Global Cities and Nation States

Prof Greg Clark &Dr Tim Moonen

Tokyo
September 2017
The BUSINESS of CITIESOrigins of the Global City: Trade and Connectivity• 1300 BC Phoenicians

Tyre, Syracuse, Carthage• 500 BC Persian Royal Road

Babylon, Susa, Ephesus• 400 BC The Silk Roads

Ctesiphon, Samarkand, Balkh• 1300 AD The Mediterranean

Venice, Barcelona, Genoa.

• 1300 AD Hanseatic League

Hamburg, Lubeck, Bruges• 1300 AD South East Asia

Canton, Melacca, Surabaya

Trade led to Innovation = Transport, Exchange, Currency, Insurance, ….
Innovation led to Cities = specialisation, clustering, agglomeration, ….
Cities organised to promote trade = Connectivity, Logistics, Merchants, ….

The BUSINESS of CITIES183 Pages, 7 Chapters
i. Navigating global cities.
ii. Origins: Trade and cities.
iii. Global Cities in the ancient world.
iv. Global cities in the modern world.
v. Understanding global cities. Theory and Benchmarking.
vi. Global Cities today. New wave. Why and what?
vii. Global City Futures: Challenges and leadership.
5 recurring ingredients of global cities over 5,000 years:• Trade and connectivity• Openness, diverse and entrepreneurial populations• Innovation and Influence• Discovery of new markets• Geo-political opportunity
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3Navigation.
Why Now?
• New trends in current cycle post 2010•••

Global economic change and new dynamics.
Rising Number of Global Cities
Metropolitanisation• Anti-globalisation and populism• Cycles, Waves, and Paths.

• Not just Finance and business centres, Capitals or Ports.
• 3 new types: Emerged, Emerging and New.
The BUSINESS of CITIESCycles
Waves
Paths

1492
1650

Antwerp,Genoa,
Istanbul,
Venice1650 1780

1780
1850

1850
1914

Amsterdam, Berlin, Bilbao, Liverpool
Manchester,
Guangzhou,
Paris,London,
Birmingha Rotterdam, Vienna
New Yorkm

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1945
1973

Munich, Seoul,
Singapore,
Tokyo, Toronto

1985 2007

Bangalore,
Barcelona,
Chicago,SydneySydney,Melbourne
Tel Aviv

2010 -Colombo,
Nanjing,
Brisbane, TelAviv,Sao Paulo…

The Silk Roads 400BC – 1600 A.D.

Innovations Caravans, paper, algebra, gunpowder, banking, medicine
Externalities The black death, Hunnic and Mongol Invasions, religious war
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6The Hanseatic League 1250-1550

Innovations

Commercial organisation
ShipbuildingBanking
Externalities

Restrictive trade monopolies
Self interest of individualcities
7Failure to adjust to newmarkets
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Global Cities of the Ancient and Modern World: 10 Waves•Phoenicians, Persians

Silk Roads and Ancient roads.

•Post Roman Empire

Baghdad, Tikal, Cairo•

1300 Commercial Wave

Hanseatic League, Venice, Barcelona•

1500 Post Columbian Wave

Antwerp, Amsterdam•

1600 Mercantilist Wave

London, New York, Buenos Aires•

1760 Early Industry wave

Guangzhou, Boston, Manchester•1850 Mass Industry wave

Los Angeles, Birmingham, Bilbao•

1945 Post War Waves

Tokyo, Munich, Singapore•

1985 ICT, liberalism and integration San Francisco, Hong Kong, Barcelona•

2008 Techno-Globalism

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3 city types: Singapore, Tel Aviv, Seoul

Global Cities of the Ancient and Modern World
Alexandria 334BC – 1450s

Baghdad 8th-10th C
Heart of Islamic single
market. “Showcase” city
open to new cultures:progress in sciences.

Grain and Silk Roads gateway. Multicultural
cross-roads = city of knowledge.

Guangzhou 10th-15th C
1760-1850s
China’s maritime gateway
Tea, opium, war.
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9Global Cities of the Ancient and Modern World
Amsterdam 1550-1700
Financial and trade
innovation. Colonies andcanals = European
distribution hub.

Vienna 1815-1914; 1995-Present• From cosmopolitan capital toFascism. Reborn as city ofdiplomacy, culture, tourism
and regional finance.

San Francisco
1970s-Present• ICT driven by
R&D network,
quality of lifeand local VC
finance

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Understanding Global Cities

1966-1990

1990-2005

2005-present+ Major comparative studies (OECD, UN, WB, Brookings, MGI)
+ 250 global benchmarks and indexes
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310 city indexes in 2017

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Mori Global Power CityIndex 2016

Xinhua•Dow Jones
International FinancialCenters

Qatar FCA: Global Financial
Centres Index

fDi global cities of the future
2016/17 winners

KPMG Global Investment
Monitor Top 15 Greenfield

IBM 'International HQ'

JLL Cross-border Real
Estate Investment

CBRE: How Global is thebusiness of retail?

Knight Frank Global Cities'Skyscraper Index'

DHL Global Connectedness
Index

MORI GPCI 'Accessibility'

Mastercard Destination
Cities Index

2thinknow Innovation Cities
Index

Dubai Innovation Index

QS Best Student Cities

Mori GPCI 'Cultural
Interaction'

EIU/Citigroup, 'Global
Appeal'The Guardian/Saffron:World’s most powerfulbrnads

1516AT Kearney Global Cities
Index

891011121314Cities of Opportunity 7 PWC

London
New York City
Paris
Singapore
Tokyo
Hong Kong
Seoul

EIU/ Citigroup Hotspots

All-round

12
3
4
56
7

Gateway +Talent and Culture, imagetransportinnovation
and brand
platform

Finance, Corp HQs,
Investment

21112121111431214511316221253324248561 20 28244347 29 95638 14 52392132432854316 15 43357 10 19 447546952 35 546176866441493611910 535328

5 30 712311 22 3

8 196-

30 20 15 21 8101058 10 16135513727 117-

11 13 13 2428-

19 20 19 39 172433

42 13

31

120 11 11 623 14 17

Amsterdam
TorontoShanghai
Los Angeles
San Francisco
SydneyBeijing

17 5 22 819 33 7 13 4 34 351412 3 17 1813 13

15 8 29 2910 2143 21 20 12

6 16 42 38 919 14 6 1325

ViennaZurich
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3 11 7420 6 23 10 12 28

21

13 8 23 24

12 6 10 14 14 7 53 5 24 33

2 11 27 26

44815 10 14 14

11 11 19 6 17 11 65 7 29 29

18 14 4 144216

39 19 9 17

9 26 12 12 42 18 10 13 940 21 25 95382519 1031 3718 45 34

40 20316 71039731 1614 9 139 51 69

33 3072 9 12 3618241813

The Established World Cities: the ‘Big Seven’

The Big Seven account for around 25% of global real estate investment

 Uniquely globalised Corporate clusters withglobal reach Biggest shares of financial
and biz services
 Strong infrastructure
platform
 Cultural appeal
 Political and legal
frameworks
 Magnets for global FDI

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14ESTABLISHEDWORLD CITIESParisLondon

EMERGING WORLD
CITIESTokyo

Beijing

New York

Shanghai
Seoul

Hong Kong

MoscowDubai
Sao Paulo
Johannesburg

Dubai

Singapore
SydneyTorontoBerlin
ViennaSantiago

Tel Aviv
Cape Town
Boston Miami
Barcelona

Copenhagen
Vancouver
Oslo

AucklandManchester
The BUSINESS of CITIESNEW WORLD CITIES
15The New World of Cities
Amsterdam

Oslo

The BUSINESS of CITIESEstablished World Cities

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Established World Cities – cycle dynamics

4th Cycle

3rd Cycle

1st Cycle
Projects & PhysicalRenewalPromote the Metro
Tourism
EventsFDI
The BUSINESS of CITIESManaging growth anddiversification
Business Friendly Metro
2nd Cycle
Investment Ready Metro
AssetsInnovation / Universities
Specialist Agencies
Shaping the future
Metro brand
Metropolitan sphereLarger Events
Broader leadership
New funding tools.
Integrated Brand
Entrepreneurship
Alliances
EconomicSummits
development.
Internationalisation
Strategic Visions
StrategyInternal governancereforms

Managing success at theinternational scaleCompetitive benchmarking
Eco-system management
Business Leadership
Dealing with growth andexternalities
External governancereforms.
Global Summits
Signature events
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Strategic
imperatives for
EstablishedWorld Cities

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Strategic
imperatives for
EstablishedWorld Cities

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20The Future and global challenges
Global cities will continue to emerge despite external threats.
Why?
••
•

Global economy and nation states need them (talent and capital and trade and innovation)
Diversification from Established WCs by talent, capital, technology and firms. Appetite for more.
Infrastructure investment will create them. New global infrastructure scenario will reinforce opencities.

What does change in city functionality and connectivity mean for global cities?
3 strategic imperatives…
1.

How to compete and achieve inclusion, resilience, flexibility?

2.

How to manage success and unintended consequences of growth?

3.

How to resolve external challenges to global city model?
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1© The BUSINESS of CITIES

2‘Thermometer’ of city empowerment
Singapore
Hong Kong

Hamburg, Berlin, Zurich
Stockholm, Vienna, Oslo
Amsterdam, Shanghai, Beijing
New York, Tokyo, Seoul
Barcelona, Milan, Mumbai
Toronto, Auckland, Sao Paulo
London, Manchester (post-2017)
Other UK cities, Dublin, NZ cities

The BUSINESS of CITIESThe nation state is not dead!
They:
Establish ‘ground rules’.

Support or deter inter-municipal co-ordination
Set in train a multi-level approach (or not)Can cause or correct perverse incentives
Align fiscal frameworks with sectoral policies

Set the framework conditions (economy, regulation, investment)

The BUSINESS of CITIESWorld Cities and Nation StatesWORLD CITIESNATION STATESHong Kong

China

5LondonUK

Moscow

RussiaMumbaiIndia

New York

U.S.

ParisFranceSão Paulo

BrazilShanghai

China

Singapore

Singapore

SeoulKorea

TokyoJapan

TorontoCanadaThe BUSINESS of CITIESThe four dimensions of successful national
government and world city relationships

World city success in its
own right

World city contribution tothe national economyRole of national
government in helping theworld city succeed andcompete

Role of national
government in managing
the consequences of its
world city for the rest ofthe nation

The BUSINESS of CITIESAgglomeration phase 1: Growth
City size and Labour productivity

Ahrend et al. (2015). ‘What Makes Cities More
Productive?’ OECD

The BUSINESS of CITIESAgglomeration phase 2: Externalities (the price of success)• High costs: housing, labour, living• Infrastructure investment demand• Two-tier labour market• Social cohesion and integration• Sprawl? Congestion? Pollution? Inflation?
• Opposition to growth model
The BUSINESS of CITIESHow are higher tier governments adjusting tosupport their world cities?
• Increased attention to internal and external infrastructure (Crossrail,Grand Paris, Moscow metro, Shanghai, Toronto)• Step changes to address housing/real estate challenges• Improved metropolitan governance and spatial development (London,Moscow, Paris, Sydney)• Fiscal and investment systems (Sao Paulo)• Awareness of competitive dynamics, business climate and labourmarkets (Shanghai, Mumbai, Toronto)• Increased investment in research and innovation (Toronto)• Extended emergency support (New York, Tokyo)
The BUSINESS of CITIESImpact of World Cities on Rest of the Nation
Advantages

The BUSINESS of CITIESDisadvantages

10Impact of World Cities on Rest of the Nation
Advantages

Disadvantages

1. Tax yield from higher-value industries
2. Transport gateways for tourists andvisitors
3. Fosters supply chain development anddemand for national goods andservices

4. Provides access to international
markets and capital, innovativetechniques/products
5. ‘Escalators’ for productivity

6. Financial expertise and trade
management capabilities.
7. Improve the ‘business brands’ fornations
The BUSINESS of CITIES11Impact of World Cities on Rest of the Nation
Advantages

Disadvantages

1. Tax yield from higher-value industries

1. Exposure to economic volatility.

2. Transport gateways for tourists andvisitors

2. Brain drain.

3. Fosters supply chain development anddemand for national goods andservices

4. Perceived favouritism by national govt
investment

4. Provides access to international
markets and capital, innovativetechniques/products
5. ‘Escalators’ for productivity

6. Financial expertise and trade
management capabilities.
7. Improve the ‘business brands’ fornations
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3. Over-concentration in key sectors.

5. Other cities and regions become lessbankable.
6. Two-tier housing and labour markets –rising inequality
7. HQ and govt role = ‘locked-in’ toprioritising world city, excessive
influence on macro/industrial/housing
policy.
12World city in a Unitary system: London

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World city in a Federal system: São Paulo

The BUSINESS of CITIES‘Special status’ city: Shanghai

The BUSINESS of CITIESTokyoGVA per% of% ofcapitaCity global
national nationalvscompetitivepopulation GDP national ness rank
average
28%

32%

1.17

6

AverageCountryAverage
GDP perglobal
Job Growth capita
competitive2000-14
Growthness rank
2000-14
60.5%

0.6%

Source: Brookings Global Metro Monitor 2014, OECD Stat., WEF Global Competitiveness Report, 2015-16; EIU Hotspots, 2012.

 Centralised system where TMG gained early autonomy – 1940s. Further reforms
in 1990s.
 Growing policy co-operation since 2000, shared objectives and communication
 Partnerships around Urban Renaissance, Special Zones, 2020 Olympics
 Dilemmas around economic policy, regulation and global competitiveness.

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Size of capital city compared to next largest city

OECD (2015). ‘Metropolitan Century’

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National support for Tokyo?
 Co-investment in Tokyo
regeneration and infrastructure
connectivity
 Shared global ambitions in key ?
sectors = Zones
 Strong support for resilience ?
and for sustainable national
system of cities?
 Olympic preparations andcommunication to the world

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speed of regulatory reform toattract
talent and enable
Tokyo’s ’Big Bang’
Promoting the sharing
economy and innovation
economySharing the costs of an aging
population
fiscal redistribution to highneed regions

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From ‘zero-sum’ to inter-dependence
Nationallevel
Highly focused on
supporting territorialpolicies+ World City

Aware of incentives aswell as rules.

‘Systems of cities’
thinking.
Customisedarrangements fordifferent cities.

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Increased selfgoverning powers.
Higher fiscal autonomy.
Able to manage theexternalities of growth
Strong customer to theother cities and ruralareas.

+ Secondarycities andmetros
More empowered andcapable of investing intheir own growthGreater specialisation andcomplementarity
Increasingly wellconnected (with eachother)20
Collective advocacy andWhat’s needed from leadership?
City and regionalleaders•

go beyond ‘zero sum’
competition withneighbours•

take a longer term
development view•

shift to higher
investment, higher return
equilibrium•

pool sovereignty•

plan land uses better

The BUSINESS of CITIESNational leaders• address coordination
failures, trade-offs, andtensions between fiscal,
spatial, economic,
environmental policies• address system of cities
and system of regions
dynamics.
• increase mutual gain
mechanisms between
places• empower sub-national tierand incentivise co21

The BUSINESS of CITIES22