Moscow: emergent world city


By Daniel Hoenderdos (3699390) and Edo van Baars (3745147)
Assignment 1 for course: World Cities and Urban Systems
Utrecht University, 20-5-2014

The novel view the way scholars perceive, rank and explain the emergence of so called ‘global cities’ has been concisely illustrated by Smith en Williams (1986, p. 221): “If the late feudal city was defined by the concentration of commercial capital (in ‘market towns’), and the early capitalist city is defined by the concentration of productive capital in industry, the late capitalist city is defined […] by […] the concentration of money capital and the gamut of financial, administrative and professional services that lubricate the money flow. It is this function that defines the late capitalist cities at the top of the new urban hierarchy.” 

This idea of exploring the intricate ways in which cities are connected to, and how they play their role in shaping the world economy has fueled a lot of literature, most notably the work of Friedman, Sassen, and Castells and was verified empirically by the GaWC research group.

Summarizing their ideas: a global city is likely to appear when places acquire the status of ‘basing point of global capital’ through globalization and the international division of labor (Friedman, 1986), by commanding and controlling the world economy through specialization in advanced (financial) services and concentrating these ‘moneymakers’ via national consolidation of stock exchanges combined with deregulation of these sectors and market liberalization (Sassen, 1991) and when these places successfully organize the various connections to each other and the large resources of intellectual capital (highly educated professionals, data, innovation, etcetera) both physically but especially via the special role of information and communication technology leading into the information age, the network society and the space of flows (Castells, 1999).

These processes strongly correlate with the private market (Gritsai, 1997, p.342) which is the main reason why Friedman explicitly ‘eliminates from consideration’ Moscow in his 1986 article. Friedman presumes that Moscow is simply no late capitalist city as is it remains defined by the accumulation of productive capital in industry because of policy based on Marxist-Leninist
ideology.

By 1986 that observation might have been correct, but since the disintegration of the Soviet Union and replacement of the centrally planned economy by the capitalist system, Russia and its capital have slowly made a switch from its public, bureaucratic focus, to the private sector (Gritsai, 1997, p.432-433). The rapidly increased service sector (most notably in the (advanced) finance, consultancy, real estate, legal and accounting sectors that are so very important in Sassens work) is increasing Moscow’s influence on the global economy. Another reason for this, is that certain strategic companies (for example the energy giant Gazprom) have been deprivatized under the regime of Vladimir Putin, making them effectively a tool for Russia’s geopolitics which in part restores Moscow’s status as an important decision making city.

In 1997, Gritsai notes that this transformation still runs decades behind in comparison to western cities; however this gap seems to be being bridged at a rapid rate. GaWC ranked Moscow 36th in 2000, and 12th place (!) in 2008. The independent consultancy firm A.T. Kearney’s 2014 list of global cities ranks Moscow 17th, just behind Vienna but ascending Shanghai as it is bouncing back from the 2008 financial crisis.

Figure 1 shows the top 20 of this A.T. Kearney list. Even though Moscow still scores relatively low in business, but makes up in cultural experience and human capital – two important proxies for ‘world-cityness potential’.

top-20

Figure 1: Top twenty world cities and their respective scores in five dimensions by A.T. Kearney. Business activity is still on the rise; human capital is already looking quite hopeful; information exchange seems to be trailing; cultural experience scores rather high; and political engagement scores low (which might be questionable considering Russia’s agenda in Eastern Europe).

Moscow’s government’s focus is mainly to attract foreign investors. The government spends money to build expensive offices and apartments for global companies and wealthy expats. Goal of this policy, of course, is the Friedmanian/Sassian idea to increase the engagement in the world economy. Another, very visible and geographically interesting, pillar of this increased engagement policy is Moscow’s attempt to function as a hub for flight- and train travel. The city, as the center of Eurasia, connects Europe with the northern parts of Asia (Gritsai, 1997, p. 343).

Although highly successful in terms of hierarchy of world cities – Moscow is clearly on the rise – this policy of market liberalization, and attraction of wealthy expats and firms has led to widespread social inequality. A lot of people have earned a lot of money (only think about Roman Abramovich buying the London football club Chelsea and investing no less than 2.6 billion euro’s in top level players, coaches, the stadium et cetera). There is no other city in the world that trumps Moscow’s amount of billionaires – not even New York City (Forbes, 2013). But on the other hand, Moscow also has a very substantial group of people living under the poverty line. Figure 2 (next page) shows the 2009 income per capita distribution in Moscow.

One of the central characteristics of world cities is a grand divide between the haves and the have-nots. About this polarization and the supposed erosion of the middle class a substantial amount of literature has been produced. According to Kolossov, Vendina and O’Loughlin (2002), Moscow now fits Peter Mancuse famous citadel-ghetto model where the most affluent social groups cluster in specially designed high-end and high-value places (in Moscow as close to the Kremlin as possible) to protect and enhance their dominant position, and the weaker social groups are marginalized into a so-called ‘outcast-ghetto’ where they are virtually excluded from mainstream economy (in Moscow pushed out to the outskirts of the city).

The social infrastructure, health care, education and housing for the marginalized are poor. The quality of life is low for a huge share of Moscow’s inhabitants compared to other world cities. Only the circumstances in Mumbai are worse (Kolossov, Vendina, O’Loughlin, 2002).

income-distribution

Figure 2: Income distribution in Moscow. In Moscow goes the general rule of thumb: tell me how far you live from the Kremlin, and I’ll tell you how much you earn.

To summarize all of the above: Moscow is an emergent global city. Its post cold war policy of (market) liberalization has led to a growing (advanced) service sector and a hub function between Europe and (northeast) Asia.

The recent turmoil in Ukraine proves that Moscow is still an important decision-making place. Further proof of its ‘world-cityness’ is the huge gap between the
rich living in their citadels, and the marginalized poor living in their outcast-ghetto’s.

Sources
AT Kearney (2013), Global Cities, Present and Future – 2014 Global Cities Index and Emerging Cities Outlook. http://www.atkearney.com/research-studies/global-cities-index/full-report#sthash.YRQf0qoC.dpuf. Consulted: 05-05-14.
Castells, M. (1999), Grassrooting the Space of Flows. Urban Geography, 20(4), pp. 294-302.
Friedman, T. (1986), The World City Hypothesis. Development and Change, 17(1), pp. 69-83.
Geromel, R. (2013), Forbes Top 10 Billionaire Cities – Moscow Beats New York Again. http://www.forbes.com/sites/ricardogeromel/2013/03/14/forbes-top-10-billionaire-cities-moscow-beats-new-york-again/. Consulted: 05-05-14.
Gritsai, O. (1997), The Economic Restructuring of Moscow in the International Context. Geojournal, 42(4), pp. 341-347.
Kolossov, V., Vendina, O. & O’Loughlin, J. (2002), Moscow as an Emergent World City: International Links, Business Developments and the Entrepreneurial City. Eurasian Geography and Economics, 43(3), pp. 170-196.
Marcuse, P. (1997), The Enclave, the Citadel, and the Ghetto, Urban Affairs, 33(2), pp. 228-264.
Sassen, S. (1991), The Global City. Princeton: Princeton University Press.
Smith, N. & Williams, P. (1986), The gentrification of the city. New York: Routledge.
Map of income inequality in Moscow courtesy of http://etomesto.ru/eng/download579/ consulted 15-5-2014


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