The network of major global cities—seats of commerce and finance—has been expanding dramatically. Back in the 1980s when globalization took off, only New York, London and Tokyo functioned as "global cities," places that could act as bridges between vast emerging global markets and national economies. Today, there are more than 20 major global cities and about 50 minor global cities. A new study released in June by the MasterCard Worldwide Centers of Commerce compares how these cities perform as global hubs, shedding light on city evolution. The biggest shift is the ascendancy of Asia and Europe relative to America.
The study looked at rankings of the world's 75 most competitive cities, identifying more than 70 cities that function as either major or minor global hubs for commerce and finance. The cities were ranked based on 100 factors, measuring things like the efficiency of political and legal systems, the number of days it takes to open a firm, the livability of the city and its global "brand" recognition. The 2008 study shows that over the last two years Europe has risen in the rankings, with new cities rising alongside the traditional powerhouses of London, Paris and Frankfurt, Germany, and often displacing U.S. rivals. Europe now claims seven of the top 15 cities, compared with just two U.S. cities, New York and Chicago. Madrid went from 16 to 11 and Amsterdam from 11 to 10, while Los Angeles fell from 10 to 17 and Boston from 13 to 21. Copenhagen rose from 15 to 14, and Zurich jumped from 19 to 15. Over this same period, Asia has strengthened its hold on four places in the top 15, anchored by Tokyo (No. 3) and Hong Kong (No. 6), and with Singapore rising from sixth place to displace Chicago at No. 4, and Sydney rising from 14th place to 12th.
The rise of Amsterdam and Madrid reflects the broader emergence of small cities, often in small countries, as significant platforms for global firms and markets. All major U.S. cities still score high on macro measures of legal, political and business conditions, but Stockholm, Singapore and Copenhagen do even better. On factors such as "ease of doing business," the U.S. cities begin to lose ground, including to such newcomers like Dubai (No. 6 as a business center). Cities like Dubai and Singapore are rising as platforms for investment in their regions and often boast stronger legal systems, as well as more stable regimes and better overall business and living conditions, than powerful megacities in Latin America, India and China. There is also a group of Latin American cities, including Buenos Aires; Santiago, Chile; São Paolo, and even Bogotá, that have been lifted by investment in construction and infrastructure projects.
What is perhaps most interesting is that there is no perfect global city—no city ranks at the top in all 100 factors. The day when the capital of the empire was the city that had it all is gone. Even London and New York, indisputably the two leading cities, rank low in several aspects—neither is in the top 10 when it comes to starting a business, or closing a business. London ranks 20th for employing workers, and 28th when it comes to dealing with commercial real-estate development. New York ranks 13th for ease of trading across borders, and 22nd for corporate tax burden. Southern cities like Mumbai and São Paulo rank high for financial and economic services, but are brought down by their low rankings around basic amenities for all, like electricity and water.
What's more, the number of cities that can now deliver global-city functions has kept growing with the expansion of the global economy since the 1980s. While much has been said about the global economy's homogenizing national economies, facts point in the opposite direction: different cities have different strengths. Companies do not want one perfect city—they want many. The loss of position of U.S. cities is part of a systemic evolution as diverse parts of the world rise. Thus "old" Europe is resurgent. Clearly, the new urban order is not a zero-sum game.