GaWC Research Bulletin 65

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Interurban Competition within the Circumstances Created by Global Capitalism

B. Gedikli*


Within the circumstances created by multinational economic blocs, such as EU1 and NAFTA2, urban areas have experienced dramatic shifts in their vertical and horizontal relations. Political-economical processes are considered to materialize on territories. In the contemporary era, urban areas come into the picture as the crucial geographical arenas where the politics of neoliberal productivism are articulated. The new logic of production, employment and distribution has led to changes in the land-use and social courses (Lever 1999, 1029; Fainstein et al. 1992, 1).

Cities in Competition

Global capitalism initialized sort of interurban competition. Beginning from 1980s, the process of interurban competition has been introduced with redefined roles of the nation-state and local state in the framework of the new urban politics generally known as "urban entrepreneurialism".

Global Urban Hierarchy

Most of the literature talks about a "new logic" of the world economy that led to the emergence of a global urban hierarchy. Actually, there have seemed to be a so-called hierarchy before 1980s, too. I.e. the contemporary logic of the world economy has been matured gradually; it cannot be assumed to have emerged in all of a sudden within 1980s. Nevertheless, since the economic transactions have been intensified in those years, this hierarchy can be said to become more visible than before. Interurban competition has helped the ranking of cities. Any competition implies sort of "winners" and "losers": The existence of winners and losers means that cities are ranked with reference to some criteria of global significance. In the new global urban hierarchy, some cities represent themselves as "world cities". They have taken over the coordinating roles of worldwide economic activity. Besides, they have been functioning as international market places for buying and selling of capital and expertise. The relative positioning of others are determined in accordance with these world or global cities.

Scope of Discussion

Briefly saying, the "interurban competition" is a consequence of the globalization of the economic activity. Within this environment, the capability to compete has become a determinant of urban development. As a means of competition, local state has oriented itself towards entrepreneurialism. This orientation cannot be understood in isolation; it needs to be examined in a wider context of global economy and regulatory restructuration (i.e. multinational organizations).

This paper is to discuss the issue of urban entrepreneurialism, which is supposed to be a fundamental means of urban development especially in Western countries. Global capitalism has led to plant closures especially in major cities of core countries, and has initialized an entrepreneurialist way of urban management. Having linked to the global economy, developing capitalist countries, too, have been impacted by this development. So, it is also worth dealing with this issue as far as the Turkish case is concerned.


Urban politics can be periodized in two broad groups: First is the period beginning from the 2nd World War and lasting till the end of 1970s. In this period, urban development problem was primarily associated with the reproduction problem of labour. This period is not to be detailed here, since the competitive attitude of localities is a matter emerged afterwards. Meanwhile, the second period has continued for 1980. The urban development in this period is characterized with the reproduction of capital rather than labor (Şengül 2000, 51-53). As global capitalism has advanced, this process has prepared the basis for interurban competition. Before examining this competition, its actors and the outcomes, it will be proper to define the "capitalist city", being the material manifestation of capitalism.

Capitalist City

While the capitalist production processes are carried out at international scale, political processes are realized at national, but also -in an increasing manner- at international scales. Within a capitalist system, capitalist city comes into the picture as the space of reproduction of labour, as Castells suggests. Also, it is a proper investment field of accumulated capital, as Harvey proposes. Both views are valid, however, lack in properly conceptualizing the role of the state (Şengül 2000, 46).

With the advent of global capitalism, the management of the capitalist city, too, has adopted new features; i.e. an entrepreneurial approach has been introduced especially in developed countries. Throughout this study, urban entrepreneurialism and interurban competition in a global urban network are being discussed in relation with each other. However, one thing is vital to note: This competition is not realized completely independent from the intervention of the nation-states. Actually, in the contemporary era, multinational economic blocs have taken over some roles of the nation-states; but, the nation-states still have conclusive roles in determining urban development, which cannot be ignored. The role of the nation-state together with the local-state is to be dealt with later.

Competing Capitalist City

Actually, the way the processes of global capitalism are treated determines the very essence of the debate of urban entrepreneurialism: On the one hand, some groups consider that these processes are inevitable results of technological advances. Such considerations imply the "irrationality" of criticizing globalization. I.e. criticisms directed towards globalization are supposed as if they were directed towards technological advances. On the other hand, the others associate globalization with capital accumulation process, and define it as a political process who have "winners" and "losers" (Şengül 1998, 1). It is through this second channel that one can talk about a global urban hierarchy, determined via intensified interurban competition. I.e. cities have become obliged to identify their comparative advantage under the pressures of the new world economy, or more specifically, of the multinational economic integration movements.

Interurban competition basically is a rivalry for the creation and attraction of economic activity which produces income. This in turn relates to other aspects of urban areas such as levels of service, size of tax base, infrastructure, quality of life, educational and cultural facilities (Butler et al. 1997, 3).

Common trends in the competing cities include declines in manufacturing and increases in service employment; rapid growth of the producer services sector; enlarged aggregation of command and control functions (Fainstein et al. 1992, 1-2). Through the economic blocs, "entrepreneuralism" has been accelerated at national and city level. Increase in competition among cities to attract inward investment has reinforced this attitude (Newman and Thornley 1996, 4).

Before detailing entrepreneurialist approach in urban politics and fields of urban competition, it should be in place to point out the main aspects of global economy, since it is the pushing factor of this urban process.


Outcomes of the Global Economy

Beginning from 1980s, the key features of the world economy have been restructured. "Internationalization" of production process or "globalization" of the product brought about international capital markets, with the spread of international "free trade" throughout the world. Table 1 displays the continuously increasing global interflows:

This outcome led to the establishment of multinational organizations. Gradually, these organizations tended to have a supranational identity. Supranational, "plurinational", international institutions such as EU, NAFTA, the World Bank, and the IMF have taken over important new roles in the regulation of global competition, international trade and foreign direct investment. Global operations of "transnational" firms have been regulated by these so-called supranational3 organizations (Brenner 2000, 371; Coleman and Underhill 1998, 44).

Broadly speaking, the constantly strengthening multinational economic blocs; advanced technologies enabling rapid information exchange; and liberalization of trade and capital flows are the basic factors "reshaping" the key elements of the world economy (Gordon 1999, 1001).

As the outcomes of these processes, key trends within the world economy include

  • The growth of the international financial market

  • The expansion of the international trade in services

  • The repatterning of direct foreign investment (Sassen 1991, 323).

The world economy is defined by a linked set of markets and production units, organized and controlled by transnational capital. Economic integration movements -that are to be examined below with special reference to the EU- have intensified this worldwide transaction. In such a system, there is the need for "nodal points", namely the so-called world cities, to coordinate and control the global economic activity. The practice of coordination and control is the production and reproduction of the organization and management of the global production system. In such a system, capital seems to be highly-mobilized, while this is not the case for the labor (King 1990, 12-13).

Multinational Economic Blocs Fostering Interurban Competition

Multinational economic integrations are considered as the facilitators of articulating global capitalism. Worldwide capitalist system needs some homogeneity to some extent, since it acts on a global sphere. Same monetary unit and similar legal systems are the prerequisites for the establishment of worldwide capitalist market relations. This obligation justifies the ever-enlargement of the common policy fields of the economic blocs; e.g. the European Union.

European integration has initialized a remarkable "territorial competition" activity over the past 15 years or so. Cities are motivated to explore competitive strategies as a means of overcoming urban problems. A wide range of regional, metropolitan, municipal and local state agencies have adopted entrepreneurial governance strategies to promote competitiveness, to attract external capital investment and to secure accumulation within their territorial administrations. Throughout Europe, increasing competition and priority given to economic objectives has caused a "fragmentation" in the planning process and greater involvement of the private sector (Brenner 2000, 371; Newman and Thornley 1996, 8).

European integration has led to the re-definition of "urban development": Development is associated with the level of competitiveness of cities. Completion of the SEM4 has brought about a closer economic integration; national barriers have been largely removed, and competition among cities has been accelerated.

The underlying logic of SEM is that of the comparative advantage. Although common features are tried to be intensified for the member countries in the EU, some elements seem to be still different: The built environment and urban infrastructure remain for a very long period "place-specific". What is more, information-rich environments, networks of information and material flows, knowledge-based innovatory industrial milieux are also place-specific factors. They are highly immobile. In this sense, comparative advantage continues to exist, even in an economic union. Here, the urban dimension is critically important (Butler et al 1997, 5).

As the above explanation indicates the EU underpins a neoliberal-productivist redefinition of spatiality particularly on "subnational" and "supranational" scales. Within this framework, state institutions are increasingly considered as instruments of activating the "productive forces", rather than as mechanisms for establishing social balance, overcoming social disparities and promoting social cohesion (Brenner 2000, 372).

In what follows, I will examine for what purposes cities try to exploit their comparative advantage under the circumstances created by the global capitalism.


How do cities fit into this globalization of economic activity? What new roles have been assigned to them? The "post-industrial" metropolis is dramatically different from its predecessors, with its revitalized city centre, high-tech transport nodes, private shopping malls, elite enclaves, and fragmented neighborhoods. Urban structures presently come to appear with spectacular urban forms, out-of-town retail parks, heritage centres and waterfront developments. These changes are associated with "new urban politics", formulated with respect to the conditions of globalized capitalist economy. Cities in capitalist societies are being run in a different manner. Many commentators label these cities as "entrepreneurial" cities (Hall and Hubbard 1998, 2).

The course of entrepreneurialism is associated with the course of competition. As the capital is globally wandering, localities try to attract it, and enter in a course of interurban competition. They compete for

  1. The mobile investment (in any wealth/employment-creating sector; including commercial development, property, information sectors)

  2. Economic growth (in terms of gross value added or gross GDP)

  3. Population (that represents income, human capital, political power and demand)

  4. Public funds (at national or international level)

  5. Hallmark events and major infrastructure (eg. Olympic games to contribute urban place marketing)

(Lever 1999, 1029).

Although it is claimed that the nation-state has losing its dominance within the global-local interplay, Newman and Thornley express that outcomes of the processes of globalization differ both among countries and among cities. National context still makes a difference in shaping the competitive advantages of cities in the global market (Newman and Thornley 1996, 11).

The Role of the State in Determining the Parameters of Urban Politics

It is occasionally mentioned throughout this paper that the global capitalism has been continuously strengthened via supranational economic blocs, transnational operations of multinational companies, growth of international finance market, technological innovations, and so on. Having positioned themselves in the global urban network, the so-called top-level cities act as the coordination centers of the interflow of capital, goods and services. Nevertheless, although they serve to the progression of global capitalist economy, those cities cannot be handled in isolation from their nation-states. In other words, political, social, economical, cultural backcloths included in a nation-state conclusively determine the "level of competitiveness" of localities. In this context, international relations of the country is also a significant determinant.

Nation-specific Superstructures

In a given nation-state, the forces of production -namely the land, labor, physical materials, technical and scientific knowledge- are organized with respect to the prevalent mode of production (i.e.capitalism). On the other hand exist the social relations of the mode of production; i.e. serfdom, mastery and lordship; relations of ownership, hiring, leasing of men and things, relations of work process. Marx states that these relations form the economic base of a society. From this base, legal, political ad ideological structures arise. Above all exists a given historical structure (Keat and Urry 1975, 99-100).

Meanwhile, Massey emphasizes the determining roles of different historical relations with capital in different countries: e.g. France, the United States and the United Kingdom are all dominated by capitalist relations of production, yet, there are enormous variations among them. In France, there is an inheritance of a long-surviving peasantry; in the U.S. a recent history including production under slave ownership. Neither of these has played a role in the U.K. The fundamental relations of capitalism developed historically under very different conditions in each case, therefore, the spatial implications of capital are different (Massey, 1984, 16).

Likewise the above example, Turkish cities do not resemble European cities, although both adopt capitalism as the mode of production. In Europe, feudal lords had certain influence on local government since the 2nd century, but, the centre -namely the kingdom- had the main authority. Coming to the 17th century, principalities emerged, and the royal power was decentralized among these principalities (Keleş and Yavuz 1983, 2-3).

However, Turkey has experienced a centralized public administration tradition since the Ottoman Era. Localities were treated to be the "extensions" of the central power in Ottoman period. The dominance of central authority on urban issues has been still existing; although from 1970s onwards, a debate was started for "independence of local authorities" in decision-making and financial processes. Comparing the Western World with the Turkish case, at the European side a 400-year tradition of local self-government have existed, whereas it was not until 1970s that Turkey began experiencing -despite partially- self-governing municipalities. The economic, social, cultural, political, legal differences tracing back to different historical backcloths explain the conclusive role of the national context in determining societal events -and for the particular case of this study- the field of urban development.

Under the present circumstances, multinational firms make their location decisions on the global scale. So, location problem is a "bargaining problem" between the multinational firms and the nation-state under these conditions. Particular features of the nation-state (to be shown in Figure 1) determine the extent and the capability of the firm to act in the territory of that state. Nevertheless, practical experiments indicate that nation-state can make some transformations in its specific structures so as to increase the capability of the multinational firm to act more freely.

The Role of the Local-State

Meanwhile, local state can intervene to the field of urban development in three manners: direct intervention, grant provision, regulation. Practically, local state applies a combination of these three ways. The weights of each of the three changes from one locality to another, and also from one nation-state to another.

In the present era, local state comes into being as the "unifying" power: It unifies interests of capital, labour, and other local constituencies. Of course, this local "power" is a result of political decisions at the level of the nation-state and international agencies. The story begins with the economy: It is assured that the regulation of the function of accumulation is shifting down from the national to the local level. Space is the milieu and product of capital accumulation processes. Şengül (2000) states that as these processes are realized, the components of them, namely the labor and the capital, are constrained within space. Workers cannot exceed a certain daily commuting distance. This is to say that they are dependent on a local labor market in this sense. Migration from one locality (or local market) to another may cause remarkable cost burdens. Naturally, such a constraint is not valid for capital; however, this is not to say that capital has an absolute independence. Having been invested in a certain locality, capital becomes a part of that locality. Leaving there and shifting to another locality may also lead to significant costs (Şengül 2000, 47).

Once localities are provided with certain power to act in the global level, they compete for certain purposes, which are to be discussed below.

Fields of Interurban Competition

Lovering (1995) explains that from the 1970s, localities were "marketed" in order to attract mobile industrial capital. By the late 1980s, this marketing effort was widened to attract property investment. Meanwhile, since 1990s, cities have been sort of "traded" for tourist industry. Cities have been competing with each other through this place marketing. Meanwhile, the aims for which cities compete are also grouped by Harvey (1985). His classification consists of 4 fields of competition, as to be described below.

Competition within the Spatial Division of Labour

Urban regions seek individually to improve their competitive position with respect to international division of labour. The aggregate effect does not necessarily have to be beneficial. What is more, competition between urban regions does not need to lead capitalism towards equilibrium.

Superior competitive position can be achieved via either

  • Raising the rate of exploitation of labour power (absolute surplus value), or

  • Seeking out superior technologies and organization (relative surplus value).

The way to improve the rate of exploitation of labour power associates with lowering the real wages through increased unemployment, in the face of international competition in production. Şengül (1998) explains that working classes can follow either of the two paths below in the face of global capitalism:

  • Thinking locally, they would make their locality attractive for foreign capital. Under the pressure of the competitive environment, they would accept low wages so as to prevent the global capital from settling in some other localities
  • Alternatively, working classes would treat themselves to be at the same scale with the global capital. This does not mean the ignorance of the nation-state. This is to say that they would treat themselves above the local scale so that they could react the actions of the global capital in a globally-organized manner (Şengül 1998, 13-14).

Acting towards the former path would bring about the above outcomes that Harvey points.

Meanwhile, the ways to generate relative surplus value, or to form a superior organization relate to improved physical infrastructures, close attention to the productive forces embedded in the land (water, sewage, so forth), improved social infrastructure and reduced costs to industry artificially by subsidies.

Competition within the Spatial Division of Consumption

This field calls for jobs to promote new amusement options, new consumer playgrounds (Baltimore's Inner Harbour, London's Dockland), sports stadia, convention centers, cultural facilities, marinas and hotels and the like. It highlights services rather than blue-collar skills. Also, this type brings about construction of totally new living environments (gentrification, projects for retirement communities, "villages in the city"). Via the processes of specialization in services and deindustrialization, this type brings about the so-called "global" or "world" city context, that is to be discussed later.

Besides the physical investments, the city has to appear as innovative, exciting, creative, high-culture and fashion. The survival of global cities largely depends on their relative positions in the international competition for cultural hegemony.

In this process, public-private co-operation plays a vital role. Out of this interurban competition comes a tendency for public subsidy of consumption by the rich at the expense of the social wage of the poor.

Competition for Command Functions

Urban areas can compete for key control and command functions of financial and governmental sectors. This sort of competition requires certain infrastructural provisions:

  • Efficiency and centrality within a worldwide transportation and communication network-this means huge public investment in airports, rapid transit, communication systems, and so on.

  • Provision of adequate office space-this requires public-private coalition of property developers, financiers.

  • A wide range of supporting services-educational provision, business and law schools, computer training and so on.

These features, too, associate with the global city context.

Competition for Redistribution

The channels for redistribution are numerous, and often hidden in the obscure provisions in the tax code or in executive order. It partly depends on the sophistication of ruling-class alliances (grants for highways, sewers, education, etc.).

In fact, these options grouped by Harvey are not mutually exclusive. They might exist together (Harvey 1985, 213-219).

Currently, the local or the "urban" scale (the boundaries of which cannot be set concretely) is considered to contain supra-local processes besides the local ones. Cheshire and Hay (1989) describe the local scale as a "functional urban region" (FUR). For them, a functional urban region is an area whose boundaries are determined on the basis of economic relationships rather than history or political division (Fainstein and Harloe 1992, 3).

The Criteria of Success in the Competition

As mentioned, competition means that there are winners and losers, but what is a winner, a successful city? Butler et al. (1997) argues that success is first and foremost associated with income-generating capacity. Secondly, success in income generation assumes certain stability in income generation over a long period. Thirdly, it is clear that this is not a zero-sum game; all the cities in the game have the potential to benefit from competition. This is to say that cities in fact compete with respect to relative rankings rather than absolute income levels. Fourthly, income generation capacity and stability naturally relate to "power" of the decisions and capacity to determine the behavior of other actors. Fifthly, income generation implies employment generation, but this is not necessarily the case (Butler et al. 1997, 7-8).

Meanwhile, cities are supposed to be successful in the competition also with respect to the criteria below:

  1. Civic leadership

  2. Flexibility in labour force

  3. Responsive public sector

  4. Effective public-private partnership

  5. Existence of an entrepreneurial milieu

Besides the above ones, Bonavero et al. (1999) state that if the following criteria display positive figures in an urban milieu, this would mean a superior position in the global urban hierarchy. They also reveal the level of competitiveness:

1. An environment connected to the quality of life

Housing and settlement conditions

Physical image of the built environment

2. A social environment

Positive demographic change (presence of extended families, younger population, limited number of older people and single-member households)

Quality of human resources

3. A cultural and scientific environment

Cultural provision

Local identification of university structures

Attractiveness of universities

4. A labour market environment

Manual worker structure (industry and services)

Professional profiles of intermediate industry

Professional profiles of higher services activities

Management of industry

5. An economic environment

Integration between small and medium-sized industrial firms and complementary services

Characterization in large traditional and intermediate industry

Integration between medium and large industrial firms and innovative services

Specialization in functions of public administration

Through the competition process has emerged a global urban hierarchy. Within this hierarchy, top-level cities (or the winners) are considered to be "world cities". They have come into being as the material manifestation of the global capitalism. So, below is to be discussed how different they are.

Global City Formation

As discussed occasionally in this paper, the decline of manufacturing has been a universal phenomenon in advanced capitalist countries for at least two decades. As a result of the deindustrialization attitude, cities faced with employment decline, and realized that their future lay in reinventing themselves as "post-industrial" service centers, and competing in this field (Ward 1998, 187).

The outcome of the deindustrialization attitude, diffusion of global capitalism and introduction of new urban politics is known as the "world city" in literature. World cities are those in which a huge part of the world's most important business is conducted.

How different is a world or global city? Actually, the differences are seen in both qualitative and quantitative features of world cities. First are to be dealt with qualitative differences:

Major Qualitative Distinctions

One qualitative distinction is their mode of integration to global capitalism. As explained before, there exists a global urban hierarchy rather than a national one, and cities compose a global network for the spatial articulation of production and markets. It is in the world cities that the world's active capital is concentrated (Friedmann 1988, 58).

Another distinction is the dual role of the world cities between the nation-state and transnational corporations. Since the 2nd World War, capitalist processes have gradually freed themselves from national constraints and acted globally. The material form of these global economic processes are the urban areas, which have been ranked in a global hierarchy with respect to their mode of integration with the global economy. At the peak point of this hierarchy exist world cities. They are tightly interconnected with each other through decision-making and finance, and constitute a worldwide system of control over production and markets. This conception implies that the world economy is dialectically related to the national economies of the countries in which these cities are situated. World cities are asked to play a dual role: To make the world safe for capital, and to articulate given national economies within the world system.

Under these circumstances, nation-states have both political fears and ambitions. They form economic blocs to provide a continuing interflow of goods and services, but also try to keep their power in the unions that they set up with other nations. Meanwhile, although the transnational capital desires maximum freedom from state intervention in the movements of capital, information and commodities; it also wants the nation-state to assume as large a part as possible of the costs of production (including reproduction of labour), and the maintenance of "law and order".

Major Quantitative Differences

World city rests at the junction of the national political interests and the desires of the transnational capital. Above are given the main qualitative characteristics of world cities. Other differences of world cities relate to economic, social, spatial and political fields. Actually, these features can also be observed in other cities, too. However, they are intensified in world cities, so they can be treated as "quantitative" differences.

Productive, financial, scientific, technological, training, trade, fair, hotel, international diplomacy, urban paradiplomacy functions and transportation facilities are remarkably abundant in world cities. To be more concrete, they are listed in Table 2. The characteristics of a world city can be summarized in a scheme (Figure 1).

As mentioned, interurban competition, global urban network, and world city formation are the outcomes of the ever-strengthening global capitalism. Obviously, these are the products of certain urban managerial approach, introduced with the advent of global economy. Below is to be discussed this new attitude, known as "urban entrepreneurialism".


Vis-a-vis the circumstances of the global capitalist system, urban politicians became obliged to think of "how the cities are positioned in the market". In other words, some kind of "urban entrepreneurialism" has been introduced as the means of managing, organizing and governing urban areas. Cities are run in a businesslike manner, employed by local politicians and public administrators who seek to accumulate wealth within one city's boundaries.

Features of Entrepreneurialist Urban Management

The new urban politics are characterized by a shift from the local provision of welfare and services to more outward-oriented policies to foster local growth and economic development. Presently, local governments are attributed some definite characteristics, once distinctive to business: risk-taking, inventiveness, growth orientation, promotion and profit motivation (Hall and Hubbard 1998, 2-4).

Hall and Hubbard state that entrepreneurial policies are everywhere throughout the capitalist world, even exist in the most "conservative" urban areas:

".entrepreneurial policies.offer something for all local governments, irrespective of political ideology. To the left, the entrepreneurial approach promises a way of asserting local co-operation, .; for the right, it can be seen to support ideas of neo-liberalism, promotion of enterprise."(Hall and Hubbard 1998, 6).

The "new urban politics" -creating the entrepreneurial city- has something to do with the shift from a Fordist to a Post-Fordist mode of accumulation; i.e. a flexible one. The adaptation of new forms of production and consumption shaped the realm of urban politics. Transition to entrepreneurial form of urban politics is clearly one part of this.

Exploring the role of urban processes in the historical development of capitalism, Harvey (1987) draws attention to the role of urban politics leading to contradictions. He places contemporary urban politics into broad spatio-temporal context, and points to two things: 1-"time-space compression", 2-reorganization of investment threatening local distinction and people's identity with place.

Passing on advanced capitalism, entrepreneurial policies have played a role in both sustaining unequal development, and reproducing local social relations which are more instrumental to flexible mode of accumulation. For Harvey, new urban politics should not be assumed as a reaction to global forces, rather, as a stimulus to new forms of competitive capitalism (Harvey 1987, 260-286).

Harvey (1989) suggests that with all cities competing in the same global market, there are bound to be winners and losers. How many successful marinas, convention centers or heritage centers can there be? Although entrepreneurial policies can benefit local elites, it tends to violate the overall interests of the community. For economic growth, primacy is assumed over distributional issues within competition with other cities. Entrepreneurial policies favour development and growth, but the result is a net transfer of wealth to urban elites (Hall and Hubbard 1998, 18-19).

The Actors of Urban Entrepreneurialism

Entrepreneurship implies putting together of various productive activities to bring about a technological innovation, creating something new. Urban entrepreneurialism sort of "commodifies" cities to "sell". There are a large number of actors involving in it, particularly in Western Europe. The growth of economic development departments within local authorities, the emergence of professional managers in local government, urban development corporations in private sector, voluntary organizations and other interest groups have created a new class of local economic-political actors (Lovering 1995, 120).

Briefly saying, competitive urban policy introduces changes in governance through multi-sector partnership (Oatley 1998, 202). Lovering states that this reorganization of local institutional structures represents a change in the "form" rather than the "essence" of policy for cities. Social polarization cannot be overcome, and even it gets worse in cities, where entrepreneurial means are applied to compete at the global level. Lovering gives the example of London; it has adopted this new urban management. London can be considered as a world city, having a GNP equivalent to that of the country of Saudi Arabia. However, it also contains the greatest number of poor people and homeless in Britain.

Multi-sector partnership is tried to be adapted in developing countries, too. In Turkey, especially from mid-1990s onwards, some municipalities -although not the majority- have established partnerships with private sector and voluntary organizations. The adoption of urban entrepreneurialism by developing countries might be studied more precisely in some further study. Still, it will be in place to examine some definite impacts of the world economy on these countries.


Global restructuring has had many impacts on cities in the core countries including deindustrialization and development of the service sector. This has an inverse effect in countries in the periphery: The establishment of manufacturing activity. Those countries have facilitated core country transnational penetration into their own economies through free trade zones, tax write-offs, weakened regulation, and also establishment of their own transnational corporations. In addition, public-private partnership is common in these countries. In developing nations, a dominant city (primate city) often develops, one that is generally 6 to 15 times the size of the next largest city. The primate city is usually the only city with significant finance capital market to facilitate exports and foreign investment.

In many developing countries, the international division of labor via global capitalism has had two major effects:

  1. An increase in export-processing activities

  2. A significant increase in the use of informal sector to support these formal sector industries (Smith and Feagin 1987, 30).

The net effect of this type of industrialization, i.e. depending upon the multinational firms, is usually negative in terms of equality. Capitalist expansion has emphasized the goal of accumulation, which creates "successful" development in certain areas of core cities of the global network, but "dependent" development in peripheral cities.

As it is the case in other developing capitalist countries, some major multinational firms established their plants in Turkey, too. Especially major firms of car industry preferred to locate their plants in Marmara region, so as to utilize the advantage of being close to main transport routes and to İstanbul. It is difficult to infer that Turkish cities have entered into a global interurban competition process, in the same manner with the Western cities. Only İstanbul is counted among world cities in some academic studies. It is developed in terms of producer services- namely accountancy, advertising, insurance, law, management consultancy, real estate, banking and finance. In a study carried out by Taylor and Walker in 1999, İstanbul was considered to be a link between east and west. In the strata that they developed, cities were ordered in terms of "world-city-ness" with a maximum value of 12. They considered 55 cities as world cities. The value of İstanbul was 4 in the strata, together with Atlanta, Barcelona, Berlin, Buenos Aires, Budapest, Copenhagen, Hamburg, Kuala Lumpur, Manila, Miami, Minneapolis, Montreal, Munich and Shanghai (Taylor and Walker 2001, 42).

Meanwhile, other Turkish cities cannot be supposed as world cities. However, some may be included in the global urban hierarchy with their comparative advantages in tourism and certain sectors of industry. Whether such a comparative advantage can have a global significance, and how those cities can compete is the matter of some other study. These are just some broad discernments about the competition side of the discussion: Meanwhile, as far as the changes in urban politics towards entrepreneurialism are concerned, the following inferences can be made for the Turkish case:

Especially from 1990s onwards, some municipalities (not the majority) have tried to adapt the process of local governance, that underlines the partnership of public and private sectors, non-governmental organizations and the local community as a whole. The local independence model of the Western countries in decision-making processes has been highlighted. Still, in the Turkish model, central government has a more conclusive role compared to the Western nation-states (Göymen 2000, 3-5).

Of course, it is not possible to infer that the urban entrepreneurialism explained above is performed in Turkey. The most visible change towards an entrepreneurial type of management is the development of alternative provisions of urban services: Private firms have taken over the provision of some public services, which were once provided by municipalities. However, urban entrepreneurialism is more than the privatization of some public services: Some Turkish municipalities have begun establishing their own companies for public service provision. However, other aspects of entrepreneurial urban management do not seem to exist in Turkey: Namely, promotion of voluntary financial contributions, tax reductions to encourage private investment, and other tools of place marketing.


This study has revealed that the global capitalistic economy has initialized and accelerated an interurban competition. Urban management focuses on economic regeneration rather than on the "welfare" issues. Urban entrepreneurialism is supposed to be an efficient means under the contemporary circumstances. Obviously, these trends have affected on the pushing factors and features of urban development.

Current urban development can be best understood by analyzing cities in terms of their transnational linkages, their connections with multinational firms, and global processes of economic restructuring.

Some major cities have become "world cities" as an outcome of this restructuring process: They have tended to specialize in particular production, distribution, marketing, financial and other service activities. Meanwhile, other cities contain complex combinations of such activities.

Of course, an urban competition process cannot be realized in isolation from state action and mediation. Any city's mode and degree of integration to the global economy is primarily determined by the nation-state. The role of the state might be generative or reactive (Smith and Feagin 1987, 5).

The transformation realized within local governance, namely the urban entrepreneurialism, is not an effect of economic forces independent of the state and other national political influences. The legal system of the nation-state defining contracts, the social relationships facilitating cooperation among employers, the infrastructure of transport links that determine the comparative cost of different localities, etc. have long been national rather than local in origin. Changes in these political parameters towards "localization" are subordinate to the nation-state's attitude (Lovering 1995, 113).

It should be noted that Western European countries have adopted sort of an entrepreneurial attitude via encouraging the role of private sector in urban development, removing local authority control over certain services, allowing public-private cooperation, establishing urban development corporations, etc. Still, control of finance and broad policy principles remain highly-centralized.

Nevertheless, adoption of urban entrepreneurialism does not mean the elimination of urban problems in the world cities: Class polarization is a major consequence. Low income groups suffer from degraded living conditions, whereas the core areas of the city represent the most comfortable and high-quality aspects of modern life. Social inequality has manifested itself spatially, as income groups have increasingly segregated. What is more, this polarization has brought about terrorism, kidnapping, street demonstrations as forms of violence in most of the world cities. Meanwhile, global restructuring processes distinguish between people's life spaces versus the economic space: Economic space obeys the rules of capital. Interfacing of life spaces and the economic space leads to contradictions. In this process, local state tries to cope with financial constraints even to provide minimal public services.

Looking the issue from the developing countries side, they seem to adapt themselves to the changing urban politics in the Western World. There are two channels of integration to the world economy: First is the interurban competition. Those, which wanted to take part in the global urban network, have facilitated the penetration of multinational capital into their territories via certain deregulation. Meanwhile, as the second channel, entrepreneurial urban management has been tried to be adapted through increasing private sector involvement.


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* Bahar Gedikli, Middle East Technical University, Faculty of Architecture, Department of City and Regional Planning, Ankara, Turkey

1. European Union.

2. North American Free Trade Association.

3. The terms "supranational" and "multinational" are used interchangeably throughout this paper.

4. SEM: Single European Market (1992).

Table 1: Interflows of Different Country Groups
GDP (Current $)
% change
Exports of goods and services (% of GDP)
% change
Imports of goods and services (% of GDP)
% change
Low-income countries
878.4 billion
965.6 billion
1.0 trillion
Middle income countries
3.5 trillion
4.8 trillion
5.5 trillion
Lower-middle income countries*
4.4 trillion
5.8 trillion
6.6 trillion
Upper-middle income countries
1.7 trillion
2.6 trillion
2.9 trillion
High-income countries
17.3 trillion
23.3 trillion
24.3 trillion

Source: World Development Indicators database, April 2001

*Turkey takes place within this group with respect to the World Bank classification

Table 2: World City Functions (How Different they are)

  • Headquartes of companies represented abroad
  • Foreign companies
  • Exporting firms
  • Export/Import firms
  • Foreign chambers of commerce
  • Bc-Net networks (business cooperation networks)
  • BRE networks (cooperation between small and medium-size firms)
  • Headquarters of banks represented abroad
  • Foreign banks
  • Headquarters of insurance companies represented abroad
  • Foreign insurance companies
  • Bodies participating in E.U. research programs
  • Agreement and contacts between universities
  • Scholarship awarding bodies
  • International flights
  • Hotels
  • Trade fairs and exhibitions
  • Consulates
  • Foreign& International institutions
  • City cooperation networks


Figure 1: Constituents of the National Framework 


Figure 2: World/Global City Formation

*Drawn with reference to Friedmann, 1988, pp.57-85.


Edited and posted on the web on 12th November 2001