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The urban impact of economic globalization - Saskia Sassen

This work aim to summarize the second chapter of Sassen' book "Cities in a world economy". Work done by Alessandra Piatti and Timur Kadyrov

Alessandra Piatti

on 14 November 2012

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Transcript of The urban impact of economic globalization - Saskia Sassen

Saskia Sassen, 2011, "Cities in a world economy" (Thousand Oaks, Calif. Pine Forge Press) The urban impact of economic globalization The global economy today The global city A new geography Summarization 1) High specialized cities in advanced service production play a significant role in the world economy today.
2) The world economy has never been a planetary event; it as always had more or less clearly defined boundaries;
3) Sharp increase in the weight of FDI (Foreign Direct Investment) in services and in the role played by international financial markets;
4) US loose the role of single dominant economic power in the world and in the meanwhile developing countries became more important in the world economy. Axes of international transition changed from North-South to East-West. Timur Kadyrov 780759
Alessandra Piatti 782071 New global economy: international transitions Thank you for your attention! Saskia Sassen Interesting correlated literature:
"Cities in the world economy",
Saskia Sassen, 2000.

"Elements for a sociology of globalization",
Saskia Sassen, 2007.

"Re-Presenting the City: Ethnicity, Capital and Culture in the Twenty-First Century Metropolis" Anthony D. King, 1996. is a Dutch-American sociologist noted for her analyses of globalization and international human migration.

Sassen studied in different universities: Université de Poitiers, France, Università degli Studi di Roma, University of Buenos Aires, in Argentina. She studied the impacts of globalisation such as economic restructuring, and how the movements of labour and capital influence urban life. She also studied the influence of communication technology on governance. During the 1800s Economy mainly based on trade = crucial sites harbors, plantations and factories. They were crucial points of international transactions.

Cities were not the key production sites: the production of wealth were concentrated elsewhere.

Geography of international transactions were concentrated in Africa, Latin America, Caribbean. What do distinguished the current period from
the immediate past? A travel into the history... 1920 1980 1950 - 1970 1800 From 1890 to the beginning of 1920s Industrial city: Fordism. Post Fordism 1970:
city center crowded, services and business activity.

Decentralization of production in the periphery (started the era of poor industrial periphery areas, shopping malls…) Early 1980s finance and specialized economic services emerged as the major components of international transactions.

Financial markets, advanced corporate service firms, banks became the crucial sites at the heart of the process of production of wealth, and they were located in cities. Changing:
the geography;
the composition;
the institutional framework of the global economy. High concentration of flows and nodes in some specific places High level of people and goods mobility (less transportation costs + internet) Standardization of preferences and
"distortion", "stretching" of the space:
just in limited areas Three types of places above all others symbolize the new forms of economic globalization:
global cities,
offshore banking centers,
high-tech districts.

Certainly harbors and industrial districts continue to be strategic in a world of international trade. But today they should be operated and managed from global centers. Concept of Global city regions can capture this new development. 1) The role of FOREIGN DIRECT INVESTMENT (FDI) - first movers fast follower investors that acquiring a firm, wholly or in part, or building and setting up a new firms in a foreign county- in this particular period changes the geography of the global economy.

For the first time in the history follows of raw materials, agricultural products or mining goods are not correlated with the location of natural resources.

Some data:
FID flows of specialized services to development counties grew up reaching an annual average of 80% in the triads USA, Europe, Japan
Another example:
Latin America was the single largest recipient region of FDI.
Between 1985 and 1989, Latin America share of total flows to developing countries fell from 49% to 38% and Sudeast Asia’a share rose from 37% to 48%.

2) Compared with the 1950s, the 1980s saw a narrowing of the geography of the global economy and far stronger East-West axis.
1) World Trade Organization have emerged as yet another crucial institution organizing the world economy and free movement of financial services started to circulate.

2) Birth of Transnational trading blocs is yet another development that contributes to the new institutional framework. The two main existing blocks are North America Trade Agreement and CEE.
1) In the early 1980s the role of cities was strengthened, when the demand of high advanced infrastructure and specialized services became the dominant component of international transitions.

Some data:
Services which accounted for about 24% of world wide stock in FID in the early 1970s, had grown to 60% of annual flows by the end of the 1970s
At the same time, the sharp concentration in these industries means that now only a limited number of cities play a strategic role.

2) At the same time another transformation has been the sharp growth in the numbers and economic weight of TRANSNATIONAL CORPORATIONS, with their offices inside the advanced infrastructure and specialized services in city center and the total amount of production The geography The composition The istitutional
framework Concept of Global City was first introduced by Saskia Sassen in 1991.
- Global City is a city generally considered to be an important node in the global economic system.
- These cities are centers of economic, political, industrial and cultural activities.

Main features:
- Concentration of advanced services
- High level of telecommunication facilities (to be connected with other global cities and all the world)
- Concentration of globally operated headquarters of firms Export processing zone and hi-tech districts:

Export processing zone (EPZ) or free trade zone (FTZ) is an area within which goods may be landed, handled, manufactured or reconfigured (formerly free port).

Hi-tech districts – are zones of high technology, research and production concentration. (Silicon Valley in US) Offshore Banking Centers:

Offshore Banking (Finance) Centers are usually a small, low-tax jurisdiction specializing in providing corporate and commercial services to non-resident offshore companies, and for the investment of offshore funds.

Peculiarities of OBC:
- Banks located outside the country of residence of the depositor
- Low taxation
- privacy and confidentiality
- security
- Effects on international trade

Isle of Man
Cayman Island (UK)
San Marino 2012 Global city index:
Top 10 Global Cities ( journal Foreign Policy and Chicago Council on Global Affairs)

1)New York City
5)Hong Kong
6)Los Angeles
10)Washington, D. C.
According to S. Sassen:
Cities are postindustrial production sites for the leading industries of this period – finance and specialized services.

Cities are transnational marketplaces where firms and governments from all over the world can buy financial instruments and specialized services. GaWC Research Bulletin 5 and ranked cities based on their connectivity through four "advanced producer services" accountancy, advertising, banking/finance, and law. Positive and negative aspects of global cities The territorial dispersal of economic activity (at the national and world scale) has created new forms of concentration. A central proposition in the global city model (Sassen 1991) is that the combination of :

geographic dispersal of economic activities
an integrated system of specialized cities and places POSITIVE:
increasing global cities country GDP;
concentration of the "creative class" (Richar Florida) in specific places = innovation;
stretching in distances (internet) and less costs of transportation; NEGATIVE:
losing local social capital;
gentrification phenomena;
dual city: more richness means more poverty = the end of the bourgeoisie;
labor offers: high level of skills and no qualify profile. Flexibility. In our opinion role of Global Cities will rise stronger. Balance of the countries in a world economy will be moved towards Asian and Eastern countries. What will be with other cities, will they transform into Global cities or will they decrease. What do you think…? Colonialism Fordism Post-fordism Global city Our consideration Our reflection
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