GaWC Research Bulletin 302

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Polarization, Spread and Upgrading of Urban Functions: From a Dominating 'First City' to a 'Network of Cities' Structure

B.A. Kipnis*


Would the newly proposed 'network of cities' strategy, aimed at replacing the 'unrealistic' re-urbanization/compact city policy, have an impact on the command of a nation's first city of the national economy in small and medium size countries like Ireland, Belgium or Switzerland? It is argued that the proposed network of cities strategy is a revival of the long neglected growth centers model, designed to pull urban economic functions (and other activities) from the first city toward a few regional urban centers designated as growth centers. The old established 'backwash' (polarization) and 'spread' (trickle down) processes, portrayed by Myrdal and Hirshman in the mid-1950s, are employed to suggest that through a continuous course of spread effects, dwindling production factors would create entry thresholds for higher-status urban activities, particularly those associated with the quinary and the quaternary sectors. As a result, a functional upgrade of first city urban activities would take place alongside a timely development of regional growth centers nested at the nation's major metropolitan regions. This process, illustrated by Friedmann's core-periphery model, would lead to the development of secondary regional urban nodes to the leading first city. In such a national structure of network of cities, the first city, through a process of continuous upgrading, would sustain its dominating position, as well as its role as the nation's anchor to the global economy. The complete process, including the impact of an erratic global economy, is examined from short- and long-term perspectives. Tel Aviv, Israel's first city (and a world city), is used as a case study.

Key words: first city, world city, polarization, spread, production factors, saturation, upgrading, growth centers, global economic crisis


Would the revived network-of-cities strategy (Bontje, 2001; Burg and Dieleman, 2004), aimed at replacing the re-urbanization/compact-city policy (Berg et al., 1982),1 diminish the command of the first city2 of the national economy, society and culture of small and medium size countries? The syndrome of a nationally dominant first city is revealed, inter alia, in Ireland (Van Egeraat and Stafford, 2006), in Belgium (Vandermotten et al., 2006), in Switzerland (Glanzmann, et al., 2006), and in Israel (Kipnis, 2005; 2009).

It is asserted here that the newly proposed network-of-cities strategy is a revival of a long abandoned 'growth centers' (growth poles) planning paradigm (Perroux, 1955), designed to draw urban economic and other functions away from the first city toward a few carefully selected urban centers, designated to develop into growth centers (Darwent, 1969; Small and Witherick, 1986). It is further argued that a growth-centers urban structure could be realized through a network-of-cities strategy and accomplished as a core-periphery processes (Friedmann, 1966) in which backwash (polarization) effects are replaced by a spread (trickle-down) trend described by Myrdal (1957) and Hirshman (1958). The mainstay of this manuscript then is the assumption that spread effects are the product of a continuous dwindling of production factors, the most important of which, in order of decreasing elasticity, are land, labor and capital. When shortage of a given factor of production occurs, urban functions that are unable to pay their increased economic rent tend to trickle down. This creates new openings for higher threshold activities, mainly of the quinary and quaternary sectors,3 usually followed by enhanced supply of local psychological rewards (Kipnis, 2006), a result of a continuous upgrading course of the first city's economy, culture and society. The outcome of the upgrading process is the enduring dominant position of the first city in the context of the evolving national network of cities.

From a Re-urbanization Paradigm to a Network-of-Cities Strategy

Berg et al. (1982) portrayed the evolutionary course of a metropolitan region in four phases, the last, a theoretical one, being re-urbanization (Figure 1). In the first phase, urbanization, the central city dominates. It experiences a positive migration balance and acts as a major regional employment node. In the second phase, suburbanization, the center of gravity of both population and land-intensive uses moves to suburban locations. The central city, however, still performs as the region's employment core. In the third phase, desurbanization, the metropolis tends to split into many urban centers, some located on the rim of the urban fringe (Johnson, 1974). At this phase the metropolis loses its compact nodal structure, and the central city, along with its nearby suburbs, tends to decline both in population and employment. The fourth phase, re-urbanization, although in its pre-empirical theoretical stage, was viewed by Berg et al. (1982) as a remedy for the split structure of the metropolis. Since the late 1980s many European governments have adopted Berg's model and initiated a rigorous re-urbanization strategy aimed at the revival of their old established metropolitan cores as high density function-intensive 'compact cities' (Shachar, 1997). Such a policy has also been adapted for Israel's metropolitan regions, above all Tel Aviv (Ministry of the Interior, 1997; 2005).

Figure 1: Berg et al.'s (1982) Metropolitan Development Model

The Rising Urban Network Strategy

Dieleman and his associates (1999 pointed out that some academics and politicians found the compact cities ideal unrealistic in light of the present forces that shape cities in North America, Europe and Australia. They doubted that the benefits ascribed to compact cities would materialize, and maintained that outlays on compact cities were a waste of the taxpayer's money and would lead to more intensive use of public space and to rising expenditures on its maintenance and surveillance. Bontje (2001) went a step further, with a critical evaluation of how successful spatial planning in the population redistribution process was in various respects. Bontje focused his evaluation on the Netherlands and three more countries in northwestern Europe. All showed a polynucleated settlement pattern and had adopted an ambitious re-urbanization policy. Bontje concluded that the currently dominant compact city policy was unrealistic and impractical, and asserted that planners in the Netherlands and in other European countries might want to reconsider their urbanization policies and think about a new concept – a network of cities – to deal with sprawling urban fields.

Burg and Dieleman (2004) reported that a debate was ongoing as to whether the objectives and expected benefits of the compact city policy,4 whose implementation was well underway in 2004, were realistic and forthcoming. They cited Bontje's (2003) inference that the existing national urbanization policy "is often said to be inadequate", and also Hajer and Zonneveld (2000) who suggested that the policy "is not a timely answer to societal change". Burg and Dieleman (2004) further claimed that urban network, a new concept for urbanization introduced by the 5 th National Policy, was a sensible substitute for the compact city paradigm. Among justifications for the urban network strategy, the last two, namely "society is developing in the direction of network-based rather than area-based relations" and "global competition favors larger urban areas rather than smaller ones", seem to have a common international ground. At issue is whether the upcoming switch from a compact city policy to an urban network strategy would weaken the dominant position first cities, many of which also hold a world city status, or would it further advance the first city's functional primacy.

First-City Command of the National Economy, Society and Culture

Even though the compact city policy has not yet reached its anticipated re-urbanization phase, many first cities of small and medium size countries tend to display the syndrome of a dominant economy, largely in their Advanced Producer Services (APS) affiliated with the quinary and quaternary sectors. These, in turn, epitomize the first city's social structure, its cultural ambience, and the range and diversity of its local psychological rewards. Table 1 shows how first cities of Ireland, Belgium and Switzerland predominate in APS. The degree of dominance is particularly high in Ireland and Belgium: Dublin and Brussels respectively hold 89% and 61% of the APS jobs; in Switzerland, Zurich and Basel respectively have 21% and 12% of their labor engaged in APS, and both hold some 76% of all APS jobs of the Swiss Northern Functional Urban Regions (FURs). Likewise, table 2 shows the supremacy of Tel Aviv, Israel's first city, a world city, and the country's gateway to the global economy (Kipnis, 2001; 2005; 2009).

Table 1: First City Domination in APS: European Small Countries


First City

Jobs in APS*



Ireland Dublin



Brussels and region



Zurich FUR**
Basel FUR


Zurich and Basel FURs hold 76% of all APS jobs of Northern Swiss FURs

Sources: Van Egeraat (2006); Vandermotten, et al. (2006); Glanzmann, et al. (2006).

Table 2: The Ascendancy of Tel Aviv City and of Greater Tel Aviv in Israel's Economy, Society and Culture (percentages)

Activity/Function Area
Tel Aviv City Total in Greater Tel Aviv Rest of Israel
Advanced producer services (APS)
Head offices of financial institutions 70
Law offices
Law offices engaged in the global economy
Accounting offices 29 73 27
Advertising firms 32 69 31
High-tech and start-up firms and luxury hotels
High-tech firms
Of which are software houses
Of which are in communication technology
Employment in high-tech
Of which in start-up firms
Venture capital invested in start-up 1995-2004 N.A. 59 31
Urban four and five stars hotels 53 59 31
The influential, the wealthy and professionals
The most influential people -- place of work 58 86 14
The most influential women -- place of work
     -- place of residence
Israeli wealthiest ($100 millions + ) -- place of
     --business (10% abroad)
     --Place of residence (16% abroad)



Highly specialized physicians – in hospitals 28 80 20
Artists and art facilities/institutions
Registered painters and sculptors -- residence N.A. 76 24
Registered stage artists and their associated service agents – residence


Art galleries 48 58 42
Repertory theaters 53 68 32

Sources: Various

Command as a Process of Polarization and Spread

In the 1950s Myrdal (1957) and Hirshman (1958) coined the term 'polarization' as synonymous to 'backwash effects', namely the spatial concentration of resources and wealth in the core, at the expense of the periphery, and the term 'spread', meaning the same as 'trickle down', denoting the dispersal of activities from the core to its spatial periphery.5 The entire polarization–spread cycle was described in Friedmann's (1966) Core-Periphery model (Figure 2), whose stages II and III are significant for our discussion:

  • In stage II, one of the particularly favored cores develops as the strongest core and the national economy is reduced to a single metropolitan region. At this stage the augmenting backwash effects create a large periphery.
  • In stage III, the simple core-periphery structure is gradually transformed into a multinuclear structure, as favored parts of the periphery develop. The secondary cores formed as a result of spread effects reduce the national periphery to a few smaller inter-metropolitan peripheries. The secondary urban cores, which perform as growth centers/growth poles 6 (Darwent, 1969), seem best to resemble the aspired-for urban network concept.

The reciprocal balance between polarization and spread is shown in figure 3. Observe how the local economy begins to trickle down when polarization reaches its peak, and how both effects, polarization and spread, reach their break-even point when the path of spread takes off. The emerging balance between polarization and spread is best explained by the concept of economic rent, namely the payments made by a given urban function/activity to local 'factors of production' needed to allow it to operate in the local economy. The most cited factors of production are land, labor and capital, signifying the key resources employed to produce goods and services (Lipsey and Harbury, 1992).7

Figure 2: Friedmann's Four Stages Spatial Development Model

Source: Friedman (1966).

Figure 3: The Reciprocal Balance of Polarization and Spread

Attributes of Production Factors

While each factor of production is evidently different from the others, there is an intrinsic link between them (Land and Freedom, 2008).8 Land, a passive factor, is defined as everything that is not created by human beings. It includes, in addition to the surface of earth, air, sunlight, water, minerals and other land elements. Labor is the work that people do, using land, capital, brawn or brain, or both in order to convert natural opportunities into tangible goods and tangible/intangible services. These that have an exchange value, are intended to satisfy human needs and desires, and are aimed at creating wealth. Capital as a factor of production allows land and labor to create wealth, in the form of capital and consumer goods and services alike.

Factors of production are limited in their quantity and restricted in their flexibility of spatial supply and in their propensity for spatial mobility. The most rigid factor in its spatial supply and mobility is land; the most movable one is capital; spatial supply and mobility of labor are determined by working people's readiness to commute or migrate. Labor propensity to commute and/or to migrate is determined by distance, by the availability of transport means and infrastructure, and by the worker's proclivity to adjust his/her commuting pattern or seek a new place of work. In our time, when more than one member of a household belongs to the labor market, the spatial behavior of other members of the household is important in determining labor spatial mobility (Katz and Kipnis, 2009).

A critical event along a life cycle of a factor of production is the moment when it reaches its saturationpoint. It is hypothesized here that a saturation event occurs close to, most likely beyond, the place's polarization peak (figure 3), altering, as a result, the existing stability of the city's economic rent (figure 4). However, due to the intrinsic qualities of the each factor, the owners of factors of production tend to act differently in response to a saturation event. Owners of land, a spatially fixed and quantity-limited factor, would be apt to boost the land users rent payments and would probably endeavor, through a process of rezoning and/or rebuilding, to upgrade the use value of their land property. Saturation of labor results in higher cost of workers, an event that would differently affect each of the diverse segments of the city's labor force. Those who benefit most would most likely be people who hold upper status occupations, whose hiring costs would increase. Surplus demand and higher salaries for upper status employees would attract labor from remote regions and could lead to longer commuting time and distance. Workers in low status jobs would probably have to seek employment outside the place, or join the ranks of structurally unemployed. In both cases migration, either into or out of the place, would follow. Capital, spatially the most mobile factor, would either shift to a higher status function/activity, thus upgrading its revenues, or migrate to another location in need of investment capital.


Figure 4: Hypothesized Saturation Schedule of Factors of Production

A saturation point of a factor of production tends to occur as a link in a chain of effects, initiating a process of continuous trickle-down of functions/activities from the urban core region, in our case the first city. Functions/activities that move out are those incapable of paying for one or more of their exhausted factors of production. Their owner/entrepreneur of these functions/activities will search for a new location where he/she can find the needed factors of production at affordable price. He/she will probably prefer a place with a suitable entry threshold for his/her production/service activity, abandoned free factors of production, and where he/she, along with the function/activity upper status labor, can enjoy of local psychological rewards of reasonable quality and quantity.

The saturation schedule of a place's factors of production (in our case the first city) seems to drive the transformation in Friedmann's (1966) core-periphery model from stage II to stage III (Figure 3). This transformation should also be significant in inspiring planners and policy makers to revise their National Urban Policy, namely to abandon a system aimed at enforcing re-urbanization and an imposed revival of the polarized first city in favor of an urban strategy advancing a network of cities. At issue still is whether the adoption of that strategy would bring to an end of the dominant and commanding role of the first city of its nation's economy, society and culture.

Saturation, Spread and Upgrading

Spread processes of economic, cultural and social functions from the first city are further intensified by the saturation of the city's factors of production. The functions that leave are those that cannot sustain the increased payments for their factors. Production and service functions tend to migrate to new locations where freed production functions are available at tolerable price. Workers, on the other hand, mainly those whose skills are no longer needed, face dilemmas of survival and occupation. They decide either to downgrade their job or to search for a new work place that suits their skills. In the latter case they will either extend their commuting distance or move their residence closer to where their skills are in demand. Worse yet, they might even join the ranks of the structurally unemployed.9 The released factors are taken by upper-status functions in need of a better quality work environment and labor. Capital, the most flexible factor, can choose between investing in the upgraded functions in the first city or relocating, either close to the first city or into one of the emerging secondary growth centers (Schwartz and Bar-El, 2007).

The upshot of intensifying spread processes is a continuous upgrading of the first city's work environment, services and all other psychological rewards (Kipnis, 2006) so essential for the quality of life of the first city/world city residents, workers and visitors. Put another way, a first city that loses activity functions, labor and capital as a result of the dynamic polarization–spread cycle, seem to continue to maintain its leading role in the national/regional settlement system (figure 5).

Tel Aviv, Israel, furnishes some evidence of the process (Kipnis, 2009). The most visible is the rising city skyline, the result of the construction of more than 250 high-rise buildings from 1965 to 2006, most of them since the early 1990s.10 More than 80 high-rises are type A11 office structures built in Tel Aviv's business centers and along the coast, mostly as five-star hotels. Ninety-five of the high-rise towers are residential. A few were built alongside the perimeter of the city's business cores, principally as high status residential complexes. The rest are situated in Tel Aviv's prestigious northern neighborhoods. Other evidence is the upgraded labor structure. In 2006 the number of employed among Tel Aviv's inhabitants was 160,000, 43% in white-collar jobs many of them (some 70%) were among Tel Aviv's city labor body of 338 thousand, which were classified as white collar labor. The rest, about of the white collar workers in Tel Aviv city, were inbound commuters.

Figure 5: Polarization, Spread and Upgrading

As Israel's hard core for employment opportunities, and as a 'city that never stops' and graced with an abundance of 'psychological rewards', Tel Aviv has become an attractive place for Israel's younger generation. Many, mostly singles in their twenties, migrate to Tel Aviv from all over Israel in search of a favorable start.12 If in mid-1990s Tel Aviv was perceived as a city of the elderly, at the turn of the millennium it was becoming a city of the young. Between 1995 and 2007 the number of people in the city aged 25-34 increased by 55%, reaching 91,000 in 2007, or 24% of the total population. Many were SINKS, a few married over the years to become DINKS.13 The number of single-parent households in Tel Aviv also rose rapidly, many of them divorcees. In the same period the number of people aged 65+ declined by 11% (Statistical Yearbook of Tel Aviv-Yafo, 2008).

Last but not the least, a 2005 survey of 510 morning train commuters (Katz, 2008; Katz and Kipnis, 2009) revealed that 46% of the Israeli rail commuters traveled to Tel Aviv City. More than 70% traveled to Tel Aviv from regions north and south of metropolitan Tel Aviv.14 Many of the commuters were married with children, and had a white-collar profession. More than a quarter of the interviewees reported that they had changed their place of work between 2000 and 2005. Some also changed their place of residence, to a location close to one of Tel Aviv's railway stations, usually in a prestigious housing tower, or to semi-rural communities near a train station serving both express and suburbanroutes. Noteworthy too is that between 2000 and 2005 the number of nonprofessional jobs swiftly rose in Israel, increasing by 16% to reach about 201,000 in 2005.15 Among Israel's nonprofessional workers, some 12,000 lived in Tel Aviv, but only 40% of them worked in Tel Aviv City. Still, total employment in nonprofessional jobs in Tel Aviv City in 2005 was 22,000; of these, 17,000 were out-of-city commuters. A few traveled from locations far from the metropolitan area (Kipnis, 2009). In contrast to inward train commuting, most of the Tel Aviv City outward train commuters were unmarried young persons; many traveled to high-tech nodes, mostly in Haifa.

The rapid development of Israel's railroad system has encouraged commuters to switch from their past commuting travel modes to a reliable train journey to work. Despite heavily crowded morning trains, mainly on Sundays and after or before holidays, half of the sampled morning commuters reported that they had changed their travel mode from bus or private car in favor of a train for work-related trips, whose daily schedule and duration were fixed and known. More than 57% of the interviewees defined themselves as 'new' train travelers.

That Israel's railroad system has evolved into a major commuter carrier suggests that it could also play a vital role in instigating the network-of-cities strategy. At present the system supports the 250 kilometer-long corridor of Israel's 'mini megalopolis' (Kipnis, 1997), stretching from northern Israel centered on metropolitan Haifa through Greater Tel Aviv to Beer Sheva, the metropolis of the south. To date, the dense megalopolitan corridor, served by direct, express and suburban trains, has helped make Tel Aviv and its immediate region Israel's economic 'hard core' (Figure 6). As a byproduct, Tel Aviv has became Israel's major social and cultural node – the 'big head on a dwindling periphery'. The other side of the coin is that the planned (but not yet financed) wide-ranging railroad system envisions a new express line to Jerusalem, a few regional lines serving central and eastern Galilee, and a regional line from Ashquelon to Beer Sheva, connecting the western Negev towns Sderot, Netivot and Ofakim to Beer Sheva and Dimona. When these lines are built they will help strengthen the two-way links between Jerusalem, the political capital, and Tel Aviv the national economic hard core, and will help extend the hinterlands of Haifa toward Galilee (the north), and those of Beer Sheva toward the western Negev (the south). As such, Jerusalem, and Haifa, and at a later stage Beer Sheva, will emerge as vital regional cores of Israel's urban structure and will, as a 'network of cities', become strong regional 'first cities' and regional 'anchors' of the global economy.

Figure 6: Existing and Proposed Railroad Lines and Their Catchment / Service Regions

Concluding Remarks

Saturation of a first city's production factors, along with intensifying processes of spread, are essential in realizing a network-of-cities strategy. To make this strategy happen, the following ought to be taken into consideration:

  • The process will be effective only if and when an extensive infrastructure, primarily of transport and communication networks, develops in the periphery.
  • This development should be aimed at target growth centers, most of which will evolve into regional first cities and service hubs for their immediate hinterlands.
  • The evolution of regional first cities into national sub-anchors of a national global network demands high commitment and the investment of every effort in order to allow them to absorb the spread opportunities and functions from the nation's first city. These efforts include the development of facilities to accommodate high-tech and advanced producer services, and diverse local 'psychological rewards', a prerequisite for the attraction of today's high status labor.

For all that, saturation and spread are allied with swift upgrading of the national first city's economic base and its psychological rewards, both associated with a speedy widening of its dichotomized society. Even if the nation's urban system did evolve into a network of cities, its first city– in the Israeli case Tel Aviv – would retain its expanding dominant position in the economy, culture and social structure.

The escalating 2008/9 global economic crisis raises the question of its irreversible impact on the aspired spread effects, thus halting the making of peripheral sub-anchors or regional global nodes of a nation's network of cities. A major feature of the global crisis is a delay in the saturation point of the first city's production factors (figure 7), hence a delay in the upgrading of its urban functions (figure 8). Observe how, as a result of the factors' limited quantity and their dissimilar flexibility, their effect on the local economy, society and culture does not crop up at the same time. The most vulnerable factors are land and labor. Capital, its stock erosion notwithstanding, can shift to other, more stable investments, whose prices have fallen as a result of the global crisis.

Since the start of the global crisis in midsummer 2008, a wealth of evidence of its impact on Tel Aviv's economy and wellbeing has appeared in the Israeli media. A survey of the Electronic and Software Association (ESA) revealed that at the end November, 73% of the firms, many of them with 100 and more workers and most of them situated in Greater Tel Aviv, planned to reduce their labor force by 10%-15%. The workers who remained would have to take a wage cut and shorter working week. A mid-December report disclosed that nine international development centers, the backbone of Israel's innovative high-tech industry, ceased their operations and laid off their workers. All these centers were located in Greater Tel Aviv. Some of the large high-tech firms considered relocating to India or Ukraine, where production factors are much less expensive.

Figure 7: Hypothesized Delayed Saturation Schedule of Factors of Production


Figure 8: Hypothesized Delayed Polarization, Spread and Upgrading


Similarly, a real estate newspaper reported that by mid-November rent for office space had fallen 25%, and that firms in Tel Aviv had started to move their offices from Type A to Type B office structures, many of which are old office buildings. The market in office space is receding five years. A late January report told us that the one third of the Platinum office tower, one of the most prestigious in Greater Tel Aviv, was on the real estate market. At the same time, residential rent was 8% down and the inequality gap between the Tel Aviv region and the national periphery was widening. The only residential real estate market that has maintained its price level is luxury apartments, reflecting a new line of investment by wealthy families.

Despite the disturbances caused by the global economic instability, one should see future developments as a long-time process. The current crisis is the second to occur since the turn of the 20 th century. The first, known as the high-tech bubble, ended in 2004; the years that followed were described in most developed countries, Israel included, as burgeoning, with annual economic growth rates ranging between 4% and 6%. Current projections predict that the present slowdown will end by 2010-2011 and that the global economy, along with its entire associated social and cultural attributes, will prosper again, probably until the next economic calamity. Viewed another way, despite the undulating global economy in the long run spread and upgrading will endure. The bottom line is that a nation's first city will maintain its superiority while the regional first cities will emerge, slowly but surely, as secondary links to the growing, but updated, global economy. An optimistic vision for Israel's urban structure, always perceived having 'big head on a dwindling periphery', will advance, regardless of the fluctuated global economy, into a network of cities. Yet regardless of the continuous spread effects from Tel Aviv, the city will always maintain its position at the top of Israel's network of cities. Jerusalem, as the capital and spiritual and cultural global node, will join Tel Aviv as Israel's multifunction/activity hard core. Haifa, and at a later stage Beer Sheva, will grow, assuming that the appropriate strategy is implemented, into regional first cities, playing a role of Israel's secondary anchors to the global economy.


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* Baruch A. Kipnis, The University of Haifa, Israel

1. The 're-urbanization'/'compact city' policy was labeled by Dieleman et al. (1999) as "unrealistic in light of the forces shaping cities in North America, Europe and Australia at present".

2. The so-called first city, the major city of a leading metropolis, is the hard core of the region's production of knowledge, occurring mainly in its primary headquarters. As such, the first city is the highest, or sometimes the only node of highly skilled international labor. Its symbolic status is vitally important for international firms, and its spatial compactness is highly valued by firms located in the most concentrated first-city global APS clusters. The level of command of individual first cities varies considerably, reflecting the relative global network consecutiveness of each (Pain and Hall, 2006).

3. The quinary sector is in charge of decision-making and control; the quaternary sector engages in the provision of advanced production services.

4. The objectives of the compact city policy were to create strong and vibrant central cities; to stimulate walking, biking and the use of public transport; to preserve open agricultural and environmental space; to provide decent housing for all (Burg and Dieleman, 2004)

5. Gradus and Stern (1980) referred to the dynamics of polarization and spread as a leading process in the evolution of the Regiopolis in the Negev Desert around Beer Sheva, Israel.

6. A growth center/growth pole consists of expanding industries which, being by nature propulsive, set off a chain reaction of minor expansions throughout the hinterland (Perroux, 1955). A growth centers/poles strategy is justified as public expenditure seen to be more effective when concentrated in a few clearly defined areas, and since new industries show better chances of building up sufficient external economies needed for self-generating growth.

7. Some economists also name technology (Parkin et al. (1999), entrepreneurship (Knight, 1992; Henry, 1995) and management (Knight, 1992) as 'factors of production'.

8. A distinct definition of each factor of production is needed since in some cases factors are defined differently or are oddly combined. Examples are human capital (namely labor) and land capital, which connotes land purchased as capital investment in the real estate market.

9. 'Structural unemployment' occurs when the skills of the unemployed do not match the jobs available (Clark, 2003).

10. The late 1980s is marked as the time of Israel's swift entry into the post-industrial age (Kipnis, 2001).

11. Type A office building is a modern office structure, usually occupied by firms that are capable of paying the economic rent; Type B is an old structure, usually occupied by functions with limited resources.

12. The yearly average migration balance to Tel Aviv between 2002 and 2006 was 10,061, 31.5% were migrants aged 20–34 whose share in the total average population of the city was 18%.

13. DINKS: double income no kids; SINKS: single income no kids.

14. Between 1995 and 2008 train passengers increased from 5 to 34 million. Most commuters arrived at their station of origin by car and went from the arrival station to their work destination on foot or by a short taxi or bus ride.

15. Characteristic of the labor structure of the post-industrial age is labor ratio of white-collar jobs, mainly quinary and quaternary, to low-skilled jobs, which is at least 1:4. Many of those who hold these jobs are structurally unemployed people, women, teenagers, retired persons and the like who seek a job. Many of these jobs are in services requiring low skills.


Edited and posted on the web on 5th May 2009