CITIES, GLOBAL ECONOMY AND INEQUALITY
Introduction
The growth of global economy has transformed many cities in the world into huge economies. This growth has made great impact in urban areas which have continued to witness growth in population as people settle in urban areas in search of employment .Due to the economic and social development that is witnessed in cities , improvement in the quality of housing facilities and establishment of new businesses act as a catalyst to further development. However, growth of underground economy, high poverty levels and unemployment are some of the negative impacts of development in cities. Due to the benefits that governments consider to emanate from a countrys active role in the global economy, many local authorities in cities have embraced policies that ensure that the necessary environment for investment and growth of industries is provided. There is no doubt that cities are vital in global economy. The strong link between the global economy and development in cities cannot be overemphasized. Growth in economy in the cities has attracted huge number of people to settle in cities due to the employment opportunities created by industries, business enterprises, private investors and manufacturing companies. Cities that play a major role in global economy are considered to be global cities and despite the high economic growth rate in the cities, economic, racial and gender inequality are witnessed.
Discussion
Relationship between cities, global economy and inequality
The growth in global economy has turned cities and towns into hubs of economic activity. This has in turn made the economic growth in some cities very important in the global economy. For instance, in the United Kingdom, cities like Manchester and London are considered to be very important to the national economic growth. The economic importance of such cities in the national economy becomes significant at a global level. Social and economic development experienced in the cities as governments try to overcome the challenges of globalization has made it necessary for them to support policy interventions that help the economies of these cities to adjust to the global realities. Globalization has had great positive impact on national economies and cities and although some cities reap high benefits from their role in the global economy, others fail to benefit. Because the global economy results to stiff competition by countries in trade, cities that aim at reaping maximum benefits from their participation in the economy must meet the needs of the urban population. The relationship between the global economy and cities has created new socio-economic structures of work, power and class. In OECD (Organization for Economic Co-operation and Development) countries, it is estimated that more than half of the total national population is found in citiesurban areas. In addition, almost 50 percent of jobs and output in the countries are found in-large cities. This has led to higher economic growth, labor productivity and foreign investment in cities than other parts of the country. The high economic growth in the OECD countries makes great contribution to growth in world economy.
In all countries, cities have become the major drivers of national economies because they act as trade centers and strategic locations for industries. For example, the stock exchange markets which are found in major cities are vital in the global economy. The world financial markets often give an indication of the state of the global economy .Some examples of cities that play a major role in the global economy include, Tokyo, Auckland, Dublin, New York and London. These cities attract highly skilled, talented and young workers who are employed in both private and public sectors. The establishment of regional and international organizations has made have become competitive locations for regional and global headquarters of these organizations. The organizations are very important in addressing economic and political issues at a regional or international level. By becoming the centers of entrepreneurship and innovation, cities promote the development and commercialization of new products. Despite the success stories of some cities as a result of globalization, some cities have been unable to achieve skills, productivity, income and employment above the national average level. For example, many cities in developing countries have not been able to benefit greatly from the global economy as compared to those in developed nations. Although there is a lot to be admired about mega cities or global cities, the poor in these cities experience similar problems like those in developing nations. This is because in the global cities, the upper class receives the greater proportion of total earnings generated from the economy while the members of the lower class rely on low wages to earn a living. Furthermore, public policy arrangements in the global city regions contribute to the high poverty levels in the regions. Government institutions therefore have a hand in the urban socio-spatial outcomes and inequality that are experienced. Immigration patterns in cities also influence the patterns of inequality.
The role of cities in the global economy
Cities derive their economic muscle from the global network of finance and commerce hence their contribution to the global economy cannot be overemphasized. Cities act as the key entry points of global imports and foreign workers. As a result, the economies of the large cities across the globe increase employment opportunities through the establishment and growth of industries. The need to meet the needs of the urban and rural population through industrial goods production has, made industries the magnets that attract new immigrant populations. Some cities have proved how effective they can be in ensuring that there is proper transfer and movement of commodities produced in industries. According to the statistics, Tokyo, New York and London are some of the megacentres from which the outcome of the world financial markets is determined. Cities have become the economy financial capitals of the globe and some are headquarters to some of the worlds largest banks. Cities also provide financial services and a ct as headquarters to real estate and insurance firms. Acceleration in urbanization has led to the expansion of metropolitan regions and large cities. Economic growth in many OECD metro-regions has made them attain higher GDP per capital than the national average. In addition, the cities show higher economic growth rates than their countries leaving no doubt how important the cities are in driving the global economy. Many industries that relate to the production and distribution of knowledge are found in cities. These industries promote both national and global economic growth restructuring in manufacturing industries such as those that are found in Quebec and Ontario in Canada. Diversified and specialized industrial structures in the cities stimulate economic growth and large cities are now trying to adapt to the new global economies. The presence of strong cities gives rise to strong national economies which in turn contribute to the global economy. The amazing economic power of large cities is very obvious hence their impact on the global economy is so great. For example, China is estimated to have about 600 million city dwellers, the worlds largest urban population .Together with the large number of cities which act as economic hubs, Chinas cities such as Shanghai have made a mark in the world economy.
Innovation in cities has led to the growth of industries as well as hi-tech research and development. Strong cities which are expected to an impact on global economy should be able to embrace new technology and address structural problems such as waste management, urban poverty, transport, energy and water supply, and environmental deterioration. Because rolling out innovative national programmes at a national level can be costly, cities have acted as the testing grounds for creative and new solutions to problems. In addition, the trends of growth in cities provide signals on when and which national programs needs to be phased out in order to stimulate economic growth. Since cities have become machines for generating wealth, investments are very rewarding especially in cities where the urban population provides a huge market for products and services. The role of cities in regional, national and global economic performance is very vital. The merger of cities, satellite towns and suburbs has given rise to large metropolitan areas. The growth of cities has made services and goods sold there very expensive. For example, cities such as New York, Tokyo, Geneva, Oslo and Copenhagen have been ranked as the most expensive cities in the world. High urban population provides market for commodities and services that are produced hence the expansion of global trade has made it necessary for cities to support an open economy.
Cities have become hubs of international economic activities. Local and national governments in the cities have begun operating at an international level with the aim of striking a balance between urban development and economic forces of the global economy. Networking of global cities has led to the growth of city based multinational corporations and multiculturalism has become a common phenomenon incities.Currently, the challenge of ensuring that urbanization and globalization benefit a large urban population rather than just a few people remains one that is yet to be tackled. Decentralization of cities has given them the ability to define where they belong to in the global order. Cities are promoting transnational cooperation by creating good practices of management and the implementation of global standards and values. Global cities have become actors that compete within the global economy for jobs, investments and creativity. The cities have also joined forces to find solutions for global problems and this has led to proper global governance.
Impact of global economy on cities
Growth in global economy has had negative and positive impact on cities in both developed and developing countries. Globalization which has led to growth of cities has improved the quality of urban life. The income generated from trade has proved that cities can be more powerful than national economics. The growth in global trade and regional development have turned countries such as Korea into one of the worlds largest economy. Cities in various countries have experienced investment in technology, human capital and infrastructure as a result of global economic processes which have changed the productive contribution of globalization to the well being of a nation. The global economy has altered the demographic composition of cities and the structure of employment which puts cities on a highly competitive framework of network and links .Many civil society organizations have their headquarters and activities coordinated in the cities where specialized services such as communications, financial and legal services, advertising and accounting acts as the key inputs for the various global operations that support enterprises. The high technology, trade and media production in cities have been internationalized. For example, New York promotes economic growth by combining proper measures to address global operations. Other cities such as Seoul, Mexico city and Sao Paulo handle some major globalized sectors of the economy and this has vital in the world economy. Cities have been transformed into the centralizing forces and major sites of change in the global economy. This has made them important nodes in the world-system. However, while some cities have managed to become key regions in the global economy, others have had their growth decline or become stagnant.
The global economy has nurtured organizational capacity of the poor people and although the urban poor have insignificant influence over global economic forces, they have benefited from the social and economic development brought about by the growth of global economy. Cities have the potential to maximize benefits as well as to offset the negative effects of globalization. Proper management of cities by the local, regional, authorities offer the people employment opportunities diverse services and goods. In order to ensure that there is environmental stability and social justice, cities need to be looked at as agents of change as well as engines of growth. Sustainability and equity in cities is important for central governance and therefore governments need to facilitate proper functioning of global markets while at the same time ensuring that there is justice, social cohesion and conflict resolution. Various institutions are being established in cities to cater for the needs of the growing urban population and private transnational institutions influence the organization and management of cities.
Globalization has had negative impact in the cities. An increase in urban poverty when the global economy only benefits a few leads to inequality and social injustice. Demographic increase in cities has caused under employment and unemployment in many cities found in developing countries. When either global or regional crisis lead to instability within local and national economies, the negative impact on the people has longer lasting effects. Growing economic inequality results to poverty in cities. This is attributed to the skewed allocation of resources or wealth generated in the cities. For example, if there is skewed allocation in the urban infrastructure services and public investment sectors, differences in living conditions together with inequality in income, social mobility and employment are evident. These patterns are exacerbated by the global economy whereby high financial returns only benefit individuals who are able to gain from industrial and technological progress while those with low wages and no skills get very little. When the global economy only rewards the high wage skills, economic inequality continues to increase.
Declining social cohesion in cities as the urban population become multicultural has increased economic distress. For example, street violence, youth unrest, crime, household abuse and the breakdown of traditional community and family structures undermine efforts that aim at improving living standards. In the developed countries, leaders in large cities work hard to have their cities reach the global status and although wealthy cities tend to have strong economies, they have dense groups of poor people high levels of income inequality in global cities are often experienced. The economic structure of global cities leads to social polarization. The economic structure of global cities leads to social polarization where the leading sectors employ high earnings individuals. This creates a demand or low skilled service and low paid workers. Studies that have been carried out about the social structures in cities such as Tokyo, Paris, New York and London show that inequality has been increasing. Global economic pressures have demanded that government policies address the issue of global economy. The increase in deregulation of privatization and financial markets has been linked to global forces. The dependence of global cities on the international financial flows makes then vulnerable to fluctuations in the global financial system. The localization of democratic processes in cities can be attributed to globalization. Global forces promote local differentiation, an issue that is vital in democracy.
Inequality in cities
Economic inequality in global cities has been linked to the concentration of a workforce that is highly educated. This increases the demand for unskilled labor where a large urban population receives low-wages. Construction jobs and the need for low-wage labor in cities are high. The tourism industry in major cities has been doing well because of the large number of tourists who come into cities to enjoy high consumption lifestyles The changes witnessed in cities due to globalization have led to socioeconomic polarization where social inequalities in race,class,gender and geopolitical location occur. Economic inequality in the cities has resulted to social inequality when people are stratified into various classes. While the upper class benefits greatly from the global economy, the members of the lower class live in poor conditions and lack proper social amenities and sanitation facilities. As the upper class members get increasingly large share of earnings, the lower class receives very little. Only a small percentage of households benefits from the aggregate income in cities. Studies show that income inequality in cities varies. Apart from the difference in income due to an upward skew in the income curve of distribution, income inequality in cities has been linked to the high cost of living which forces low income people into poor living conditions.
Similar to other urban areas, global cities experience economic and racial divisions. In the current global economy, racial minorities may lack the education and skills that are demanded by the employers in huge industries and companies within cities. In addition, racial discrimination in housing, recruitment and payment can cause inequality. In the cities, the declination of old industries has led to the coming up of new commercial centers and many immigrant groups have entered various levels of the labor market. Despite the transformations that are witnessed in the cities, segregation along ethnic and racial lines is evident. While seeking jobs and housing facilities, racial stereotyping and antipathies lead to discrimination of minor workers. Gender inequality in cities has been experienced due to economic globalization .The significance of economic globalization on gender depends on the effect it has on job ques in the labor market. If it affects the nature of job ques in cities, gender inequality occurs when women and men are sorted out to match some jobs.
Conclusion
Cities play a critical role in global economy and the need for countries to become active players in the global economy has turned cities into economic hubs. Some of the cities that make great contribution to the global economy include Tokyo, New York, Paris, London and Dutch Randstad.The establishment of new industries and the growth of the already existing ones in cities has attracted a large number of people .Although the growth in global economy and development in cities has had great positive impact on the society,economic,racial and gender inequality are witnessed .While members of the upper class benefit greatly from the economic and social development of cities, the members of the lower class rely on low wages and live in poor living conditions.
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