Hierarchy of Business Services

Geographers identify a handful of urban settlements known as global cities (also called world cities) that play an especially important role in global business services. A global city is a major center for the provision of services in the global economy. Global cities can be subdivided according to a number of criteria.

Business Services in Global Cities

Global cities are most closely integrated into the global economic system because they are at the center of the flow of information and capital. Business services that concentrate in disproportionately large numbers in global cities include:

• Financial institutions. As centers for finance, global cities attract the headquarters of the major banks, insurance companies, and specialized financial institutions where corporations obtain and store funds for expansion of production.

• Headquarters of large corporations. Shares of these corporations are bought and sold on stock exchanges located in global cities. Obtaining information in a timely manner is essential in order to buy and sell shares at attractive prices. Executives of manufacturing firms meeting far from the factories make key decisions concerning what to make, how much to produce, and what prices to charge. Support staff far from the factory accounts for the flow of money and materials to and from the factories. This work is done in offices in global cities.

• Lawyers, accountants, and other professional services. Professional services cluster in global cities to provide advice to major corporations and financial institutions. Advertising agencies, marketing firms, and other services concerned with style and fashion locate in global cities to help corporations anticipate changes in taste and to help shape those changes.

Consumer & Public Services in Global Cities

Because of their large size, global cities have consumer services with extensive market areas, but they may have even more consumer services than large size alone would predict. A disproportionately large number of wealthy people live in global cities, so luxury and highly specialized products are especially likely to be sold there.

Leisure services of national significance are especially likely to cluster in global cities, in part because they require large thresholds and large ranges and in part because of the presence of wealthy patrons. Global cities typically offer the most plays, concerts, operas, night clubs, restaurants, bars, and professional sporting events. They contain the largest libraries, museums, and theaters.

Global cities may be centers of national or international political power. Most are national capitals, and they contain mansions or palaces for the head of state, imposing structures for the national legislature and courts, foreign embassies, and offices for the government agencies. Also clustered in global cities are offices for groups having business with the government, such as representatives of foreign countries, trade associations, labor unions, and professional organizations.

Unlike other global cities, New York is not a national capital. But as the home of the world’s major international organization, the United Nations, it attracts thousands of diplomats and bureaucrats as well as employees of organizations with business at the United Nations. Brussels, Belgium, is a global city because it is the most important center for European Union activities.

New York, a Global City, is Home to the United Nations

Pause & Reflect 12.3.1

How would you expect an alpha city such as Chicago to differ from a beta city such as Houston or a gamma city such as Phoenix?

Ranking Global Cities

Global cities are divided into three levels: alpha, beta, and gamma. These three levels are further subdivided. The same hierarchy of business services can be used within individual countries, including the United States. A combination of factors is used to identify and rank global cities:

• Economic factors. Number of headquarters for multinational corporations, financial institutions, and law firms that influence the global economy.

• Political factors. Hosting headquarters for international organizations and capitals of countries that play a leading role in international events.

• Cultural factors. Presence of renowned cultural institutions, influential media outlets, sports facilities, and educational institutions.

• Infrastructure factors. A major international airport, health-care facilities, and advanced communications systems. Technology was expected to reduce the need for clustering of services in large cities, but it hasn’t.

• Communications. The telegraph and telephone in the nineteenth century and the computer in the twentieth century made it possible to communicate immediately with coworkers, clients, and customers around the world.

• Transportation. The railroad in the nineteenth century and the motor vehicle and airplane in the twentieth century made it possible to deliver people, inputs, and products quickly. Modern transportation and communications enable industry to decentralize, as discussed in Chapter 11, but they reinforce rather than diminish the primacy of global cities in the world economy.

Global Cities

Geographers distinguish various ranks of global cities. London and New York, the two dominant global cities, are ranked as alpha++. Other alpha, beta, and gamma cities play somewhat less central roles in the provision of services than the two dominant global cities. Cities ranked alpha++ and alpha+ are labeled on the map.

Global Cities in North America

Atop the hierarchy of business services is New York, followed by Chicago, Los Angeles, and Toronto.