The agency of cities in locational preferences Key protagonists (1)World city theorists (Geographers, Urban Studies) (1)‘Basing points for capital’ (Friedmann, 1986) (2)Strategic sites for command and control (Sassen, 1991) (2) Urban sociologists and economists (1) Economy of cities (Jane Jacobs), plus, Krugman, Storper (2) Human capital and the city (Glaeser et al, 1991) (3) IB specialists (1) Location = urban in the ILO (Dunning, various) (2) World cities and the locational strategy of MNCs (Goerzen, Asmussen and Nielsen, JIBS)
The agency of the (world) city in determining MNCs location
Jennifer Johns+ University of Liverpool Jon Beaverstock+ University
of Bristol + both are delighted to report they are Economic
Geographers by training!! Introduction World cities World cities in
the division of labour World cities and MNC HQ preferences World
city hierarchies World cities and international finance World
cities and the war for talent The agency of the city Location = the
city in the ILO paradigm Strategic sites for production &
consumption Relational urban agglomeration economies The agency of
cities in locational preferences Key protagonists (1)World city
theorists (Geographers, Urban Studies) (1)Basing points for capital
(Friedmann, 1986) (2)Strategic sites for command and control
(Sassen, 1991) (2) Urban sociologists and economists (1) Economy of
cities (Jane Jacobs), plus, Krugman, Storper (2) Human capital and
the city (Glaeser et al, 1991) (3) IB specialists (1) Location =
urban in the ILO (Dunning, various) (2) World cities and the
locational strategy of MNCs (Goerzen, Asmussen and Nielsen, JIBS)
World cities - definitions great cities in which quite a
disproportionate part of the worlds most important business is
conducted (Peter Hall, 1966). ... world cities... [are]...
[t]ightly interconnected with each other through decision-making
and finance, they constitute a worldwide system of control over
production and market expansion (John Friedmann and Goetz Wolff,
1982). World cities - definitions ... a combination of spatial
dispersal and global integration has created a new strategic role
for major cities... these cities now function... as highly
concentrated command points in the organization of the world
economy... as key locations for finance and for specialist service
firms... as sites of... production of innovations... and... as
markets for the products and innovations produced (Saskia Sassen,
1991). World cities in a division of labour Knox et al, 2008 Main
locations of 198 non-US corporate HQs in 1978 Metropolitan
areaNumber of TNC HQs Tokyo30 London28 Osaka13 Paris12
Rhine-Ruhr10.5* Randstad Holland3.5* *HQ in two places Cohen (1981)
Hierarchies of MNC HQs (see Cohen, 1981; Dicken, 2007) The world
city hierarchy Friedmann, 1986 Top ranking city locations for
Fortune Global 500 companies, 2006 and RankCityNo. of Global
RankCityNo of Global500 companies 1.Tokyo511.Tokyo52
2.Paris272.Paris27 3.Beijing263.New York24 4.New York184.London23
5.London155.Beijing15 6.Seoul116.Seoul9 7.Madrid97.Toronto8
=8.Toronto7=8.Madrid7 =8.Zurich7=8.Zurich7 =8.Osaka7=10.Houston6
=8.Moscow7=10.Osaka6 =8.Munich7=10.Munich6 13.Houston6=10.Atlanta6
=14.Mumbai5=14.Rome5 =14.Atlanta5=14Dusseldorf5 =14Amsterdam5
Source: Authors adaptation from CNNMoney.com (2009) World cities
& international finance The agency of world cities in a world
economy Locational preferences for: 1. Internationalization of
capital Location of corporate HQs International trade (maritime
ports) Banking, finance and business 2. Internationalization of
services International financial centres 3. ICT, transportation and
communication Communication, ICT, internet, infrastructure Airline
travel (airports) e.g. Warf 4. Labour Global talent and the
highly-skilled Low and no-skilled, illegal 5. Culture 6. Global
governance Saskia Sassens (1991) Global city thesis The concept of
the global city has emerged because of two interrelating factors
(1) the globalization of economic activity Deindustrialization of
manufacturing Internationalization of banking and the producer
service sector Management, control and coordination in cities (not
regions!!) New International Division of Labour (concentration of
decision-making in cities) (2) the organizational structure of
banking and the producer service and finance industry
Specialization, concentration, intensity (agglomeration) obtain
agglomeration economies when they locate close to others that are
sellers of key inputs or are necessary for joint production of
certain service offerings (Sassen, 1991) Locational Strategy of a
Global Law Firm: Clifford Chance 1972 Amsterdam 1802 London 1962
Paris 1976 Dubai 1980 Madrid Hong Kong 1981 Singapore 1968 Brussels
Moscow 1992 Warsaw 1993 Barcelona Milan Rome Budapest Shanghai 1996
Bangkok 1995 Prague 1997 Ddorf Padua 1990 Frankfurt 1986 New York
Coward Chance and Clifford-Turner merger 2000 Luxem- bourg Beijing
1999 Washington 1998 Sao Paolo 1974 Tokyo 2003 San Francisco Palo
Alto San Diego Los Angeles Merger with Rogers & Wells and Pnder
Munich Berlin Source: Charlton 2003 Offices closed: Chicago Bahrain
Jeddah Riyadh Sharjah Leipzig Ho Chi Minh City Hanoi Clustering of
law firms in London, 2001/2 Source: Corporation of London, 2003
See: Cook et al (2007) Clustering of management consulting firms in
London, 2001/2 Source: Corporation of London, 2003 See: Cook et al
(2007) World cities & the war for talent Talent as a growth
engine Human capital (Jacobs, 1961) Creative class (Florida, 2002+)
Labour-factor in location Highly skilled vs. low skilled Transient
vs. settler Expatriation 18 MNCs: Hymer the international
corporation tends to create a world in its own image by creating a
division of labour between countries that corresponds to the
division of labour between various levels of the corporate
hierarchy. It will tend to centralise high-level decision-making
occupations in a few key cities (surrounded by regional
sub-capitals) in the advanced countries, thereby confining the rest
of the world to lower levels of activity and income (Hymer, 1972:
59) Oversimplification Lower level functions also contained in
cities Dicken: different types of geographical location contain
different mixes of corporate units in which the actual proportions
vary. MNCs: GPN Cities and their relative importance are implicit
in value chains/production networks Relational geographies Nodes in
networks Local economic development (often local = city) Empirics
Sectoral variation GPN power, value and embeddedness = importance
of cities 21 Human capital as a determinant of city growth and
competitiveness (Glaeser et al,1995) City-regions dominate economic
policy in the UK Relational urban agglomeration economies Henry and
Dawley, 2011 Source: Taylor 2001 Locational preferences and
interlocking networks Minuscule section of the world city network
The agency of cities* in MNC location Key protagonists (1)World
city theorists (Geographers, Urban Studies) (1)Basing points for
capital (Friedmann, 1986) (2)Strategic sites for command and
control (Sassen, 1991) (2) Urban sociologists and economists (1)
Economy of cities (Jane Jacobs), plus, Krugman, Storper (2) Human
capital and the city (Glaeser et al, 1995) (3) IB specialists (1)
Location = the urban in the ILO (Dunning) (2) World cities and the
locational strategy of MNCs (Goerzen, Asmussen and Nielsen, JIBS) *
Spatial forms: CBDs; financial centres; valleys; clusters;
roundabouts etc
