Cities and the Wealth of Nations: How can Helsinki, London, Paris and Stockholm prosper from TTIP?

The two major forces shaping the global economy are globalisation and urbanisation. Both these forces have both contributed to a much greater role of global cities for the way an economy is structured. A global city is a large city but not necessarily a mega city – a city defined by the size of its population alone. Size is important to build agglomerative strengths, but the defining character of a global city is rather its capacity to help reinforce the mechanics of specialisation and division of labour in the economy.

A global city is a vector of globalisation: it fuses a larger economy by intermediating its connections to the world. In that way, a global city spurs natural structural reform in the market. It helps producers and consumers to adapt to new technology and new economic behaviour. It also helps producers to achieve scale by supporting their expansion abroad.

Cities should take a much greater role in shaping trade policy. Global cities have interests in trade and global economic policy that are usually not high up the agenda of any country or non-city entity. Such cities are usually empowered by policy conditions for global commercial exchange that put the emphasis on the benefits of imports. Needless to say, a global city intermediates exports too – and thus appreciates both flows of trade. But it is not a mercantilist entity that predominantly thrives on exports. Furthermore, the three key ways for a global city to fuse a larger economy are the movement of people, capital and data. All three issues have been neglected in past trade-policy agreements.

This study contextualises trade policy in four global cities in Europe: Helsinki, London, Paris and Stockholm. They are in several ways different, but they share one character: they are cities that spur specialisation in a larger economy. Even “small” cities like Helsinki and Stockholm play that role – and increasingly so as adaptation to data and the modern digital sector have become competitive strengths (or weaknesses) for a larger region. While London and Paris can utilise their size to achieve agglomerative effects in capital and labour, a city like Stockholm does it by serving the larger Nordic region and by stronger reliance on qualitative characters of specialisation.

The study also outlines the trade-policy for global cities in the Transatlantic Trade and Investment Partnership (TTIP) negotiations. TTIP is an interesting trade-policy initiative for global cities because it is premised on the idea of ushering trade policy into the 21st century – and begin the process of building new trade-policy mechanisms to address modern obstacles to trade. Such obstacles are much about the policy realities facing the movement of people, capital and data. Furthermore, a liberalisation of public procurement could be a boon for global cities that face infrastructural needs. Fragmented markets for infrastructural goods and services only serve to raise the cost of adapting cities to bigger population and the concentration of some environmental problems.