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Latin American cities join the global club

July 05, 2004

The urban development in Latin America confronts an exciting phase of change. The reason for this is the globalisation of its metropolises. For a long time these were the centres and end points of the economic and social development, but today they serve as the "gateways to the world". According to a study sponsored by the Austrian Science Fund (FWF), this change of significance, known only in the USA and Europe previously, can be evidenced now for the first time in Latin America as well.

The role of the metropolises in the USA and Europe has been changing for a while. Earlier they were centres of production and logistics for the domestic economy, but today they serve as junctions that link the national and international markets. Dr. Christof Parnreiter and his colleagues at the Institute of Urban and Regional Research in the Austrian Academy of Sciences have proved for the first time that this development is taking place likewise in the capital cities of Chile and Mexico, Santiago de Chile and Mexico City respectively.

Planned Dominance
Since the 1930s, both metros established a strong dominance within their own nations. The objective of this controlled development for the so-called "urban primacy" was to reduce dependence on imports. For this purpose the rural areas were linked to the capital as the centre of a national market. The changes in the economic and social development of the metros subsequent to this process of integration were analysed in the scope of the three-year project sponsored by FWF.

Parnreiter states: "This process of integration was built on the mass production of low-value goods through traditional industries and had taken place mainly within the two metros. Thus these developed into socio-economic centres of their respective nations. For some time now their urban development is shaped not only by their supremacy. A development process is taking place at the present time in both metros, focussing on their role as a linkage to the global economy. They act as global cities."

Service-oriented activities such as financial services are the essential links for this function. Their service offers are bound neither to a city nor to a nation. The share of this economic sector (including insurances and real estate) in the city GDP in Mexico City alone increased by more than 50 % in the period 1980-1998. In Santiago de Chile, financial services already accounted for more than 25 % of the city GDP in 1997.
The progression to a global city is also visible by the settlement of the headquarters of large corporations. Parnreiter established an interesting correlation in the course of his work. "The stronger the connections of a company to the global economy, the larger was the probability for its headquarters to be situated in the metropolis. Thus these companies also support the growth into a global city," says Parnreiter.

Facets of Globalisation
In the course of the project, however, Parnreiter also came across essential differences in the development of Santiago de Chile and Mexico City. The reason is that, whereas the development of Santiago de Chile to a global city occurred parallel to a strengthening of national supremacy through further integration of the national market, Mexico City lost this urban primacy cumulatively. The basic driving force in Mexico is thereby the migration of traditional industries to the area bordering the USA. "The varied development of the two metropolises shows that the globalisation of economy need not lead necessarily to a standardisation of urban development," stresses Parnreiter.

Parnreiter succeeded in rebutting two general notions with this project: one, globalisation takes place without Latin America, and two, it leads to the standardisation of urban development. The FWF-sponsored basic research contributed to the rectification of opinions that are held generally as valid by a scientific analysis of the actual instances.

Image and Text will be available online from Monday, 05th July 2004, 09.00 am MEZ, onwards: http://www.fwf.ac.at/en/press/globalisation.html

Public Relations - Research and Development