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Since the publication of Saskia Sassen's 1991 landmark study of New York, London and Tokyo, London has become recognized worldwide as an archetypal ‘global city'. Its historic reputation as a dominant world political power exerting influence across the globe through the British Empire has been succeeded by one of supremacy in the new global service economy. In 2001, data from the Globalization and World Cities (GaWC) research network at Loughborough University showed London to be the pre-eminent 21st century node in the world for advanced business services - the number one global city. Importantly, Sassen's use of the specific term global city identifies a very contemporary city process not captured by the notion of the world city which has evolved from early definitions by Patrick Geddes in 1915 and Peter Hall in 1966. Today London represents Sassen's iconic new kind of city.
The restricted space of the historic City of London ‘Square Mile' together with its more recent offshoot at Canary Wharf is the premier location for highly complex, high-value decision-making functions and transactions in global financial and professional services known as ‘advanced producer services' (APS) because their clients are businesses and organisations. Sassen famously recognised the association between the nineteen eighties geographic dispersal of their production functions to service multinational corporate clients in developing world markets and the centralization of their key coordination functions in a few specific world locations. Along with New York and Tokyo, London was identified for the first time by Sassen as a new city phenomenon resulting from this spatial logic, a global service centre.
As demonstrated by the recent global banking crisis, finance is central to the functioning of the modern world economy however it is the co-presence of a broad range of service activities which makes London a truly global centre in ongoing world economic expansion. Apart from banking and finance, other business and professional services, including insurance, accounting, law, advertising and management consulting, are essential to support economic development. Specialization and diversification in these interrelated industries leads to highly complex operational practices which cross-cut traditional sectoral and organizational boundaries. It is the intensity of interactions between these international services which defines London's present-day global role and creates the buzz of the City.
In spite of the dematerialization of many aspects of commercial trading, a range of market drivers is reinforcing the need for proximity in globalizing services and multi-sector clustering in London. Access to specialized international labour is critical to firms' competitiveness in cross-border markets and London's strength in this respect is a key reason for its continuing prominence as a global service centre. A variety of other factors also plays a part but the capacity for face-to face encounters involving many international actors is of paramount importance for trans-national relationship-building and interaction and a key reason for ongoing clustering in the centralized locales that comprise the ‘global village'. Proximate overlapping clusters intersect with finance and extend geographically from the Square Mile to the ‘West End', Soho, Hoxton, London Bridge and Canary Wharf, interlinking London (the place) to other cities worldwide.
A networked city
Sassen's reflections on the global city have recognised the importance of its cross-border, inter-city transactions. But these interlinkages are played down by the current policy obsession in developed and developing countries alike, with the economic competitiveness of cities in the world economy. This view of cities as competing for economic resources reflects a dominant preoccupation in the world cities literature, notably John Friedmann's 1986 ‘world city hypothesis', with hierarchical relations between cities. According to this way of thinking, a polarisation of power makes leading (world) cities, such as London, ‘command centres' controlling and dominating the world economy. GaWC Director, Peter Taylor's innovative approach to studying the relations between cities in economic globalization reveals a more complex reality.
Taylor's approach to city relations draws on Sassen's understanding of the new role of cities as global service centres and Manuel Castells subsequent 1996 insights into the significance for cities of emergent network forms of global economic organization made possible by developments in information and communications technologies. As service firms have progressively opened new offices around the world to extend their global reach and depth in opening markets, according to Taylor (2004), the cities where their key global functions are located have come to comprise an interlinked ‘world city network' of global service nodes as liberalization proceeds.
The offices of a global financial services firm in London are functionally linked to those of the same firm in New York. Because London has many offices representing many service firms and so has New York, these two cities are highly interconnected by the interactions occurring within and between the multiple service networks that link them. Because networks represented in London also have a presence in many other cities around the world, London is connected to cities world-wide to different degrees depending on the service networks located in them. The size of offices and their functions (global or regional head office, etc.) in a given city indicates their likely degree of interaction with offices elsewhere in the world, and hence the connectivity between cities. In the case of London, empirical measurement of the w orld city network (Taylor 2001; Taylor et al. 2001) therefore depicts the global service presence in London, the place, and also the geography of London's connectivity to global cities world-wide.
Considering cities in this way introduces a new slant to the interpretation of their relations. The high representation of global firms in London can be understood as making it a dominant place in a world hierarchy of cities. T he number of major offices with global or regional functions located in central London can be seen as showing its world power and importance, or alternatively, London can be understood as a multi-connected functional node in global business networks. GaWC's interview-based qualitative research demonstrates that, for firms, business relations between cities are complementary. Firms use many cities as bases to compete in global markets and this produces synergistic relations between cities. Flows of knowledge and finance between co-operating offices world-wide lead to a network structure of power relations across cities.
Breaking with traditional economic perspectives on the local hinterland relations of cities based on central place theory, the notion of world city network focuses on the hinterworlds of cities in which power is vested in, and flows though, network organizations and is not a settled attribute of cities as places. A senior representative of a US bank thus describes the function of their London office as “international business... access between the States and the Far East …” (London 2002, GaWC Project 21). China Merchants Bank's recent decision to base its new European headquarters in London illustrates its continued importance as a major east-west linking node post-financial crisis due to its “unrivalled access to the European market” (Think London, http://is.gd/21wyN).
A new type of place
But while the concentration of fiber optic grids, prestigious architecture and bespoke office towers in central London, essential to support intense, near instantaneous inter-city global interaction and trading seems relatively ‘fixed', business knowledge and finance can no longer be regarded as assets that are tied to one locality. Interconnectivities between global cities are creating a different sort of place. Seen as a global service centre, a networked node for world business flows, London is this new kind of fluid place, part of a transitional, global space. The concept of world city network thus depicts new pathways of power involving many cities world-wide, associated with the unfolding economic geography of capitalism.
GaWC empirical measurement of the world city network in the year 2000 included 100 service firms and 315 cities. Working with the Chinese Academy of Social Sciences, Beijing, and the University of Ghent, Belgium, the data set for 2008 was increased to 175 firms and 526 cities. Importantly the latter data collection exercise was carried out in the first half of 2008 and so represents a key benchmark of the state of the world city network just before the crash of the global financial system. Figure 1 shows the 50 cities in the world with the highest global network connectivity (GNC) in 2008 and Table 1 lists the 10 most connected global cities with London ranked ‘1' as in the year 2000.
Figure 1: Global Network Connectivity 2008: Global ‘top 50' cities.
Table 1: Global Network Connectivity (GNC) ‘APS 175' 2008: Global ‘top 10' cities.
Note: Individual city connectivity scores are shown as a proportion of the most connected city, London (=100.00).
Direct comparison between the 2008 and 2000 data is problematic however. The increase in the number of cities surveyed and dynamic changes in the composition of the network structures measured would distort the results, hence modifications to the original data have been necessary. The adjusted data shown in Table 2 reveal the changes in the world geography of London's service links since the year 2000.
Table 2: G lobal Network Connectivity (GNC) Adjusted Scores 2000/08.
Note: The method of adjustment to the original 2000/2008 data used to produce this revised comparative table is described in detail in Derudder et. al. 2009.
It is evident that major changes have occurred during this eight year period. Most immediately striking is the changed ranking of London (98.96) in 2008 which now appears less well connected than New York (100.00). Nevertheless these two cities remain the most connected service nodes in the world together with Hong Kong (81.44), indicating a certain stability. Notably however, they have been joined by Paris (76.83) in the world ‘top four' connected cities, Paris having overtaken Tokyo (72.18) now ranked 6 (one of Sassen's three original global cities), which has also been overtaken in connectivity by Singapore (73.36).
Meantime all US cities except New York have suffered a substantial loss of global connectivity. S ignificantly, the only US city included in the 2008 ‘top 30' apart from New York is Chicago (52.71) which has dropped from 2000 rank 7 (61.49). Western European cities apart from Paris, have also experienced a fall in ranking between 2000-08 though in this case the change is not due to a loss of connectivity. Europe's connectivity levels have actually increased during the eight year period but they have been overtaken by cities in Pacific Asia and/or Eastern Europe.
Sydney (71.90), Shanghai (69.74) and Beijing (69.16) have gained connectivity entering the world ‘top ten'. Astonishingly, Shanghai and Beijing have risen from rank 28 and rank 30 respectively in this eight year period. Moscow (63.44) has also gained connectivity dramatically, rising from rank 39 to 13 and Warsaw (56.40) has moved from a ‘top 40' to a ‘top 20' city. Densely urbanised Western Europe remains the most connected world region in 2008 but connections to global cities located in emerging markets on the Pacific Rim have increased exponentially.
Places in the world with the strongest consistent global service connectivity throughout the eight year period are thus the US/New York, UK/London, Pacific Asia/Hong Kong, and within Europe, France/Paris. Therefore withi n the western world it is clearly three global service nodes - New York, London and Paris - that constitute the most intense inter-city flow spaces.
The term ‘NY-LON' which derives from a Newsweek headline of 13 November, 2000, “A tale of one city: Living, playing and working in New York and London” in which a girl wears an ‘I love NY-LON' t-shirt, has come to represent the notion of these two cities becoming one in an increasingly interconnected, global world. NY-LON dual city living has been a popular focus of media attention and in city business, the term ‘Anglo-Saxon' has been widely used to describe a shared US/British, i.e. New York-London, culture. The GaWC time-series data for service connectivity shows how network practices in this key component of the world economy are contributing to the NY-LON process.
In 2000 London and New York were already very close in their global network connectivity and the adjusted 2008 data shows that the gap between them has narrowed. Their connectivity scores are now so close that they can be considered equivalent. Nevertheless sectoral data reveal that their roles in the world city network are also distinctive to an extent, their connectivity in different networks varies. For example, New York is more connected (ranked 1) than London by financial services (banking, finance and insurance), whereas London is more connected for non-finance. Even within non-finance services, New York (ranked 1) is stronger than London (ranked 2) for advertising and consultancy, highlighting diverse network complementarities that comprise NY-LON servicing relations.
Within Europe, a similar city process to NY-LON can be identified in relations between Paris and London. Research on service business practices in North West Europe between 2003 and 2006 revealed that the two cities have many features in common as European service nodes (Halbert and Pain, 2009) - as in the case of NY-LON, their roles and functions in global networks should be understood as complementary. Within the Eurozone, Paris has proved much more strongly globally connected as an all-round business service cluster in 2008 than Frankfurt (rank 32) yet London's gross connectivity has not diminished as a result of Paris's inclusion in Economic Monetary Union or its increased prominence in the world city network.
The closing gap in Paris-London global network connectivity between 2000 and 2008 reinforces an impression of PAR-LON as the new kind of city space that is coming about as a result of the way in which service networks are using these cities. Paris is relatively less strong in its connectivity to finance networks (Paris rank 8 / London rank 3) and accountancy (Paris rank 9 / London rank 1) but it is third global city in the world for advertising, law and consultancy. Compared with NY-LON, PAR-LON is therefore more integrated in the world city network through its non-finance service activity. However, as in the case of NY-LON, PAR-LON relations can be considered essentially synergistic and non-competitive.
The shrinking gap in the global connectivity of all three cities (PAR-LON-NY) is representative of their increasing network integration. The new spaces produced through this process are redefining the way in which cities must now be understood.
Spaces of power and governance in the global economy
The data used in this article describe a process by which network forms of organisation in advanced business services referred to by Sassen's global city thesis, are changing the role of some cities in the world to global service nodes for connectivity in the world city network. Of course there are many other roles of cities which are not considered here such as their roles as political centres (both London and Paris are capital cities as well as global cities, whereas New York is a global city but not a capital) and as bases for public corporations etc. In order to focus on the question of London's specific role as a global city, the advanced services analysed for 2008 have in fact been stripped out from an enlarged GaWC data set which now includes other city connectivity measures such as data from the Forbes global 2000 listing. The data reviewed here indicates that when cities are considered in their service centre capacity they are associated with synergistic functional relations and that these can have a levelling effect in terms of a notion of hierarchical power because service flows are not the property of individual cities.
In general, cities besides the global cities originally identified by Sassen (London / New York / Tokyo) are now integrating developing economic regions in the world city network indicating a shift of power geographically. Tokyo has lost connectivity and many other cities are gaining connectivity and thus catching up with London. verall the connectivity of the ‘top 40' city rankings has increased significantly. Half the ‘top 20' cities surveyed in 2008 are located in the Pacific Asia region, thus London-Hong Kong nodal linkages are especially important to monitor in future research. A t the stage of world economic development observed in the first six months of 2008, the image of power relations associated with global service network development can be said to have been moving towards m ore heterarchical east-west global city (as opposed to hierarchical world city) relations.Ongoing quantitative and qualitative data collection at GaWC is mapping the changes in the world city network post-financial crisis and will further understanding of the changes contemporary cities in the world are undergoing in economic globalization. The Globalization and World Cities (GaWC) Research Network based at Loughborough University is the leading academic think-tank on cities in contemporary globalization, www.lboro.ac.uk/gawc.
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Note: This Research Bulletin has been published in Sciences Humaines, Les Grands Dossiers, 17, (2009)