Master’s Degree programme
in Languages, Economies and
Institutions of Asia and North Africa
Second Cycle (D.M. 270/2004)
Final Thesis
The role of global cities in
knowledge sourcing:
a focus on the Chinese
context.
Supervisor
Ch. Prof. Alessandra Perri
Assistant supervisor
Ch. Prof. Paolo Magagnin
Graduand
Giulia Cometti
Matriculation Number 846715
Academic Year
引言 历史上，城市在它们的国家一直起一个核心的作用。由于城市在它们国家的经济 和政治体系一直占据重要的战略地位，所以经济和政治力量集中在城市。世界经济的 全球化大幅度地改变了企业之间和企业与城市交流的方式。这个重大的变化推动了为 数有限的特殊城市的出现。这些城市都融入全球化的经济中：它们被叫全球城市。纽 约、伦敦和东京是全球城市三个主要的例子。全球城市的特点有哪些？各种各样的战 略资源集中在全球城市。这是因为全球城市的特点是：第一，既与当地市场又与国际 市场高度互连；第二，它们环境文化上的世界性；第三，在全球城市的工作机会吸引 着高技能专业人员；第四，高级生产者服务企业集中在这类城市。最近几年，许多学 者研究了城市在世界的复杂位置。他们提供了很多不同的理论，定义了“巨型城市”、 “世界城市”、“全球城市”等的概念。对巨型城市而言，只要设定具体的人口数量 门槛，就很容易对城市进行分类。以人口规模来定义巨型城市，相比界定世界城市或 全球城市容易得多。但是，同一个城市可以由多个术语加以描述。界定全球城市特别 复杂。Sassen 的研究为全球城市的理论作出了有益的贡献。 根据她的研究，全球城市 概念的核心是它的动感。并且，全球城市的主要特色是具体功能的发展。由于全球城 市发展这种功能，所以它们有全球控制的能力（这方面是 Sassen 的全球城市概念和 Friedmann 的世界城市概念的主要区别）。全球城市的主要特色是“全球功能”的发展， 并不是具有一个静止的特性。全球城市的高度连通性有很多相同的因素。生产者服务 企业集中在这些城市。全球城市拥有最先进的技术设备和基础设施。所以，一方面， 生产者服务企业跟许多位于世界各地的公司联系，另一方面，生产者服务企业和全球 城市的世界性环境吸引来自世界各地的高技能专业人员。为了从这些战略的资源受益， 开创性企业在全球城市里建立他们的分公司。由于这些原因，全球城市都是知识生产 的中心。另外，由于城市相互间的关系，它们跟全球经济有着强烈地交结。由于全球 城市具有这些特征，在当今的世界全球城市成为了“完成全球化”的地方。并且，它 们是革新的创造地方。也就是说，全球城市是推动世界经济发展的那一些中心。 由于在全球化的经济竞争特别激烈，所以革新对跨国公司变成了一件十分重要的 事情。通过不断创新跨国公司保持竞争力。由于革新代表新颖知识与现有知识结合的 结果，公司需要进行获取知识的活动。通过外部知识库和资源的利用，企业可以成功 把这种知识和资源转型为创新的成果。更具体地说，跨国公司需要进行国外获取知识
的活动。这是因为，一方面，公司为了创造革新需要结合新颖和现有知识；另一方面， 它们会获得这种知识位于遥远的地方（由于国家创新体系的多元化）。公司通过国外 获取知识活动扩大它们自己的知识库，并且加强自己的创新能力。但是，公司的需要 （他们找的知识类型）、动因（比如说，赶上竞争者或者扩大自己的知识库）和从外 部资源有效学会的能力（也就是说，公司的吸收能力）非常驳杂。此外，在遥远的地 方进行获取只是活动的话，就应该面对距离的不同形式和外来者劣势。这些方面都广 泛地影响公司研发地点的决策。由于全球城市环境的以上特点，全球城市是更容易创 造革新的地方。因为全球城市的互连度很高，环境的世界性很强，该技能专业人员和 高级生产者服务企业特别多，所以跨国公司在这里进行获取知识活动会获得很大的利 益。因此，全球城市更有可能被公司选择为它们国外研发活动的地点。相比在国内其 他地方，在全球城市进行研发活动会加强公司的创新能力。但是，每座全球城市会提 供的机会和挑战并不一样。更具体地说，发达国家的全球城市和新兴国家的全球城市 提供的机会和挑战更不一样。也就是说，在这两种国家的城市会获得的利益和会担负 的成本不一样。同样，不同跨国公司具有不同的抓住机会的能力和逾越障碍的能力。 源自发达或新兴国家的跨国公司具有的优势和劣势也不一样。通过对这些差异的仔细 分析，就可以加深对在不同的地点决策获得的利益以及担负的成本的理解，以及就可 以了解这两中因素如何影响到公司的地点决策。 新兴国家中，中国也许是最有趣的案例代表。通过最近几十年的非凡发展，中国 成为了世界上最重要的经济体之一。过去中国经历了很长的隔离时代（顶点是文化大 革命）。隔离时代结束了之后，中国打开了国际贸易和投资的大门。这推动了中国经 济的非凡发展。自帝国时代结束了以来，中国创新体系的发展一直受到了政府决定的 强烈影响。所以，由于社会主义理想的追求，中国的创新体系一直依赖国外的知识和 技术来源，尤其是因为“用市场占有率换取技术”政策的实施。由于这样情况，中国 自己创新能力比较有限。并且， 中国是以自己的模拟能力，并不以他的创新能力而闻 名于世。不过，从模拟向创新过度成为了中国决策人的一个重要目标。为了达到这个 目标，中国政府已采取了很多不同的措施。实际上，通过创新体系发展的控制中国政 府在国内是创新的主要动力。所以，在世界上中国是一个独一无二的代表案例。但是， 由于它国家情景的独到特点，中国的创新气力和果实还不平衡。因为中国自己创新能 力的发展离不开国外的知识和技术，所以对中国来说外国研发是特别重要的方面。政 府战略的变化对外国研发的演变生产影响。但是，对外国机构来说在中国进行研发活
动带有很多不同的障碍、风险和不确切的情况。这些障碍、风险和不确切的情况会阻 止它们在中国进行这类活动。城市化动态和城市发展是中国向有全球竞争力的国家过 度的非常重要的方面。通过对国际参与者的开放度的日益增加，中国城市成功进入全 球城市的行列。但是，中国全球城市的特征独一无二。在中国，全球一体化城市的出 现确实可以被视为国家战略的一部分，并不仅仅是自然过程的结果。全球城市在中国 对研发活动有很强的吸引力。它们吸引的研发活动既有中国机构的又有外国机构的。 由于在中国研发活动面对的障碍的性质，所以外国创新参与者可能从使全球城市作为 它们研发活动的地点中获得很大的利益。北京和上海是中国的主要全球城市。也就是 说，北京和上海在中国代表两座对发达国家的全球城市竞争的全球城市。并且，国家 和国际研发活动集中在这两城市里。由于北京和上海之间的差别，创新机构在这两城 市里又面对不同的机会和威胁。另外，最近几年其它一些的中国城市进入了全球城市 的行列，比如说重庆、广州、深圳等。虽然这些城市的全球一体化和重要性达不到北 京和上海的水平，但是它们也是在国内很重要的中心。并且，它们中也有一些吸引研 发活动。不过，政府决策的影响对中国全球城市的发展还特别强。因此，全球城市、 研发活动和中国特征的相关会推动很多复杂的动态。 专利是研究活动和结果很有效的指标。专利文件中有很多不同的有用的信息，比 如说关于受让人、发明者（或发明者们）和创造的技术价值的信息。通过在专利文件 中有的信息的观察就可以对研发活动很多不同的方面进行调查研究。通过与中国有关 制药工业专利的观察，这些复杂的动态都可以被研究。在本文中，Perri 和 Scalera （2016 年）用的同一专利数据集被用于研究。样品包括由美国商标局从 1975 年到 2010 年授予的制药工业专利。因为中国代表本研究的重点，所以样品包括有最少一位 在中国工作的发明者或者由中国机构申请的那一些专利。一共有 1026 个专利。三个子 样品被挑选：第一，由中国受让人申请的专利；第二，由非中国受让人申请的专利； 第三，有发明者在北京和上海工作的专利。通过这三个子样品的观察就可以了解在中 国全球城市和获取知识的相关存在很复杂的动态。本文提供了对数据集的描述分析和 各自的解释。虽然本数据集的观察有一些限制，但是从它的观察可看见在本文的其它 部分中研究的很多内容。对大部分受让人来说，全球城市是为了进行研发活动特别合 适的地点。所以，很多受让人选择它们作为这类活动的地点。但是，不同机构有不同 从全球城市环境得利益的能力。为了很深得了解这复杂的情况并且揭露它们的意义，
本文观察了发明者团队在全球城市和非全球城市的分配、在不同国家全球城市的分配 和挑选的质量的指标。 论文的内容安排如下。首先，第一章总结了全球城市书籍。其次，第二章阐述了 全球城市与研发地点战略之间的联系。而后，第三章里有中国情境的广泛介绍（尤其 是中国的创新体系、在中国的研发活动和中国全球城市的特征）。最后，第四章分析 了由美国商标局授予前文的制药工业专利。
Table of contents
Foreword ... 3
Chapter One ... 7
1.1. The concept of global city and its implications ... 7
1.2. Global cities as advanced business services centres attracting high-level professionals ... 15
1.3. Global cities and technology ... 20
1.4. Global cities as knowledge production centres ... 22
1.5. Global cities and global networks ... 23
Chapter Two ... 31
2.1. The role of global cities in knowledge sourcing ... 31
2.2. Sourcing knowledge to innovate: the choice of location ... 36
2.2.1. Sources of knowledge ... 36
2.2.2. Factors affecting R&D ... 40
2.3. Choice of global cities as locations for R&D activities ... 45
2.3.1. Dimensions of distance and the LOF ... 46
2.3.2. R&D and the LOF ... 48
2.3.3. Global cities as preferred locations for R&D ... 50
2.4. Global cities and multinational corporations: a classification ... 55
2.4.1. Global cities located in developed and emerging countries ... 56
2.4.2. Multinational corporations originating from developed and emerging countries .. 64
2.5. Global cities as locations for knowledge sourcing activities ... 70
Chapter Three ... 74
3.1. The role of global cities in knowledge sourcing: the Chinese context ... 74
3.2. Innovation in China ... 77
3.3. Foreign organizations sourcing knowledge in China ... 83
3.3.1. Barriers to foreign R&D in China ... 89
3.4. Choice of global cities for knowledge sourcing activities in China ... 94
3.5.1. Beijing and Shanghai ... 101
3.5.2. Other Chinese global cities ... 109
Chapter Four ... 113
4.1. Using patent data to observe the relationship between global cities and R&D ... 113
4.2. Data set ... 114
4.3. Observations ... 115
4.3.1. Pharmaceutical patents applied for by Chinese assignees ... 115
4.3.2. Pharmaceutical patents applied for by non-Chinese assignees ... 134
4.3.3. A comparison between locations: Beijing and Shanghai ... 148
Conclusions ... 157 References ... 161 Chinese references ... 167 Websites ... 167 Chinese Words ... 171
Foreword
What is the role of global cities in knowledge sourcing? How do the peculiarities of the Chinese context give rise to specific implications for the role of global cities in knowledge sourcing? In this work, the interaction of global cities and knowledge sourcing activities in relation to the idiosyncrasies of the Chinese context is observed.
The globalization of the world economy triggered dynamics that substantially transformed the environment in which firms interact with each other and with cities. Such dynamics pushed for the emergence of a limited number of urban centres around the globe that share specific characteristics - global cities. What makes a city global? Strategic resources concentrate in global cities, as they are characterised by (I) high degrees of interconnectedness to both local and global markets, (II) cosmopolitan environments and (III) concentration of highly skilled professionals and (IV) high-level advanced producer service firms. In the past decades a wide body of scholarship has investigated the complicated role of cities on the world stage. Concepts such as “megacity”, “world city” and “global city” have been theorized. While megacities are easily identified by referring to a given population threshold, defining world cities and global cities is a less straightforward task. However, the categories are not mutually exclusive. The work of Sassen gave an important contribution to the theorization of global cities. Less easy to define, at the core of the idea of global city lays its dynamism. What makes a city global is the development of specific functions that generate the capability to exercise global control (global city functions). Global cities are characterized by high degrees of connectivity, which is determined by a variety of interrelated factors. Global cities are first of all advanced producer service centres, which gather in global cities thanks to the availability of state-of the-art technologies and infrastructures within their boundaries. On one hand, advanced producer services firms are connected to other firms located all over the world. On the other hand, advanced producer service firms and the cosmopolitan environments of global cities attract highly skilled workforce from all over the world. Innovative firms gather within global cities in order to benefit from the presence of these strategic resources. Moreover, the connectivity and the interconnectedness of cities contribute to their global integration. Due to the convergence of these factors, global cities have emerged as knowledge production centres. Global cities therefore represent the centres that drive the world’s economic development.
Due to the extremely intense competition that characterizes today’s globalized economy, innovation gained strategic importance. Competitiveness is maintained through the
continuous creation of innovations. As innovations represent the result of the combination of novel and existing knowledge, firms need to conduct knowledge sourcing activities. The access to external knowledge pools and resources allows for the successful transformation of such combination into innovative results. Due to, on one hand, the necessity to source novel and diverse knowledge in order to generate innovations and, on the other hand, the availability of such kind of knowledge in distant locations (thanks to the diversification of National Systems of Innovation), firms face the necessity to conduct knowledge sourcing activities beyond their home countries’ boundaries. Knowledge sourcing activities beyond the home country’s boundaries help firms expanding their knowledge base and enhance their innovative capabilities. However, firms’ needs (the type of knowledge their seeking for), motives (catch up with competitors or expand their knowledge base, for instance) and capability to successfully learn from external sources (their absorptive capacity), are heterogeneous. Moreover, sourcing knowledge from distant locations involves the necessity to deal with the different dimensions of distance and the liability of foreignness (LOF). These aspects significantly affect a firm’s research and development (R&D) location decisions. Due to the specific characteristics of their environments, global cities represent sites in which innovations are more easily generated. Thanks to the high connectivity, cosmopolitan environments, availability of skilled workforce and the supply of advanced producer services, locating knowledge sourcing activities in global cities enhances firms’ innovative capabilities. The location of knowledge sourcing activities in global cities - compared for instance to other locations within the same country – may positively affect firms’ innovative results. However, global cities do not all offer firms the same opportunities. More specifically, the benefits and costs that can be derived from developed and emerging global city locations are not equal. Likewise, not all multinationals share the same capability to exploit opportunities and to overcome barriers. Multinationals originating in developed and emerging countries exhibit distinct strengths and weaknesses. An analysis of these differences helps in the understanding of the different benefits and costs that the choice of location may involve, and how such decision may be affected by these considerations.
Among emerging countries, China perhaps represents the most interesting case. The extraordinary growth experienced in the past decades enabled China to become one of the most important economies of the world. After the end of an era of isolation (that culminated in the Cultural Revolution) China opened its doors to international trade and investments, which boosted this extraordinary growth. Ever since the end of the Imperial Era, the development of China’s innovation ecosystem was strongly influenced by the state’s
decisions. In virtue of the pursuit of the Socialist ideals, the country’s innovation system developed a history of reliance to external sources of technology, which continued with the implementation of the “market for technology” policy, and which had significant consequences on the development of indigenous innovative capabilities. For this reason, China has been known for its imitative – rather than innovative - capabilities. However, a transition from imitation to creativity has become a new goal for Chinese decision makers. Many measures have been implemented in order to encourage the development of indigenous innovative capabilities. Indeed, China represents a peculiar case in which the government has positioned itself as the main driver of innovation. It is however to be recognized that, due to specific characteristics of its national context, innovative efforts and achievements in China still exhibit a certain discrepancy. Foreign R&D represents a crucial aspect in the case of China, as the development of innovative capabilities has been strongly linked with the inflow of external technology. Indeed, the evolution of foreign R&D in China reflects changes in the government’s strategies. However, foreign organizations investing in R&D in China must face several barriers, high risks and uncertainties, which may discourage them to locate such activities in the country. Urbanization dynamics and cities represent an important aspect of the evolution of China into a globally competitive power. Thanks to the increasing openness to interactions with international actors, Chinese cities managed to enter the global city rankings, with some of its centres competing with the established ones. Chinese global cities however exhibit unique characteristics. The emergence of globally integrated cities can indeed be considered in the Chinese case as part of a national strategy, rather than the result of merely natural processes. Global cities within the Chinese context play an important role in the attraction of R&D, both at the national and international level. Due to the nature of the barriers to R&D in China, foreign innovative actors (and especially those originating in developed countries) are likely to benefit from the choice of global cities as location for their R&D activities. In particular, within the Chinese context Beijing and Shanghai represent two centres that are now as competitive as other global cities located in developed countries, and which exhibit concentration of domestic and foreign R&D activities. Due to the various differences that exist between these two important centres, they provide organizations with distinct opportunities and threats. Moreover, other Chinese centres - such as Chongqing, Guangzhou and Shenzhen, for instance - reached the status of global city in the past years. Although the degree of global integration and importance of these cities do not equal that of Beijing and Shanghai, however they represent important centres within the Chinese territory. Some of the newly emerged Chinese global cities attract knowledge sourcing activities as
well. In this context, however, the role of the government is still significant. Therefore, complex dynamics are triggered in the combination of global cities, knowledge sourcing and the idiosyncrasies of the Chinese context.
Patents represent effective indicators of research efforts and their results. Different types of information can be found in patent documents about the assignee, the inventor(s) and the technological value of the invention itself. Through the observation of different types of information provided with patent data it is possible to investigate a variety of factors connected to R&D. The complex dynamics behind the benefits of locating knowledge intense activities in global cities and R&D location choice are therefore investigated through the observation of a set of patent data from the pharmaceutical industry linked to the Chinese context. The same patent data utilized by Perri and Scalera (2016) are examined. The sample includes patents granted by United States Patent and Trademark Office (USPTO) between 1975 and 2010 in the pharmaceutical industry. As the Chinese context represents the focus of this research, the sample includes patents that report at least one Chinese inventor or which were applied for by a Chinese organization. The sample includes a totality of 1026 patents. The observation of various aspects of three selected subsamples (patents applied for by Chinese assignees, patents applied for by non-Chinese assignees and patents with inventors in Beijing and Shanghai) confirms the existence of complex dynamics behind the connection of global cities and knowledge sourcing in relation to the Chinese context. A descriptive analysis of the data set and the relative interpretations are suggested. Although the data set exhibits some limitations, many of the dynamics investigated in the first chapters are visible. Global cities represent in general preferred locations among the patents observed. However, organizations exhibit different ways of leveraging the benefits of the choice of such locations. The distribution of teams’ inventors across global city and non-global city locations, across global cities belonging to different national contexts, as well as selected qualitative aspects of patents are observed in order to enlighten the meaning of these dynamics.
The work is organized as follows. Chapter One offers a review of the global city literature. Chapter Two specifies the connection between global cities and knowledge sourcing activities. Chapter Three shifts the focus to the description the Chinese context. In Chapter Four the mentioned sample of USPTO patents is analysed.
Chapter One
1.1. The concept of global city and its implications
Cities have historically played a strategic role as spaces in which the economic and/or political powers are tightly concentrated, and have represented the central bases from which such powers were exercised. As a result of their power, cities have always been central hubs within which the intersection of cross-border processes - such as the flows of capital, people, ideas and goods - could take place. The centrality of cities also strengthened their role as spaces of interaction, not only in an economic and political sense but culturally as well. The growth of the importance of cities began to slow at the beginning of the 20th
century, when a global trend towards the formation of nation-states1
started to take form (Sassen, 2006). As nation-states emerged, there was a shift of economic and political power from the cities to the nation-states as a whole (Sassen, 2006). The role of cities was partly taken over by the states, which immediately became the main actors playing in the economic and political world. With such a shift of power, cities were left to the role of “routine administrative centres” (Sassen, 2006: 29). Thus, in the world of the mid 1900s, cities mostly represented centres of conventional activities, such as “corporate administration, small-scale manufacturing and
commerce” (Sassen, 2008: 25).
Globalization became a reality during the 1970s due to the convergence of several factors: political, technological, social and competitive (Lasserre, 2012). As the globalization of the world economy began to take place, “the privatization of public sector operations, the
deregulation of the economy, the emergence of new technologies, the opening of national economies to foreign firms and professionals and their participation in global markets”
(Sassen, 2006: 29) created the conditions for people, information and goods to move freely across borders. With the process of globalization underway, the power of nation-states once again began to shift back toward cities. Nation-states continued to play an important role, however, global cities and global firms began to take over many of the functions historically played by the states (Sassen, 2006). Yet, cities did not eliminate the power of states. Rather, the emergence of global cities determined a change that affected the configuration of the
1 The nation-state is a territorial entity where the cultural boundaries coincide with the political boundaries (source:
http://www.unesco.org/new/en/social-and-human-sciences/themes/international-migration/glossary/nation-state/, accessed on 03/17/2018).
networks encompassing the global system. In the past the world could be conceived as a mosaic of states and characterised by territorial boundaries: along with these changes, such configuration evolved in an “alternative metageography” (Beaverstock, Smith and Taylor, 2000: 123), taking the shape of a network characterised by flows, linkages, connections, and relations.
When globalization started to spread, cross-border economic processes were nothing new to the world economy. Yet, in the past the key articulators of such flows of capital, people or goods were the nation-states, resulting in an economic apparatus that was closely incorporated in the inner-state system (Sassen, 2006). With the increasing privatization, deregulation and digitalization that came with globalization, markets saw “the partial
unbundling or partial weakening of the state as a spatial unit, and the emergence of new ones, such as sub-national entities (i.e. cities and regions), cross-border regions encompassing two or more sub-national entities and supra-national entities (i.e. global digitalized markets and free trade blocks)” (Sassen, 2001: xviii). Cities regained their leading
role within such new spatial units. Global cities, indeed, started to emerge due to two major economic changes occurred in the 20th
century. On one hand, advanced economies became increasingly dependent on service industries (role once played by manufacturing industries); on the other hand, the development of information technology allowed economic operations to be managed more rapidly and on a global scale (Beaverstock, Smith and Taylor, 2000). In this context (as well as in the past) cities are configured as places that “pivot both on
cross-border networks and massive concentration of resources” (Sassen, 2001: xxii), which coexist
and create strategic conditions. Cities represent key sites for the management of resources through worldwide networks. Today’s networks, however, present different degrees of intensity and complexity, as they involve the whole world, increasingly dematerialized and digitalized portion of economies, and a constantly growing number of cities (Sassen, 2001). More and more cities are now connected to global networks and play an important role in connecting their national economies to global circuits, but to do so they require particular configurations.
What makes a city global? Many scholars have conducted studies on the connection between cities and the world economy in the past decades. Beaverstock, Taylor and Smith (1999) summarize the study of the world’s major cities in two different approaches: the demographic approach and the functional approach. While the former refers to the concept of mega-city and investigates the implications of huge concentrations of population, the latter conceives the emergence of a certain type of cities as part of the dynamics of globalization.
The existence of two different approaches to the study of such phenomenon, however, does not imply a distinction of cities into two separate classes. Mega-cities and global cities do not represent two firmly separated categories (Beaverstock, Taylor and Smith, 1999). New York and Mexico City, for instance, belong to both the categories, being mega-cities and at the same time exhibiting global city characteristics. At the same time, however, not all mega cities can be considered world cities, and not all world cities are also mega cities. Examples are Calcutta – a city but not a global city – and Zurich – a global city but not a mega-city. Zurich is an extensively interconnected and cosmopolitan centre, provided with business services of high level. It represents a cultural, political, economic and social centre on a global scale. Yet, it does not present the characteristics of a mega-city, due to the fact that population is not large. Sassen agrees – in an interview with Foreign Policy, in 2010 - on the fact that global cities are not always megacities: a lot of large cities do not share global cities features. A tendency for larger cities to also play an important role in the dynamics of globalization, however, cannot be denied. As Sassen argues (Foreign Policy, 2010), in order to present the diversity and complexity needed to become global, a city certainly needs to be large enough to contain sufficient levels of economic, social and cultural resources. The number of global cities continues to grow, yet there are still a large number of cities that interact with a few global networks but lack the resources that are necessary to manage and service global firms and markets (Sassen, 2008). While mega-cities can be easily defined by referring to a given population threshold (Beaverstock, Taylor and Smith, 1999), the concept of world or global cities is less clear and multifaceted.
As long as the functional approach is concerned, scholars have used many different criteria to define the world’s most important cities. The two most commonly used denominations are world city and global city. The main theorizations of such concepts come respectively from the work of Friedmann and Sassen. Although it was object of earlier studies2
, the concept of world city was given a new meaning by Friedmann (Friedmann and Wolff, 1982; Friedmann, 1986). Sassen introduced the term global city in 1991. First of all, it is necessary to make a distinction between the “old” concept of world city and the “new” concept, which show significant differences. The old concept of a world city describes these centres as the most important business sites of the world, thanks to their typical concentration of economic and political power (Yeong-Hyun, 2010). Such centres enjoyed complete autonomy and did not need to be part of a network of other similar centres to be powerful. As
2 The term world city was first used by Patrick Geddes in 1915 (Cities in evolution) and later reinterpreted in many studies,
Sassen declares (Foreign Policy, 2010), “many of today’s global cities are old-world cities
that reinvented themselves”, thanks to the fact that they already had the diversity and
complexity necessary to do so. As she suggests, examples are London and Istanbul: important urban centres in the past, they followed the evolution of globalization and became world cities. On the other hand, there are old-world cities, such as Venice, that would not be considered global cities in today’s terms (Foreign Policy, 2010). For such an ancient city like Istanbul, the strategic location obviously had a major impact on the development of its long history as a crossroads for people and goods. The strategic location made possible for Istanbul to represent the place in which flows of people and goods could intersect, creating the need to develop specific capabilities “across diverse histories and geographies” (Sassen, 2012: 203) for such flows to be handled. Not only Istanbul historically occupied a position of centrality for capital flows between East and West, but it was also characterised by large flows of people, both for immigration purposes and short-term visits (Sassen, 2012). Such flows of people involved highly diverse groups that brought with them diverse cultures and skills into the city. Their intersections made possible the development of specific forms of knowledge that pushed Istanbul to the leading positions in the world for its human capital and talent offer. Moreover, Istanbul is characterized by high global political engagement. In the context of the expanding geographic span of the international flows of people and goods that came with globalization, these factors made possible for Istanbul to enhance its historical importance as a crossroads for global networks and intersections, and thus to reach the status of global city (Sassen, 2012). Sassen (2001) also states that world cities have long existed in history, while global cities constitute a totally new and contemporary concept. In most cases, world cities evolved into global cities, but some of today’s global cities do not necessarily have a history of world cities.
With the conceptualization of world cities suggested by Friedmann (Friedmann and Wolff, 1982; Friedmann, 1986), a new aspect was introduced: the linking role between urbanization processes and global networks played by these cities. According to this vision, in the growing and increasingly rapid freeing from national constraints of capitalist institutions occurred since the Second World War, multinational corporations played a central role, especially fostering the emergence of a system of economic relations articulated on a global scale (Friedmann and Wolff, 1982). Such system began to take material form in a particular scheme of urban centres in which multinational corporations were located, which articulated through “an urban hierarchy of influence and control” (Friedmann and Wolff, 1982: 310). World cities, a limited number of major inter-connected urban centres, are at the top of such
hierarchy. Indeed, according to this theorization, the world economy is organized and controlled by transnational capital, and world cities represent the material manifestation of this control (Friedmann and Wolff, 1982). Such material manifestation only occurs in those that are defined, in a hierarchical vision, the core and semi-peripheral areas of the world: core
areas include the major markets of the world, while semi-peripheral regions are those rapidly
industrializing areas that are for some aspects still dependent on core regions - a third component of the world economy is represented by the world periphery, represented by those economies mainly characterized by technological backwardness and political weakness (Friedmann and Wolff, 1982). Within these areas, world cities represent the locations of different types of control: financial, administrative, ideological and so on. World cities, in allowing for control over the world economy, are thus conceived as instruments (Friedmann and Wolff, 1982). They constitute the connection between the world economy and territorial nation states. In other words, according to this vision the role played by cities in the world economy was no longer seen as the “extension” of their national economic environment, but as part of global dynamics.
Sassen introduces the concept of global cities for the first time in in 1991, in the first edition of her book The Global City: New York, London, Tokyo. She theorizes the formation of global cities in the context of globalization and of the consequent spatial dispersal of economic operations, which led to an increased complexity of central functions. With central functions she refers to all those activities that deal with the management, coordination, servicing and financing of the firm’s operations. As she explains, with these kind of functions becoming more complex and thus strategic, it became extremely difficult for firms to produce them autonomously. Companies started to outsource and buy them from highly specialized firms, which were located in a limited number of strategic sites across the world. Indeed, due to the high degree of specialization of their tasks, service firms benefit from environments in which, as talent and other service firms are concentrated, information exchange is fast and intense. Although the new information and communication technologies made possible for distance to be no longer an issue for communications, the technological progress did not cause the end of cities as strategic sites. It is such specialized service firms that, providing a global service yet at the same time being located and concentrated in a limited number of cities, increase the criticality of the role of cities in the global system and strengthen inter-city relations. Due to the primary role played by service firms and of the multinational corporations they supply through the articulation of world-spanning networks, global cities cannot be considered as single entities: they only make sense as nodes of networks
encompassing the whole world. Moreover, global cities are increasingly disconnected from the economy of the territorial entity of which they belong to (Sassen, 2001). Their relationship with their nation state is thus different from that of Friedmann’s world cities. Sassen’s global cities are increasingly disconnected from the national economy of the state they belong to due to their engagement in networks that are articulated globally, rather than representing key instruments in a conflict of interest between the “global” and the “national”.
There is an important distinction between the two concepts. Derudder, De Vos and Witlox (2011) analyse the differences between the conceptualizations suggested by Friedmann and Sassen. In the context of the global economy, Friedmann’s world cities represent centres in which the geographical complexity of economic operations finds its “control bases”, which are necessary for the integration in the world system to take place. The world economy is seen as “a set of markets and production units organized and controlled by
transnational capital” (Friedmann and Wolff, 1982: 311): such control has taken shape in
world cities, which thus can be considered instruments allowing for global control. In this vision, the world system is characterized by a limited number of core zones in which two specific functions are carried out. World cities represent the places in which the economic power is located and which also house other forms of control. World cities not only rely on the central business district as their territorial basis, but also on a wider area and on an economic and social system (Derudder, De Vos and Witlox, 2011). Instead, Sassen’s global cities are characterized by their functional centrality in the global economy: the characteristic environment of these cities makes them sites in which the capability for global control is produced, rather than places in which global control is carried out (Derudder, De Vos and Witlox, 2011). Sassen’s global cities still represent core zones in the world system, but they do so not as locations of global control but as sites in which key dynamics happen (rather than those that contain power). Friedmann’s world cities represent, thanks to their attributes, central instruments allowing for global control; instead, Sassen’s global cities represent, thanks to the dynamics that take place within them, the places in which the “instruments” allowing for global control are produced (Derudder, De Vos and Witlox, 2011).
Indeed, according to Sassen, in order to be classified as global a city needs to have developed “global city functions” (Sassen, 2012: 180). The most important aspect for a city to become global is not the possession of certain attributes (which often derive from its history), but the development of specific functions. What makes a city global is a specific capability - to create the conditions for given functions to be carried out – and not the simple possession of certain characteristics (Sassen, 2012). In most cases, world cities evolved into
global cities, but some of today’s global cities do not necessarily have a history of world cities (Foreign Policy, 2010): what is necessary to be a global city is to have developed global city functions. In the investigation of the concept of global city functions, Sassen (2012) refers to the case of Miami to explain how the lack of a long history as a business centre with international reach did not prevent the city to develop global city functions. Miami was never an old-world city, however, it is certainly a global city today. After the 1959 Castro revolution, large immigration flows created in Miami a large Cuban community. Due to the presence of such community, in the 1960s and 1970s “an international trading complex
oriented to Latin America and the Caribbean” (Sassen, 2012: 180) was developed, as well
small-scale investment flows from Latin America into real estate. Therefore, in the 1970s Miami was already provided with “a concentration of international trading operations” (Sassen, 2012: 181), in which the main players were represented by the Cuban elite residing in the city. With a sharp growth of the international economic relations with Latin America in the 1980s and 1990s, coordination and management functions increased in complexity and the choice of Miami for the location of regional headquarters became common. In the 1980s, firms from the US, Europe and Asia began to choose Miami for the location of their offices. Thus, significant numbers of foreign banks and high-level personnel from abroad were brought to the city, as well as telecommunications facilities and technological infrastructures. Financial and specialized business services grew. Together with the importance of Miami as a transportation hub, these factors made possible for the city to develop “a specific role […] as
a bridge between cities and countries that are not particularly well articulated with the global economy” (Sassen, 2012: 184) - i.e. Latin American countries. The sharp growth of a “new international corporate sector” (Sassen, 2012: 186) took place in Miami because the Cuban
immigration flows and the economic activities derived from such phenomenon “supported
the internationalization of the city by creating a pool of bilingual managers and entrepreneurs skilled in international business” (Sassen, 2012: 186). Yet, not only Cuban
immigrants represented a key factor in the development of global city functions by Miami, but also immigrants from the Caribbean and other Latin American nations, as well as other parts of the world.3
What must be noted is that a good share of the immigrant population in Miami enjoys a higher socioeconomic status than other US cities. This means that large proportions of immigrants in Miami are wealthy, educated and provided with entrepreneurial skills and experience. Miami’s elite is represented by immigrants and thus has a cosmopolitan
3 The proportion of foreign-born residents in Miami reaches the highest numbers, as well as the proportion of people who
mindset. Miami did not develop its global functions through becoming first a manufacturing centre, but developing the characteristic that allowed it to be considered the perfect place for the location of service firms. Due to the still strong relationship of interdependence between Miami as a global city and the Caribbean and Latin American markets, Miami represents the perfect example of “a site for global city functions” (Sassen, 2012: 187), although “not a
global city in the way Paris and London are” (Sassen, 2012: 188). Indeed, due to their long
history as international business centres, Paris and London can rely on a wider span of markets for their economic relations. Alongside Miami, an additional example of the fact that global city functions need to be developed over time is represented by Singapore, which promoted a specific growth strategy aimed at becoming a global city (Sassen, 2012). Singapore is today a well-established global city. It managed to reach such status through the concentration of high value-added activities in the centre, while moving resource-dependent activities to other areas in Asia. This happened along with the development, fostered by the government, of a big knowledge-intensive industry (through the construction of the Singapore Science Park in 1980) and the promotion of Singapore’s global reach (with the establishment of the Committee on Singapore’s Competitiveness in 1997).
Goerzen, Asmussen and Nielsen (2013) suggest that it is necessary to study global cities by focusing not only on the linking patterns of cities in the world economy, but also on the
“idiosyncratic nature of the firms that are the raison d’etre of global cities” (Goerzen,
Asmussen and Nielsen, 2013: 2). Multinational enterprises play a primary role in global city formation processes, and they do so due to specific resources and capabilities. Different firms are provided with different resources and capabilities and thus prefer different cities. Global city formation processes are directly linked to multinational enterprises location strategies, which, for this reason, represent the key agents of global city formation and evolution. Therefore, a substantial contribution to the establishment and evolution of global cities comes from internal resources and capabilities of multinational enterprises. The relationship between global city formation and multinational enterprises is conceived as a sort of virtuous circle. On one hand, global cities attract multinational enterprises due to the cosmopolitanism and interconnectedness of their environments, on the other hand, it is the presence of multinational enterprises that boosts the development of such environments’ characteristics:
“while it may be the particular characteristics of global cities that, in the first place, attract MNEs4 to locate particularly competence-exploiting activities within them, such activities
further influence the cosmopolitan and interconnected nature of such cities” (Goerzen,
Asmussen and Nielsen, 2013: 17). In line with Friedmann’s view (1986) – according to which the global integration of a city and its structural configuration are strictly linked - as multinational corporations are provided with distinct resources and capabilities, firms’ location choices will directly affect the way in which a given city integrates in the world economy and develops its functions.
In other words, “global cities are those central places where the work of globalization
gets done” (Sassen, 2005: 35). To do so, they require the combination of specific resources
and infrastructures.
1.2. Global cities as advanced business services centres attracting high-level professionals
According to Sassen (2001), the presence of advanced business services firms represents the distinguishing feature of global cities. This is because, thanks to the specialization and agglomeration of advanced producer services, global cities represent places in which the key inputs for the control of global economic operations are produced. Beaverstock, Taylor and Smith (1999) agree with Sassen’s (2001) argument according to which advanced producer services represent the distinguishing trait of global cities. In their work, different approaches to the study of global cities (within the functional tradition) are identified and compared. Despite the use of different approaches in the definition of global (or world) cities, a general consensus about the top four cities is detected. London, New York, Tokyo and Paris are cited in all the studies taken into account, showing their obvious and generally agreed leading position in the world city hierarchy. However, below the apex of such hierarchy results show substantial heterogeneity. In order to overcome the limitation showed by the previous approaches, Beaverstock, Taylor and Smith (1999) suggest Sassen’s argument as a starting point to create a list of world cities that takes into account what they agree represents the distinguishing feature of global cities: advanced producer services. Taking into consideration as critical services accountancy, advertising, banking and law, they create “an inventory of world cities in terms of their provision of corporate services” (Beaverstock, Taylor and Smith, 1999: 450). An evaluation of the overall “world city-ness” (Beaverstock, Taylor and Smith, 1999: 450) of given cities allows to create the GaWC (Global and World City) inventory of world cities. It is a list of 123 world cities, among which
three classes are identified. Alpha world cities, with the highest scores, represent global service centres in all four sectors and leader in at least two sectors. Beta world cities, which represent global service centres in at least three out of four service sectors. Gamma world
cities, global service centres for at least two sectors. In this study we see a confirmation of the
fact that the status of global city (“world city-ness”) is primarily related to the presence of business services, which in global cities find centres of both production and consumption.
Figure 1. The world according to GaWC
(Source: Beaverstock, Taylor and Smith, 1999)
In the context of the rise of cities as strategic places for the coordination of the global economy, it is important to note the emergence of services in today’s society, which represents an extremely important factor. In her book (2001), Sassen suggests a precise definition of producer services. Beyond the distinction between consumer and producer services, her use of such expression premises a further distinction. Producer services are conceived as part of a broader intermediary economy, in which different activities can either be produced in house by firms or bought from other firms, depending on a large range of factors (among which the degree of specialization of such services has primary importance). Such services can be in different degrees produced for firms (for instance, management functions) and for individuals (for instance, insurance). When Sassen uses the term producer services, she refers to what she defines “mostly producer services” (Sassen, 2001: 91), referring to those services that are produced for organizations, rather than for individuals and final consumers, as opposed to “a range of industries with mixed business and consumer
industries and in their role made possible for them to represent a key aspect of the control of the global economy and thus to be part of global city formation processes. Indeed, along with the global integration of the world economy, firms’ operations became increasingly geographically dispersed and for this reason more complex to be managed. Firms started to grow in size and to diversify their components, increasingly separating their functions. The increased product differentiation promoted by firms had an impact on the requirement of stronger production, organization, marketing, selling and research capabilities. Central functions gained importance, as the need for centralized control of the network of the firm’s operations became stronger due to the geographical dispersal and the digitalization of economic operations. Organizational requirements changed, and central functions became strategic for a firm’s activity going global (Sassen, 2005). “Central functions are all those
functions that support a firm’s operations: all the top level financial, legal, accounting, managerial, executive, planning functions necessary to run a corporate organization operating in more than one country, […]” (Sassen, 2005: 34). This marked a shift of
importance from headquarters functions to what is called the “corporate services complex,
[…] that is, the network of financial, legal, accounting, advertising firms that handle the complexities of operating in more that one national legal system, national accounting system, advertising culture, etc. and to do so in conditions of rapid innovations in all these fields”
(Sassen, 2005: 34). The demand for advanced business services rose sharply, pushed by the need of firms to deal with increasingly articulated processes. Even those economic sectors that deal with the most material outputs today rely on the support of many kinds of intermediate services - accounting, legal, financial, consulting, software programming and so on (Sassen, 2012). Firms started to require increasingly specialized services, which for this reason became impossible to be produced in house “because of the rising level of
specialization and the costs of employing in-house specialists full time” (Sassen, 2001: 99).
Thus, companies started to rely on the support of other firms, pushing the development of a large specialized services industry and market.5
This appeared to be more convenient than producing such functions in house and allowed firms to relocate all kinds of operations while at the same time benefitting from strategic position advantages. Goerzen, Asmussen and Nielsen (2013) explain this phenomenon with the existence of two opposite forces: the centrifugal action of multinational enterprises locating their operations and the related routine
5 The growing demand, indeed, made possible for such producer services firms to lower price of services and to be able to
provide support even to those small firms that otherwise would not have been able to get access to specialized services (Sassen, 2016).
office activities in increasingly wide areas all over the planet, and a countering centripetal force represented by global cities as sites of concentrated state-of the-art infrastructures and specialized expertise.
The resulting dichotomy between geographic dispersal of routine office services and centralization of control finds its reasons in a basic characteristic of producer services. Advanced services, no matter the location of what demands for them, tend to be produced in cities (Sassen, 2012). Producer services do not need to be proximate to their buyers (firms); rather, they benefit from the proximity to other firms producing key or potential integrative inputs. For instance, accounting firms can service their clients from anywhere, but in order to produce such services they need to be close to specialists of all kinds (from lawyers to programmers). Indeed, the effectiveness of operations, when dealing with complex products, depends on the immediate and simultaneous access to expertise (Sassen, 2012).6
According to Sassen (2001), unlike consumer services, producer services are more likely to be concentrated in central places due to the benefit they get from agglomeration economies. In the distinction between central places and peripheral regions, central places appear to present a high concentration (and specialization) of producer services, while such services are less present in peripheral regions (which see a higher concentration of consumer services). In the advanced producer services industry, knowledge and information obviously play a fundamental role. The circulation of information is a matter of primary importance and therefore is proximity (as a facilitator of such circulation). “Production of these services benefits from proximity to
other services, particularly when there is a wide array of specialized firms” (Sassen, 2001:
104).
As specialized services firms benefit from agglomeration economies, they locate their activities in a limited number of centres – global cities – in which the resources necessary to provide such highly specialized services are readily available. The concentration of specialized services firms in global cities certainly generates the need for cities to host the right infrastructures and resources (Sassen, 2005). In order to provide a highly specialized service, firms need to have access to specific technological infrastructures. However, technology alone is not enough to supply the instruments needed to operate in the global economy. “Any town can have fibre optic cables, but this is not sufficient” (Sassen, 2002:
6 Sassen (2012) explains this phenomenon with a shift from weight to time in the identification of the forces pushing for
agglomeration. In the past agglomerations would occur in the locations of the heaviest inputs (from iron to agricultural products), being weight the biggest constraint. Today agglomerations occur in those places where the constraint of time can be overcome with proximity. The constraint of time, in fact, is now critical to specialized services firms but not, for instance, to routine operations, which only need cooperation between firms that can be geographically dispersed, due to the lack of time pressure and the limited complexity.
27). As the number of specialized service firms increased in certain centres, the number of high-level professionals grew sharply. Indeed, talent became a key factor as the functions carried out by specialized service firms became so complex and important. Talent is a matter of primary importance when dealing with such strategic outputs (Sassen, 2005). Due to their high complexity, operations carried out by specialized services firms not only need access to state-of the-art infrastructures, but also to top talents and therefore need concentration of such talents in order to enable their intersection and contact (Sassen, 2002). This social networking infrastructure is a strategic aspect of global cities (Sassen, 20029, in which face-to-face communication and intersection of skilled people from all over the world find the right conditions to take place. Within these social groups, density and diversity are matters of primary importance. Global cities have the power to attract his type of workforce thanks to several factors.
The emergence of global cities, although primarily derived from worldwide flows and economic relations, brought about the emergence of a specific type of environment. Indeed, with (I) the ascendance of the importance of producer service firms, (II) their need for highly skilled professionals and (III) their concentration in certain places, a new “class” has emerged. Globalization and the rise of global cities (with the concentration within their boundaries of advanced service firms) had as a consequence the polarization of wealth, and the high-level professionals dealing with global operations in their everyday jobs started to demand higher wages (Beaverstock, Smith and Taylor, 2000). High-wage job offers characterize global cities as a manner in which they attract specialized professionals from all over the world. However, the presence of specialized services firms is not the only factor attracting high-level professionals in global cities. The increase of high-income professional jobs pushed the growth of sectors linked to the quality of life, which represent a key factor of attractiveness in these cities (Sassen, 2008). A new class of “waged rich” (Beaverstock, Smith and Taylor, 2000: 132) emerged and with it the associated spatial configuration. Indeed, the rise of any class comes with the associated built environments: “the growth of a
high-income professional class and high-profit corporate service firms becomes legible in urban space through the growing demand of state-of the-art office buildings and all the key components of the residential sphere and consumption” (Sassen, 2012: 110). Creating the
conditions necessary for high-level professionals to maximize the performance of the new technologies also means creating a welcoming environment both in and out of their offices. This means, on one hand, providing them with the right infrastructures, services and environments (such as state-of the-art office buildings and luxury living facilities) and on the
other hand, relying on the work of lower level workforce to make the maintaining of such conditions possible.7
Global cities offer cosmopolitan environments in which state-of the-art living and working facilities, high-level schools, high-wage jobs opportunities and international social compositions (in which English is often the lingua franca) are available. The image that such exclusive environments convey has an immense effect on the decision to relocate. Florida (2003) investigates the reasons that push people to cluster in certain places. He analyses the creative class motives in the decision on where to locate and posits the creative capital theory. The creative class presents as its distinguishing trait the fact that its members work to “create meaningful new forms” (Florida, 2003: 8) - they are scientists, artists, opinion-makers and so on. This category also includes those that are defined as
creative professionals, which are defined by their knowledge-based occupations in highly
complex sectors (high tech, financial, legal, health-care) and their high-level education. In his vision, a mix of both economic and lifestyle factors motivate such creative class decisions. People do not just follow jobs to certain places; “innovative, diverse and tolerant” (Florida, 2003: 8) environments attract them. Cities that manage to create this kind of environment succeed in making people want to live there. In the choice of where to relocate, each individual’s decision is therefore influenced by several factors, that not only affect them but also their families - such as: quality of life, level of schooling for children’s education, opportunities for spouses to find a job, the extent to which language represents a barrier, cultural offer, pollution, media access are all important components of such choice.
1.3. Global cities and technology
Technology certainly played and still plays a crucial role in globalization, “and the new
information and communication technologies are generally recognized as the handmaiden of economic globalization – both tool and infrastructure” (Sassen, 2012: 109). Technological
progress led to lower communication and transportation costs as well as the promotion of information exchange, pushing forward the process of global integration of markets (Lasserre, 2012). For this reason, by the early 1980s the expectation was that the strategic role of cities would come to an end (Sassen, 2008), relying on the belief that in the digital era it would be
7 Both Friedmann (1986) and Sassen (2001) point out the impact of these dynamics on the social order of cities. According to
Sassen (2001), the global city is characterized by economic polarization. Not only the service industry itself, but also the residential setting of global cities require both high- and low-paying jobs to function, resulting in the polarization of income distribution.
possible for firms to locate their operations anywhere, with distance no longer being an issue. The emergence of a number of urban centres as strategic nodes for global networks proved this assumption wrong: it was indeed the advanced functions of firms (the most sensitive to technological progress) to be located in a limited number of cities around the globe (Sassen, 2008). Instead of neutralizing geography, new information and communication technologies contributed to the spatial concentration of strategic economic functions (Sassen, 2012).
This can be explained, according to Sassen (2008), by the fact that the production (by engineers) and the use (by firms) of new technologies – i.e. information and communication technologies (ICTs) - do not share the same objectives. Users are not likely to exploit the full technical capacities of the technology, because “when firms and markets globalise their
operations thanks to the new technologies, the intention is not to relinquish control over the worldwide operation or appropriation of the benefits of that dispersal. Insofar as central control is part of the globalising of activities, their central operations expand their operations globally. The more powerful these new technologies are in allowing centralised control over globally dispersed operations, the more these central operations expand” (Sassen, 2008: 35). For this reason, firms expanded their office operations to major
cities. “Thus the more these technologies enable global geographic dispersal of corporate
activities, the more they produce density and centrality at the other end—the cities where their headquarter functions get done” (Sassen, 2008: 35). Even for specialized corporate
services, which extensively use ICTs and mostly produce de-materialized outputs, location still matters (Sassen, 2005). What actually creates a demand for such services, for example manufacturing plants, can be located anywhere - wherever it is more convenient – which is usually far from major urban centres (Sassen, 2002). However, a need for physical bases from which their operations can be controlled and managed persists. In global cities, specialized service firms can operate in environments that allow them to maximize their performance. Indeed, as physical proximity still plays an important role (face-to-face communication is critical in such sectors, and especially in decision-making situations), they benefit from agglomeration. No matter how powerful technologies are in allowing the simultaneous connection of people around the globe, technical infrastructures need the right degree of social connectivity among high-level professionals to maximize the benefits of the use of such technologies in the management of global operations.
