GaWC Research Bulletin 245

For a full version of this Research Bulletin, see the authors Final Report to the Netherlands Environmental Assessment Agency (MNP)

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Towards Network Sustainability: Between Corporate Network Analysis and Development Indicators

R. Wall, B. v.d. Knaap and W. Sleegers^*

 

Abstract

Central to this report is the argument that to achieve effective sustainability, cities should be developed as interdependent systems. A ‘network' model of sustainability is proposed which requires knowledge of a both a city's internal properties and its external linkages to other cities. Today corporate relations between cities are increasingly important to their development. Therefore it is arguable that a city's sustainability depends highly on its corporate connectivity within the world-city-network. In the first chapter the theoretical relationship between sustainability, scarcity, and city-firm networks is discussed – leading to the second chapter in which a ‘network sustainability' model is conceptualized. In third chapter, three hypotheses are explored. The first hypothesis concerns the structure and network centrality of city-firm connectivity - revealed at both global and European scales. The second hypothesis investigates the statistical disproportionality of these networks, while the third hypothesis investigates relationships between city-firm connectivity and contemporary sustainability indicators, such as the Human Development Index, Ecological Footprint, Global Competitivity Index and Infrastructural Accessibility Index.

 

Introduction to Network Sustainability

In this report it is argued that sustainability is a transformative concept that is strongly related to the evolution of city-firm networks over time, whereby the issue of sustainability can only properly be tackled from a network perspective. Because sustainability is a measure of the performance of human interaction with the environment where local and global scales interact more than ever, there is a need for an integral understanding and operationalization. This means that a network conception of sustainability is required that ties municipal, national, and regional policies and interventions into an integrated model. It requires a move from a static understanding ‘within' spatial locations (municipal, national, regional, global) to an interactive understanding ‘between' these units. In this way a contribution can be made to horizontal and vertical policies within and between different spatial scales. Hereby it is proposed that ‘bottom-up' environmental theories such as Islands of Sustainability can be combined with ‘top-down' City Network theories to form an integral, ‘relational' understanding of sustainability. In this sense a worldwide archipelago of interrelated islands becomes more plausible. Obviously there are many types of networks which can be explored - but for this research it is restricted to economic networks such as corporations, foreign direct investment, (FDI) and trade – because these networks are fundamental to the age-old processes of globalization and urbanization, from which most other networks stem. The research stresses that the sustainable performance of cities or nations is strongly related to the development of firms, trade and capital flows – and specifically the degree of network connectivity related to this. More importantly, the research argues for an improved understanding of the ‘relational structures' of power exercised by individual cities and nations upon others. From this, at an even higher level, the structure of the entire network as an integral system can be scrutinized. Hence, sustainability should be defined under nodal, relational and structural components! At a methodological level it is argued that today's different environmental and network approaches, should eventually become unified into a novel ‘network sustainability theory' - where this explorative research serves to contribute towards such an endeavour.

The question of how economic networks evolve is important if we are to understand how markets become organized and what their impact is on worldwide development. Three decades ago Stephen Hymer produced a remarkable essay that clearly described the economic network structure of the 21st century. The report is remarkable in that it anticipated the implications of globalization on urbanization and what increasing ‘multinationalization' of the world economy would mean for cities. In Hymer's seminal report ‘The Multinational and the Law of Uneven Development' he defined a global system in which the hierarchical division of labour between geographical regions matches the vertical division of labour within firms.

The system would centralize high-level decision-making occupations in a few key cities in the advanced countries, surrounded by a number of regional sub-capitals and confine the rest of the world to lower levels of activity and income. Income, status, authority and consumption patterns would radiate out from these centres along a declining curve and the existing pattern of inequality and dependency would be perpetuated. Indeed, it appears that a disproportionate system has evolved over the past centuries, and where its impact on issues of population growth, social inequalities, and environmental degradation are paramount to contemporary and future sustainability. To improve this system, many believe that demographic and new world economic forces should be curbed - but this is highly unlikely as these forces are not driven by deliberate decisions but rather by self-organizing demographic and technological developments. Instead the challenge is to sophisticate governance so that it is attuned to the powerful forces surging ahead. Thus, we have to deal with both a ‘crisis of complexity' and a ‘crisis of governance', or in the words of German philosopher Jurgen Habermas - ‘domestic policy on the scale of the planet'. However, today integral multidisciplinary definitions of sustainability are hard to find – where instead hundreds of fragmented and highly specific variants exist. Therefore a new definition for sustainability should become coherent, interdisciplinary and adaptable to shifting content and different users.

NOTE

* Ronald Wall, Bert van der Knaap and Wilfred Sleegers, Faculty of Applied Economics, Erasmus University Rotterdam, E-mail: wall@few.eur.nl

For a full version of this Research Bulletin, see the authors Final Report to the Netherlands Environmental Assessment Agency (MNP)