Globalisation began with the emergence of capitalism as the dominant mode of production in the sixteenth century. Since the late 1960’s, it has integrated the global city networks by breaking down trading barriers and improving communication. More recently, there has been a rapid growth in economic development causing great changes in economic restructuring. There is a shift from international economy from being largely controlled by nation states to one that is dominated by TNC networks. Globalisation has brought rapid growth in number, size and importance of TNCs. Over half of the global trade is between or with TNCs. This has caused a restructuring of cities as it changed the way people produce and consume goods and services. The result is a transformation in the dynamic nature of cities.
Globalisation and the growing significance of TNC’s influence in the world economy have lead to the creation of a global hierarchy- dominant world cities, major world cities, secondary world cities, megacities, metropolitan centres, regional centres, and small towns and villages. This hierarchy ranks cities primarily in accordance to their economic significance. In the already industrialised countries, this means a shift from a manufacture based economy to one of service based, as well as a growth in the city’s global importance. While in developing countries, globalisation is transforming cities into megacities.
At the top of the hierarchy are the dominant world cities-Tokyo, London and New York. These cities are located in developed countries because of their early industrialisation period meant that they have moved on from being once a manufacture based economy to predominantly service based. Dominant world cities link all cities together as they are the control centres and command points of the global economy through finance and business. Hence any decisions made can have a flow on effect across the world due to the close links between the world network of cities.
The cause of dominant world city’s importance derives from the fact that many TNC and large national corporation head quarters are located in and/or originated from these cities. TNCs have enormous influence on the global economy because they often dominate government decision-makings. This is due to the fact that TNCs not only decide what they will produce, but the location of production. This decision influences the economy of the city through the amount of employment, infrastructure and technology that accompanies the set up the production workshop. TNCs have caused a spatial shift in cities, as manufacturing plants are relocated to places where production cost are low or being decentralised into component parts to specialised areas. For instance the white goods company Electrolux, whose head quarter is in Sweden, made decisions in 2004 to cut its workforce by 20% as the company decided to move some of its operations to low cost Asian locations. TNCs usually shift manufacture to cities in the developing world.
Lower down on the hierarchy is the cities which hold multinational economic importance. These cities have a complex set of function including wholesaling, retailing, manufacturing, finance corporate management. They make major decisions that affect its country and surrounding regions. Further down on the global hierarchy are cities that hold regional importance. The economy of these countries often develops at a rapid pace with unplanned and limited industry and infrastructure. These cities experience rapid urbanisation as a result of growth in manufacturing. TNCs have created a new international division of labour. Often these cities offer intensive manufacturing for low costs.
The impact of globalisation is not evenly distributed. It has caused widening gap between the developed and developing countries. This disparity in economic wealth and power between the developing and developed nations has lead to emergence of dependent and dominant cities. Dependent cities, such as Dhaka and Jakarta are those that rely on more powerful cities for economic activities such as factories and employment. These cities are usually located at the bottom of the global hierarchy and are from developing nations such as Mexico and South Korea. The outcome of globalisation on these cities is the creation of megacities due to the fact that these cities are not suited to cope with the rapid rate of urbanisation with little industrialisation. Dominant cities are the cities that provide economic authority over other urban places. These cities are concentrated in the developed world, and are at the top of the global hierarchy, for example Japan and USA. Globalisation’s impact on dominant cities is the emergence of world cities.
The relationship between dominant and dependent cities can be distinguished through looking at the spatial distribution of links between world cities. It can be noted that most world cities are located in the northern hemisphere except for Sao Paulo, Sydney, Buenos Aires and Johannesburg. The lack of world cities in Africa reflects the continent’s marginalisation within the world economy. The spatial distribution of world cities also reflects the north-south divide.
Globalisation has also caused changes to the role of regional centres and rural towns. TNC’s strategic choice of locations to extend and maximise their influence within the global economy have lead to the growth of metropolitan and regional centres. Regional centres are attracting increasingly concentrated amount of control because they offer a concentration of industry and the availability of more options in areas such as lifestyle, employment and services. As these places become more important, there is a general decline in small towns. This means that it is harder for small towns, with limited functions and a small population, to survive.
Developments in the global economy have shaped the world network of cities. The most recent economic development is the emergence of a new economy, globalisation. The growth of TNCs as a result of rapid globalisation has created a global hierarchy of cities as well as economic disparities between the cities of the developed and developing world. This in turn, has caused the emergence of dominant and dependent cities. Finally, globalisation has caused changes to the role of regional towns, often leading to the demise of small towns.
