Saskia Sassen: University of Chicago Chicago, USA
 
IMPACTS OF INFORMATION TECHNOLOGIES ON URBAN ECONOMIES AND POLITICS (Page 2)
 
A. NEW INTERACTIONS BETWEEN CAPITAL FIXITY AND HYPERMOBILITY
 
Information technologies have not eliminated the importance of massive concentrations of material resources but have, rather, reconfigured the interaction of capital fixity and hypermobility. The complex management of this interaction has given some cities a new competitive advantage. The vast new economic topography that is being implemented through electronic space is one moment, one fragment, of an even vaster economic chain that is in good part embedded in non-electronic spaces. There is today no fully virtualized firm or economic sector. Even finance, the most digitalized, dematerialized and globalized of all activities has a topography that weaves back and forth between actual and digital space. To different extents in different types of sectors and different types of firms, a firm's tasks now are distributed across these two kinds of spaces; further, the actual configurations are subject to considerable transformation as tasks are computerized or standardized, markets are further globalized, and so on. Let me select the following three issues for discussion.
 
a) The importance of social connectivity and central functions.
First, while the new telecommunications technologies do indeed facilitate geographic dispersal of economic activities without losing system integration, they have also had the effect of strengthening the importance of central coordination and control functions for firms and for markets. Major centers have massive concentrations of state of the art resources that allow them to maximize the benefits of telecommunications and to govern the new conditions for operating globally. Even electronic markets rely on traders and banks which are located somewhere; for instance, Frankfurt's electronic futures market is actually embedded in a global network of financial centers, each of which concentrates resources that are necessary for Frankfurt's market to thrive.
 
One proposition I derive from this mix of variables is that organizational complexity is a key condition necessary for a firm or market to maximize the benefits it can derive from the new information technologies. It is not enough to have the infrastructure. It also takes a mix of other resources: state of the art material and human resources, and the social networks that maximize connectivity. Much of the value added these technologies can produce for advanced service firms and advanced markets represents a new type of urbanization economy insofar as it depends on conditions external to the firms and markets themselves and to the technologies as such.
 
A second fact that is emerging with greater clarity concerns the meaning of "information." There are two types of information that matter to advanced services firms. One is the datum, which may be complex but comes in the form of standardized information easily available to these firms: e.g. the details of a privatisation in a particular country. The second type of information is far more difficult to obtain because it is not standardized. It requires interpretation/evaluation/judgment. It entails negotiating a series of data and a series of intepretations of a mix of data in the hope of producing a higher order type of information. Access to the first kind of information is now global and immediate thanks to the digital revolution. But it is the second type of information that requires a complicated mixture of elements, not only technical but also social -- what we could think of as the social infrastructure for global connectivity. It is this type of social infrastructure which gives major financial centers a strategic role. In principle, the technical infrastructure for connectivity can be reproduced any where, but not the social connectivity.
 
When the more complex forms of information needed to execute major international deals cannot be gotten from existing data bases, no matter what one can pay, then one needs the social information loop and the associated de facto interpretations and inferences that come with bouncing off information among talented, informed people. The process of making inferences/interpretations into "information" takes quite a mix of talents and resources. In brief, urban centers provide the mix of resources and the social connectivity which allow a firm or market to maximize the benefits of its technical connectivity.
 
b) The spatialities of the center.
 
The combination of the new capabilities for mobility along with patterns of concentration and operational features of the cutting edge sectors of advanced economies suggests that spatial concentration remains as a key feature of these sectors. But it is not simply a continuation of older patterns of spatial concentration. Today there is no longer a simple straightforward relation between centrality and such geographic entities as the downtown, or the central business district. In the past, and up to quite recently in fact, centrality was synonymous with the downtown or the CBD. The new technologies and organizational forms have altered the spatial correlates of centrality.
 
Information technologies have had a sharp effect on the spatial organization of economic activity. But this effect is not uniform: the locational options of firms vary considerably. It is not simply a matter of reducing the weight of place. The scattered evidence for the last decade which saw the widespread use of information technologies by firms in a broad range of sectors allows us to identify three types of firms in terms of their locational patterns. First, firms with highly standardized products/services see an increase in their locational options insofar as they can maintain system integration no matter where they are located. This might also hold for firms with specialized products/services that do not require elaborate contracting and subcontracting or suppliers networks, all conditions which tend to make an urban location more efficient. Data entry and simple manufacturing work can be moved to wherever labor and other costs might be lowest. Headquarters can move out of large cities and to suburban locations or small towns.
 
A second locational patterns is that represented by firms which are deeply involved in the global economy and hence have increasingly complex headquarter functions. Perhaps ironically, the complexity of headquarters functions is such that they get outsourced to highly specialized service firms. This frees up the headquarter to locate anywhere so long as they can access a highly specialized networked service sector somewhere, most likely in a city. The third locational pattern is that evident in highly specialized networked service sectors. It is these sectors, rather than the headquarters, that benefit from spatial agglomeration at the point of production. These firms are embedded in intense transactions with other such firms in kindred specializations and are subject to time pressures and the constraints of imperfect information discussed in the preceding section. Along with some of the features contributing to agglomeration advantages in financial services firms, this has the effect of rendering the network of specialized service firms more place-bound than the hyper-mobility of their products and of their professionals would indicate.
 
Given the differential impacts of the capabilities of the new information technologies on specific types of firms and of sectors of the economy, the spatial correlates of the "center" can assume several geographic forms, likely to be operating simultaneously at the macrolevel. Thus the center can be the CBD, as it still is largely for some of the leading sectors, notably finance, or an alternative form of CBD, such as Silicon Valley. Yet even as the CBD in major international business centers remains a strategic site for the leading industries, it is one profoundly reconfigured by technological and economic change (Fainstein 2001; Schiffer Ramos 2001; Ciccolella and Mignaqui 2001). Further, there are often sharp differences in the patterns assumed by this reconfiguring of the central city in different parts of the world, notably as between the United States and Western Europe (e.g., Kunzmann 1994; Hitz et al. 1995; Veltz 1996).
 
Second, the center can extend into a metropolitan area in the form of a grid of nodes of intense business activity. One might ask whether a spatial organization characterized by dense strategic nodes spread over a broader region does in fact constitute a new form of organizing the territory of the "center," rather than, as in the more conventional view, an instance of suburbanization or geographic dispersal. Insofar as these various nodes are articulated through digital networks, they represent a new geographic correlate of the most advanced type of "center."This is a partly deterritorialized space of centrality.
 
Third, we are seeing the formation of a transterritorial "center" constituted via intense economic transactions in the network of global cities. These transactions take place partly in digital space and partly through conventional transport and travel. The result is a multiplication of often highly specialized circuits connecting sets of cities. These networks of major international business centers constitute new geographies of centrality. The most powerful of these new geographies of centrality at the global level binds the major international financial and business centers: New York, London, Tokyo, Paris, Frankfurt, Zurich, Amsterdam, Los Angeles, Sydney, Hong Kong, among others. But this geography now also includes cities such as Bangkok, Seoul, Taipei, Sao Paulo, Mexico City. In the case of a complex landscape such as Europe's we see in fact several geographies of centrality, one global, others continental and regional.
 
Fourth, new forms of centrality are being constituted in electronically generated spaces. For instance, strategic components of the financial industry operate in such spaces. The relation between digital and actual space is complex and varies among different types of economic sectors (see Graham 2000; Sassen 1999).
 
3) What does contextuality mean in this setting?
 
These networked sub-economies operating partly in actual space and partly in globe-spanning digital space cannot easily be contextualized in terms of their surroundings. Nor can the individual firms and markets. The orientation of this type of sub-economy is simultaneously towards itself and towards the global. The intensity of internal transactions in such a sub-economy (whether global finance or cutting edge high-tech sectors) is such that it overrides all considerations of the broader locality or urban area within which it exists.
 
On another, larger scale, in my research on global cities I found rather clearly that these subeconomies develop a stronger orientation towards the global markets than to their hinterlands. Thereby they override a key proposition in the urban systems literature, to wit, that cities and urban systems integrate and articulate national territory. This may have been the case during the period when mass manufacturing and mass consumption were the dominant growth machines in developed economies and thrived on national scalings of economic processes. Today, the ascendance of digitalized, globalized, dematerialized sectors such as finance, has diluted that articulation with the larger national economy and the immediate hinterland.
 
The articulation of these sub-economies with other zones and sectors in their immediate socio-spatial surroundings are of a special sort. There are the various highly priced services that cater to the workforce, from up-scale restaurants and hotels to luxury shops and cultural institutions, typically part of the socio-spatial order of these new sub-economies. But there are also various low-priced services that cater to the firms and to the households of the workers and which rarely "look" like they are part of the advanced corporate economy. The demand by firms and households for these services actually links two worlds that we think of as radically distinct. It is particularly a third instance that concerns me here, the large portions of the urban surrounding that have little connection to these world-market oriented sub-economies, even though physically proximate. It is these that engender a question about context and its meaning when it comes to these sub-economies.
 
What then is the "context," the local, here? The new networked subeconomy occupies a strategic geography, partly deterritorialized, that cuts across borders and connects a variety of points on the globe. It occupies only a fraction of its "local" setting, its boundaries are not those of the city where it is partly located, nor those of the "neighborhood." This subeconomy interfaces the intensity of the vast concentration of very material resources it needs when it hits the ground and the fact of its global span or cross-border geography. Its interlocutor is not the surrounding, the context, but the fact of the global.
 
I am not sure what this tearing away of the context and its replacement with the fact of the global could mean for urban practice and theory. The strategic operation is not the search for a connection with the "surroundings," the context. It is, rather, installation in a strategic cross-border geography constituted through multiple "locals." In the case of the economy I see a re-scaling: old hierarchies --local, regional, national, global-- do not hold. Going to the next scale in terms of size is no longer how integration is achieved. The local now transacts directly with the global --the global installs itself in locals and the global is itself constituted through a multiplicity of locals.