The world city network

STEFAN KRÄTKE

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ONE of the major challenges of contemporary urbanization is the economic development of urban areas in the context of globalization. The economic development and internal structure of cities is increasingly affected by global influences and particularly by their external relations. Hence, it is increasingly difficult to analyze the ‘inner workings’ of the city endogenously, from what is happening inside its conventionally defined administrative boundaries. We are facing the formation of new transnational urban spaces in cities all across the world.

With regard to the worldwide urban system, globalization doesn’t simply lead to the formation of a small group of outstanding ‘global cities’ that are functioning as command and control centres of the world economy – such as London, New York and Tokyo. Rather, we are facing a continued extension of transnational economic networks that include more and more cities both in the global North and South in the complex fabric of a ‘world city network’. Thus, I prefer to speak of ‘globalizing cities’, whose economic development prospects are shaped by their specific positioning within global economic network relations and capital flows.

In order to investigate the structure of the contemporary world city network, I applied a network analysis and concentrated on the manufacturing industries’ global connectivity (by contrast, previous analyses of the world city network focused on the advanced producer services). The network analysis involves three sub-sectors of manufacturing industries: the automotive industry, information technology industry, and the pharmaceutical and biotechnology industry. Due to space restrictions, this essay will focus only on the automotive industry. For each sub-sector, the 40 largest global firms were identified according to the ‘Forbes 2000’ listing, made up of the world’s 2,000 largest firms (of all sectors) in 2010. As the next step, the prominent firm database ‘corporate affiliations’ (which contains more than a million corporations) was utilized in order to detect the selected firm’s national and international organizational network and its linkages within the global urban system.

 

The firm level data base offers information on the multilevel corporate hierarchy of firms such as the parent company, divisions and regional headquarters, subsidiaries, affiliates and joint ventures, and the location of their units. The multilevel hierarchy means that a parent company located in city A can have a division in city B, which directs a subsidiary firm in city C. In this way, my analysis of the automotive industry’s 40 largest firms involves more than 1,000 enterprise units and its 881 subsidiaries.

In the procedure of registering individual firm units, the financial subsidiaries of manufacturing firms were not included in the analysis, since the focus of this research is geared towards capital based interconnections in the realm of manufacturing industries’ value chains. The locations of the registered enterprise units of the automotive industry sector are distributed across the world in a total of 339 cities in 65 different countries. The locational addresses of included firm units were assigned to the respective urban region. The urban region of large cities and metropolises was delimited to cover a radius of 50 kms around the city core (in the cases of Tokyo, London and New York, the radius has been enlarged to 70 kms).

 

The network analysis detects the geographic destination and strength of the organizational links within the global urban system. As a result, the analysis reveals the positioning of particular cities within the global production network of the automotive industry. This globally extended production network might be interpreted as an organized system of channels for capital flows between cities.

In detail, the analysis differentiates between ‘incoming links’ (the so-called ‘in degree’ of a city), which demonstrate an urban region’s role as a destination of capital flows, and the urban region’s ‘outgoing links’ (the so-called ‘out degree’ of a city) that reveal an urban region’s role as the source and control centre of capital flows. Similarly, the ‘in degree’ can be interpreted as a measure of an urban region’s attractive power or ‘relational prestige’ in terms of its platform function, for example, for the penetration of foreign markets, the utilization of local production capacities, or the access to specific knowledge resources and innovation capabilities. The ‘out degree’ of a city can be interpreted as a measure of an urban region’s control capacities or ‘relational power’.

Thus, the identification and the comparative ranking of outstanding network nodes in the global urban system draws on several different measures of centrality (such as the out degree-based and the in degree-based centrality and, additionally, the urban region’s ‘betweenness-centrality’ which indicates its role as an intersection in the channel system of worldwide capital flows).

The methodical approach of a network analysis of the global urban system, which takes into account the direction of intercity links (distinction between outgoing and incoming links), has been applied by Alderson and Beckfield and by Wall and v.d. Knaap.1 These analyses, however, are based on a selection of global firms from both the service and manufacturing sectors, and thus do not reveal the role of particular manufacturing industries in the formation of the global urban network.

 

A cartographic presentation of the locational centres of the automotive industry’s corporate establishments on the macro-level of the global urban system reveals a distinct geographical distribution according to world regions: The locational centres are concentrated in the regions of the so-called ‘global triad’ – North America, Europe, Asia (particularly East and South Asia), where the included 40 large parent companies have their command centres and where they find their most important market spaces.

In North America, particularly urban regions in the eastern part of the USA, contain a large number of the automotive industry’s corporate units. In Europe, we find – as seen from a global-scale perspective – a concentration of locational centres of the automotive industry in the central core area of the EU that is circumscribed by the pentagon – London-Paris-Milan-Munich-Hamburg. In Asia, the industry’s locational centres of global firms’ establishments are distributed over a comparatively larger geographic area, which particularly includes Japan, the eastern part of China, South Korea, Thailand, Malaysia, Singapore and India (with Mumbai and Bangalore).

Moreover, due to the distinction between ‘relational power’ as measured by outgoing links (out degrees) and ‘relational prestige’ as measured by incoming links (in degrees), the cartographic representation reveals that a comparatively large number of cities in the respective world regions are functioning as target destinations of capital-based interconnections, whereas a significantly smaller number of cities have the potential to command and control capital flows in the automotive industry. Urban regions that contain a strong command and control capacity in the automotive industry’s global production network show an uneven geographic distribution on the world-scale. In North America, we find two prominent urban regions in the eastern part of the USA. In Europe, several cities in Germany and one city in Sweden stand out, and in Asia, the cities which have a particularly strong ‘relational power’ are concentrated in Japan.

 

As the next step, I present a more detailed account of my research findings in terms of a comparative ‘ranking’ of urban regions according to their ‘relational power’ and ‘relational prestige’ within the automotive industry’s global networks. This ranking of cities doesn’t refer to specific functions of individual corporate establishments or subsidiaries, or to the respective firms’ output and employment figures in a particular urban region. The ranking solely refers to the positioning of individual cities in the capital-based production network of globally operating manufacturing firms.

 

The representation of the city ranking is sorted according to the included cities’ out degree (outgoing links) and demonstrates the top 50 ranks of a total of 339 cities. The representation distinguishes between ‘out degrees’ (outgoing links) and ‘in degrees’ (incoming links). Furthermore, for each city the difference between out degree and in degree is indicated. Urban regions with a strong ‘surplus’ of out degrees (such as Tokyo) primarily function as command and control centres of capital flows in the automotive industry. Urban regions with a strong ‘surplus’ of in degrees (such as Toronto) primarily function as ‘platform’-locations for the supply of distinct market regions, the utilization of local production capacities, or the access to specific knowledge resources and innovation capabilities. We might argue that these cities possess of a significant ‘relational prestige’ in the automotive industry’s global networks. Of course, there are also urban regions which show a rather ‘balanced’ relation of out degrees and in degrees (such as New York and Chicago), so that no definite ‘primary’ functional designation can be assigned to these cases.

Out degree and in degree represent relevant measures of centrality in the network analysis context. However, the network analysis method also offers a variety of more complex measures of centrality, such as the so-called ‘betweenness-centrality’. The measure of ‘betweenness-centrality’ indicates the extent to which an urban region is positioned as an intersectional node within the connecting links of all other cities included in the network, and thus has a ‘mediating position’ in the capital flows that run through the overall network structure. The highest betweenness-centrality is recorded for the urban regions of Tokyo and Detroit, which also corresponds to their outstanding position in terms of other (degree-based) measures of centrality. Comparatively high values of betweenness-centrality are also indicated for the urban regions of Gothenburg, Milwaukee, Frankfurt, Stuttgart and Hanover, which are all positioned on the upper level ranks of out degrees. However, the presentation of research findings will focus on the degree-based measures of centrality, which can be interpreted more easily.

 

The representation of cities is sorted according to out degrees (outgoing links) which are interpreted as a measure of a city’s ‘relational power’ within worldwide capital flows. With regard to the automotive industry, the urban regions of Tokyo and Detroit take on the first and second rank. On the subsequent ranks, we find the urban regions of Stuttgart, Gothenburg, Milwaukee, Nagoya, Frankfurt, Wolfsburg, Hanover and Munich. Thus German cities are strongly represented amongst the top 50 ranks. The overall picture indicates the dominance of global firms from some European countries, the USA and Japan in the automotive industry.

However, it is remarkable that several urban regions of the ‘global South’ appear on comparatively high rank positions: Two of these are cities of India, in particular Mumbai (rank 14), and Pune (rank 47). In China, the urban region of Shanghai (rank 36) has achieved a high rank, and in Brazil, the urban region of Sao Paulo (rank 44) has joined the top 50 listing. This finding clearly indicates the increasing integration of the so-called ‘emerging markets’ in global production networks. Mumbai in particular shows a comparatively strong ‘surplus’ of relational power, which reflects the fact that in recent times globally operating firms from India have entered the automotive industry’s global production network.

As regards cities that are primarily functioning as ‘platform’-locations and thus possess a strong ‘relational prestige’ within the automotive industry’s global networks, which is measured according to a strong surplus of incoming links (in degrees), the urban regions of London, Toronto, Barcelona, Los Angeles and Sao Paulo stand out.

 

In order to prove our thesis that the contemporary world city network encloses ‘multiple globalizations’, particularly with regard to the differing sectoral profiles of globalizing cities, we present a comparative ranking of the outstanding network nodes of global services and global manufacturing. The comparison focuses on the difference between the cities’ rank positions in global service and manufacturing activity. In the tabular representation of selected cities (see Table 1), the left section (cities no. 1-50) displays cities that possess a ‘surplus rank’ in manufacturing in terms of a positive rank difference. These cities are characterized by strong global connectivity in manufacturing activity, which considerably exceeds their rank position in the sphere of global services.

The right upper section of Table 1 (cities no. 51-67) presents cities with a relatively balanced relation of global connectivity in both the service and manufacturing sector. Globalizing cities such as Tokyo, Boston, Toronto, Bangalore, Sao Paulo, Milan and Paris function both as globally connected centres of manufacturing firms and as global service centres. The right lower section of Table 1 (cities no. 68-98) shows cities with a negative rank difference, which means that these cities possess a ‘surplus rank’ in the finance and service sector. Here, we find well-known examples of leading global cities such as New York and London as well as a number of globalizing cities in the world region of Asia, such as in particular the Chinese cities of Hong Kong, Beijing and Shanghai. Cities that appear in this section of Table 1 are characterized by strong global connectivity in service sector activities, which exceeds the degree of global connectivity they have achieved in the sphere of manufacturing (as represented by the automotive industry). However, the point of delimitation between the three city groupings mentioned earlier is in some way ‘fuzzy’ and open to adjustment (see for example, the delimitation between city no. 67 and 68).

The main finding of our comparative ranking of the urban network nodes of global services and global manufacturing confirms our thesis that different profiles of globally connected economic activities can be detected in globalizing cities all across the world. The world city network includes globalizing cities focusing on advanced producer services and the financial sector in particular, as well as many cities with differing profiles of their globally connected activities. Thus, there are possibly different pathways or sectoral trajectories of cities in globalization, a perspective which might have significant implications for urban economic development strategies.

 

We usually think of the global economy as a mosaic of national state territories which are the ‘containers’ of national economies. This paper presents a different view, one which starts from a relational perspective and characterizes the world economy as a globally extended network of cities and metropolitan regions. Urban development might be regarded as a process of networking that is unfolding on different but intertwined spatial scales, resulting in the interplay of local, regional and global networks that are constitutive forces in the production of urban space.

Transnational and local actors are constitutive elements of these multiple relational networks. Global firms (as well as international migrants) contribute to the formation of transnational urban spaces. Apparently, these do not cover a city’s territory as a whole. Rather, we will find ‘globalized’ fragments of urban economic and social space. It is also worth noting that the interrelations between the different fragments of urban space may become conflictual, for example in terms of activities of transnational firms crowding out local firms in the competition for skilled labour and other resources, labour market competition between ‘home’ and ‘migrant’ workers, extensive processes of residential gentrification in cities that are characterized by a strong presence of global players combined with the growth of a group of highly skilled urban professionals who are running the urban economy’s ‘globalized’ segments.

 

I have presented new empirical research on the formation of a world city network that functions as a backbone for channelling worldwide capital flows. My research confirms the thesis that globally operating manufacturing firms are connecting cities across the world and thus contribute to the emergence of ‘multiple globalizations’ in the world city network. The research detected different profiles of globally connected economic activities in globalizing cities all across the world. Second, the ‘ranking’ of globally connected urban centres of manufacturing activity differs considerably from the well-known rankings of global service centres.

 

The inclusion of many cities in global value chains of the manufacturing sector also opens up a new perspective on the variable ‘positioning’ of cities in a globalizing economy. This concerns the question as to how the rather ‘peripheral’ cities could increase the economic returns from participating in global value chains. In this respect, the debate might concentrate on the prospects for ‘upgrading’ the position of ‘peripheral’ cities within global production networks. Today, such processes of ‘upgrading’ can be detected, particularly in diverse countries of East and South Asia.

However, the unequal extent and different form of the cities’ integration in global economic networks raises questions concerning the governance of urban economic and spatial development – for example, we might ask, in which ways might urban government be able to actively influence the upgrading of a city’s role in global economic networks, and in which ways it might deal with growing social and socio-spatial inequality in globalizing cities in order to spread the gains of ‘globalized city fragments’ in favour of the whole population of an urban area.

In the sphere of urban governance, many cities are striving to take on global city functions in order to strengthen their reputation and position in a worldwide inter-urban competition. Very often, urban governance in the globalization arena is geared towards restructuring the city’s spatial fabric and built environment according to the presumed ‘needs’ of global finance and service firms, with the consequence of fostering socio-spatial polarization.

 

We need more effort and initiative for developing strategies that are socially inclusive and might benefit urban residents beyond the upper strata of business elites in the finance and service sector. This paper indicates that there exist different pathways for cities in globalization. A city’s integration in the globalization process might as well be taken as a resource for upgrading its industrial structure and employment standards and as a resource of urban policies in favour of the urban poor and the city’s ordinary population.

TABLE1

Comparison of Cities’ Global Connectivity Rankings with Regard to the Service Sector and the Manufacturing Sector

(Automotive Industry)

 

No.

Urban Region

GaWC* Rank

Manufacturing Rank

Rank Difference

 

No.

Urban Region

GaWC* Rank

Manufacturing Rank

Rank Difference

1

Hannover

57

8

49

 

50

Lyon

50

35

15

2

Nagoya

55

7

48

 

51

Chennai

39

34

5

3

Milwaukee

53

6

47

 

52

Los Angeles

23

18

5

4

Detroit

46

2

44

 

53

Barcelona

26

22

4

5

Turin

57

14

43

 

54

Tokyo

5

1

4

6

Stuttgart

41

3

38

 

55

Berlin

29

27

2

7

Osaka

51

23

28

 

56

Stockholm

20

19

1

8

Cleveland

49

21

28

 

57

Boston

33

33

0

9

Birmingham

47

19

28

 

58

Dallas

33

33

0

10

Indianapolis

52

25

27

 

59

Hamburg

31

31

0

11

Charlotte

51

24

27

 

60

Toronto

11

11

0

12

Portland

45

19

26

 

61

Bangalore

32

33

-1

13

Cincinnati

57

32

25

 

62

Helsinki

29

30

-1

14

Antwerpen

45

20

25

 

63

Milan

7

9

-2

15

Nashville

54

30

24

 

64

Cairo

31

34

-3

16

Newcastle

54

30

24

 

65

Melbourne

24

28

-4

17

Pune

54

30

24

 

66

Sao-Paulo

15

19

-4

18

Nantes

57

34

23

 

67

Paris

3

7

-4

19

Puebla

56

33

23

 

68

Dubai

28

33

-5

20

Rochester

56

33

23

 

69

Chicago

13

18

-5

21

Raleigh

54

31

23

 

70

Mumbai

12

17

-5

22

Cologne

53

30

23

 

71

Zurich

15

21

-6

23

Munich

33

10

23

 

72

New Delhi

27

34

-7

24

Bologna

52

30

22

 

73

San Francisco

26

35

-9

25

Utrecht

57

36

21

 

74

Bangkok

16

25

-9

26

Southampton

56

35

21

 

75

Auckland

23

33

-10

27

Strasbourg

56

35

21

 

76

Lisbon

18

28

-10

28

Salt Lake City

55

34

21

 

77

Budapest

21

32

-11

29

Valencia

55

34

21

 

78

London

1

12

-11

30

San Jose

53

32

21

 

79

Caracas

22

34

-12

31

Kaohsiung

56

36

20

 

80

Rome

17

29

-12

32

Winnipeg

56

36

20

 

81

Seoul

11

23

-12

33

Curitiba

55

35

20

 

82

Madrid

9

21

-12

34

Leipzig

55

35

20

 

83

New York

1

13

-12

35

Liverpool

55

35

20

 

84

Athens

21

34

-13

36

Ankara

55

36

19

 

85

Istanbul

17

30

-13

37

Dresden

55

36

19

 

86

Mexico City

15

29

-14

38

Penang

55

36

19

 

87

Buenos Aires

12

26

-14

39

Basel

54

35

19

 

88

Kuala Lumpur

12

26

-14

40

Philadelphia

45

26

19

 

89

Dublin

16

33

-17

41

Porto Alegre

54

36

18

 

90

Taipei

16

33

-17

42

Memphis

53

35

18

 

91

Jakarta

15

32

-17

43

Baltimore

52

34

18

 

92

Warsaw

14

32

-18

44

Kansas City

51

33

18

 

93

Shanghai

7

25

-18

45

Bristol

52

36

16

 

94

Sydney

6

25

-19

46

Saint Louis

52

36

16

 

95

Singapore

4

25

-21

47

Hanoi

50

34

16

 

96

Moscow

10

35

-25

48

Seattle

43

27

16

 

97

Beijing

8

33

-25

49

Leeds

51

36

15

 

98

Hong Kong

2

33

-31

 

Footnote:

1. A.S. Alderson, and J. Beckfield, ‘Power and Position in the World City System’, American Journal of Sociology 109, 2004, pp. 811-851. See also, R.S. Wall and G.A. v.d. Knaap, ‘Sectoral Differentiation and Network Structure within contemporary Worldwide Corporate Networks’, Economic Geography 87(3), 2011, pp. 267-308.

 

References:

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S. Krätke and P.J. Taylor, ‘A World Geography of Global Media Cities’, European Planning Studies 12(4), 2004, pp. 459-477.

S. Krätke, K. Wildner and S. Lanz (eds.), Transnationalism and Urbanism. Routledge, New York, London, 2012 (forthcoming).

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