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World City Analysis

What Is World City or Strategic Connectivity Analysis, and Why Is It Useful?

In the increasingly globalized new economy, major cities have become the centers for global wealth and trade, and understanding which factors make cities strategically competitive and impact on their ranking within the ”world city” hierarchy has become a progressively more important topic for political decision makers. They are recognizing that urbanization has become synonymous with globalization and that cities will increasingly become the focal point for future economic growth across all continents.

World city analysis, or strategic connectivity, provides a new methodology for examining a city’s competitive position—its strategic competitiveness—within a world cities hierarchy by reviewing strengths and weaknesses relative to other cities in that hierarchy, and understanding where investment can be best targeted (e.g., in skills, research and innovation, infrastructure or supporting political, or business institutions) to have optimum benefits and improve a city’s world ranking.

Since the late 1990s, leading urban economists and geographers, such Saskia Sassens from Columbia University and Manuel Castells and Peter Taylor in the UK, have led research into different aspects of the world city phenomenon. Using the virtual branding umbrella of Globalization and World Cities (GaWC), they have published well over 400 academic papers and several books looking at global city formation. One of the most interesting aspects of this research has been the emergence of ”connectivity” as a major explanatory variable in the relative positioning of cities within the world city hierarchy.

What Is a World City?

There are a number of ways in which to define a world city:

  • by size, typically by population or GDP (interestingly, only two to three of the world’s most populous cities would make the top 10 of most world city ranking lists; in the case of GDP it would be six to seven of the top 10);

  • by some combination of quantitative economic (e.g., GDP per head) or social (e.g., educational attainment) indicators, with or without qualitative indicators (e.g., political/institutional power, quality of life); or

  • by infrastructure (e.g., broadband/IT capacity, international/intercontinental transport infrastructure, etc.) and business network connectivity (measured in terms of the presence and size of global producer service firms)—factors that GaWC analysis in particular focuses on.

The first of these three indicators offers simple, readily accessible measures of the economic/political importance of a city which, if not handled with care, can be very misleading. The second tends to have a significant element of subjectivity and so typically produce inconsistent results. The third, of which GaWC is the leading proponent, focuses on factors that are critical to city formation and hierarchical development.

GaWC analysis proposes the idea of contemporary globalization as “network society” in which cities provide the key nodes for the movement of people, goods, information, and intellectual and financial capital connecting them. A city’s importance, and therefore its position in the hierarchy of world cities is, therefore, a function of its network connectivity. For GaWC, the most useful and manageable measure of that connectivity is the presence and scope of producer service firms (e.g., architects, lawyers, management consultants, financiers, and adverting agencies) who underpin the functioning of major corporations and therefore the modern economy.

Under this conceptualization, “infrastructure capability” carries more weight than quality of life indicators, whilst function, status, and competitiveness—rather than subjectively defined livability—are key output measures.

Thus while some ranking indices (e.g., Global Cities Index or Knight Frank) reflect outcomes that take these kind of factors more or less substantively into account, GaWC is much more focused on evidence of innovation, high quality productive function, business connectivity, and institutional representation that drive a city’s economic and political power.

The Importance of Aviation in Facilitating International and Intra-Continental Connectivity

Alongside internet and telecoms, transportation is seen as particularly important in serving the interaction between global cities, with the highest ranking cities frequently having the strongest networks. A seminal report by Oxford Economics argues strongly that aviation networks between major cities are ”the Real World Wide Web,”1 and analysis by GaWC2 points strongly towards aviation connectivity as being one of the single most important factors determining a city’s position within the world city hierarchy.

Value of World City (or Strategic Connectivity) Analysis

By examining world city rankings and the data underpinning them alongside key aviation metrics it becomes possible to develop a better understanding of the role of aviation in developing and maintaining world cities and the strategic economic value of investment in aviation infrastructure.

The analysis also has the major advantage of being easily understandable conceptually, having significant strategic and political resonance for key decision makers, and using data that is manageable in terms of scale and transparency.

In their most recent rankings data for 2010, GaWC assigns Alpha status—the highest ranking in the world cities hierarchy—to the cities shown in Box 2. There are 560 cities in the ranking classification.

Many emerging economy world cities are in the subsequent Beta, Gamma, or Sufficiency categories, but their connectivity and ranking scores are rising over time relative to their developed economy competitors. The appearance of Shanghai, Beijing, and Dubai in the 2008 and 2010 top 10 ranking lists in Box 3 is a sign of things to come.

Why Is World City Status So Important?

In addition to being the location where most global wealth is created and traded, world cities are where:

  • international capital is serviced and key decision makers who manage these processes are concentrated;

  • clusters of multi-national headquarters, continental, and regional offices are drawn;

  • significant contributions to national income are made;

  • global power and influence is exercised at corporate, governmental, and institutional levels;

  • the nucleus of future “mega-city regions” will be located; and

  • the drivers of national economies are usually found.

Cities aspire to improve or maintain their world ranking position because it is a measure of success or advancement. As a result, the published rankings are intensely competitive and analysis of the rankings offers a new way to describe a city’s relative performance.

How Does Aviation Support a World City?

Because of the need for people to meet face-to-face to undertake negotiations or conclude transactions or political agreements, access to good air services is essential to the executives located at the headquarters of leading corporations, government, and global institutions. Similarly people employed in higher added value economic activities tend to have a high propensity to fly and so are more likely to be attracted to cities that are served by airport(s) that feature good connectivity. The same holds true for knowledge-based sectors (e.g., universities) and typically major sports venues and conference and exhibition facilities will tend to locate in those cities which have airports serving a good range of international as well as domestic markets.

But perhaps most significantly, successful entrepreneurs and innovators and the most talented and skilled labour are all highly mobile; like the global firms that they run/employ them, they will move to another city if the business environment offered by their current base (including global connectivity) is poor. Consequently, the more economically advanced a city is, and the greater its importance politically and culturally, the better developed and more resilient its air services and airports need to be. It is the number and diversity of destinations that is paramount to a ranking position, not passenger or freight volumes. Consequently there is a strong correlation between the world ranking of cities and the extent, scale, and frequency of the air service networks that serve them.

The Analytical Basis for Linking Global Competitiveness to Air Transport

Box 4 on the following page, which is based on analysis by Aviation Strategy and Planning et al., shows a clear statistical correlation between world city status, the range of destinations served, and the number of scheduled departures. 

Box 5, which is also based on analysis from Aviation Strategy and Planning et al., shows the positive and statistically significant correlation (R2 = +0.555) that exists between the ranking or relative importance of a world city and the strength or extent of development of the airline networks of that city’s airport or airports.

Of course cause and effect is an important consideration, because it can be hard to disentangle which is the dependent variable (i.e., does airline connectivity simply follow the demand generated by a city, or can investment in infrastructure and the commercial offer made to airlines enable the development of a network of routes that will attract businesses?). Members of the GaWC network have examined this issue based on an analysis of 112 metropolitan regions and reported their findings in a recent research paper.2

Air connectivity is critical to a city’s position in the global urban hierarchy and higher ranking world cities tend to have:

  • a diverse range of destinations to both mature and emerging markets;

  • higher frequency of service to other high ranking world cities; and

  • either single mega-airports or multiple airport systems capable of providing sufficient capacity to accommodate these service demands.

The presence of a major hub airport does not automatically mean that a city is ranked highly in the global hierarchy, however. Airline hub operations may be a contributory factor, but only if interlining is international in character, involves passengers rather than goods, and/or is the base for a major national carrier or airline alliance (e.g., Dubai), rather than being intra-continental (e.g., Atlanta) or freight focused (e.g., Memphis).

Based on the foregoing, although the presence of a major airport facility cannot of itself guarantee a prominent global rank for a city, there is nevertheless clear evidence and rationale to support the proposition that, when taken alongside other key factors such as high quality telecoms/internet infrastructure, good universities/R&D base, and a highly skilled workforce, provision of a world class airport or airport system is a necessary precondition to becoming a highly ranked world city.

Airports: Key Investment for a World City

Airports and associated international and intra-continental route networks should therefore be a focus for investment, not only for an aspirant world city, but also by existing world cities looking to “future proof” their position. The model that will best achieve this for each city will depend upon:

  • the maturity of the air transport sector in its host country and extant of route structures that are already in place;

  • existing airline presence and competition; and

  • location, condition, and sensitivity to development of existing airport assets.

To optimise the link between city connectivity and competitiveness, there must first be a supportive infrastructure and regulatory environment. Typically this would include:

  • Robust airport infrastructure with spare capacity and resilience, such as:
    • airside, runway capacity, aprons, and taxiways;
    • a layout conducive for airline network hub construction;
    • terminal capacity;
    • supporting landside infrastructure; and
    • well-developed surface access—roads, transit, and high speed rail.

  • Transparent, dynamic, and affordable airport access regime (e.g., a coherent and objective slot-allocation process which encourages new route start-ups and new entrants; charging regime and supporting incentives which encourage airline investment); and

  • Liberal regulatory and tax regime in terms of bilateral and open skies

agreements and taxes which don’t weigh against new route formation or discourage enhanced frequencies.

Conversely, those cities that have an airport or airport system that is capacity constrained or subject to regulatory or fiscal impediments will not easily be able to develop route networks and frequencies, and consequently will over time begin to offer relatively poorer connectivity.

Many cities have already enacted, or have plans to build new runway and terminal capacity. MENA (Middle East/Northern Africa) cities are setting the pace in airport development, with new airports planned or under construction. Leading Asian cities already have, or are planning to make, major airport investments. In Europe, major hub airports have added new runways and terminal capacity in addition to providing access to high speed rail.

 

For cities that lag behind, such as London and some cities in North and South America, the risk is that their aspirations to be players on the world stage will not be met, or that their position will gradually erode as their competitors make the investments needed to be globally connected and competitive.

The Value of World City Analysis

The value of world city analysis is its ability to feed seamlessly into strategic business targets and the ease with which key decision makers and political constituencies can grasp and articulate the headline messages it provides.

It represents a powerful analytical tool which helps define the role of aviation in future global competitiveness, offers insight into capacity and infrastructure planning allowing the wider strategic economic case for investment to be made, and gives confidence to decision makers, allowing them to offer leadership on major projects.

Aviation is a key driver of economic growth and status. Those cities and regions that have invested in capacity at their airport(s) stand to benefit from connectivity to existing, traditional markets and entry to more diverse emerging markets through enhanced connectivity. Conversely those cities that have not stand to lose out—GDP may slow and world city ranking fall. 

 

Notes:

  1. Oxford Economics. Aviation: the Real World Wide Web (2009)
  2. E. Van De Vijver, B. Derudder, D. Bassens, and F. Witlox. Filling Some Black Bholes: Modelling the Connetion Between Ubanization, Infrastructure, and Glocal Service Intensity in 112 Metropolitan Regions Across the World. Published in GaWC Research Bulletin 396 (2012)

 

Image Header Source: Andy Powell (Creative Commons)