|United Nations University - Work in Progress Newsletter - Volume 13, Number 3, 1991(UNU, 1991, 12 pages)|
By Fu-chen Lo
Powerful economic and technological forces, argues Fu-chen Lo, are bringing about sharply changed configurations in the world city system. Most notable is the emergence of cities in East and South-East Asia as world finance and trade centres - forming a new urban "growth corridor" on the world scene. Meanwhile, the great urban centres of Europe and North America that have dictated economic trends for several centuries are experiencing medium growth rates as they deindustrialize and change over from blue-collar to service economies. At the bottom of the heap - and, tragically, probably for some time to come - are the cities of Africa and Latin America, driven by debt, inflation, and massive inflows of rural migrants into a spiralling stagnation.
The many factors at play in this vast reshaping of urban patterns were discussed by Dr. Lo in a paper he presented to the Tokyo conference, and from which the following article is excerpted. A specialist in development economics, he is a Senior Academic Officer at the UNU. - Editor
The rise and stagnation of the OPEC cities; the debt burden of Latin American metropolises; the collapse of commodity prices and stagnation of import-substitution industries in African urban centres - along with the rising role of Tokyo and other Asian cities as new dominant trade and financial centres - clearly demonstrate how the major metropolitan centres of the world have been affected by the global economic adjustments that have been occurring in recent years. A new wave of techno-economic patterns is in the process of replacing the old production paradigm and reshaping, in the decades to come, the major metropolitan centres both in developed and developing countries.
Lewis Mumford wrote in 1961 that "megalopolis is fast becoming a universal form, and the dominant economy is a metropolitan economy, in which no effective enterprise is possible without a close tie to a big city." Whether they should be called megalopolis, mega-city or world city, the role of the dominant cities is increasing associated with a nation's economic capacity and its external linkages as global economic interdependence has become more and more a reality in the post-World War II world. But particularly during the last decade, the world economy has undergone a series of upheavals which are changing the configurations of the mega-cities.
Uneven Economic Growth
Global adjustments which took place in the early 1980s continue to transform the world economy into a pattern of uneven growth among the major economic blocs. East and South-East Asia are leading with the highest growth rates, while the United States, the EC, and the rest of the world remain at a much lower level. The process of uneven growth and regionalization of world economic development is not a short-term phenomenon. It is mid-term to long-term in scale and structural in nature.
One of the key issues in the world economy today is the unresolved third world debt problem - estimated currently at US$1.2 trillion. Since 1984, there has been a net capital outflow from the third world to the industrialized countries. Despite numerous efforts in debt rescheduling and negotiations, this outflow had reached US$50 billion a year by 1990, and it is likely to continue for sometime.
The current third world debts and economic stagnation are largely attributed to the collapse of the prices of oil and other primary commodities in the early 1980s. As most of the developing countries are heavily dependent on commodity exports for their foreign exchange earnings (which, in turn, underwrite their industrialization), the collapse of commodity prices has led to serious and widespread economic crises in the third world - in Africa, Latin America, the OPEC bloc, and other commodity-exporting developing nations.
Copper vs. Optical Fibres
A structural problem that comes into play here is the long-term decline of material inputs needed by the industrialized economies - that is, to a large extent, the raw materials and other inputs provided by imports from the third world. In Japan, for example, it is estimated that it now only requires 50 to 60 per cent of resource inputs to produce the same level of GNP as a decade ago. A declining share of material inputs in a given product has been spreading across most of the high valued trade manufacturing products, including automobiles, machinery and electronic related goods. New innovations in micro-electronics and communications, robotics technology, biotechnology and new materials have gradually become the fast growth and dominating sectors in the developed countries and some of the newly industrialized economies. The copper of Chile and Zambia, to cite just one example, is needed less and less; it is being replaced by more efficient optical fibres produced by high-tech northern industries.
The changing trade patterns that have emerged among the countries of East Asia, and between them and the United States and the European Economic Community, are the result of the rapid industrialization that took place in the 70s and early 80s among the Asian countries. Part of this is explained by the shift in the newly industrialized economies (NIEs) away from light manufacturing to durable consumer goods and machinery products, and the shift in the ASEAN countries* from raw material export to manufacturing exports. From these shirting patterns a new industrial belt has emerged within the global economy and within the world city system. Three groupings can be discerned:
* Brunei, Indonesia, Malaysia, Philippines, Singapore, Thailand.
· Group One - Debt and Dependency
The Latin American and African cities are plagued by high debt, high inflation and high dependency on primary commodities. These cities face immense difficulty in financing structural adjustment and urban infrastructural expenditures. Stagnation of commodity prices has also led to massive rural to urban migration - which escalates the pressure to expand the stock of urban infrastructure. Heavy external lending and sluggishness in commodity export earnings is further retarding urban development. This spiral of stagnation casts a dark shadow in immediate recovery of cities in these countries.
· Group Two - Blue-Collar vs. Service
In the medium growth group lies a whole range of cities from both developed and developing countries. The cities in the United States and Western Europe - New York, Chicago, London, Paris, Milan, etc. - have been suffering from the trend of deindustrialization in the 1970s accompanied by a continuous decline of blue-collar jobs in the traditional industrial centres. It is also evident that the structural change of these metropolitan areas corresponds with the increasing role of the service sector.
Lately a new trend of information processing and high-technology industries has begun to serve as the impulse for future growth. But this does not necessarily coincide with some of the old metropolises. In Europe, the opening of East European cities and the impending integrated EC market is expected to stimulate industrial revitalization with an increasing role for high technology.
· Group Three - World's New Growth Corridor
The cities with high economic growth rates have been highly concentrated in East and South-East Asia. These cities have witnessed a phenomenal expansion in their share in world trade and production. Tokyo has emerged as a world financial centre as Japan has assumed the role of the largest creditor in the world. Many Asian economies have also experienced a two-digit growth rate in the recent past. Trade and inter-industrial linkages, together with a massive flow of capital, the Asian NIEs, the ASEAN countries and Japan have led to rapid growth and structural transformation. A network of Asian cities is expected to form a new growth corridor in the world city system.
Long Waves and World Cities
In recent years, there has been a revival of interest in the notion of long waves of economic structural changes - 50-to-60-year-cycles of economic fluctuation, often known as "Kondratieff cycles" (after the Russian economist Nikolai Kondratieff who developed the theory in the 1920s.) Innovation is seen as the fundamental impulse which sets and keeps the economic engine in motion.
Briefly, it is proposed that the world economy has undergone fourth Kondratieff cycles since the beginnings of the Industrial Revolution in 18th-century Europe. In the first long wave (1770s - 1830s), clusters of innovation in steam engines, iron casting, textiles and mechanization brought with it the factory organization and the emergence of British supremacy in trade and international finance. There was rapid expansion of retail and wholesale trade in new urban centres.
In the second Kondratieff wave (1830s-1890s), railway and steam power were the dominant technologies and overcame the limitations of water power. Britain continued to lead during this wave and was joined by France, Germany and the United States. Modern urban centres in the major industrial countries emerged, interconnected by railways and seaports - including colonial control of the third world resources and seaports.
In the third wave (1880s-1930s), Germany and the United States took over the lead from Britain in applying electrical and heavy engineering and steel technology in overcoming the limitations of iron as an engineering material. An important phenomenon was the rise of mega-cities such as London and New York as major commodity markets as well as banking and finance centres.
By the fourth wave (1930s-1980s), Britain had lost its preeminence to the United States and Germany, with Japan emerging as a latecomer. Fordist mass production was the dominant technological paradigm, based on full standardization of components. The United States had the advantage in cheap energy resources with the requisite technology to tap mass markets.
The fourth wave coincided with the post-world war industrial development of most of the third world countries. The availability of relatively cheap and abundant resources witnessed a massive build up in production capacity. The economies of both the North and South were becoming increasingly interdependent, with cross border flows of raw materials, goods, capital and technology. The major cities began to assist in the process of globalization and integration of the economies of nations.
Now - The Fifth Wave
It has been argued that a fifth Kondratieff cycle has emerged in the late 1980s, with clusters of new innovations in computers, electronics and telecommunications, new materials, biotechnology and robotics becoming the leading growth sector in the world economy.
The mega-cities have shown great potential to tape these new rapidly-growing knowledge-intensive industries. In particular, Japan and its mega-cities have demonstrated that they have the social and institutional ability to exploit this new paradigm, and have assumed a new leadership role in this area. The Japanese approach to mega-city management has also supported regional policies which lay great stress on the development of "technopolis," providing science, education, communications and transport infrastructures. Tokyo, Osaka, Nagoya, North Kyushu, etc. have consistently sought to strengthen technological and managerial capabilities to service its new knowledge-intensive industries, both domestically and globally. They have demonstrated clearly that the power of a mega-city of the future lies in its capacity to identify and formulate policies on the basis of those new technologies which are most likely to transform existing urban patterns.