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Global cities, the liability of foreignness, and theory on place and space in international business

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Anthony Goerzen re-evaluates the role of cities as micro-locations against the emergence of megatrends that are shaping our future.

Image courtesy of interviewee. July 24, 2024

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This video discusses the insights that emerged from conversations with senior managers at InBev, previously known as Interbrew. These discussions centered on the company's strategy of acquiring regional beer brands and the complexities involved in creating global brands from these local entities. The author, an international business scholar, highlights the distinction made by managers between expanding into regions or cities rather than entire nations, emphasizing a subnational approach.

The examination of these interactions led to a broader exploration of the role that global cities play in international business, suggesting that the nuances of corporate behavior and performance are often more closely tied to specific urban centers than to entire countries. The authors developed a multi-level nested model, focusing on the subnational level's relevance, which includes cities and regions, in understanding multinational corporations’ strategies.

This video also highlights the recent trend of globalization leading firms to concentrate their investments in a limited number of global cities. Empirical research indicates that a significant portion of global investment is funneled into these urban areas, which are characterized by the presence of advanced producer services, connectivity, and cosmopolitanism. These elements create an environment conducive to multinational operations.

Additionally, the text discusses how global cities are key players in addressing global challenges, especially regarding sustainability, where city mayors are increasingly collaborating to develop solutions at the local level, despite national political stalemates. Ultimately, the findings suggest that, contrary to the belief that globalization diminishes the importance of location, the geographic context and characteristics of global cities are crucial in shaping multinational corporate strategies and responses to global issues.

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X-TIMESTAMP-MAP:LOCAL=00:00:00.000,MPEGTS=900000

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The origin of this topic for me, stems back

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to a conversation

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or a series of conversations that I had with

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senior managers at, in,

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they're called InBev now in Interbrew at the time,

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and it's the global brewery.

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They, at that time, what these,

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what these executives were doing,

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or what the multinational corporation was doing was

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to buy up local brands like,

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rolling Rock, like Stellar Trois,

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and they were trying to figure out

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how do they go about creating greater value from these,

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what they perceived to be regional brands.

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They were very popular in and around where they were brewed,

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but not well known outside of that.

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And it was in that process that they were talking

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to me about the ways in which

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global brands can be created.

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And in that discussion, it led to, in fact, a,

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a teaching case that's used in business schools called the,

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the, global Brand Branding of Stella Artis.

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In those conversations, what emerged in,

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from, from me as an international business scholar

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and the focus being on international,

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was I would ask questions around their efforts

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and interests in internationalizing those brands,

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and they kept correcting me.

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I would say it's to say that we're not really investing,

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or we're not trying to, to expand in the us

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What we're trying to do is expand in New York or in Seattle,

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or in San Francisco or in Frankfurt.

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And I sort of pushed back on that to ask, so

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you don't view this as a, an international strategy,

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but instead it's much more subnational.

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Their, their answer was emphatically yes.

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And when I looked at the international business literature,

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as you can tell by the, the name of our academic field

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that is international, we're very much tied

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to the concept of international.

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And I would say much most of the work

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that is done within our academy has to do with comparing

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nations in terms of, in a variety, in whatever way is,

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is important, whether it's culture or business practices or,

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or trends or, or whatnot.

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What this alerted me to the, the conversation with introvert

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or InBev they're called now, was that

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managers don't really think that way.

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They don't think in terms of expansion to the us

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what they think of is it's a much

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More local, much more subnational,

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point of view.

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In fact, it would appear as though it was

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not even subnational, which would be, let's say regions

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or states, but much more specifically on cities.

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And that was really intriguing.

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And so with myself,

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and, two, two colleagues, Christian,

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asmussen at Copenhagen Business School

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and Bo Nielsen at the University of Sydney, we started

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to think this through, like, what is it

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that we need to examine?

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What's the relevant unit

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of analysis if the nation isn't the u re relevant,

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u unit of analysis?

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Well then what is,

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and we first got some, you could say, some,

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intuitive,

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support from the notion that many

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of the phenomena that we're interested in

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operates at the subnational level.

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When you look, for example, many of us, particularly those

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that don't really know that much about China, think

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of ch the, of the Chinese as being kind of monolithic.

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There's the Chinese culture,

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the Chinese way of doing things.

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But when you start to kind of peel back the onion,

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what you realize is that China actually is a group

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of languages.

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It's a group of cuisines, it's a group of behaviors.

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When we think of, languages, for example, some

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of the dialects that we, as you know, that many

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of us think of just as Chinese are about as close

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to each other as German is to English, right?

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They, they, they can't read each other's newspapers.

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They can't speak to each other, not in their native,

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let's say, in their local languages.

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Um, similarly, the foods that they, the, the, the, the,

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the products, the pr, the produce that they buy, the recipes

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that they follow, all, you know, when we think of the notion

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of culture, of attitudes, of behaviors,

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very much tied towards things like food language,

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and we can go actually beyond that.

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When we look at, Italy, for example,

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the judicial system, where in northern Italy,

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at versus Southern Italy, when you look at many

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of the metrics of the legal system, like for example,

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how quickly verdicts are reached, there's quite a difference

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between northern and southern Italy.

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And this is despite the fact that the judges

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and the lawyers are coming from the same schools.

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It's not like they're not being separated,

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but it's once they sort of embed themselves in their

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sub region, certain behaviors tend to

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become more prominent.

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And I think anybody who is,

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who is following the US political situation, it's,

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it's hard not to notice the differences between Republican,

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Democrat, there's blue states and there's red states.

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So even when we think of the notion, we've all heard this,

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this notion of, of an American culture.

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Well, what is American culture or,

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or Canadian culture for that matter?

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We've got individuals on the east coast,

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we've got Francophone Canada, we have Central Canada,

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we have Western, and these are are places

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that operate differently.

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They, they value different things.

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They, they, you know, behave in different ways.

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And so that gave us a lot of, let's say, let initial support

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that we are, we think we're onto something here.

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And so what we did in our research team with,

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with Asmussen, Nielsen

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and myself, we built a

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multi-level nested model to try

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and get at the nuances of the ways in which

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multinational corporations differed in their behavior

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and in their performance.

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Was there something that we can know about the way

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that they behave if we start to control for things like,

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the nation, the region, region, the city,

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the organiza and the specific organization?

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And where that led us initially was, you know, there,

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there is a, a lot of work that has been done on various

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economic and social issues as they relate

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to the sub-national level.

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Um, for example, you could say that, economic geography,

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the question of the subnational of agglomeration, how firms,

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co-locate and refer to each other

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and invest near each other.

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That was something that was started in the twenties by 1920s

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by, Marshall, very influential piece of work

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that alerted, economic geographers to this notion that

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these are, are, are factors

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or elements that operate at the subnational level.

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So when we started thinking through

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what is it about the subnational level, is it sort of a,

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is it at the state level?

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Is it the, is it sort of cities in general?

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Is it, or is there something special about certain cities

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that would lead us to maybe a more precise explanation of

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what multinational corporations are doing?

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Where that led us was to the, global city research,

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which, is a longstanding, very rich research,

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but not an international business.

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And this is one of the points in the, the articles,

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the several articles that we've read,

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that we've written on this topic is that,

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there actually is a very rich,

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and longstanding literature on global cities,

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but it's not been brought into international business

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because I would say most of us in, in international business

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felt that subnational wasn't international, and

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therefore it's not really, you know,

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it's not really inside our tent.

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But when we started to look at this notion of global cities,

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what they were, how they operated, we started to realize

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that this might be an extremely interesting unit of analysis

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to access the nature

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of multinational behavior and performance.

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So, as I said, it's a, it's quite a longstanding literature.

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There are a number of scholars who've done a great deal

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of work to try and understand how do we go about measuring

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what, what is a global city, what is not?

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There are many ways to understand cities.

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There's a, a demographic approach,

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which is just simply size.

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So big cities, Mexico City, Rio,

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Calcutta.

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But then there's a functional approach which the global

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cities researchers have pursued, which is

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what happens in these cities

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and what exists within these cities.

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Not just simply how many people are there, how big they are,

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but what actually goes on,

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and this is where theorists like Sassan,

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provided a huge boost when she started

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to identify the attributes of certain cities

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that made them fundamentally different than other places.

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And of course, now that becomes really interesting

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for scholars in an international business,

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because perhaps one of the core ideas in our discipline has

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to do with space, place,

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and the, the, the, the, the nature of distance.

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This to us was a really exciting idea

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because there was an, an emerging notion

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that kind of goes along with economic globalization,

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which is that the,

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the global economy will become, in a sense,

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democratized, right?

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It doesn't matter where you are, you can work from anywhere.

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You can invest anywhere, right?

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And, and instead of being,

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of having certain places being highly favored, the notion

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of economic globalization,

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it's the emphasis on globalization.

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It's anywhere. It's everywhere.

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Um, what we found though was that in our research, what we,

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what became evident was in a

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counterintuitive way, it start, it seems to matter

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in the face of globalization, as eco, as

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communication becomes, less expensive,

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as transportation technologies become increasingly,

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efficient, cheaper, faster, more reliable, all

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of these things you would say would lead you to think

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that distance doesn't matter.

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You can be anywhere

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because of communication, transportation, the, the,

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technologies are getting better and they're getting cheaper.

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So it would make, make it less important as to

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where you located your operations.

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What we found in contrast was exactly the opposite,

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that it becomes increasingly important to

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understand the nature of location decisions

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by multinational corporations.

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Now, these are corporations, multinationals are corporations

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that are responsible for perhaps 60,

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70% of global trade, probably the same amount

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of foreign direct investment.

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So they are, when you think of what are, who is behind

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or what is behind economic globalization, which has been

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perhaps one of the major trends of the, of our, of our era,

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it's multinational corporations.

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So it becomes really important to understand

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how are they making those location choices.

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And what we discovered in our, in our, empirical,

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in our empirical tests was that

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around half of all investments everywhere

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were located in global cities.

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And in fact, even as you tighten that definition

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of global cities, you make it more and more strict.

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The relationship holds all the way to the point where

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if you count only 10 cities in the world

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as being global cities, they have around 40%

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of all investment.

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All new investment goes to these global cities.

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So, you know, we're talking about, we,

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we actually calculated, geographically what kind

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of space are we talking about?

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And it's something like less than 0.02%

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of the globe gets roughly

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40% of all investment.

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So that really put us onto the, the notion that

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global cities were a, an an economic globalization

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phenomenon that we really needed to explore

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how are businesses making choices?

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Why are they going there?

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What is it about the multinet about the global city

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that's drawing them in?

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And prior research gave us a number of very powerful clues.

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The work by Sasson, for example, I referred to earlier,

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found that there were, are essentially

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three attributes that are extremely important in,

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in identifying global cities.

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One is the existence of what the,

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what we call advanced producer services.

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Those are the organizations that exist

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to facilitate global trade, like international tax lawyers,

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international accountants,

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international advertising agencies,

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international consulting agencies.

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These are, are, are organizations that specialize

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in providing the services

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and advice that enable multinational corporations

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to start to disperse their operations

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in various locations throughout the world.

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They were now agglomerating themselves

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in global cities to provide those services.

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So it was one, the presence of ad advanced producer services

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or, or a PS, the other was

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the extent to which these places were connected

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in terms both in terms of the, their flow

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and transmission of information, internet, telephone lines,

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that kind of thing, but also physical, seaports

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airports, railway, you know, nu kilometers

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of railway, these kinds of, of,

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measures of connectivity.

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The third element had to do with the concept

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of cosmopolitanism.

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It's that cultural notion of being open to influence,

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of being welcoming, even being interested in

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the things that are foreign.

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I think we call that xena as opposed to xenophobia.

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It's actually, it's a welcoming, it's a,

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it's foreign is good, foreign is interesting,

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foreign is exciting.

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And so what we've, what, researchers have found is that

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global cities are, you could say, repositories

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for these three really fundamental aspects.

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And so they're causing, they are

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creating the conditions under which multinationals are

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capable or get the ability to globalize.

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And then as they globalize in these global cities,

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they become bigger and more powerful, which leads to,

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now we we're into like a virtual circle

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or virtual cycle where it's this sort of

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what we call the Matthew effect.

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It's where if you have, you'll be given more,

18:29.005 --> 18:31.585
and if you don't have, everything will be taken away.

18:33.245 --> 18:37.105
And this, for us is a really exciting notion, this idea

18:37.805 --> 18:42.225
to capture this idea of, of, the, the nature

18:42.365 --> 18:45.785
of economic globalization and the way it's unfolding.

18:45.785 --> 18:48.505
And one of the really interesting hypotheses

18:49.375 --> 18:53.625
that we're exploring now has to do with the extent

18:53.625 --> 18:57.795
to which global cities are detaching

18:59.165 --> 19:01.775
from their, what we call the hinterland

19:01.915 --> 19:04.655
or all of the, the, the space in place

19:04.655 --> 19:06.615
that surrounds them, right?

19:07.195 --> 19:11.735
So to what extent, in, in many ways, culturally,

19:12.115 --> 19:16.615
in economically, politically, socially, how,

19:16.915 --> 19:18.015
to what extent

19:18.115 --> 19:19.655
or first maybe ask the question,

19:20.515 --> 19:21.815
are they becoming different?

19:22.475 --> 19:24.975
Our hypothesis is, yes, they are.

19:24.975 --> 19:28.295
And we've got some preliminary results that seem

19:28.295 --> 19:29.375
to bear that out.

19:30.235 --> 19:32.095
And in addition, what's,

19:32.355 --> 19:36.225
an equally interesting hypothesis for us is that

19:37.005 --> 19:40.025
global cities are becoming more similar

19:40.205 --> 19:42.425
to each other, right?

19:42.805 --> 19:45.625
In certain, in many really important ways.

19:45.845 --> 19:48.305
Now, one global city is Tokyo,

19:48.535 --> 19:50.705
another global city is New York City.

19:51.855 --> 19:54.435
Now, the differences between those two are obvious.

19:55.495 --> 19:57.195
In one, they speak Japanese

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and culturally they're Japanese in one,

20:00.105 --> 20:02.995
they speak mostly English as well as other languages,

20:03.495 --> 20:06.475
but are sort of in a broad sense, you know,

20:06.735 --> 20:11.715
the New York culture, northeast culture,

20:12.555 --> 20:14.555
northern US culture, that kind of thing.

20:15.695 --> 20:19.385
But when you start to again, peel back that onion about

20:20.155 --> 20:23.425
those are the differences, those are the, the, the,

20:23.425 --> 20:25.425
let's say the superficial differences.

20:25.485 --> 20:27.985
You could almost say it's like paint on your house,

20:29.005 --> 20:33.945
but what about the structure of society, the way that they,

20:33.975 --> 20:35.145
like, who are these people?

20:35.205 --> 20:38.265
And what we find is that in terms of their education,

20:39.085 --> 20:40.975
in terms of their needs

20:40.995 --> 20:44.655
and wants, in terms of their opportunities

20:44.795 --> 20:48.245
and threats, their concerns,

20:49.385 --> 20:50.805
the kind of work they do,

20:51.355 --> 20:54.365
when you start peeling back the onion, what you discover is

20:54.365 --> 20:57.485
that within these global cities, there are

20:59.555 --> 21:02.765
many groups of individuals

21:02.865 --> 21:06.685
and organizations that are very similar to each other.

21:07.755 --> 21:12.255
So this for us is a really interesting take on the concept

21:12.395 --> 21:14.415
of global, of economic globalization,

21:14.425 --> 21:16.895
where at one time the starting point

21:17.465 --> 21:20.495
where there were authors suggesting the death of distance

21:21.075 --> 21:23.655
and the world is flat, right?

21:23.655 --> 21:26.335
This sort of notion that it doesn't matter.

21:26.805 --> 21:28.975
What we're finding is that it actually,

21:28.995 --> 21:30.455
it matters profoundly

21:31.275 --> 21:33.055
and it's having a great impact,

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not only in economic globalization,

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but in terms of all of the other forms of globalization,

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political, social, technological.

21:44.795 --> 21:48.335
And when we think of, of certain,

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really important issues that are emerging today,

21:51.865 --> 21:54.375
let's take sustainability as an example.

21:56.205 --> 22:00.175
What we see is that, you know, there's very little,

22:00.275 --> 22:03.765
it would appear very little ability

22:05.115 --> 22:07.535
to make a difference at the national level.

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The US won't do anything until China does something first.

22:14.015 --> 22:16.365
China says, we're not gonna do anything

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because you are the one who started this.

22:20.035 --> 22:22.485
India's saying the same thing, don't tell us

22:22.585 --> 22:24.005
to be sustainable.

22:24.585 --> 22:25.845
Not until you are,

22:26.075 --> 22:30.125
because we've got a large population that we need to rise

22:30.665 --> 22:33.605
out of poverty, something that you did a hundred years ago.

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So it's that kind of stalemate.

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However, what we're seeing is some very exciting

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developments at the city level.

22:44.915 --> 22:47.305
There was an organization, let's say,

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a coalition is maybe a better, a better,

22:52.445 --> 22:55.135
description of what, what they are a coalition

22:55.235 --> 22:56.375
of city mayors.

22:56.885 --> 22:59.655
Initially they were called C 40 I think,

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than they were called C 100.

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But what that is, is these mayors of Toronto,

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of Frankfurt, of Tokyo of Rome are speaking

23:13.615 --> 23:15.575
directly to each other to say,

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how do we go about making cities more sustainable?

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How do we go about creating, systems

23:25.875 --> 23:27.055
and procedures

23:27.395 --> 23:31.775
and institutions that allow that enable

23:31.875 --> 23:34.695
or improve the wellbeing of our citizens?

23:34.695 --> 23:36.895
And you can see why that might work,

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because they don't have a sense of,

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this is the US and you're China,

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or you're Italy and we're Canada.

23:46.195 --> 23:47.685
It's, we're all in this together.

23:48.825 --> 23:50.685
And so it's one of the areas

23:50.785 --> 23:55.385
that's really exciting development of issues

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of, of solutions rather, that address the questions of,

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of sustainability.

24:02.445 --> 24:05.145
So in other words, global challenges

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that are being solved, not at the global level,

24:10.105 --> 24:12.085
but at the subnational level,

24:12.225 --> 24:16.445
or more specifically, very much at the global city level.

24:17.025 --> 24:20.765
It was recently the chancellor of Germany said that

24:22.885 --> 24:26.755
he expects that the solutions

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to some of humanity's greatest challenges,

24:31.345 --> 24:32.395
they will all come,

24:32.425 --> 24:36.005
they will all emanate from cities, right?

24:36.065 --> 24:41.005
And so we're seeing that in terms of their, the, the,

24:41.055 --> 24:45.765
importance of global cities is becoming really kind

24:45.765 --> 24:49.765
of an exciting, element as it relates to

24:50.645 --> 24:53.805
questions of politics, of society.

24:54.705 --> 24:59.165
Uh, not to mention where we started this was, with the,

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the, the nature of economic globalization

25:03.145 --> 25:05.725
and the ways in which multinational corporations

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who drive investment, who drive, international trade,

25:11.705 --> 25:15.365
to what extent are they influenced by drawn towards

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or repelled from global cities.

00:00 - The origin of this topic for me, stems back to a conversation or a series of conversations that I had with senior managers at, in, they're called InBev now in Interbrew at the time, and it's the global brewery.

00:16 - They, at that time, what these, what these executives were doing, or what the multinational corporation was doing was to buy up local brands like, rolling Rock, like Stellar Trois, and they were trying to figure out how do they go about creating greater value from these, what they perceived to be regional brands. They were very popular in and around where they were brewed, but not well known outside of that.

00:47 - And it was in that process that they were talking to me about the ways in which global brands can be created. And in that discussion, it led to, in fact, a, a teaching case that's used in business schools called the, the, global Brand Branding of Stella Artis. In those conversations, what emerged in, from, from me as an international business scholar and the focus being on international, was I would ask questions around their efforts

01:27 - and interests in internationalizing those brands, and they kept correcting me. I would say it's to say that we're not really investing, or we're not trying to, to expand in the us What we're trying to do is expand in New York or in Seattle, or in San Francisco or in Frankfurt. And I sort of pushed back on that to ask, so you don't view this as a, an international strategy, but instead it's much more subnational. Their, their answer was emphatically yes.

02:09 - And when I looked at the international business literature, as you can tell by the, the name of our academic field that is international, we're very much tied to the concept of international. And I would say much most of the work that is done within our academy has to do with comparing nations in terms of, in a variety, in whatever way is, is important, whether it's culture or business practices or, or trends or, or whatnot. What this alerted me to the, the conversation with introvert

02:46 - or InBev they're called now, was that managers don't really think that way. They don't think in terms of expansion to the us what they think of is it's a much More local, much more subnational, point of view. In fact, it would appear as though it was not even subnational, which would be, let's say regions or states, but much more specifically on cities. And that was really intriguing.

03:18 - And so with myself, and, two, two colleagues, Christian, asmussen at Copenhagen Business School and Bo Nielsen at the University of Sydney, we started to think this through, like, what is it that we need to examine? What's the relevant unit of analysis if the nation isn't the u re relevant, u unit of analysis? Well then what is,

03:45 - and we first got some, you could say, some, intuitive, support from the notion that many of the phenomena that we're interested in operates at the subnational level. When you look, for example, many of us, particularly those that don't really know that much about China, think of ch the, of the Chinese as being kind of monolithic. There's the Chinese culture, the Chinese way of doing things.

04:18 - But when you start to kind of peel back the onion, what you realize is that China actually is a group of languages. It's a group of cuisines, it's a group of behaviors. When we think of, languages, for example, some of the dialects that we, as you know, that many of us think of just as Chinese are about as close to each other as German is to English, right? They, they, they can't read each other's newspapers. They can't speak to each other, not in their native,

04:55 - let's say, in their local languages. similarly, the foods that they, the, the, the, the, the products, the pr, the produce that they buy, the recipes that they follow, all, you know, when we think of the notion of culture, of attitudes, of behaviors, very much tied towards things like food language, and we can go actually beyond that. When we look at, Italy, for example, the judicial system, where in northern Italy, at versus Southern Italy, when you look at many

05:32 - of the metrics of the legal system, like for example, how quickly verdicts are reached, there's quite a difference between northern and southern Italy. And this is despite the fact that the judges and the lawyers are coming from the same schools. It's not like they're not being separated, but it's once they sort of embed themselves in their sub region, certain behaviors tend to become more prominent. And I think anybody who is,

06:04 - who is following the US political situation, it's, it's hard not to notice the differences between Republican, Democrat, there's blue states and there's red states. So even when we think of the notion, we've all heard this, this notion of, of an American culture. Well, what is American culture or, or Canadian culture for that matter? We've got individuals on the east coast, we've got Francophone Canada, we have Central Canada, we have Western, and these are are places

06:40 - that operate differently. They, they value different things. They, they, you know, behave in different ways. And so that gave us a lot of, let's say, let initial support that we are, we think we're onto something here. And so what we did in our research team with, with Asmussen, Nielsen and myself, we built a multi-level nested model to try and get at the nuances of the ways in which

07:12 - multinational corporations differed in their behavior and in their performance. Was there something that we can know about the way that they behave if we start to control for things like, the nation, the region, region, the city, the organiza and the specific organization? And where that led us initially was, you know, there, there is a, a lot of work that has been done on various economic and social issues as they relate to the sub-national level.

07:49 - for example, you could say that, economic geography, the question of the subnational of agglomeration, how firms, co-locate and refer to each other and invest near each other. That was something that was started in the twenties by 1920s by, Marshall, very influential piece of work that alerted, economic geographers to this notion that these are, are, are factors or elements that operate at the subnational level. So when we started thinking through

08:25 - what is it about the subnational level, is it sort of a, is it at the state level? Is it the, is it sort of cities in general? Is it, or is there something special about certain cities that would lead us to maybe a more precise explanation of what multinational corporations are doing? Where that led us was to the, global city research, which, is a longstanding, very rich research, but not an international business. And this is one of the points in the, the articles,

09:04 - the several articles that we've read, that we've written on this topic is that, there actually is a very rich, and longstanding literature on global cities, but it's not been brought into international business because I would say most of us in, in international business felt that subnational wasn't international, and therefore it's not really, you know, it's not really inside our tent. But when we started to look at this notion of global cities,

09:39 - what they were, how they operated, we started to realize that this might be an extremely interesting unit of analysis to access the nature of multinational behavior and performance. So, as I said, it's a, it's quite a longstanding literature. There are a number of scholars who've done a great deal of work to try and understand how do we go about measuring what, what is a global city, what is not? There are many ways to understand cities. There's a, a demographic approach,

10:13 - which is just simply size. So big cities, Mexico City, Rio, Calcutta. But then there's a functional approach which the global cities researchers have pursued, which is what happens in these cities and what exists within these cities. Not just simply how many people are there, how big they are, but what actually goes on, and this is where theorists like Sassan,

10:45 - provided a huge boost when she started to identify the attributes of certain cities that made them fundamentally different than other places. And of course, now that becomes really interesting for scholars in an international business, because perhaps one of the core ideas in our discipline has to do with space, place, and the, the, the, the, the nature of distance. This to us was a really exciting idea because there was an, an emerging notion

11:26 - that kind of goes along with economic globalization, which is that the, the global economy will become, in a sense, democratized, right? It doesn't matter where you are, you can work from anywhere. You can invest anywhere, right? And, and instead of being, of having certain places being highly favored, the notion of economic globalization, it's the emphasis on globalization.

11:58 - It's anywhere. It's everywhere. what we found though was that in our research, what we, what became evident was in a counterintuitive way, it start, it seems to matter in the face of globalization, as eco, as communication becomes, less expensive, as transportation technologies become increasingly, efficient, cheaper, faster, more reliable, all of these things you would say would lead you to think that distance doesn't matter.

12:42 - You can be anywhere because of communication, transportation, the, the, technologies are getting better and they're getting cheaper. So it would make, make it less important as to where you located your operations. What we found in contrast was exactly the opposite, that it becomes increasingly important to understand the nature of location decisions by multinational corporations. Now, these are corporations, multinationals are corporations

13:17 - that are responsible for perhaps 60, 70% of global trade, probably the same amount of foreign direct investment. So they are, when you think of what are, who is behind or what is behind economic globalization, which has been perhaps one of the major trends of the, of our, of our era, it's multinational corporations. So it becomes really important to understand how are they making those location choices. And what we discovered in our, in our, empirical,

13:54 - in our empirical tests was that around half of all investments everywhere were located in global cities. And in fact, even as you tighten that definition of global cities, you make it more and more strict. The relationship holds all the way to the point where if you count only 10 cities in the world as being global cities, they have around 40% of all investment. All new investment goes to these global cities.

14:39 - So, you know, we're talking about, we, we actually calculated, geographically what kind of space are we talking about? And it's something like less than 0.02% of the globe gets roughly 40% of all investment. So that really put us onto the, the notion that global cities were a, an an economic globalization phenomenon that we really needed to explore how are businesses making choices?

15:16 - Why are they going there? What is it about the multinet about the global city that's drawing them in? And prior research gave us a number of very powerful clues. The work by Sasson, for example, I referred to earlier, found that there were, are essentially three attributes that are extremely important in, in identifying global cities. One is the existence of what the, what we call advanced producer services.

15:51 - Those are the organizations that exist to facilitate global trade, like international tax lawyers, international accountants, international advertising agencies, international consulting agencies. These are, are, are organizations that specialize in providing the services and advice that enable multinational corporations to start to disperse their operations in various locations throughout the world.

16:24 - They were now agglomerating themselves in global cities to provide those services. So it was one, the presence of ad advanced producer services or, or a PS, the other was the extent to which these places were connected in terms both in terms of the, their flow and transmission of information, internet, telephone lines, that kind of thing, but also physical, seaports airports, railway, you know, nu kilometers of railway, these kinds of, of,

17:05 - measures of connectivity. The third element had to do with the concept of cosmopolitanism. It's that cultural notion of being open to influence, of being welcoming, even being interested in the things that are foreign. I think we call that xena as opposed to xenophobia. It's actually, it's a welcoming, it's a, it's foreign is good, foreign is interesting, foreign is exciting.

17:38 - And so what we've, what, researchers have found is that global cities are, you could say, repositories for these three really fundamental aspects. And so they're causing, they are creating the conditions under which multinationals are capable or get the ability to globalize. And then as they globalize in these global cities, they become bigger and more powerful, which leads to, now we we're into like a virtual circle or virtual cycle where it's this sort of

18:23 - what we call the Matthew effect. It's where if you have, you'll be given more, and if you don't have, everything will be taken away. And this, for us is a really exciting notion, this idea to capture this idea of, of, the, the nature of economic globalization and the way it's unfolding. And one of the really interesting hypotheses that we're exploring now has to do with the extent to which global cities are detaching from their, what we call the hinterland

19:01 - or all of the, the, the space in place that surrounds them, right? So to what extent, in, in many ways, culturally, in economically, politically, socially, how, to what extent or first maybe ask the question, are they becoming different? Our hypothesis is, yes, they are. And we've got some preliminary results that seem to bear that out.

19:30 - And in addition, what's, an equally interesting hypothesis for us is that global cities are becoming more similar to each other, right? In certain, in many really important ways. Now, one global city is Tokyo, another global city is New York City. Now, the differences between those two are obvious. In one, they speak Japanese and culturally they're Japanese in one,

20:00 - they speak mostly English as well as other languages, but are sort of in a broad sense, you know, the New York culture, northeast culture, northern US culture, that kind of thing. But when you start to again, peel back that onion about those are the differences, those are the, the, the, let's say the superficial differences. You could almost say it's like paint on your house, but what about the structure of society, the way that they, like, who are these people?

20:35 - And what we find is that in terms of their education, in terms of their needs and wants, in terms of their opportunities and threats, their concerns, the kind of work they do, when you start peeling back the onion, what you discover is that within these global cities, there are many groups of individuals and organizations that are very similar to each other. So this for us is a really interesting take on the concept

21:12 - of global, of economic globalization, where at one time the starting point where there were authors suggesting the death of distance and the world is flat, right? This sort of notion that it doesn't matter. What we're finding is that it actually, it matters profoundly and it's having a great impact, not only in economic globalization, but in terms of all of the other forms of globalization,

21:40 - political, social, technological. And when we think of, of certain, really important issues that are emerging today, let's take sustainability as an example. What we see is that, you know, there's very little, it would appear very little ability to make a difference at the national level. The US won't do anything until China does something first. China says, we're not gonna do anything because you are the one who started this.

22:20 - India's saying the same thing, don't tell us to be sustainable. Not until you are, because we've got a large population that we need to rise out of poverty, something that you did a hundred years ago. So it's that kind of stalemate. However, what we're seeing is some very exciting developments at the city level. There was an organization, let's say, a coalition is maybe a better, a better,

22:52 - description of what, what they are a coalition of city mayors. Initially they were called C 40 I think, than they were called C 100. But what that is, is these mayors of Toronto, of Frankfurt, of Tokyo of Rome are speaking directly to each other to say, how do we go about making cities more sustainable? How do we go about creating, systems and procedures

23:27 - and institutions that allow that enable or improve the wellbeing of our citizens? And you can see why that might work, because they don't have a sense of, this is the US and you're China, or you're Italy and we're Canada. It's, we're all in this together. And so it's one of the areas that's really exciting development of issues of, of solutions rather, that address the questions of,

24:01 - of sustainability. So in other words, global challenges that are being solved, not at the global level, but at the subnational level, or more specifically, very much at the global city level. It was recently the chancellor of Germany said that he expects that the solutions to some of humanity's greatest challenges, they will all come, they will all emanate from cities, right?

24:36 - And so we're seeing that in terms of their, the, the, importance of global cities is becoming really kind of an exciting, element as it relates to questions of politics, of society. not to mention where we started this was, with the, the, the nature of economic globalization and the ways in which multinational corporations who drive investment, who drive, international trade, to what extent are they influenced by drawn towards or repelled from global cities.

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