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Global Cities’ Success Isn’t A Zero-Sum Game

Two of the country’s best-known urban thinkers have a discussion underway at Atlantic Cities and New Geography about changes in the urban hierarchy brought along by globalization. It paints a picture of globalization as a zero-sum game in which one city’s growth comes at the expense—at least relatively—of another’s. They suggest that peaks—concentrated centers of population and prosperity—get higher while valleys—economic left-behinds—get lower.

Global competition certainly can sap a region’s assumed strengths and lead to periodic even multiple decade long population decline if a transition into new industries doesn’t succeed.  It is also true that the geography of global fluency and connectedness varies in this country (not every city can be an international air hub, for example). In fact the Global Cities Initiative recently launched by Brookings is explicitly designed to boost the global awareness and increase the global fluency of actors across sectors rooted in U.S. metropolitan areas. 

While all metros are not equally well-positioned to take advantage of globalization, world-beating firms and industries are located across the country’s landscape—from optical equipment manufacturers in Rochester, NY and consumer marketers in Cincinnati, to the hospitality and entertainment complex in Las Vegas. Even beleaguered Detroit has seen its fortune partially reversed over the last year as its auto sector has revived.

 Globalization remains an opportunity, one that cities in a market economy should welcome. Since industries benefit from geographic concentration, places specialize in producing certain items for the market. As market size increases, so do opportunities for further specialization and trade. The economic axiom that the division of labor is limited by the extent of the market holds true spatially as well; globalization presents places with an opportunity to hone their specializations and occupy niches of larger global demand. And it is this specialization that drives prosperity.

The authors mentioned above look at the media industry in New York, Los Angeles, and Washington, for example, and see a Washington ascendant. Certainly, in the age of Twitter and the 24-hour news cycle, proximity to the halls of the superpower is a draw for the news media nationally and globally. But financial media will remain drawn to New York for the same reason. Los Angeles exports film to the world and New York television. Each established hub is wildly successful in its niche, while Washington’s media exports are miniscule. Where Washington does excel is in activities benefitting from proximity to the federal government. Within defense, for example, management operations and contractors populate office parks in Northern Virginia, and cybersecurity is a growth industry, but defense manufacturing lies elsewhere.

The heightened global profile of certain cities does not mean that metros lower on the urban hierarchy will automatically lose high value prosperity-driving activity to the “peaks.” And while large metros that serve as nodes in a global network have their own gravity, other economic forces disperse activity into regions.   Globalization therefore confronts places with a challenge: make yourselves both attractive and adhesive—“sticky” if you will, and dynamic—by fostering new entrepreneurship and investment, while maintaining the competitiveness of your region’s industry clusters.

How to do that? Places must offer firms a value proposition. In the knowledge economy and even in advanced manufacturing, skills will be key to this value proposition, and skills were the most prominent omission in the hierarchy discussions linked to above. But, depending on the cluster, there are other assets that places can offer as well, such as infrastructure, access to financial markets and VC networks, university research connections, or access to specialized suppliers. The point is that certain competitive advantages exploited by firms are public goods by nature. They exist outside of the firm but taper off with distance—they exist in regions, and root companies in regions.

The urban hierarchy of the United States is a complex network of people, industries, and places. Bolstering any point on the network can improve the competitiveness of the entire system. Some places may struggle to engage globally, but their more modest role in the nation’s urban system can still secure prosperity, if that system is working well. 

The data suggest that the urban hierarchy of the U.S. is indeed balanced and healthy, full of specialized and prosperous smaller cities succeeding next to some of the world’s largest. Of the country’s largest metro areas, the top 10 ranked for patent applications per capita from 2001 to 2010 were Austin, Boise, Boston, Poughkeepsie, Raleigh, Rochester NY, San Diego, San Francisco, San Jose, and Seattle. The top ten for export intensity in 2010 were Baton Rouge, Grand Rapids, Greensboro NC, Indianapolis, Oxnard, Portland, San Jose, Toledo, Wichita, and Youngstown. The top 10 on personal income per capita included Baltimore, Boston, Bridgeport CT, Hartford CT, New York City, North Port-Sarasota FL, San Francisco, San Jose, Seattle, and Washington DC.

In sum, shifts in the urban hierarchy are not necessarily reflective of advances in one place at the expense of others. In many cases, changes will be tied to long term expansions or contractions of particular industries. That industry may experience a faster growth rate than the economy overall but it will also contribute to economic growth overall and it is the rising tide across the economy that matters. The challenge we face is to mitigate the damage when a region’s industries are down and help it transition into a more competitive niche, even if this means that the region shrinks in population. Relative population size of a city shouldn’t matter. Wealth and employment should.