ABSTRACT
Global cities are strategic sites for the management of the global economy and the production of the most advanced services and financial operations that have become key inputs for that work of managing global economic operations. The growth of international investment and trade and the need to finance and service such activities have fed the growth of these functions in major cities. The erosion of the role of the government in the world economy, which was much larger when trade was the dominant form of international transaction, has shifted some of the organizing and servicing work from governments to specialized service firms and global markets in services and finance. A second, much less noted, shift of functions to this specialized service sector concentrated in cities comes from the headquarters of global firms. The added complexity and uncertainties involved in running global operations and the need for highly specialized knowledge about the law, accounting, business cultures, and so on, of large numbers of countries has meant that a growing component of headquarter functions is now being out sourced to specialized corporate services firms. Therefore, today there are two sites for the production of headquarter functions of global firms: One is the headquarters proper, and the other is the specialized service sector disproportionately concentrated in major cities. Thus, when firms globalize their operations, they are not necessarily only exporting jobs, as is usually argued. They export certain jobs, for example, labor-intensive manufacturing and clerical work, but they actually may be adding jobs to their top headquarter functions. One way of putting it is to say that when Detroit lost many of its manufacturing jobs, New York City actually gained specialized service jobs, as the work of major auto manufacturing headquarters became increasingly complicated and required state-of-the-art legal, accounting, finance, and insurance advice, not to mention consulting of various kinds and new types of public relations efforts. Headquarters of firm that operate mostly globally tend to be located in global cities. But given the option to outsource the most complex and variable headquarter functions, headquarters can actually locate anywhere, a trend evident in the United States but less so in countries where there is only one major internationally connected city.
