How cities took over the world: a history of globalisation
History shows that cities have tended to embrace international opportunities in waves and cycles. They rarely break out into global activity by themselves. Cities participate in collective movements or networks to take advantage of new conditions, and often their demise or withdrawal from a global orientation is also experienced jointly with other cities as circumstances change, affecting many at once. The world’s first great market-driven cities were established more than 4,000 years ago in the early bronze age, and their rich history is only now beginning to be understood. An urban revolution was taking place, with most residents of what is today southern Iraq living in cities, and this process of urbanisation was accompanied by trade on a new scale. Farther east, the cities of Mohenjo-daro and Harappa, in modern-day Pakistan along the Indus River valley, were among the first cities with diversified economies and societies. They were located on trade routes that specialised in gemstones and spanned the whole of central Asia.
These cities formed the epicentre of a vast trade network based on a common cultural and linguistic community, and built infrastructure to provide good standards of living for residents. With their deep-rooted cultures and external orientation, they exhibited many of the hallmarks of what are now considered to be global cities. One important lesson to be drawn from the early waves of urbanisation and the long distance activities of cities is that prized assets and luxury possessions have often been drivers of interconnection and collaboration. As China began to expand its horizons, the trade in horses, silk, bamboo, rice and wine was vigorous and often used in diplomacy to guarantee peace between empires and cities. Silk even became an international currency.
Within a few hundred years, the world had been effectively shrunk by the growing sophistication of the trade network. As historian Peter Frankopan, author of The Silk Roads, notes: “We think of globalisation as a uniquely modern phenomenon, yet 2,000 years ago it was a fact of life – one that presented opportunities, created problems, and prompted technological advance.” The first European city to develop networks akin to those of a modern global city was Rome. Its empire came to consist of a federation of cities – stretching from Spain and Scotland in the west, to the Euphrates river in the east – each of which had a territory attached. Rome provided the administration, the stability, the monetary regime, and the tax structure for cities to thrive amid a huge spike in population mobility and mercantile activity.
By the mid-Roman era, most contemporaneous historians perceived the world to have been globalised. Polybius in his Histories remarked that “from this point onwards history becomes an organic whole: the affairs of Italy and Africa are connected with those of Asia and of Greece, and all events bear a relationship and contribute to a single end.” Among the lasting features of this wave of globalisation of trading cities was a much larger and more diverse trading of goods across continents. This trade fuelled a new commercial zone in the Indian Ocean and direct trade with India. The Roman urban network also helped spread religion, and cities in the Roman system later became centres of Christian authority. This era was perhaps the first time that one city’s power and influence became the fundamental driver of intercontinental trade.
But while the rise and fall of Rome as a global city is well documented, others have resumed global roles whenever the geopolitical opportunity has presented itself. Istanbul, for example, has experienced many cycles of global exchange over the last two millennia because of its unique strategic location as a bridge between Europe and Asia. Formerly named Byzantium, the city was transformed by Emperor Constantine in the fourth century AD and renamed Constantinople because it was close to Rome’s economic and political interests in the eastern empire.
Roman leaders needed an open city located close to Rome’s supply market along the Silk Roads, across the Black Sea, through rich Anatolia and into the wheat producing areas of the Nile. As a result, Constantinople assumed command and control functions, and drew ambitious Roman citizens and traders from around the world. As a cultural melting pot, Constantinople facilitated the spread of Christianity across the Roman Empire. Despite the collapse of the western Roman empire, Constantinople later resumed its role as a vibrant trade hub in the eighth and ninth centuries. Under a tight system of state control over factories, workshops, wages and tariffs, the city processed trade from Russia, India, China and Africa, with merchants attracted by its gold and silk commodities. It transported goods to and from Venice, Pisa, Genoa and all over Europe, and at one point is said to have been home to 60,000 Italians.
Much later, under the Ottomans, Constantinople became Istanbul. Its leaders grasped the new opportunities of European trade and actively invited the intelligentsia of the Islamic world. While Istanbul’s influence has waxed and waned, its strategic position has repeatedly proved an asset to outward-looking leaders, and has created an enduring appeal to immigrant entrepreneurs and innovators.
Europe’s commercial wave
A new wave of cities developing international roles took place in the 11th and 12th centuries, as part of what is sometimes called the “commercial revolution”. As population and urbanisation grew, a two-pronged system of cities emerged: the lucrative trade in the Baltic Sea and the North Sea of Europe was gathering pace in some, while many Italian city-states were becoming prosperous through shipping, commerce and banking. This was a time when many systems of rule and governance coexisted. As cities grew, they became independent or semi-autonomous entities with their own military capability. This wave of globalisation was also characterised by a powerful merchant class that dominated the market economy and had an active role in city leadership.
Italian cities took advantage of geopolitical opportunity during the Crusades to expand their trading and banking services for the military campaigns. Venice in particular gained privileges in the Byzantine empire and extended relations with the pope. With Italian success came influence. By the late 1200s, Florence and Genoa were minting gold coins, and Florence’s own currency became dominant in European commercial and financial markets. This wave marked the first time that so many regions and religions had come into sustained contact. In her book Before European Hegemony, sociologist Janet Abu-Lughod identified eight regional circuits in operation, stretching from north-western Europe all the way to modern-day Malaysia and Philippines.
It was also a time in which cities achieved great cultural, artistic and intellectual advances, spawning both trade and knowledge exchange. The circuits Abu-Lughod described thus fostered interregional contact through cultural gateway cities such as Venice in the west and Malacca in the east. In between, the geopolitical opportunity for peace after the 13th-century Mongol invasions was also a catalyst for ports and caravan cities in the Middle East to develop and globalise.
One example was Tabriz, in modern-day Iran, which attracted a large number of European merchants and was described as the most cosmopolitan city in the world in the 13th century. It specialised in gold and silk cloth-weaving, and in trade in precious stones. Five hundred years later, the city was still noted for its independent merchant class. The Black Death devastated many of the leading cities in this wave, but the advanced network of the Hanseatic League and the globalising cities in southern Europe endured into the 15th century, brought together by a shared desire to conduct free trade. This wave is thus often seen as vital to the later spread and success of modern capitalism.
The post-Columbus wave
Beginning in around 1500, cities that had globalised in the previous wave began experiencing multiple and long-lasting setbacks. Agriculture was earning diminishing returns, and religious warfare gripped many cities. Italian and Iberian cities began to experience deindustrialisation, uncompetitive wages, and loss of market share to cities in the east. A shift in favour of northern European cities began to take place. Globalisation had taken on new characteristics, with new roles for cities in a system where sovereign states were stamping their authority. Advances in map-making and ship-building helped improve communications and reduce transaction costs for cities. One change was in the nature of consumption: a new class of consumers appeared with a shared goal to signal position and status, driving major growth in production and retail sectors. Gradually a much better connectivity emerged, characterised by an enlarged and integrated global market, new notions of a single world, and a sense of cosmopolitan identity. Northern European cities profited the most from this wave of globalisation.
At this point, the beginnings of what became known as the “great divergence”between Europe and Asia appeared. Many arguments have been put forward to explain it. One factor was that merchants and bankers in northern European cities were able to protect their investments by legal means and to separate their capital from personal risk, which was not possible in Asian cities. A higher pace of urban growth, greater self-government for cities, and a strong trade focus in urban public policy have all also been suggested as key factors explaining the divergence. European cities are often described as the globalising cities of this era, but Islamic conquests were also enabling a new group of cities to go global. From the early 1500s, northern Indian cities in particular were brought into a vast Muslim sphere of influence under the Mughal empire.
The unification of commercial practices, common customs and beliefs allowed cities such as Delhi to become tightly integrated into Eurasian trade routes, especially for the export of textiles. Ahmedabad and Agra also thrived, aided by factory investment from the English East India Company – and, along with Delhi, reached a peak population of 400,000 people. Meanwhile Surat, nearly 200 miles north of Mumbai, became possibly the world’s largest port, home to 150,000 people and at one point the richest city in India. Many assessments place these Indian cities’ output at least on a par with leading European centres of the time – of which Antwerp and Amsterdam stand out as the two foremost world cities in continental Europe during this wave of globalisation.
Antwerp rose to prominence by cannily exploiting its gateway location at the heart of a rapidly expanding Habsburg empire. The fall of Constantinople in 1453had weakened Venice and Genoa, and the Scheldt river made the city a gateway to navigable inland waterways reaching far into western Europe. When nearby Bruges’ own port silted up, Antwerp’s merchants made incremental gains in the wool and fabric trade, and Portuguese spices from the East Indies started passing through the port. By the mid-15th century, Antwerp had become a preferred trading hub between the Baltic, the North Sea, northern Italy, France, and the Holy Roman empire. A few decades later, the city’s stock exchange and banking sector had become the largest in Europe.
Antwerp benefited from geopolitical advantage when it was absorbed into the Spanish Hapsburg Empire. This gave the city privileged access to a large unified market, and it became an entry point for silver and other precious goods shipped from Spanish American possessions. At its height, 40% of the world’s trade was channelled through Antwerp. It was Europe’s truly global city, with an ambitious and enlightened merchant class. The phenomenal wealth generated saw urbanisation in the region reach 30%. The city’s population peaked at 100,000 by the 1560s, but then the city suffered from Spanish insistence that Atlantic trade go through Seville – a way of diverting wealth to Spain. Entanglement in the Dutch revolt and religious conflicts saw the city sacked and repeatedly besieged. While it retained a merchant ethos, it never recovered its mantle as a global city, although its port is today resurgent.
Amsterdam took over the mantle from Antwerp and Genoa as Europe’s major commercial city during the 1600s, and it developed many of the technologies that underpin today’s global cities. The overthrow of the Spanish elite, which had hampered the interests of powerful local merchants, granted more freedom to Dutch traders. Soon after, the blockade of Spanish Antwerp triggered a flight of capital and talented entrepreneurs to Amsterdam. The protestant city became prized for its safe port, political stability and access to inland waterways. It maximised its appeal by guaranteeing equal protection to all merchants, wherever they came from, while developing standardised institutional norms. A relaxed attitude toward interest-bearing loans spurred the development of modern finance in Amsterdam, including maritime insurance, making the city both the logistical hub and the trade financier of Europe.
The establishment of the Dutch East India Company and a powerful navy helped Amsterdam secure control over trade routes and outposts as far away as Japan, Indonesia, India and the Americas. The city’s shipbuilders pioneered new materials and produced cheap cargo vessels, which considerably lowered transport costs. Amsterdam gained sufficient leverage over supply chains to wage price wars, prioritising volumes over margins to eliminate weak competition and secure a monopoly over pepper, tea and sugar imports. The impact of European wars and the rise of British naval supremacy in the 18th century meant that London eventually took Amsterdam’s mantle. However, much of the know-how and assets acquired during Amsterdam’s era of supremacy remain relevant today.
The industrial wave
For many observers of urban history, the modern era of globalisation began with industrialisation, whose effects occurred at a pace and on a scale not previously seen. Although the globalisation of traded goods long preceded the industrial era, industrialisation really reshaped whole societies, not just the tastes of upper-income groups. By this point in history, national governments had become much more effective at managing global trade and reducing the dangers involved in carrying it out, while transport was becoming ever more reliable. These were the preconditions for successive waves of cities to become substantially more global in their traded specialisations, to diversify their populations, and to increase their capacity for commercial innovation.
A turning point in globalisation occurred in the late 18th century owing to a confluence of geopolitics and technological innovation. The victory of Britain in the Seven Years’ War enhanced British power in India, and a more comprehensive system of colonial government was installed. This situation favoured British industrial development, and in 1771 the first water-powered cotton spinning model was invented. At the same time, colonial disputes in North and Central America intensified. As a result, a new wave of cities globalised as part of the British Empire. The slave trade, managed from London, was undoubtedly critical in financing British imperialism and industrialisation, and cities such as Bridgetown, Barbados and Kingston, Jamaica became subject to the empire’s needs.
As the empire extended its reach east, Cape Town, Calcutta and Hong Kong all became globally engaged cities, with Calcutta (now Kolkata) subject to a system of mercantilism, while Hong Kong became an instrument for promoting free trade. In east Africa, Mombasa grew into an important trade entrepôt with strong maritime business links to India and the Arabian Peninsula, as well as the long-distance caravan trade across east Africa. Another city that became open to global flows was Canton. The British empire likely had a greater impact on global cities than any of its rivals, and many of the cities enrolled in the imperial project remain highly influential actors on the global stage today. London, New York, Hong Kong, Singapore, Sydney, Mumbai, Shanghai, Toronto, Cape Town and Boston each developed their global roles and reach within the British Empire.
Infrastructure connectivity was often the catalyst. One of the clearest examples of this was in New York. In 1825, a growth coalition between New York’s city leaders and businesses began the construction of the Erie Canal, connecting the city to the Great Lakes and the US midwest. The availability of this water route resulted in a phenomenal surge in local manufacturing and trade and new financial and insurance industries supplying the growth of a young America. New York moved ahead of Philadelphia in financial power as a result of its enhanced connectivity.
In Britain itself, cities such as Liverpool, Bristol and Birmingham prospered from having access to imperial markets and from the global reach they afforded. Manchester emerged as the world’s first global industrial city, while London, the city at the centre of it all, surpassed Beijing’s all-time population record, reaching two million by 1840. Across Europe, a wave of cities benefited from unprecedented urban growth and industrial expansion. The European cities that globalised in this wave had in common a specific set of assets: historical trading knowledge, locations on major rivers or seas, and the ready availability of natural resources such as coal, iron and water.
Drawing on this asset base, places such as Bilbao, Bremen, Leipzig, Sheffield and Turin were able to build exceptional manufacturing economies, specialising in engineering, machine tools, ships and other industrial areas. They attracted a huge manufacturing labour force, and became pioneering cities in terms of their public services, education and civic institutions. Economic globalisation expanded massively in the decades leading up to the first world war. One of the main groups of cities to globalise in this wave was in the United States. American cities became substantially differentiated and specialised at this time, with their own mix of industrial enterprises and the “second wave” of immigration giving them very different social and cultural characters.
New York specialised in advanced services and consumer products, Chicago became a centre for heavy industrial plants, while Los Angeles moved into oil and the creative industries. Diverse and entrepreneurial populations played an indispensable role: New York was the main US gateway for immigrant labor. Tens of millions of immigrants, mainly Europeans, came to the city, and many settled there in search of a better life, making New York a cosmopolitan city on a scale never previously seen. Infrastructure was a critical enabler for this wave of American city globalisation. The installation of canals, railroads, water systems, highways and sewerage systems helped to provide the conditions for a half-century of extraordinary growth.
The postwar wave
A major wave of cities taking on global roles unfolded in the aftermath of the second world war. Changing geopolitics and American investment support provided opportunities for many commercially minded cities to become highly specialised. Often benefiting from sound city leadership, cities in this wave of globalisation were successful in restoration and in planning ahead to avoid the worst in congestion. Munich, Toronto and Tokyo are all prominent examples of cities in this wave. These cities were able to achieve intensive clustering and organisational modernisation in a supportive political environment among higher tiers of government. For this wave, it was key for corporate proficiency to partner with a strong knowledge platform in order to develop successful products for export.
Cities in this wave of globalisation were prominent well into the mid-1970s, by which time they had acquired many of the core assets that make them competitive today. Although these cities have experienced slowdowns and setbacks in the last 25 years, they have successfully preserved a culture of knowledge and innovation to support specialisations with global reach. Perhaps the most remarkable example during this wave was Singapore, the only global city also to be a fully autonomous city-state. Prior to independence in 1965, Singapore’s economic prospects were uncertain. Its traditional entrepôt trade industries had declined, manufacturing was stagnant, and housing and roads were in urgent need of modernization.
But its first prime minister, Lee Kuan Yew, was not deterred by geographic limitations and immediately pursued a labour-intensive industrialisation policy that was open to overseas capital. Emphasis was placed on tax incentives for industrial investors, improved labour discipline, technical education and foreign expertise, in order to specialise in industrial technologies. Singapore immediately tried to build trade and connectivity roles by leveraging its position as a multilingual city, with links to east and west, and a strong western legal model.
Since achieving global status, Singapore has continued to adapt to the global marketplace through state-led policies and programmes that encourage light manufacturing and high-tech research investment. Its economic development board and housing development board, in particular, have been able to leverage the scale of large public institutions to create effective systems at a citywide scale. The postwar wave of globalisation was also striking for the process of decolonisation, which saw many cities lose their imperial roles. In the past, many global cities fell along with the empires that spawned them. Indeed, for London, this period coincided with a challenging postwar process of deindustrialisation, port decline and outdated regulation in its stock exchange, banking and insurance sectors.
Although London attracted immigrants from the Commonwealth diaspora, the city continued to lose population until the mid-1980s, when it resumed the journey toward becoming a quintessential global city.
The IT-powered wave
The decade after the 1973 oil crisis and the subsequent global slowdown was a period of great flux in the global economy. Older models became discredited and new ideas and solutions came to the fore. By the mid-1980s, a new wave of globalisation was under way, led initially by a small group of cities but with an increasing number of smaller cities also becoming globally engaged and globally oriented for the first time. For a small, elite group of financial centres, the mid-1980s started a wave of resurgence when these cities began to re-attract people, business and capital. London and New York began to reverse their population decline, and in London the 1986 “Big Bang” in financial services marked the start of a new generation of international banks and surrounding business services firms setting up shop.
For Asian members of this group, such as Tokyo and Singapore, this wave was characterised by a more selective and tactical globalisation. It promoted internationalisation of financial and business sectors through liberalisation reforms, while also protecting against over-exposure to western cultural influences.
In this wave of globalisation, cities also re-established themselves as information and media capitals in their respective regions. This period was notable for significant governance changes in some cities – such as the abolition and then the recreation of a metropolitan government system in London; the new “one country, two systems” policy in Hong Kong, which sought to guarantee that it would maintain a capitalist system for 50 years after the 1997 British handover to China; and the increasing withdrawal of federal government from its role in New York City.
At the same time, the new wave of globalisation was showcasing a set of cities that until then had not been globally oriented. The global geopolitical context had changed considerably as a result of the fall of communism in Europe, the unification of Germany, the opening up of China beginning in 1980, and the Oslo peace accords, part of the Arab-Israeli peace process, in 1993.
The agreements of new trade arrangements – such as the European Economic Area and the North American Free Trade Association, and the establishment of the World Trade Organisation in 1995 – ushered in an era of multilateralism that allowed many countries and cities to globalise. These factors created a climate of opportunity for the growth of leading cities in the Brics (Brazil, Russia, India, China and South Africa) and the smaller Mints (Mexico, Indonesia, Nigeria, Turkey) economies, as well as in eastern Europe, the Middle East and Australasia. Among the most notable cities coming to global prominence in this wave were Bangalore, Barcelona, Cape Town, Sydney, and Tel Aviv.
New tradable specialisations associated with the information and communications technology revolution precipitated the unexpected globalisation of many cities. Bangalore is one of the most striking examples: its electronics specialisation took off in 1985 after the arrival of Texas Instruments. This prompted other multinational firms to relocate and boosted the local software design environment, laying the platform for successive climbs up the value chain. Another striking example of innovation driving a city’s globalisation in this wave comes from Tel Aviv. This young city’s spirit of commerce and entrepreneurial capitalism translated into an open and horizontal concentration of skills in finance, optics, communications, information systems, medicine, and software. This strong technological base was reinforced by the Israeli military’s investment in the city’s advanced defence industries, which produced a regular flow of highly proficient talent.
With its tech cluster benefiting from a supportive early stage investor arrangement and a positive attitude to risk, Tel Aviv is noted for its numerous tech inventions. The city’s leadership has since sought to reinforce this global potential by emphasising Tel Aviv’s pluralism, tolerance and investment readiness.
This wave of globalisation was distinctive for a more intentional approach by city governments and the rise of strategic planning for globalising cities. For cities like Barcelona and Tel Aviv, city governments designed strategic approaches to infrastructure, quality of life, and architecture in order to build a profile that would attract global talent. Many also converted their commercial land into use by more innovation-led activity. In nearly all cases, these cities witnessed an unprecedented wave of population diversification, fuelled by immigration and mobile talent. By the climax of this wave in 2007-8, these cities had a totally different global proposition – and new problems that had appeared alongside growth.
The current wave
The most recent cycle of globalisation has seen the start of a new wave of distinctive, specialised and globally aspirational cities. Many of them are higher-income cities within their respective regions and seek to leverage their efficient infrastructure, improved quality of life, and better security and environmental performance compared to the larger megacities. Cities in this wave are less likely to have major political or institutional functions. Rather, they are competing in more dynamic and fast-moving global industries where opportunities have arisen for greater market share. Among this group are Brisbane, San Diego, Shenzhen, Santiago de Chile and Stockholm.
In the aftermath of the global financial crisis and its impact on public sector finances, the ability of cities to find new sources and tools for investment has been a key enabler for globalising cities since 2008. Brisbane is an example of a city that has been able to globalise with the help of a large and financially astute city government, which has used the surplus from its recent commodities boom to erect a more international model of economic development. The Brisbane city council has pursued a wide range of joint ventures, sponsored business conventions and sporting events, and convinced its state government to prioritise Brisbane for road and rail infrastructure funding. It has also experimented with public-private partnerships and toll roads, with some success.
Much of the city’s investment attractiveness owes to its reputation in Asia, where its ambassadors programme has boosted expatriate investment connections and reached out much more successfully to Chinese, Japanese and Malaysian commodities firms. The ability to attract a new generation of immigrants and entrepreneurs has been central to many cities’ success in this wave. The ability to convey opportunity and appeal to the world, whether to talent, investors, or visitors, has also been very important. London is an example of a city that has been successful in this area since 2008. Through a unified organisation, London & Partners, it has delivered a consistent message to the world that it is open for business and investment and has made substantial strides in becoming a city that welcomes new technology and science industries.
In medicine, media, and digital industries, the ingredients of leading sector innovations, combined with an open city with deep labour markets and cosmopolitan liveability, have created a winning formula. The city’s advocacy organisations have helped maintain its appeal by successfully lobbying for a competitive business and tax climate.
Lessons for future cities
A comparison of the waves of globalisation in the last two centuries with the earlier waves shows clearly that the duration of each wave is becoming shorter. Where waves once lasted a century or more, they now appear to run their course in as little as 15-to-20 years, and in the future this duration may be even shorter. As the global economy becomes ever more integrated, globalising city waves increasingly come to resemble global economic cycles, and the windows of opportunity for cities to participate close quickly. Although there are vast differences between the networks of cities along the ancient Silk Roads and the 21st-century system of global value chains and competitive advantage, there are also striking parallels. Today’s cities can learn much from how those in previous waves built and sustained their competitive attributes, and how to avoid becoming locked into unsustainable or unproductive cycles of development.
Not all of today’s leading cities were destined to play key roles in the global economy. Many started out from an unpromising or uncompetitive situation because of either internal weaknesses or external disadvantages. Sometimes cities have endured long periods of global isolation, and begin to internationalise only when geopolitical changes occur and foreign investment arrives. This was certainly the case in the 20th century, and in the 21st century it is visible in many other cities outside the established west.
Equally, the ebb and flow of cities’ fortunes means that some cities we take for granted today as global will likely be much less globally oriented in future. History shows this is a risk if cities lose competitiveness in traded sectors, fail to embrace innovation or to project influence, are closed to immigration and entrepreneurship, or are unable to adapt to a changing geopolitical or geoeconomic centre of gravity. The ingredients of today’s most successful cities are sometimes hard for other cities to emulate directly, and so alternative strategies and pathways to global engagement have arisen. Over time, these alternative pathways result in very different kinds of global cities.