Re-Positioning Cities at the Core of Global Trade

Recalling the structure of ancient trade hubs, the Brookings Institute’s Alan Berube calls for local and national policies to once again place cities at the center of international trading strategies.
January 29, 2013, 6am PST | Melina Cordero
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Cities, Berube argues, have always been crucial to international trade. By assembling people in a common space to trade goods, services, and information, cities and market towns enabled the emergence of the earliest trading routes, from the Silk Road to the Hanseatic League. “In short,” Berube claims, “cities make trade possible.”

However, with the rise of the nation-state over 2,000 years ago, Berube argues that governments both local and global have generally focused on crafting strategies at the national level, limiting the power of cities to directly engage in global flows. But for Berube, such strategies forget the fact that “…cities, not countries, are the real centers of global trade.”

With the world’s 300 biggest cities accounting for 48% of global GDP and 51% of GDP growth, Berube argues that cities should be granted greater power in global exchanges. This means national governments should promote linkages between cities while providing them the resources to compete with each other. At the local level, it means moving away from traditional approaches to urban development commonly used in US cities. So-called “vanity projects” like stadiums and convention centers to achieve economic growth “fail to capitalize on rising demand in global markets – for which the growth of emerging-market cities is largely responsible.”

Although the US has held more firmly to the nation-state model than emerging economies like China, Berube notes evidence of change. He cites the case of Portland, where a public-private partnership under the name of Greater Portland, Inc. is designing a new export plan for the Portland metro region. In San Antonio, he adds, local authorities converted a military base into an inland port, which hosts over half of trade flows between Mexico and the US.

But, as Berube warns, “Global trade is not pleasant; it is fiercely competitive, and policymakers must address the short-term costs that it routinely imposes on people and places.” Nevertheless, he writes, international exchange also offers plentiful opportunities for long-term growth at local, national, and global levels.

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Published on Friday, January 25, 2013 in Project Syndicate
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