Cities in a World Economy

Saskia Sassen

• Publisher: SAGE Publications, Inc
• Year: 2018
• Print ISBN: 9781506362618
• eBook ISBN: 9781506362595
• Edition: 5
• Topic: Social Sciences
• Subtopic: Sociology
• Index: Social Sciences

Cities in a World Economy examines the emergence of global cities as a new social formation. As sites of rapid and widespread developments in the areas of finance, information and people, global cities lie at the core of the major processes of globalization. The book features a cross-disciplinary approach to urban sociology using global examples, and discusses the impact of global processes on the social structure of cities. The Fifth Edition reflects the most current data available and explores recent debates such as the role of cities in mitigating environmental problems, the global refugee crisis, Brexit, and the rise of Donald Trump in the United States.

1 Place and Production in the Global Economy

In the late twentieth century, massive developments in telecommunications and the ascendance of information industries led analysts and politicians to proclaim the end of cities. Cities, they told us, would become obsolete as economic entities. The growth of information industries allows firms and workers to remain connected no matter where they are located. The digitizing of both services and trade shifts many economic transactions to electronic networks, where they can move instantaneously around the globe or within a country. Indeed, from the 1970s onward, there have been large-scale relocations of offices and factories to less congested and lower-cost areas than central cities, as well as the growth of computerized clerical work that could be located anywhere—in a clerical “factory” in the Bahamas or China or a home in a nearby suburb. Although these trends may be sharpest in the United States, they are evident in a growing number of countries around the world. Finally, the emergent globalization of economic activity seems to suggest that place—particularly the type of place represented by cities—no longer matters.

But, as I argue in this book, the spatial dispersion of the economy is only half of the story of today’s global and digital age. Alongside the well-documented spatial dispersal of economic activities and the increased digitizing of the sphere of consumption and entertainment are the growing spatial concentration of a wide range of highly specialized professional activities, top-level management, and control operations, as well as, perhaps most unexpectedly, a multiplication of low-wage jobs and low-profit economic sectors. More analytically, these trends point to the development of novel forms of territorial centralization amid rapidly expanding economic and social networks with global span.

Given the generalized trends toward dispersal—whether at the metropolitan or global level—and given the widespread conviction that this is the future, what needs explaining is that at the same time, centralized territorial nodes are growing. In this book, I examine why and how firms and markets that operate in multisited national and global settings require central places where the top-level work of running global systems gets done. I also show why information technologies and industries designed to span the globe require a vast physical infrastructure containing strategic nodes with hyperconcentrations of material facilities. Finally, I show how even the most advanced information industries, such as global finance and the specialized corporate legal and accounting services, have a production process that is partly placebound: Not all of the activities of these industries circulate in electronic networks.

Once these place-centered processes are brought into the analysis of the new global and electronic economy, surprising observations emerge. These centralized territorial nodes of the digitized global economy turn out to be not only the world of top-level transnational managers and professionals but also that of their secretaries and that of the janitors cleaning the buildings where the new professional class works. Further, this is also the world of a whole new workforce, increasingly made up of immigrant and minoritized citizens, who take on the functions once performed by the mother/wife in the older middle classes: the nannies, domestic cleaners, and dog walkers who service the households of the new professional class also hold jobs in the new globalized sectors of the economy. So do truck drivers and industrial service workers. Thus emerges an economic configuration very different from that suggested by the concept of information economy. We recover the material conditions, production sites, and placeboundedness that are also part of globalization and the information economy. To understand the new globalized economic sectors, we actually need detailed examinations of a broad range of activities, firms, markets, and physical infrastructures that go beyond the images of global electronic networks and the new globally circulating professional classes.

These types of detailed examinations allow us to see the actual role played by cities in a global economy. They help us understand why, when the new information technologies and telecommunications infrastructures were introduced on a large scale in all advanced industries beginning in the 1980s, we saw sharp growth in the central business districts of the leading cities and international business centers of the world—New York, Los Angeles, London, Tokyo, Paris, Frankfurt, São Paulo, Hong Kong, and Sydney, among others. For some cities, this era took off in the 1980s, and for others, in the 1990s and into the new century. But all experienced some of their highest growth in decades in the form of a vast expansion of the actual area covered by state-of-the-art office districts, high-end shopping, hotel, and entertainment districts, and high-income residential neighborhoods. The numbers of firms opening in these downtown areas grew sharply.

These trends in major cities in the 1980s, 1990s, and onward go against what was expected according to models emphasizing territorial dispersal; this is especially true considering the high cost of locating a business enterprise in a major downtown area. Complicating the understanding of the new global economy and also often receiving most of the attention from the media and commentators was the fact that the departure of large commercial banks, insurance firms, and corporate headquarters was far more visible than the growth of smaller, highly specialized, and high-profit firms that was happening at the same time. This suggests that the growth trends were part of a new type of economic configuration. Thus, explaining the place of cities simply in terms of the departure of large corporate firms and the growing dispersal trends was evidently missing a key new component of the story.

But this still leaves us with the question, if information technologies have not made cities obsolete, have they at least altered the economic function of cities—have cities lost some of their old functions and gained new ones we could not quite understand when this new phase was taking off? And if this is so, what does it tell us about the importance of place and its far greater mix of diverse economic sectors and social groups than is suggested by the prevalent imagery of high-level corporate economic globalization and information flows? Is there a new and strategic role for major cities, a role linked to the formation of a truly global economic system, a role not sufficiently recognized by analysts and policymakers? And could it be that the reason this new and strategic role has not been sufficiently recognized is that economic globalization—what it actually takes to implement global markets and processes—is not only about massive dispersal of operations around the world. It is also about the specifics of the diverse sites where these operations materialize. That is to say, it is also about thick places—complex sites constituted through many overlapping and varying social dynamics. Further, economic globalization is much more than high-level executives managing massive, transnational institutions. A thick place such as a global city comprises many diverse components of the social order, from the very rich to the janitors and the nannies.

The notion of a global economy has become deeply entrenched in political and media circles all around the world. Yet its dominant images—the instantaneous transmission of money around the globe, the information economy, the neutralization of distance through telematics—are partial, and hence profoundly inadequate, representations of what globalization and the rise of information economies actually entail for the concrete life of cities. Missing from this abstract model are the actual material processes, activities, and infrastructures crucial to the implementation of globalization. Overlooking the spatial dimension of economic globalization and overemphasizing the virtual information dimensions have distorted the role played by major cities in the current phase of economic globalization.

A focus on cities almost inevitably brings with it recognition of the existence of multiple social groups, neighborhoods, contestations, claims, and inequalities. Yet this raises its own questions. Where does the global function of major cities begin, and where does it end? How do we establish what segments of the thick and complex environment of cities are part of the global? These issues are difficult to measure and determine with precision. But that does not mean that we can overlook them and simply focus on the economic core of advanced firms and the households of top-level professionals. We need to enter the diverse worlds of work and social contexts present in urban space, and we need to understand whether and how they are connected to the global functions that are partly structured in these cities. This requires using analytic tools and concepts that come from the scholarship on class and inequality, immigration, gendering, the politics of culture, and so on. These are scholarships not easily associated with the prevalent imagery about the information economy. At the same time, these kinds of inquiries also help us specify the question of globalization in more than its economic forms and contents. Such inquiries help us specify the fact of multiple globalizations—economic, political, and cultural. Cities are good laboratories for these types of inquiries because they bring together vast mixes of people, institutions, and processes in ways that allow us to study them in great detail. Few, if any other places, contain such a mix of people and conditions and make their detailed study as possible as cities do.

One way of addressing the question of where the global begins and ends in this dense urban environment is to focus in detail on the multiple shapes and contents of globalization rather than assuming it consists of global firms and global professionals.

Beginning in the late 1970s and taking off in the mid-1980s, pronounced changes have occurred in the geography, composition, and institutional framework of the world economy. Although cross-border flows of capital, trade, information, and people have existed for centuries, the world economy has been repeatedly reconstituted over time. A key starting point for this book is that in each historical period, the world economy has consisted of a distinct configuration of geographic areas, industries, and institutional arrangements. One of the most important changes in the current phase has been the increase in the mobility of capital at both the national and especially the transnational levels. This transnational mobility of capital has brought about specific forms of articulation among different geographic areas and transformations in the role played by these areas in the world economy. This trend in turn has produced several types of locations for international transactions, the most familiar of which are export processing zones and offshore banking centers; these began to be developed in the late 1960s, precisely a time when national states exercised strong regulatory powers over their economies. One question for us is, then, the extent to which major cities are yet another type of location for international transactions in today’s world economy, although clearly one at a very high level of complexity compared with those zones and centers.

A key focus in studies of the global economy has been the increased mobility of capital, particularly in the shape of the changing geographic organization of manufacturing production and the rapidly expanding number of financial markets becoming part of global networks. These are critical dimensions, and they emphasize the dispersal of firms and markets worldwide. What such studies leave out is that this dispersal itself generates a demand for specific types of production needed to ensure the management, control, and servicing of this new organization of manufacturing and finance. These new types of production range from the development of telecommunications to specialized services—legal, accounting, insurance—that are key inputs for any firm managing a global network of factories, offices, and service outlets, and for any financial market operating globally. The mobility of capital also generates the production of a broad array of innovations in these sectors. These types of service production have their own locational patterns; they tend toward high levels of agglomeration in cities with the needed resources and talent pools. Thus, the fact itself that a manufacturing multinational firm produces its goods partly in export processing zones in ten, twenty, or even thirty countries creates a demand for new types of accounting, legal, and insurance services. These increasingly specialized and complex services can benefit from the many state-of-the-art firms and experienced professionals concentrated in cities.

We will want to ask whether a focus on the production of these service inputs illuminates the question of place in processes of economic globalization, particularly the kind of place represented by cities. In fact, specialized services for firms and financial transactions, as well as the complex markets connected to these economic sectors, are a layer of activity that has been central to the organization of major global processes beginning in the 1980s. To what extent is it useful to add the broader category of cities as key production sites for such services for firms to the list of recognized global spaces, that is, headquarters of transnational corporations, export processing zones, and offshore banking centers? These are all more narrowly defined locations compared with cities. But I show in this book that to further our understanding of major aspects of the world economy’s organization and management, we cannot confine our analysis to these narrow and self-evident “global” locations. We need to enter and explore the more complex space where multiple economies and work cultures come together to produce the complex organizational and management infrastructure necessary to handle the running of global operations. Further, we need to understand the new types of tensions, segmentations, and inequalities that are generated in this process and become visible in the space of the city.

However, this way of thinking about cities as a site for empirical research about economic, political, and cultural globalization has tended to fall between the cracks of existing scholarship. On the one hand, much of the research on cities focuses on internal social, economic, and political conditions, and it views cities as parts of national urban systems. International matters have typically been considered the preserve of nation-states, not of cities. On the other hand, the literature on international economic activities has traditionally focused on the activities of multinational corporations and banks and has seen the key to globalization in the power of multinational firms and the new telecommunications capabilities. This leaves no room for a possible role for cities. Finally, the cholarship on international relations has confined itself to a focus on states as the key actors in the global realm.

All of these approaches contain much useful and important empirical and analytical material. But they are not enough to allow us to understand cities as strategic global sites. Twenty years of empirical and theoretical struggles by a small but growing number of researchers from many parts of the world have now produced a novel type of scholarship that gets precisely at this issue. Usually referred to as world cities or global cities scholarship, it provides many of the materials examined and discussed in this book.

Including cities in the analysis adds three important dimensions to the study of globalization. First, this analysis breaks down the nation-state into a variety of components and thereby allows us to establish whether and how some of these components are articulated with global processes, but others are not at all. Second, our focus is not only on the power of large corporations over governments and economies but also on the range of activities and organizational arrangements necessary for the implementation and maintenance of a global network of factories, service operations, and markets; these are all processes only partly encompassed by the activities of transnational corporations and banks. Third, centering the analysis in cities privileges a focus on place and on the urban social and political order associated with these activities. Processes of economic globalization are thereby reconstituted as concrete production complexes situated in specific places containing a multiplicity of activities and interests, many unconnected to global processes. As with other production complexes—mines, factories, transport hubs—the narrowly economic aspects are only one, even if crucial, component. The organization of labor markets, their gendering, new inequalities, and local politics can variously be part of this new urban production complex. Including these dimensions allows us to specify the microgeographies and politics unfolding within these sites places. Finally, focusing on cities allows us to specify a variety of transnational geographies that connect specific groups of cities—depending on economic activity, migration flows, and the like.

Bringing all these elements together is a central thesis organizing this book: Since the 1980s, major transformations in the composition of the world economy, including the sharp growth of specialized services for firms and finance, have renewed the importance of major cities as sites for producing strategic global inputs. In the current phase of the world economy, it is precisely the combination of, on the one hand, the global dispersal of factories, offices, and service outlets, and on the other hand, global information integration—under conditions of continued concentration of economic ownership and control—that has contributed to a strategic role for certain major cities. These I call global cities (Sassen [1991] 2001), of which there are by now seventy-five plus worldwide, covering a broad variety of specialized roles in today’s global economy. Some of these, such as London, Amsterdam, Mumbai, and Shanghai, have been centers for world trade and banking for centuries. Others have not, notably São Paulo, Singapore, Chicago, and Los Angeles. Today’s global cities are (1) command points in the organization of the world economy, (2) key locations and marketplaces for the leading industries of the current period—finance and specialized services for firms, and (3) major sites of production, including the production of innovations for these industries, because their products are not simply a function of talent but are made. Several cities also fulfill equivalent functions on the smaller geographic scales of both trans- and subnational regions. Furthermore, whether at the global or the regional level, these cities must inevitably engage each other in fulfilling their functions, as the new forms of growth in these cities partly result from the proliferation of interurban networks. There is no such entity as a single global city.

Once we focus on places, whether cities or other types of places, rather than whole national economies, we can easily account for the fact that some places even in the richest countries are becoming poorer, or that a global city in a developing country can become richer even as the rest of the country becomes poorer. An analysis of places rather than national indicators produces a highly variable mosaic of results. Alongside these new global and regional hierarchies of cities lies a vast territory that has become increasingly peripheral and is excluded from the major processes that fuel economic growth in the new global economy. Many formerly important manufacturing centers and port cities have lost functions and are in decline, in the most advanced economies as well as in the less developed countries.¹ This is yet another meaning of economic globalization. We can think of these developments as constituting new geographies of centrality that cut across the old divide of poor versus rich countries, or, as in my preferred usage in this book, the Global South versus Global North divide. But new geographies of marginality are also cutting across the poor–rich country divide, as growing numbers of people in global cities of both the north and the south are now poorer and work in casual rather than unionized jobs.

The most powerful of these new geographies of centrality binds together the major international financial and business centers: New York, London, Tokyo, Paris, Frankfurt, Chicago, Seoul, Hong Kong, Shanghai, São Paulo, Mumbai, Zurich, Amsterdam, Sydney, and Toronto, among others. But this geography now also includes cities such as Buenos Aires, Shenzhen, Kuala Lumpur, Istanbul, Dubai, Abu Dhabi, and Budapest. The intensity of transactions among these cities, particularly through financial markets, flows of services, and investment, has increased sharply, and so have the orders of magnitude involved. At the same time, there has been a sharpening inequality in the concentration of strategic resources and activities between each of these cities and others in their respective countries. For example, Paris now concentrates a larger share of leading economic sectors and wealth in France than it did in 1980, whereas Marseilles, once a major economic center, has lost some of its share in France’s economy. Frankfurt’s financial center has gained sharply over the other six financial centers in Germany; given the country’s rather decentralized political organization, we might have expected to see multiple equally strong financial centers. Some national capitals, for example, have lost central economic functions and power to the new global cities, which have taken over some of the coordination functions, markets, and production processes once concentrated in national capitals or in major regional centers. A case in point, São Paulo has gained immense strength as a business and financial center in Brazil over Rio de Janeiro—once the capital and most important city in the country—and over the once-powerful axis represented by Rio and Brasilia, the current capital. This is one of the consequences of the formation of a globally integrated economic system.

These economic dynamics are partly constituted in social and cultural terms. For example, foreign or native migrant workforces supply the new types of professional households with nannies and cleaners; these same migrants also bring cultural practices that add to a city’s life, and they bring political experiences that can help with union organizing. Further, the new economic dynamics have often sharp and visible effects on urban space, notably the expansion of luxury housing and office districts at the cost of displacing lower-income households and low-profit firms. The city brings together and makes legible the enormous variety of globalities that are emerging and the many different forms—social, cultural, spatial—they assume.

More generally, what is the impact of this type of economic growth on the broader social and economic order of these cities? Much earlier research on the impact of dynamic, high-growth manufacturing sectors in developed and developing countries show...

Table of contents

• Cover
• Half Title
• Acknowledgements
• Title Page
• Copyright Page
• Brief Contents
• Detailed Contents
• Publisher Note
• Preface to the Fifth Edition
• Preface to the Fourth Edition
• Preface to the Third Edition
• Preface to the Second Edition
• Preface to the First Edition
• Illustration List
• 1 Place and Production in the Global Economy
• 2 The Urban Impact of Economic Globalization
• Chapter 2 Appendix
• 3 National and Transnational Urban Systems
• Chapter 3 Appendix
• 4 The New Urban Economy The Intersection of Global Processes and Place
• Chapter 4 Appendix
• 5 Issues and Case Studies in the New Urban Economy
• Chapter 5 Appendix
• 6 The New Inequalities Within Cities
• 7 Global Cities and Global Survival Circuits
• Chapter 7 Appendix
• 8 The Urbanizing of Global Governance Challenges
• 9 A New Geography of Centers and Margins
• References
• Index
• About the Author