GaWC Research Bulletin 347

This Research Bulletin has been published in Al Manakh 2 (2010), OMA, Archis/Volume and Pink Tank (Columbia University), 456-463.

Please refer to the published version when quoting the paper.

(Z)

Gulfworld: Corporate Profiles and Networks of Gulf Cities

R. Wall ^*

Introduction

Recently, there has been increased interest in the role and nature of the dynamics of urban systems. This literature argues that the rise of the network economy is epitomized by advances in transport and communication technology, the rise of common markets, the individualization of production, and the propagation of multinational firms. These factors are said to have significant impact on the spatial economic structure of cities and their respective regions¹. Meanwhile, the previously monocentric city is simultaneously transforming into a polycentric urban network, where socio-economic processes are taking place at increasingly larger geographical scales². Physical and administrative boundaries have become insufficient to characterize spatial entities, where cities are no longer confined by territorial delineations but instead are defined by patterns of interaction³. Hence, to understand the competitive nature of cities it is essential to know what flows through them instead of only what is fixed within them⁴. In this context, cities are said to gain their privileged status in the global network economy by virtue of their position within a ‘global space of flows'⁵. This conception shifts attention away from merely the traditional focus on a city's internal urban functions, towards a complimentary understanding of its external relations to other cities, such as trade or corporate activities. In this manner, cities can be considered as parts of an extensive urban system, together forming a society of cities, in which no city develops in isolation⁶.

Thus, cities are relatively autonomous entities whose evolution is highly influenced or disturbed by other cities in the interaction network⁷, and where city development can no longer be understood without considering the networks and systems to which cities belong⁸. This interdependence has been confirmed in empirical studies⁹, which demonstrates that a strong coherence exists between the urban development levels (place) of 2,259 unique cities across the world and their share of global corporate investments (network). Simply speaking, the more connected a city is, the higher its level of performance e.g. urban GDP, technical achievement, business efficiency, technological innovation, human development, education levels and ICT communications¹⁰. However, this relationship works the other way too (circular causality), meaning that the higher the urban performance of a city, the higher will be its connectedness to other cities. In this light, the socio-cultural fabric of the city is said to regulate economic production in a range of ways. For instance, the ‘institutional thickness'¹¹ and the socially constructed business cultures of the city can be perceived as critical to the success of particular industries such as finance¹². At another level, the city is also an important site for the production of cultural goods (e.g. museums and concert halls) that are consumed by a city's workers¹³. Furthermore, at a more sophisticated level, the city itself can be perceived as a cultural phenomenon, waiting to be consumed.

Because the development of world cities is increasingly tied to their position in international flows of trade and investment¹⁴, this article explores the economic profiles and network strengths of Gulf cities within the contemporary global economic system. This is carried out based on two empirical studies. The first explores the economic profiles of Gulf cities based on Thomson Reuters database (2009), concerning different types of firms found in the region. In this way it is shown which industries Gulf cities are strong in, and also to what degree these cities are industry or knowledge based. Second, the level of integration of Gulf cities within the world is explored based on the Zephyr database (2005-2009), which contains data on mergers and acquisitions (M&As) between firms throughout the world. Because M&As are known to represent 78% of global foreign direct investment (FDI)¹⁵, it serves as a good indicator of investments existing between firms in different cities. From this data the level of integration of Gulf cities with the rest of the world has been defined.

Today, the asserted existence of the ‘network society'¹⁶, and claims that multinationals are an essential unit of global production and integration, (World Investment Report, 2002), are becoming more evident than ever before. However, although economic networks are said to hold the modern world together, there is a lack of empirical understanding of what these networks actually are¹⁷, especially where this concerns the corporate networks between cities worldwide¹⁸ and how these lead to the creation and shift of societies within the world economy. It is said that this is largely due to the fact that city network data is not easily obtainable and therefore extremely scarce¹⁹. In the case of Gulf cities this disparity is even more prominent. The study “Setting Other Standards” (Bassens et al. 2009) comes closest to empirically defining the economic networks of Middle Eastern cities²⁰.

The study reveals how cities are interconnected through interlocking directorates of Shari'ah scholars who control Islamic financial service firms. Interesting is that this study reveals a system which is said to represent an alternative to that of Western “debt-based” financial institutions. Central to this system is that Shari'ah Scholars have the power to make and break the rules of finance based on Islamic Law, which in turn is grounded in religious sources. In this way these scholars are entitled to renounce by means of fatwa any contractual ambiguities gharar which can lead to debt²¹. Essentially, trading in ‘indebtedness' is prohibited. In theory this system is aimed at replacing the capitalist “risk-taking” financial system by one of “profit-and-loss” sharing. However, it should be noted that other studies argue that the Islamic system has more in common with the conventional Western system than might be expected²². Nonetheless, in principle, Shari'ah is based on several essential laws. For instance, financing should only be raised for specific, identifiable assets. This means that the generation of money from money, or riba, is forbidden. Also, uncertainty in financial contractual terms, or gharar, is also prohibited. These types of laws are applied to sukuk transactions by Shari'ah boards, which monitor transactions and operations to ensure compliance with Shari'ah. The resulting sukuk, sometimes known as Islamic Bonds, can be seen as ‘trust certificates' that grant the investor a share of an asset along with the risk compensation.

Figure 1: The Islamic ‘Shari'a' controlled financial system (Source: Bassens et al, 2009).

In the diagram (figure 1) the Islamic financial system which is controlled by Shari'a scholars is shown. It is evident in this map that the heart of this system is Manama which sets the standards for the future development of Islamic finance at the global scale. Furthermore it is seen that London, Kuwait City, Dubai and New York are well connected to Manama and where it has been said that these networks are closely interwoven with massive urban developments, such as recently found in Dubai and Abu Dhabi²³. The strong linkages to New York and London reveal the fact that sukuk transactions are strongly governed by English or American law to their ‘creditor friendly' nature²⁴. Nonetheless, although the Islamic Financial System spans the globe, and has an exceptional growth rate of 45% per year, it must be realized that its relative importance within the world economy is quite small. Although the role of the Islamic financial system is still small in the region and the role of conventional banking and finance are (still) much larger, its growth is closely interconnected to massive urban developments. Governments take an active stake in large Islamic banks (e.g. the Dubai-based Noor Islamic Bank) or through the issuance of sukuk for large scale infrastructure projects executed by construction giants such as Emaar and Nakheel. Interestingly this means that unlike other developing regions of the world, Gulf cities are developing along two different trajectories²⁵. Therefore, parallel to the Islamic financial system, this article is aimed at revealing the role of Gulf cities within the more conventional Capitalist economic network and ultimately contemplates on the confluence of these two systems.

The Capitalist System

The growing openness of the global economy has resulted not only in expanded trade but more importantly to the growth of multinational corporations and the consequent increase of foreign direct investment (FDI) between cities in both developed and developing countries²⁶. FDI is an investment of one firm in another with the intention of gaining a degree of control over that firm's operations (market access, production and cost advantages). The fact that after the mid-1980s FDI grew much faster than trade and today claims a huge share of global GDP, suggests that it has become the primary mechanism of the global economy and hence impacts most on the process of globalization and urbanization. In fact, as a whole, the share of urban infrastructure in total FDI stocks globally is approximately 10% compared to only 2% in 1990²⁷. Furthermore, as argued earlier on, the degree of a city's corporate connectedness, in terms of FDI, is strongly correlated to urban indicators such as technological innovation, human development, education levels and ICT communications²⁸. It is important to realize that firms serve as the essential transmitters of FDI across the globe. This is emphasized by the fact that only the top 500 multinationals in 2004 accounted for 90% of global FDI and 50% of global trade²⁹. As previously discussed, international “mergers and acquisitions”(M&As) represent 78% of all FDI and in this way appear to be the preferred form of international investment by multinational companies – far outstripping Greenfield investments in terms of value³⁰. In this sense, M&As form a reliable way of measuring FDI.

An historical perspective reveals a remarkable characteristic of M&As (figure 2) in which the evolution from 1985 – 2005 shows substantial overall increase and variation over time, with periods of rapid increase followed by periods of rapid decline. It is clear that the first significant peak occurred around 2000 followed by the IT bubble crash. Gradually the highest peak emerged in 2007 with a gradual demise towards our current recession. As argued earlier on, FDI has a strong impact on urban development. Hence, cyclic FDI fluctuations inevitably boost and deflate urban entrepreneurialism and development and accelerate the speculative construction of place³¹. This reveals a major characteristic of globalization and urbanization i.e. its inherent volatility in which periods of very rapid growth in FDI and trade are interspersed with periods of very slow growth³². The penetration of foreign capital through inter-urban competition is said to generate urban growth faster than previous forms of industrialization³³. In this sense, it has led to today's “entrepreneurial city”³⁴ in which the city is not only structure but also agent, generating urban growth by pursuing place-based dynamic competitive advantages to capture mobile capital and fix this place³⁵. In its absorption of FDI the entrepreneurial city introduces new types of urban space for producing, serving, working, consuming, etc, like technopoles, intelligent cities and cross-border cities. It also introduces new methods of space or place production to create location-specific advantages for producing goods and services or other urban activities, like the installation of new physical, social and cybernetic infrastructures.

Figure 2: Global cross-border M&As (Source: Wall 2009 - based on Brakman et al, 2006 and Dealogic, 2009).

Although the growth of FDI and its impact on urbanization is a remarkable, so too is the unevenness of its geographical distribution (figure 3). The map shows the corporate ownership network resulting from M&As between 2,259 unique cities worldwide³⁶. The visualized network represents approximately 50% of global GDP. It is clear that cities in North America, Europe and Pacific Asia dominate the economic system and that the Southern hemisphere plays a reserved role in the world economy. In fact Sub-Saharan Africa only holds 0,5 % of global outward investments and 2% of inward investments. Similarly, North Africa and the Middle East combined hold 0,2% of global outward investments and 1,5% of inward investments³⁷. This is further exemplified in the cut-out (figure 3b) which shows that although the Gulf region may be doing well in terms of growth in investments its relative share in the global economy is not particularly significant. The table (figure 3c) reveals the share of these corporate investments, in terms of both outward and inward investments.

Figure 3a: The 2005 global network of corporate shares (Source: Wall, 2009).

Figure 3b: Zoom-in Europe and Gulf (Source: Wall, 2009).

Figure 3c: The 2005 global network of corporate shares – distribution between regions (Source: Wall, 2009).

Economic Profiles of Gulf Cities

The first analysis is aimed at understanding the economic profiles of Gulf cities. In this way it becomes clear which economic sectors these cities are strongest in, and also the degree to which these cities are knowledge based. The data concerns publicly listed firms in the Gulf (2009). All firms have been classified according to standard industrial classification (SIC) codes, hereby enabling the categorization of firms under various goods and service industries. Because the city locations of each firm has also been identified, the industrial profile of each Gulf city could be revealed. In the table (figure 4) the four major countries i.e. Saudi Arabia, United Arab Emirates (UAE), Qatar and Bahrain are organized according to the amount of their firms total corporate assets found in their respective cities. Corporate assets are economic resources owned by a company. Anything tangible or intangible that a firm possesses, usually considered as applicable to the payment of one's debts, is considered an asset. Within each country the strongest sectors are evident, similarly arranged according to total assets of each sector. The last two columns represent these assets in percentages. The first column shows the percentage strength of a city within its own country, while the second column represents its score relative to the whole Gulf region. For instance, Riyadh claims 91% of all assets in Saudi Arabia and 38% of those in the Gulf. Similarly the combined cities of Saudi Arabia claim 41% of all Gulf assets. In this way it is evident that Saudi Arabia holds the most assets in the Gulf, followed by the U.A.E., Qatar and then Bahrain. At a more detailed level we see that Riyadh (38%) holds the highest relative count of total assets in the Gulf, followed by Abu Dhabi (18%), Dubai (17%) and Doha (11%).

In terms of sectoral strengths it is clear (figure 4) that all cities are firstly headed by the financial sector. Riyadh holds a 22% share of all financial assets in the region, followed by Abu Dhabi (12%) and Dubai (12%). Interestingly, Manama which as shown earlier is the heart of the Islamic financial system only plays a moderate role in terms of conventional finance. Furthermore, representing a 95% share of its combined sectors, it appears that finance is Manama 's core sector. Besides finance, Riyadh appears to be primarily strong in chemical industries. Abu Dhabi 's strength is in the specific sector of electricity, gas and sanitary services - but also real estate and communication infrastructure. Dubai, as expected, plays the strongest role in the Gulf in terms of real estate, followed by water transportation. Unlike other cities, Dubai has a reasonable share of engineering, accounting and management firms. This is a strong indicator of the formation of a knowledge industry. In this context it is arguable that Dubai is the only significant knowledge directed city in the Gulf. Doha appears to specialize, besides finance in metal related industries. Although Gulf cities claim a strong share in general services they do not reveal to have well developed knowledge based industries (besides Dubai). This outcome is supported by other studies in which it is stated that in general the Middle Eastern region's readiness for the knowledge economy is low. Compared to other parts of the world, the region trails behind East Asia, Eastern Europe, Central Asia, and Latin America. It is only slightly ahead of South Asia and Sub-Saharan Africa (Aubert and Reiffers 2003).

The Integration of Gulf Cities with the World

The Zephyr database consists of all worldwide publically listed M&As that are above one million Euros. Because annual M&As between firms can be quite sporadic, a period of five years of data (2005-2009) have been condensed for this analysis. In this way a more reliable image of the Gulf network is revealed. The data consists of the top 500 M&As between firms in Gulf cities and firms in other cities of the world. It is ordered according to location and industrial sector (SIC code) information, for the “acquiring firm” and the “target firm” - plus the “deal” which took place between them. Based on this information, the network could be explored both spatially and sectorally. In the Geographic System Analysis (GIS) maps (figure 5a and 5b) the extent and dispersion of Gulf cities M&As with the world are seen. Unlike the previously shown maps (figures 3a and 3b) which reveal the corporate network across the entire globe, the following maps reveal the networks of Gulf cities at a higher level of detail. It is evident (figure 5a) that the highest density of international connections is with Europe, the east coast of North America, and Southern Asia. Australia and South America are not apparently significant to the Gulf, but Africa does play a moderate role. Zooming into the Gulf (figure 5b) it is seen that Riyadh, Abu Dhabi, Kuwait City, Dubai and Manama play important roles within the region, as well as the world. The strongest intensity of reciprocated M&As takes place between cities along the Arabian Gulf coast.

Figure 4: Industrial strength of various Gulf cities, by assets (Source: Wall, 2010).

These initial geographic observations are further explored in the network diagram (figure 5c), based on specific social network analysis techniques³⁸. The thickness of the line represents the strength of deals, while the arrow shows the direction of the deals occurring between cities - from acquirer to target. In this way it is seen that for instance Kuwait City has strong corporate influence in Riyadh, or that Dubai has strong influence in Cape Town. An important feature of this diagram is that the more oil and industrial related cities of Riyadh, Kuwait, Abu Dhabi have roughly a third of the diversity of connections that Dubai has. Therefore, not only are these cities quite homogenous in terms of economic profile, but are far less integrated with the world economy, than is the case of Dubai.

As seen earlier, Dubai 's economy is not based on oil, but instead depends on various service, knowledge and advanced industrial activities³⁹. Seeing that such activities are essential to mainstream global economic networks, it is not surprising that of all major Gulf cities, Dubai holds the strongest investment control over other world cities. This is more clearly exemplified in the table (figure 6). This table shows the top Gulf cities power of acquisition (control of shares) over firms in different nations. The table should be read as investments from cities in column directed to countries in column two. The last column depicts the relative percentage of a particular city's total M&As in relation to that of the entire Gulf. In the case of Dubai, it claims 35% of the Gulf's total M&A control over other world cities, followed by Abu Dhabi at 18%. The other four cities prove to have very little control of firms in other cities. Judging by the economic structure of Dubai it proves to carry the most “Capitalist” traits of all Gulf cities, and it is therefore not surprising that it is the city most affected by the global financial crisis. Another important fact about Dubai is that it also holds the highest share of M&As of firms in the Middle East (19%) and especially within the United Arab Emirates (see second last column = 23%). Considering that firms use FDI to gain control over markets⁴⁰, means that Dubai has strong control in the Middle east. This is similarly evident in the network diagram (figure 5c). In fact, many of these investments are in Dubai itself. This makes Dubai 's economic power, both global and local at the same time - which is a characteristic of all global cities. It is clear by the results in the last column that Kuwait City, Manama, Riyadh and Doha are not globally, but particularly regionally oriented cities. The table further specifies which countries Gulf cities invest in most. Lastly, it is seen that the entire Gulf region invests primarily into non-Gulf nations (bottom right = 56%), followed by (39%) investments into the Gulf itself. In this sense, the Gulf is not as often perceived, regionally oriented, but is instead a true global contender. But this is primarily due to Dubai and Abu Dhabi.

In the following table (figure 7) we see the level of international investments into the top Gulf cities. It should be seen as the inverse of the previous table (figure 6). In this case the M&As of specific nations (first column) into Gulf cities (second column) are evident. A specification of investments from Gulf and non-Gulf nations has also been provided. The second last column depicts the percentage share of M&As from countries to particular cities, while the last column reveals the same share of investments to particular cities, but relative to all investments into the Gulf. For instance, Manama claims the highest relative amount of international investments (50%) coming into the entire Gulf region. Remembering that Manama is also the heartland of the Islamic Financial system (discussed earlier), Manama can be considered an important interface between conventional and Islamic financial systems.

Figures 5a and 5b: Gulf cities by M&As (Source: Wall, 2010).

Figure 5c: Diversity and strength of Gulf cities (Source: Wall, 2010).

Furthermore, Manama 's investments are almost essentially from the far east, while only a small relative investment (3%) comes from other Gulf nations. Strikingly the majority of investments into Dubai come from Gulf nations (15%), and the vast majority of these are from the UAE, particularly Abu Dhabi (see second last column = 89%). Furthermore, Dubai has the highest diversity of nations investing in it, with the majority from the far east (headed by Japan). Riyadh is primarily invested in by Gulf nations, particularly Kuwait. This reveals Riyadh 's more regional presence in the Gulf. Riyadh 's primary international investors are the United States, United Kingdom and Japan (New York, London and Tokyo), obviously related to oil security. The relative share of investments into the remaining four cities is quite modest. However, it must be stressed that these results only show the level of integration into the Capitalist system and do not represent the Islamic financial system, discussed earlier on. In the graphs (figure 8) we can say something about the cycle of investments over the past five years. Firstly, we see investments in 2005 were low, following very much the world trend of M&As (figure 2). Next, the highest peak of ‘firms being acquired within the Gulf' occurs between the period of 2005 and 2007. This peak logically matches the peak of ‘global firms acquiring firms in the Gulf'. These two peaks also match the global trend (figure 2). In turn, the highest peak of firms ‘elsewhere' being acquired by Gulf firms is found between 2006 and 2008. This peak is similarly matched by ‘firms in global cities being acquired by firms in the Gulf. The steep decline of M&As after 2008 clearly illustrates the impact of the current global recession on the Gulf.

The last analysis investigates firms under different industrial sectors and to what degree these invest in each other. This is different to previous results as the nodes do not represent cities but instead the economic sectors (figure 9a and 9b). However, the data is the same as the previous analysis. In this case the linkages represent the M&As occurring between industrial sectors, where line thickness shows the strength of the flow, and the arrow shows the main direction of flow. In figure 9a the M&As from industrial sectors in the Gulf to non-Gulf industrial sectors are shown. In this diagram we firstly see by the high diversity of linkages, that Gulf financing is central to all industries. The second most central sector is business services, because these manage and coordinate the economic activities of the other sectors. The strong presence of business services is characteristic of advanced economic regions⁴¹. The strongest financing emergent from the Gulf is directed to oil extraction, hotels, water transportation and real estate industries - into sectors beyond the Gulf's territory. This shows that Gulf cities (specifically Dubai) invest in these foreign industries to be less dependent on only Gulf economic activities. The downside of this is that in times of global recession these foreign investments (dependency) can impact on the performance of Gulf cities. Furthermore, we see that transportation equipment industries in the Gulf have made large deals in air transportation industries beyond the Gulf. Similarly it is seen that real estate firms in the Gulf invest in construction firms beyond the Gulf. Evident in figure 9b is that financing from international cities into Gulf cities is equally central to various economic sectors within the Gulf region. Again, the second most central sector is business services, which are needed to coordinate complex economic activities within the Gulf. International finance is primarily directed to the oil extraction and real estate industries. Gulf real estate is in turn highly invested in by international construction firms. Reflecting on these two diagrams a number of broader conclusions can be made about the Gulf. It is firstly an oil, real estate, construction and heavy transportation oriented region. It is not strong in high tech manufacturing or agriculture. Furthermore its economic strength in knowledge based industries e.g. engineering and research, insurance services and business services, is quite moderate. This is different to European and North American regions in which these very industries excel.

Figure 6: M&As from Gulf cities to various nations, ranked by deal percentages (Source: Wall, 2010).

Figure 7: M&As from various nations to Gulf cities, ranked by deal percentages (Source: Wall, 2010).

Figure 8: M&As between Gulf cities and other cities of the world (Source: Wall, 2010).

Conclusions

It has been discussed in this article that although the Gulf region is generally experiencing a strong growth in FDI, its share of FDI relative to that of the global economy is not significant. This is problematic in a world in which (as explained in the introduction) the level of a city or region's integration with the global economy is essential to its level of development. Furthermore, it has been revealed that the Gulf holds both an Islamic “profit-and-loss sharing” financial system, plus a “risk-taking” Capitalist financial system. The principle aversion of the Islamic financial system to conventional risk-taking, indebtedness and financial assets, arguably affects the full fruition of the Gulf's Capitalist system and its subsequently modest share of the global economy. This is evident by the fact that in the conventional economic system, the insurance sector (the proprietor of risk), which is usually extremely prominent and powerful in well established global economies, is evidently far less prominent in the Gulf region. The recent inability of Dubai to cover financial risk through insurance, has possibly contributed to its recent bankruptcy and the awkward need for Abu Dhabi to bale it out. This issue strongly coincides with the region's notorious “lack of transparency” in revealing essential business information. Indeed, a complex of cultural, political and economic factors are said to be responsible for the regions relatively modest economic success⁴², as many Middle Easterners view the globalization of finance and business as a threat to their national, religious, or cultural identities, - “comparable to that of an earlier period of globalization prior to 1914, when the foreign intrusions were associated with European imperialism”⁴³. In this light, it can be said that the region's future sustained integration into the world economy is as much a global responsibility as it is the Gulf's responsibility. Interesting will be to see how World and Gulf cities tackle the next wave of economic growth and the degree to which the two financial systems will converge or diverge.

Figure 9a: M&As from industrial sectors in the Gulf to industrial sectors in non-Gulfl cities (Source: Wall, 2010).

Figure 9b: M&As from industrial sectors in non-Gulf cities to industrial sectors in the Gulf (Source: Wall, 2010).

A hybrid financial policy which leans more towards “profit-and-loss sharing” might better install trust in the Gulf World and may equally contribute to the necessary evolution of the contemporary Capitalist system. Hence, it is interesting to speculate over how certain parts of the Islamic and Capitalist systems can liberalize, innovate and reinforce each other, and hereby develop the Gulf's share of the world economy. This arguably includes the reformation of the IMF and World Bank whose operations remain all too reminiscent of the European financiers who helped informally to colonize much of the region in the nineteenth century. Related to this, essential issues to be tackled should concern how to adapt policies concerning the liberalization of the Islamic and conventional financial systems, trade and FDI. An essential incentive to getting this done is the further development of urban infrastructures, specifically through healthier, more ‘trustworthy' policies between states and transnational corporations⁴⁴. Nonetheless, although physical infrastructure may serve as a useful device for further development, it will not be enough. The fragility of the region's political, social, economic and environmental structures are said to be essentially related to its lack of people centred policies and its current vulnerability to foreign interventions⁴⁵. As with cities like Seoul and Singapore, a more robust economy is highly dependent on investments not only in material assets, but also in overall societal development.

This article has shown that Gulf cities, although their contribution is limited, are not independent of the world system of FDI, and that the economic cycles of these cities neatly follow those occurring at the global scale. For this reason it is essential to find ways to enable Islamic and Capitalist systems to coexist in a more agreeable way. As previously discussed, the facilitated growth of corporate connectivity in the Gulf will expectedly lead to higher economic and human development levels, which at the moment lag behind several other economic regions of the world⁴⁶. Essential to this will be the development of more diversified economies, including advanced technological and knowledge based (people oriented) ones⁴⁷. This is important considering that Gulf cities (as shown in this study) are essentially oil, construction and real estate oriented – in which, besides Dubai, most cities do not exhibit advanced knowledge based sectors. This seems to be an interesting prospect for the Gulf's future development, but will require a stronger willingness of the region to engage with the globally dispersed knowledge industry.

Furthermore, it has been shown that Dubai is the only Gulf city which is highly integrated with regional and global cities and which holds the strongest M&As. In this sense, Dubai 's recent bankruptcy simply reflects its unique role within the turmoil's of the current recession. As discussed earlier on, contemporary urbanization is strongly tied to cyclic fluctuations of FDI, in which prosperity peaks are succeeded by downfalls. Hence, it is the expectation that as the recession passes on, so too will Dubai again start to boom. More important is how Dubai and its region will take on the next boom period. In this context, a common characteristic of global cities such as London, Tokyo and Paris is that they are embedded within strong and highly diversified regional economic networks⁴⁸. Therefore, it is imaginable that the relatively weak regional integration and modest sectoral diversity of the other Gulf cities is tackled in future. In this light, it is imaginable that Dubai serves as the Gulf's nexus within the global economy, strongly reinforced by the other regional cities. This may require stronger collaboration between Gulf states and a mutual incentive to establish higher complimentarily between cities.

This study has been limited to an understanding of the M&A networks taking place between Gulf cities and cities in the rest of the world. However, this thin slice of the world's economic network only reveals partial knowledge on the Gulf. Future comparative studies should go a step further by exploring the entire global economic network at a detailed level. In this way the corporate networks of Gulf cities could be relatively compared to those of all other cities in the world. From this type of data, all the global competitors of the Gulf can be revealed, regardless of geographic location. By exploring the corporate networks of these competitors (industries and alliances), Gulf cities can develop economic strategies, which in turn will generate smart urban programmes for its cities. In this way, it is imaginable that someday such cities can be affectively planned by understanding the interdependency of network and place.

REFERENCES

1. Anas, A., Arnott, A., Small, K.A. (1998). Urban Spatial Structure. Journal of Economic Literature 26, pp. 1426 – 1464.

2. Oort, F.G. van, Burger, M.J., Raspe, O. (2008). Economic Networks and Urban Complementarities. GaWC Research Bulletin 243.

3. Friedmann, J. (1986). The World City Hypothesis. Development and Change 17, pp. 69 – 147.

4. Derudder, B., Witlox, F. (2008). World Integration Through Global City Networks: Specification, Measurement, and Analysis. Paper presented at the Conference of the Regional Science Association International, Sao Paulo, 17 – 19 March 2008.

5. Castells, M. (1996). The Rise of the Network Society. Blackwell Publishers, Oxford.

6. Storper, M. (1997). The Regional World: Territorial Development in a Global Economy. Guilford Press, New York.

7. Pred, A. 1977. City systems in advanced economies: past growth, present processes and future development options. London: Hutchinson.

8. Taylor, P.J. (2004). World City Network: A Global Urban Analysis. Routledge, London.

9. Wall, R.S. 2009. Netscape: cities and global corporate networks. Rotterdam: Haveka.

10. Wall, R.S., Knaap, G.A. van der, Sleegers, W. (2007). Sustainability within a World City Network.Netherlands Environmental Assessment Agency (MNP), Bilthoven.

11. Amin, A. and Thrift, N. (1995) 'Globalisation, institutional thickness and the local economy' In Healey, P., Cameron, S., Davoudi, S., Graham, S. and Madani-Pour (Eds.) Managing Cities Wiley, Chichester, 91-108.

12. Leyshon, A. and Thrift, N. (1997) MoneySpace Routledge, London.

13. Amin, A. and Thrift, N. (2007) 'Cultural-economy and cities' Progress in Human Geography 31: 143-161.

14. Alderson A S, Beckfield J, 2004, ‘Power and Position in the World City System,' American Journal of Sociology 109, 811-851.

15. Brakman, S., Garretsen, H., and C. van Marrewijk; 2006; Comparative Advantage, Cross-Border Mergers and Merger Waves; CESifo Forum (1): 22-26.

16. Dijk, J. van (19910. De Netwerk maatschappij: Sociale Aspecten van Nieuwe Media. Bohn Stafleu Van Loghum, Houten.

17. Todeva, E. (2006). Business Networks: Strategy and Structure, Routledge, New York.

18. Taylor, P.J. (2004). World City Network: A Global Urban Analysis. Routledge, London.

19. Smith, D.A., Timberlake, M. (1995). Conceptualising and Mapping the Structure of the World Systems City System. Urban Studies 32, pp. 287 – 302.

20. Bassens, D.; Derudder B. and Witlox F.; 2009; Setting ‘Other' Standards: On the Role, Power and Spatialities of Interlocking Shari'a Boards in Islamic Financial Services; GaWC Research Bulletin 309.

21. Iqbal M, Molyneux P, 2005 Thirty Years of Islamic Banking: History, Performance and Prospects; Palgrave Macmillan, New York

22. Howladar K; 2006; Shari'ah and Sukuk: A Moody's Primer; Moody's Investor Service

23. Bassens, D.; Derudder B. and Witlox F.; 2009; Setting ‘Other' Standards: On the Role, Power and Spatialities of Interlocking Shari'a Boards in Islamic Financial Services; GaWC Research Bulletin 309.

24. Howladar K; 2006; Shari'ah and Sukuk: A Moody's Primer; Moody's Investor Service

25. Sidaway J D, 2008, “Globalising the geohistory of city/state relations: on ‘Problematizing city/state relations: towards a geohistorical understanding of contemporary globalization' by Peter Taylor” Transactions of the Institute of British Geographers, 33 (1) 149 – 151

26. Dicken, P. (2007). Global Shift: Mapping the Changing Contours of the World Economy. Sage Publications Limited.

27. World Investment Report 2008: Transnational Corporations and the Infrastructure Challenge.

28. Wall, R.S., Knaap, G.A. van der, Sleegers, W. (2007). Sustainability within a World City Network.Netherlands Environmental Assessment Agency (MNP), Bilthoven.

29. Rugman, A. (2005). The Regional Multinationals. Cambridge University Press, Cambridge.

30. Brakman, S., Garretsen, H., and C. van Marrewijk; 2006; Comparative Advantage, Cross-Border Mergers and Merger Waves; CESifo Forum (1): 22-26.

31. Harvey, J. (1989). The Post-Modern Condition. Blackwell Publishers, Oxford.

32. Dicken, P. (2007). Global Shift: Mapping the Changing Contours of the World Economy. Sage Publications Limited.

33. Harvey, D. (1989), Geografiska Annaler. Series B, Human Geography, Vol. 71, No 1, the roots of geographical change: 1973 to present, 3-17.

34. Jessop, Bob and Ngai-Ling Sum (2000), An Entrepreneurial City in Action: Hong Kong's Emerging Strategies in and for (Inter)Urban competition, Urban Studies, Vol. 37, No. 12, 2287-2312

35. Cox, K R, A Mair (1991), From localised social structures to localities as agents, Environment and Planning A, pp.197-213.

36. Wall, R.S. 2009. Netscape: cities and global corporate networks. Rotterdam: Haveka.

37. Similar results have been shown in an independent studies by Brakman et. al (2006) concerning global M&As between 1985 and 2005; and Iqbal and Nabli of the World Bank (2004).

38. Borgatti, S.P., Everett M.G., and Freeman L.C. 2002. UCINET 6 for Windows: social network analysis software. Analytic Technologies. Needham, MA.

39. Sassen, S. (ed) (2002). Global Networks, Linked Cities. Routledge, New York.

40. Dicken, P. (2007). Global Shift: Mapping the Changing Contours of the World Economy. Sage Publications Limited.

41. Sassen, S. (1991). The Global City: New York, London, Tokyo. Princeton University Press.

42. Arab Human Development Report, 2009, UNDP – Regional Bureau for Arab States, Alarm SARL, Beirut, Lebanon

43. Henry C. M. and Springborg R; 2001; Globalization and the Politics of Development in the Middle East; Cambridge University Press.

44. World Investment Report 2008: Transnational Corporations and the Infrastructure Challenge.

45. Arab Human Development Report, 2009, UNDP – Regional Bureau for Arab States, Alarm SARL, Beirut, Lebanon

46. Arab Human Development Report, 2009, UNDP – Regional Bureau for Arab States, Alarm SARL, Beirut, Lebanon; and Iqbal F and Nabli M. K.; Trade, Foreign Investment and Development in the Middle East and North Africa; 2004; The World Bank.

47. Aubert, J. E. and Reiffers, J. L.; 2003; Knowledge Economies in the Middle East and North Africa; World Bank Institute

48. Dicken, P. (2007). Global Shift: Mapping the Changing Contours of the World Economy. Sage Publications Limited.

NOTES

^* Ronald Wall, Erasmus School of Economics, Department of Applied Economics, Erasmus University Rotterdam. Email: wall@few.eur.nl