In Cities in a World Economy written by Saskia Sassen, the author attempts to explore the answer as to why central locations in large cities are a feature that all major, globally operating firms and markets require in order to successfully operate. Many of these central locations that operate on a global scale are based somewhere material and have facilities that are able to globally network with one another without being solely located within the internet sphere of communication. Some may say that it seems as if the necessity for major cities is becoming obsolete in an era where major corporations are moving out and away from major cities due to a high cost in keeping and maintaining a on office building. Sassen however, makes the point to say that major cities such as New York are not becoming obsolete, rather, there is a new type of global economic order that comes into play when considering the mobility of capital on not only national, but additionally on global scales. Sassen emphasizes the point of dispersal in her work, saying that there is an increasing number of financial markets becoming a part of global networks and are thus able to be connected to an increasing number of other financial markets throughout the world. Sassen classifies cities in which there is a concentration of the ownership and control of such global businesses as “global cities” (Sassen 7).
Sassen defines global cities as places that have a major, specialized role in the maintenance of the global economy that we have today. There are nearly 70 global cities today worldwide, including New York city, London, Amsterdam, Mumbai, Tokyo, Paris, Frankfurt, and many more (7-8). In order for a city to be considered a global city, it must fulfill 3 requirements to be considered a global city in addition to being able to work in relation to other global cities whether it be on a national or global scale. The first requirement a city must fulfill in order to be considered a global city is that it must be a command post. Secondly, a global city must be a production site for producer services. Finally, a city must also be known as a marketplace that facilitates the exchange of global transactions between other global cities. Only if a city fulfills these requirements can it be a global city that aids in feeding the growth of multinational headquarters and as a result helps to control the global economy. In a specific area, only
The first characteristic that defines a global city is that it must be a command post, that is, such a city must have multiple large corporations that can easily access other large corporations so they have easy access to one another. As a command post, a global city must be like a company headquarters based on a larger scale of the global economy. Globalization, or when businesses begin to influence the world economy by beginning to function on a national level, is how multinational headquarters grow in size and complexity, as the location of global cities facilitates communication between them and other multinational headquarters that are located in other global cities. (127). With a concentration of corporate headquarters, companies agglomerate to one place in order to more easily communicate with one another
Agglomeration, or the idea that various inputs need to be in close proximity to one another in order to be utilized when necessary, can also be seen in the second function all global cities have: being a site that specializes in the production of producer services. Producer services are a “mechanism that organizes and adjucates economic exchange for a fee and are a part of a broader intermediary space of economic activity” (129). Here, Sassen means that producer services are necessary for all aspects of the economy to thrive. Producer services produce the services that are then sold to other businesses. Producer services can be either white collar or blue collar, as they simply provide services for firms; examples of producer services include things such as: “financial, legal, general management matters, development, design, sanitation…” (129). This agglomeration of producer services is one of the roles of global cities, as producer services will go wherever needed in order to meet the demand for the. Producer services allow the global economy to expand by providing the goods and services major company headquarters need in order to grow and as a result they have become the fastest growing sector in many cities (133). Even when the amount of jobs decrease in other sectors within a city, producer service jobs stay the same, which is why they have a greater likelihood of staying in a city than a major corporation that might move out onto the urban fringe. Global cities have the function of being production sites for producer services that supply their business to firms and as a result of this agglomeration of producer services companies can build themselves up, expand, and evolve. Producer services help to re-concentrate the global economy.
Another function of global cities in a new world economic order is the development of marketplaces for global transactions (7). These global transactions deregulate national markets and assist in coordinating trade on a wider scale. In particular, these investments are financial but take place on a global scale, for example, stock market like investment banks and networks. This is not only an example of the functions in a new world economic order but also agglomeration, as multiple financial industries will come together in order to feed off one another and develop. In this way, the development of the marketplace aids in expanding the global economy by allowing all major headquarters in the same field to be located in the same place.
While global cities have many functions, the agglomeration of global headquarters and producer services in addition to the patterns of economic growth that result from these functions produce much change to the social and spatial relationships that take place within a city like New York. In the spatial sector, changes are seen as a result of economic growth within a global city. Global cities change in how they are arranged spatially because of an influx of new, migrant workers that live and work in global settings. In the 1970’s this spatial change was mainly marked by “white flight” out of the cities (249). However, gentrification, or the process of people moving back into the cities occur as the number of jobs in high scale producer services increase, and as a result raise the cost of living within a city such as New York.
As global cities grow, so does the number of professionals and managers who are paid higher salaries for their role in high scale producer services, and as a result of this economic growth and the ability to increase pay, they migrate into these cities. A result of this is whiter population coming into major cities and staying there. However, not only is the white population increasing, so is the foreign-born population that seek lower paying jobs. While it may seem as if all jobs in the same sector are growing, it is typically the amount of blue collar jobs that increase from advanced industry sector growth, such as the custodial or other parts of a firm. (254) This increase in people taking low wage jobs in inner cities increase their risk of falling below the poverty line, but these low wage jobs are significant to an advanced information economy as they compose a great deal of job opportunities for both unskilled workers and migrants.
As the upper and middle classes grow within a global city, so do the need for producer services within that realm. even though the upper and middle class are only half of the residents of major cities, they create a great demand for domestic labor services by minoritized and migrant workers who are typically female, and this results in the concentration of poor in large cities. The poverty rate in the united states is 18% even though it is much higher in many major cities, and this means that the necessity of producer services by the rich actually cause the influx in poverty in many of these cities (251). Although the influx in rich and middle class in major cities that has occurred since the 1980’s does not have a great impact on the number of underpaying jobs given to migrant workers, it does have strong social and spatial connotations. An example of this can be seen in the shops that the rich and middle class go to that the poor are unable to afford. While the upper classes want nicer shops with higher prices, people who make less than a living wage cannot afford these luxuries. As a result of this inner-city spending, more lower class households are pushed below the poverty line and are displaced because they can no longer afford the overpriced goods found in their own neighborhoods. This leads to the displacement of cities or families, which results in an increased homeless population in global cities such as New York.
The economic patterns associated with global cities also have a profound impact on the social realm of the place in which people live. For example, many poor and immigrant people travel and work in global cities due to the availability of part time and temporary jobs. Immigrants and people in minority groups flock to places with high turnover rates because certain job sectors are closed to them, while younger workers tend not to care as much about job stability as they do experience (249). While this influx of producer services increases the rates of under employment, it also creates agglomeration of businesses. This agglomeration of businesses also affects the social aspects of a global economy because it helps to create a community of producer services and trust that reduces uncertainty and risk between laborers in addition to benefitting the productivity of the people who work in producer services. It is in this way, the high competition of the global city results in a change in social classes in addition to the occupational structure of a specific place (249). With a more unstable work force, economic polarization occurs, and the poor remain poor while the middle class remains unable to expand because of the inequality that takes place within major global cities (271).
Global cities have affected the position of cities in a monumental way. Some smaller cities located outside of the urban fringe perform some of the necessary functions that are required by larger cities and as a result are only important in their relation to larger cities (329). An example of this is Stamford, which only exists in relationship to New York. Stamford is an example of an edge city, or a place where financial headquarters and offices locate just beyond highly developed urban areas into suburban areas and are connected to these global cities through electronic means (228). these edge cities perform important jobs for global cities, and allow the global economy to grow through: “distinctive combinations of rewards, security, and conditions of access” (249). Global cities affect the position of smaller cities, by causing major financial sectors of the economy to move out and form these cities out of suburban areas.
Additionally, global cities affect the relationships between cities benefits the world economy. As a result of the global economy, systems of cities, or operations of cities that work in relation to other cities. This builds stronger relationship ties between cities, as these systems exist in networks that rise and fall together. Additionally, major ports that most global cities have facilitate trade and strengthen the connection between other cities throughout the United States. However, it does make it hard for other cities to develop once major satellite cities are already rooted outside global cities. Bridgeport, for example, struggles to become part of a relationship that takes place between cities because New York city already has developed Stamford and as a result Bridgeport is not able to thrive because it does not provide services different from that of a city that already exists in its network. Global cities are important in the sense that they strengthen the ties between cities and allow room for the strengthening of global networks
“Global cities” have three major roles in the new world economic order. First, global cities must be command posts or places where global headquarters are able to be easily contacted. Second, the must be production sites of producer services, which provide their services in all areas both blue and white collar to major firms and companies. Finally, they must be sites of a marketplace of global transaction that help to coordinate mainly fiscal transactions on a larger scale and help to coordinate trade (7). While the rich have made their claim on global cities, the agglomeration of producer services has brought in lower income households to these cities which results in a change in social and spatial relationships within such a city. Smaller, satellite cities tend to form around global cities, and they affect the relationship of cities within the United States by creating networks between them that aid them in trading with one another. According to Sassen, there are around 70 global cities worldwide, and their importance remains the same in helping to maintain and control the world economy.