What Makes Boston a “Global” City?

James C. O’Connell. Ph.D.

City Planning-Urban Affairs Program

Boston University

September 3, 2019

Copyright © 2019 by James C. O’Connell

 

In 1980, the 350th anniversary of Boston’s founding, Mayor Kevin White introduced the idea that Boston was a “world class city.” Mayor White organized the Great Cities of the World Conference to highlight Boston’s urban revitalization achievements and discuss strategies for redevelopment with other leading international cities. He invited mayors from 36 large cities, including Athens, Hong Kong, Dublin, Paris, Rome, Jerusalem, Bombay, London, and Istanbul, for a week-long conclave held at Faneuil Hall, MIT, and Harvard’s Kennedy School of Government.

 Some of the local reaction to the Great Cities Conference was derisive. A Boston Globe editorial entitled “A Great Dirty City” read: “Despite all the fancy hotels, the glass highrises, and developments on the drawingboard, Boston is a city run down at the heels. And so long as this is true, maybe Kevin White better scratch all-inclusive references to some kind of worldwide urban renaissance.”[1] Globe columnist Robert A. Jordan wrote: “Mayor Kevin H. White has shown that he can do two things well – win re-election and make Boston look better to visiting delegations than it really is.” He chided White for camouflaging “Boston’s social and racial problems, its dirty streets and its poorer neighborhoods,” as well as Boston’s being “an unfriendly, even hostile city.”[2]

Though motivated by boosterism, Mayor White sensed the changes that were happening to his city. There were such things as “world-class cities”—and he wanted Boston to become part of the discussion. Yet even Kevin White could not have foreseen the transformations ahead. Just as Boston had been one of the first American cities to industrialize and then suffer the loss of its industries, it became one of the first to adapt to the high tech and service economies and secure a foothold in the emerging global economy.

What really changed for Boston and cities around the world was the intensified globalization that started during the 1980s. When the Cold War ended, free-market neo-liberalism became the preferred path for economic development around the world. Communist China staked its economic rise on manufacturing goods for export. The explosion of digital technology and the Internet accelerated global trade.

Cities that were plugged into globalization benefited enormously. Urban planning professor John Friedmann is credited with first identifying a network of “key cities throughout the world” that were bases for capitalism to organize and manage global markets in his 1986 article “The World City Hypothesis. Sociologist Saskia Sassen followed up with a comprehensive explanation of the new situation in her book The Global City: New York, London, Tokyo (1991). She argued that the leading economic activities of global capitalism were no longer manufacturing, but were financial and advanced professional services. The business services that could manage operations in a worldwide network were necessarily concentrated in large, established cities. The growing use of information technology has reinforced the dominant position of cities where these high value-added activities are taking place and has generated entirely new economic sectors. Industrial cities that have not been able to successfully adjust to the new reality have declined, producing an atmosphere of social and political discontent.

Cities, nations, and businesses are scrambling to position themselves advantageously in the new global cities order. To understand how cities can be “global” and competitive, universities, public agencies, think tanks, consulting firms, and the media have launched a cottage industry of studies analyzing city performance. The international real estate investment firm JLL (Jones Lang LaSalle) asserts these studies contribute to a “new urban science” and have a “significant influence on how the world ‘reads’ cities.”[3] Policy-makers are using these metrics in these reports for developing policies to improve urban economic and social performance, particularly in cities eager to advance their fortunes. Globally-oriented businesses, especially investors in companies and real estate, use these studies to target acquisition opportunities. The most insightful of these studies go far beyond listing world “hot spots,” they reveal business flows and urban development processes.

Global city rankings can be divided into three broad categories. The first set of studies measures cities’ interactions with other places in the global economy, covering trade, capital investment, informational exchange, and population movement. These studies track the actual flows of globalization. The second type of global city studies assesses the production factors that drive economic exchanges and overall performance. In the case of Boston, these measures survey the impacts of innovation, institutions of higher education, workforce skills, finance and business services, and investment. The third type of city rankings compares urban characteristics that form a supporting environment for global exchange. These studies, which can be most susceptible to claims of subjectivity, include quality of life factors, local infrastructure, cost of living, sustainability, and social equity. Such reports can be instructive for cities seeking to improve their livability, but they do not measure the proficiency of cities within the global economy.

Global Connectedness

Some of the most insightful research argues that global cities are defined by their interactions with other cities.[4] Loughborough University’s (UK) Global and World Cities (GaWC) Research Network pioneered the ranking of global cities in 1998, when it developed the first social-science-based model depicting the “network” of world cities. The GaWC Research Network studies followed the lead of pioneering urban sociologist Manuel Castells, whose book The Rise of the Network Society (1st ed., 1996) introduced the concept of the globalized network reshaping the economy and the role of cities. Castells argued: “Our society is constructed around flows. Flows of capital, flows of information, flows of technology, flows of organizational interaction, flows of images, sounds, and symbols.”[5] In the global “space of flows,” major cities are the primary control hubs and nodes of the worldwide transportation and information infrastructure. Horizontal networks have replaced vertical bureaucracies—this is how General Electric can have its world headquarters in Boston employing 250 people who direct almost 300,000 workers elsewhere around the world.

Seeking to measure the actual level of globalization among cities, the GaWC Research Network rates New York and London as the leading economic centers, followed by Hong Kong, Beijing, Singapore, and Shanghai. Boston ranks #57 out of 708 cities on the volume of global business connections, indicating that Boston is a middle-tier global city in terms of overall business connections. GaWC rankings trace the provision of corporate services by 175 leading firms (legal services, accounting, advertising, management consultancy, real estate, design, banking, and insurance) in world cities, tracking over 177 million connections between pairs of cities. GaWC explains that American cities are under-represented because the U.S home market is so large that domestic exchanges far outpace international transactions.

An instructive feature of the GaWC study is its measurement of connections between cities. Perhaps it should be no surprise that Boston’s most intensive business links are with New York, followed by London, Chicago, and San Francisco. From there on it gets more surprising, with strong connections to Hong Kong, Paris, Los Angeles, Shanghai, and Sydney. You wonder what business is driving these exchanges.[6]

DHL, the global logistics company, expanded upon the GaWC model with the Global Connectedness Index 2016. This Index focuses on international interactions between cities, tracking trade (35% of score), capital investment (35%), information flow (15%), and foreign migrants, tourists, and students (15%). Harvard economist Dani Rodrik says of DHL’s globalization reports: “There is no better index that measures the overall global connectedness of nations—encompassing flows of goods and services, capital, people, and information across borders.”[7]

According to DHL, Boston ranks #58 out of 113 cities (almost the same score as the GaWC) on the total of its actual international interactions related to trade, capital, information, and people. Two factors that DHL considers as indicators of connectedness are international students attending area universities and foreign tourists. In 2017, over 47,000 international students attended Greater Boston colleges, with 13,201 attending Northeastern, 8,992 at Boston University, 5,978 at Harvard, and 4,685 at MIT.  In the area of foreign tourism, Boston ranks #10 for American cities, behind San Francisco (#7), Honolulu (#8), and Houston (#9). The number of foreign tourists (not including Canada and Mexico) visiting the Hub increased from 475,000 to 1.7 million between 1991 and 2017. China and the United Kingdom are the leading sources for Boston’s international visitors.

Boston’s Global Role as an Innovation Hub

The Global and World Cities and DHL researchers acknowledge that their reports measuring global flows tend to overemphasize giant financial and corporate management centers and underestimate cities with more specialized functions in the global economy. Boston is a perfect example of such a specialized city. It is a world leader in higher education, advanced R&D, healthcare, and life sciences. Its highly skilled workforce, strong financial and professional services, entrepreneurialism, and an urbane culture have enabled its innovation sectors to thrive.

Boston’s robust economy is demonstrated by its #12 world ranking for metropolitan GDP (Gross Domestic Product). In 2017, Boston’s metropolitan area GDP was $438 billion, placing it just behind Mexico City and Washington, DC. This represents enormous economic production for a moderately-sized American city.

The Brookings Institution’s Global Cities Initiative places Boston in its “knowledge capital” category, one of seven types of global cities described by that think tank. The knowledge capitals are the focal centers of the global innovation economy. They are built upon highly-educated talent pools, leading-edge universities and entrepreneurs, and first-rate transportation and telecommunications infrastructures. All but two of Brookings’s 19 “knowledge capitals” are located in the United States (including San Francisco, Austin, Washington, DC, and Chicago), with the two others being Stockholm and Zurich. A comparable typology of global cities the international real estate management firm JLL’s 2018 Universe of City Indices. JLL classes Boston in its “innovator” category. The 11 other “innovators” include Silicon Valley, Austin, Dublin, Berlin, and Tel Aviv. These cities attract  the most real estate investment relative to their economic size, with Boston being the top real estate investment destination. Innovation cities also tend to generate the most per capita airline trips of any type of city.

Other global city studies numerically rank cities. Many project high rankings for Boston’s science and technology sectors, in large part because of its outstanding institutions of higher education. Site selection consultant Hickey & Associates’ Global Innovation Hubs: 2019 Report ranks Boston #1 in the world for innovation as well as #1 for the biotechnology and pharmaceuticals sub-sectors and #2 for medical science and for nanotechnology. The Global Innovation Index 2018, spearheaded by the World Intellectual Property Organization (WIPO), ranks Boston #7 in the world, based on patents and scientific papers. This report observes: “If parts of the San Jose/San Francisco or the Boston area in the U.S. were countries, they could top most, if not all, innovation rankings.”[8] The Center for American Entrepreneurship ranks Boston #5 globally for attracting venture capital for startup businesses. Urbanists Richard Florida and Ian Hathaway call Boston one of the “Superstar Global Startup Hubs.” It only trails San Francisco, New York, London, and San Jose.[9]

An intriguing report by the San Francisco-based innovation research organization Startup Genome, Global Startup Ecosystem Report 2019, provides a detailed context for understanding Boston’s role as an innovation center. Startup Genome (uses the “genome” concept to describe the sum total of a city’s entrepreneurial DNA) maintains that Silicon Valley is far and away the world’s leading innovation region. Startup Genome maintains that there will be no “Next Silicon Valley” because leading innovation functions will be distributed by as many as 30 cities around the world. The runner-up startup ecosystems are New York, London, Beijing, and Boston (#5). In innovation sub-sectors, Boston ranks #2 for life sciences, #2 for advanced manufacturing and robotics, and #4 for artificial intelligence. Startup Genome’s key indicators for an urban startup ecosystem are venture capital investment and the maturation of startup companies.

The economic health of the innovation economy also relies upon advanced professional services that support business development, including finance, insurance, accounting, design, legal, sourcing, consultancy, and marketing. A gauge of Boston’s world-class business support services is provided by the Global Financial Centres Index 23 (2018), published by Z/Yen Partners and the China Development Institute. This report ranked Boston #10 as a financial center—ahead of Zurich (#16), Frankfurt (#20), and Paris (#24). Boston was recognized for its complex financial ecology with strengths in banking, insurance, and professional services (#8) and investment management and government and regulatory systems (#10).

Global city ranking studies are predicting increasing importance for innovation cities. The Chinese Academy of Social Sciences’ Global Urban Competitiveness Report (2017) maintains that “technological centre cities are occupying an increasingly higher status in the global city system, and also improving their financial centre function.” These cities are on the cutting edge of artificial intelligence, biotechnology, and other breakthrough technologies. The traditional financial centers of New York, London, and Tokyo, having found their relative global status to be vulnerable, have been transforming themselves into centers of technological innovation to maintain global preeminence.[10]

Despite increasing competition from mega-business centers in innovation sectors, Boston is considered highly promising for future development, with the Chinese Academy of Social Sciences ranking Boston #4 globally. JLL ranks the city at #5, another real estate company Knight Frank grades Boston at #7, and management consultant A.T. Kearney forecasts the Hub to be #8.

The Challenge of Being a Global City  

With soaring prospects, how should Boston be using its good fortune? The city, of course, must pay close attention to maintaining its research and entrepreneurial advantages in the innovation sectors.  The region, led by state government, must undertake far more serious (and costly) initiatives to build new and affordable housing and upgrade the transportation system. Such measures are necessary, to support long-term economic development and create a more just and stable community.

Beyond, this, global cities like Boston need to address the two types of social polarization and income inequality that have accompanied globalization—income inequality within the metro area and inequality between Boston and the struggling post-industrial cities across New England.  Income inequality within the region is a phenomenon challenging all global cities. This inequality occurs where there are a sizable number of people earning high incomes in research & development and business services, while a substantial population is working in low-skill service jobs in restaurants, hotels, shops, entertainment, real estate, domestic services, and security. The resulting social structure resembles an “hourglass.” Although there are plenty of jobs in the less-skilled services, the cost of living is high, particularly for housing, and the economic stress is consequential. Urbanist Richard Florida argues that income inequality is the most serious problem facing cities across the world in his recent book The New Urban Crisis (2017).

Boston officials and policy mavens are alert to these issues. The Boston Foundation has delved deeply into the problematic underside of the knowledge economy, most recently in Boston’s Booming … But for Whom? (2018). Metropolitan Boston ranks #10 (2016) for income inequality in the United States.[11]   The Boston Foundation surmises: “Finding ways to better leverage our economic boom for the benefit of all residents and all neighborhoods has become the central challenge of our time. Fortunately, we’re operating from a position of tremendous strength. We have vast local resources to invest in better workforce training pipelines and we know what it takes to provide better labor force protections, to increase multifamily housing production and to rebuild our transit infrastructure.”[12] This summarizes the general spectrum of thoughtful opinion in the region.

Beyond Greater Boston there is the challenge of spurring development in the New England hinterland—Worcester, Providence, Springfield, Hartford, et al. DHL offered a direction in its Global Connectedness Index: “The role that cities play as nodes connecting their hinterlands with other countries/regions suggests a need for greater focus by city-level policymakers on the health of their hinterlands. Cities’ international connectedness depends in part on the demand for connections to or from the regions that surround them.”[13] A strategic initiative related to increasing New England’s connectedness could help resolve some of the divisive inequalities resulting from globalization. It isn’t apparent that American cities have been pursuing this sort of economic development initiative. Yet connecting with the greater region is exactly the approach that Boston pursued in the nineteenth century, when businessmen built railroads linking the communities of New England and invested in their industrial development. Despite a largely negative debate around globalization these days, there are promising development opportunities for regions seeking to seize them.

September 3, 2019

 

[1] “A Great City,” Boston Globe, September 16, 1980.

[2] Robert A. Jordan, “There’s Another Side of the City That Visitors Don’t See,” Boston Globe, September 30, 1980.

[3] JLL and The Business of Cities, The Universe of City Indices 2017: Decoding City Performance (2017), p. 8.

[4] Richard C. Longworth, in On Global Cities (2015), maintains that there is a difference between “global” cities and “great” cities: “The two are not the same. The global city, as we have seen, is a hub in the network of global commerce. A great city is one that dominates its culture and defines its nation and civilization.” London, Paris and New York can be both, while Cairo and Jerusalem are in the “great” city category.

[5] Manuel Castells, The Rise of the Network Society (Wiley-Blackwell, 2nd ed., 2000), p. 442.

[6] Globalization and World Cities Research Network, “The World According to GaWC 2018,” https://www.lboro.ac.uk/gawc/world2018.html.

[7] DHL, DHL Global Connectedness Index 2016: The State of Globalization in an Age of Ambiguity (2016), p. 294.

[8] World Intellectual Property Organization, INSEAD, Cornell SC Johnson College of Business, and PwCStrategy, The Global Innovation Index 2018, 11th ed. (2018), p. xxxix.

[9] Richard Florida and Ian Hathaway, The Rise of the Global Startup City (The Center for American Entrepreneurship, 2018), p. 18; also, “How the Geography of Startups and Innovation is Changing,” Harvard Business Review, Nov., 2018, https://hbr.org/2018/11/how-the-geography-of-startups-and-innovation-is-changing.

[10] The Global Urban Competitiveness Report 2017-2018: Housing Prices, Changing the City World (2017), pp. 94, 98.

[11] Alan Berube, “City and Metropolitan Income Inequality Data Reveal Ups and Downs through 2016,” Brookings Institution, February 5, 2018, https://www.brookings.edu/research/city-and-metropolitan-income-inequality-data-reveal-ups-and-downs-through-2016/.

[12] Luc Shuster and Peter Ciurczak, Boston’s Booming … But for Whom?: Building Shared Prosperity in a Time of Growth, Boston Foundation Indicators Project (2018), p. 43.

[13] Ibid., p. 65.

 

Table of Leading Global Cities Ranking Studies

Compiled by James C. O’Connell, Ph.D., City Planning-Urban Affairs Program, Boston University

 

Author Report Boston Global Ranking with Selected Factors
Global City Typologies    
Brookings Institution Redefining Global Cities (2016) 1 of 19 “Knowledge Capitals”
JLL & The Business of Cities The Universe of City Indices (2018) 1 of 12 “Innovator Cities”
Global City Economic Dynamism  
Organisation for Economic Co-Operation & Development (OECD) City GDP (2017) #12
JLL Global Research City Momentum Index (2018) Future-Proofing #5
A.T. Kearney Global Cities 2018 Current Performance #24

Outlook #8

Mori Memorial Foundation Global Power City Index 2018 Overall #20

R&D #5

Economy #23

Accessibility to World #28

Cultural Interaction #31

Livability #36

Chinese Academy of Social Sciences (CASS) The Global Urban Competitiveness

Report, 2017-2018

Economic Competitiveness #18

Sustainable Competitiveness #4

Innovation #5

Human Capital #2

IESE Business School IESE Cities in Motion Index (2018) Overall #21

Human Capital #3

Governance #12

Economy #14

Technology #39

International Outreach #55

Social Cohesion #61

Transportation #77

Toronto Region Board of Trade Scorecard on Prosperity (2015) Overall #6

Economy #2

Information Tech #4

Labor Attractiveness #18

Arcadis Citizen Centric Cities:

The Sustainable Cities Index (2018)

Overall #22

Profit (economic) #8

Planet (environmental) #29

People (social) #44

Grosvenor Resilient Cities (2014) Overall #8

Most Adaptive #9

Least Vulnerable #12

Global Connectedness  
DHL DHL Global Connectedness Index  2016 “Giant Index” #58
GaWC Globalization and World Cities (GaWC)

Research Network (2016)

Beta+  #57
Innovation & Talent  
World Intellectual Property Organization, INSEAD, Cornell SC Johnson College of Business, PwCStrategy Global Innovation Index, 11th ed. (2018) Scientific Publications #6

Patents #9

 

KMPG Changing Landscape of Disruptive Technologies (2018)

 

Overall #12
INSEAD 2018 Global City Talent Competitiveness

Index

Overall #17

Growing Skilled Workforce #4

Enabling Workforce #10

Hickey & Associates

 

Global Innovation Hubs: 2019 Report Overall #1

Biotech #1

Pharmaceuticals #1

Medical Science #2

Nanotechnology #2

Information & Communications Technology #10

Startup Genome Global Startup Ecosystem Report 2019 Overall #5

Life Sciences #2

Advanced Manuf. & Robotics #2

Artificial Intelligence #2

2thinknow Innovation Cities™ Index 2018 Overall #7
Financial Sector  
Z/Yen Partners with China Development Institute The Global Financial Centres

Index 23 (2018)

Overall #10

Financial Sector #6

Business Environment #9

Human Capital #10

Infrastructure #12

Knight Frank The Wealth Report (2018) Overall #13

Lifestyle #21

Future #7