Urban competitiveness between regions of the global south

This study aims to provide an overview of the situation of the global urban economic network in the global South as a result of the current financial crisis. The crisis is hitting the global urban economic network at its core, while the periphery of the network is enjoying an economic boom, which is causing changes in the global economy. Key concepts to help in understanding these changes are: city networks, urban competitiveness and multinationals. The study provides an introductory overview of the theories that have contributed to the concept of the global urban economic network, describing the way it is “structured”, its main features, and the way that internal economic flows are affected by the ongoing global financial crisis. The emphasis of the study is on the southernmost component of this network, The global South, which has largely been dependent on exporting goods and services to the northern hemisphere, but is set to “revolutionize the global economy”. The generation of a South-South network that will be at the core of this revolution is thoroughly discussed. The main research question was: What is the state of the global urban economic network in the global South? Two specific research questions derived from this one: (i) What have the trends and patterns of FDI in the global south been during the last decade? and (ii) Which location factors have been crucial for attracting this FDI? In order to answer these questions, the study combines descriptive and explanatory approaches to provide an understanding of the contemporary structure of the global South within the world system, and the causes of the transformation of the global urban economic network. In the first part of the study a dataset based on Foreign Direct Investment (FDI) is analysed to find flow trends and patterns, especially in the global South that could reveal the development of a network within the so-called “periphery”, which corresponds to a large extent with the global South. The second part uses location factors to test the results from the first part in order to understand: the processes behind the changes going on in the world economy, the factors impacting the decisions of multinational enterprises to invest in a given place and the consequences of such investments on specific countries and regions. The analyses shows that during the 10-year period covered by the study the investments originating in the South were double the investments originating in the North, and continue to grow even after the 2008 crisis, although they still represent a very small amount (8%) of total volume of investments worldwide. The outcome of this is that the global South`s share in the global economic urban network is beginning to grow in strength and relevance, and as result the South-South and South-North links of the network are rapidly being strengthened. When observing the structure and geographical distribution of FDI flows, the research reveals that the network has a strong hierarchical structure with its central elements located in India and the UAE. In addition, two established heterarchical patterns were identified: first, a region constituted by the Asia Pacific, and part of the Middle East; and second, Latin America. Still at the periphery of the global economic urban network are vast parts of Africa, which have only a few asymmetrical economic relations with a limited number of core countries. This study also demonstrates that location factors such as domestic market size, innovation, technological readiness, and the macroeconomic environment are key to attracting investment flows to the global South as well as being central to investments from the South in the North. This set of location factors indicates that what is required from the region nowadays is more sophisticated than the mere provision of raw materials or cheap labour. The study also indicates that a country’s national state of affairs (local policies, economic and social conditions, politics, etc.) matters for FDI attraction and for becoming part of the global urban economic network. This study can be considered a guideline for understanding the development of the global South as a whole, and as a part of the global system. This study also contributes to closing at least one of the gaps in world city research. Further research could lead to a deeper understanding of the structure of the global urban economic network in the global South, and to more accurate and resource conscious urban planning, management and policy making processes.