Sunday, December 24, 2017

Saskia Sassen: Cities in a World Economy

Sassen examines, why, with modern information technology, corporations still need cities as central hubs. Some once theorized that information technology would make cities obsolete once everyone could work from home on their computers. As IT has not made cities obsolete, Sassen asks how modern IT has changed the economic function of cities.

Sassen cites capital mobility as one of the major factors shaping today's cities. With capital mobility, manufacturing has moved to new places, and export processing centers must be created to get the goods from where they are produced to where they will be consumed. This in turn drives a need for new sectors to support it, such as IT, legal, and accounting services. Not that legal or accounting services are new, but new needs now exist to navigate international trade policy and the legal and banking systems of multiple countries.

Her main thesis is: "Since the 1980s, major transformations in the composition of the world economy, including the sharp growth of specialized services for firms and finance, have renewed the importance of major cities as sites for producing strategic global inputs. In the current phase of the world economy, it is precisely the combination of the global dispersal of factories, offices and service outlets, and global information integration - under conditions of continued concentration of economic ownership and control - that has contributed to a strategic role for certain major cities. These I call global cities." - p. 7.

She adds that global cities are:
  1. "Command points in the organization of the world economy"
  2. "Key locations and marketplaces for the leading industries of the current period - finance and specialized services for firms"
  3. "Major sites of production, including the production of innovations, for these industries." (p. 7)

Sassen argues that once we study these global cities, we can see that in some cases, a global city becomes richer even as the rest of the nation becomes poorer. Therefore, studying cities can bring to light dynamics that we miss if we study nation-states as a whole. She also points to how this leads to inequality within cities, as the rise of highly paid professional jobs bring with them demand for low paid unskilled jobs (such as delivery trucks).

The existence of international markets link these global cities together. Real estate investors can buy and sell anywhere in the world, so suddenly the price of real estate in New York is more tied to the prices of real estate in Frankfurt and London than it is to the price of real estate in the greater metro New York area (p. 10).

Works Cited:
Sassen, Saskia. 2006. Cities in a World Economy. Pine Forge Press. 3rd edition.

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