Cities are replacing countries as nodes for the international economy, politics, diplomacy, culture and technology; Being more culturally dynamic, geographically compact and globally connected allows competitiveness (Sassen S. , The Global City, 1991) that lacks on national levels. This situation is a trend that has initiated with the Nixon Shock of the 1970s[i] and the “S&L” crisis of the 1980s[ii], weakening the regulative arm of public institutions and leading to a higher concentration of banks and corporations in their respective headquarters, i.e. Big Cities, allowing them power and influence. Coupled with the International Division of Labor, catalysed by technological advances, the new Global panorama consisted of a few wealthy Cities hosting Financial and business hubs, emerging cities hosting manufacturing facilities and Western bankrupt cities falling into irrelevance.
The winners in this juncture were called Global Cities[iii], functioning as concentrated command points in the organization of the world’s economy, key locations for finance and business firms, and sites for production and consumption of innovation; Functions insured by the presence of Multinational Corporations (Sassen S. , The Global City, 1991); giving them an ability to serve as the infrastructure of the Global economy[iv], creating fierce competition to become Global Powers[vi], by attracting business, talents, and Capital.
Consequently, the information technology revolution, rise of Big data and the Internet of things from one hand, and the adoption of a looser platform approach of doing business and the rise of the sharing economy and ecosystems on the other, has unlocked what was accessible before only to public or highly financed companies; meaning that technologies in processes, products and services became at once much more available and highly imitable necessitating constant novelty and innovation in order to ensure growth and economic development.
Therefore; A city’s ability to stay relevant became in how it can sustainably attract (mainly Human) Capital, through investing on attributes to gain global attraction [vii] becoming a magnet for talents, creators and entrepreneurs, a humanization of Capital that turned its identity, and the understanding of the value of its culture, pre-requisites to identify its intended “clients”.
“attract, engage and retain people and organizations whose talents, ideas and entrepreneurial spirit directly influence economic well-being of their country. A nation of visionaries and problem-solvers is a powerful thing.” (Weber Shandwick, 2015)
Hence, understanding the dimensions that dictate the city and their relationships becomes crucial in discovering the potential and approach of this city, in how the way of creating and responding to pain points does affect and influence the perception of power accordingly.
And as much as the industrial revolution and rise of finance, later on, have redefined cities and their perceptions, so will the platform approach and innovation economics.
How the platform approach of doing business can help sub-national organisms surpass their limitations into having their own Soft Power strategy and based on what conditions?
[i] The Nixon Shock was a series of measures undertaken in 1971 by the United States President, which included a unilateral cancellation of the direct convertibility of the United States Dollars to gold, so that foreign governments can no longer exchange their Dollars with gold due to the constant devaluation of the United States Dollar. Although it was a tool to stabilize the dollar’s value worldwide, it opened the door for the floating exchange rate system leading after two years to the Smithsonian Agreement when most of the currencies followed US’s suit creating an institutional void mostly benefited by the U.S. Transnational firms and banks, leading to a liberalization of Capital control and deregulation of financial services.
[ii] The “Saving & Loans” Crisis of the 1980s was of frugal institutions resulting in the failure of a huge number of banks leading to an unprecedented concentration of the banking sector with the Top 10 biggest banks controlling 60% of the Market, creating uneven development and financial exclusion, shaping the re/de-territorialization of global economic space under the power of Finance.
[iii] A term used by Saskia Sassen in her book “The Global City: New York, London, Tokyo”; to describe: “in the age of globalization, the activities of production that are scattered on a global basis, requiring new forms of financial and producer services that are often complex and require highly specialized skills that tend to be clustered in a limited number of cities, creating a specialized production node. Therefore, a Global City is a significant production point of specialized financial and producer services that serve as a motor for the globalized economy”
[iv] “This future is partly shaped by the firm-to-firm aspects of our global economy that thrives on the specialized differences of global cities. In other words, there is no perfect global city because different companies prefer different networks of cities. It also explains why there are so many more global cities today….A second trend is the emergence of geopolitical urban vectors that are becoming a sort of Infrastructure for the global economy, which is increasingly not about state-to-state transactions, but rather about urban axes that bring together key cities. This holds even in the case of the U.S.-China relations that are dominated by hard politics. While some of these urban vectors are mostly economic, the major networks- those shaping the next phase- are also geopolitical. Much of global politics is increasingly also economic, and much of the global economy runs through cities.” Saskia Sassen, Beyond State-to-State Geopolitics: Urban Vectors Dominate, 2012 Global Cities Index and Emerging Cities Outlook, ATKearny, p.8
[v] ”…the development of contemporary globalization has been based on the creation of two city triads relating global cities to leading states. The initial impetus to economic globalization was built on a New York-Washington-London triad, with each city having a distinct role. New York was the financial center, Washington the leading political center (including governance of political finance via the international monetary Fund and World Bank) and London the global platform outside U.S. jurisdiction. The latter allowed for certain processes that could not take place within the leading state, notably the creation of a euro-dollar market in London as among the first steps toward globalization.” Peter Taylor, Relational City Thinking, 2012 Global Cities index and Emerging Cities Outlook, ATKearny, p.4
[vi] “Today, more than ever, global cities need to run just to stand still. Urban leader who wish to provide their citizens with the benefits of becoming a global powerhouse must fire on all cylinders, all the time…By creating an environment that spawns, attracts and retains top talent, business, ideas, and capital, a global city can generate benefits that extend far beyond municipal boundaries.”2012 Global Cities Index and Emerging Cities Outlook, ATKearny, 2012. P.1-2
[vii] “…, talented people want to live in places that not only offer the best career opportunities, but also the best cultural attractions and highest quality of life.” -Michael Bloomberg, New York City Mayor, Hot Spots, Economist Intelligence Unit, The Economist, 2012
[viii] “combine the creation, production and commercialization of contents which are intangible and cultural in nature. The contents are typically protected by copyright and they can take the form of goods or services” - UNESCO
[ix] The Creative Class is considered a key driving force for economic development in post-industrial cities in the United States, it includes all who “fully engage in the creative process… along with problem solving, their work may entail problem finding” and all those who “draw on complex bodies of knowledge to solve specific problems.” “The Rise od the Creative Class. And how its Transforming Work, Leisure and Everyday Life.”- Florida, 2002
[x] “Culture should be regarded as the set of distinctive spiritual, material, intellectual and emotional features of society or a social group, and that it encompasses, in addition to art and literature, lifestyles, ways of living together, value systems, traditions and beliefs.”- UNESCO
[xi] “According to the UN(2012), the world urban population is expected to increase by 72 percent by 2050, from 3.6 billion in 2011 to 6.3 billion in 2050. A large amount of this growth will be seen in the world’s largest cities. The global trend of rapid urbanization has meant the growth of metropolitan areas or city-regions – large urban areas with densely-populated cores and connected surrounding areas.”- Data, Boundaries, Competitiveness: The Toronto Urban Region in Global Context, Global City Indicators Facility, December 10, 2013.