturing has contributed nearly 38 percent to gross domestic product growth post-recession, fueling a significant jump in exports. In the past two years, exports accounted for 46 percent of GDP growth, despite comprising only 13 percent of total U.S. GDP.” In this editorial (http://www.dispatch.com/content/stories/editorials/2012/06/01/global-economy-offers-many-opportunities.html) he is talking about what we DO with information about a city’s global dimension, rather than what it tells us about how worldy or provincial a city “feels.” I again think that the emphasis on the rankings in these comments is missing the point. We just need to know what elements of any place link us to the rest of the world so that we can take advantage of that.

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