London is the world's most economically important city (sorry, New York)
MasterCard released a report today ranking the 50 most important "centers of commerce" around the world. Here's the top ten:
1. London
2. New York
3. Tokyo
4. Chicago
5. Hong Kong
6. Singapore
7. Frankfurt
8. Paris
9. Seoul
10. Los Angeles
I had breakfast this morning with Yuwa Hedrick-Wong, the Singapore-based MasterCard economic adviser in charge of the ranking project, and Michael Goldberg, chief academic officer of U21 Global (the "Graduate School for Global Leaders") in Singapore and a member of the "knowledge panel" that helped draw up the criteria for the rankings.
The six dimensions on which cities were judged were "legal and political framework," "economic stability," "ease of doing business," "financial flow," "business center" (which measures things like airplane traffic and amount of commercial real estate), and "knowledge creation and information flow." Said Hedrick-Wong: "What we really tried to understand was global cities and their level of contribution to global commerce."
The goal here, other than to get some nice publicity for MasterCard, was to get corporate customers to focus more on what really matters in global commerce. "Emerging-market cities are often way ahead of the rest of the country," said Hedrick-Wong, "whereas global companies continue to use countries as their unit of analysis." Some examples: Shanghai (No. 32), Mexico City (No. 42), Mumbai (No. 45).
London beat out New York for No. 1 entirely on the strength of its "financial flow" and "business center" rankings. "At a very fundamental level, London makes its money from the global market," Goldberg said. He also argued that, nowadays, "the locus of economic activity is cities, not nation-states." Sounds like more bad news for Mudcat.
Update: Commenter YMM asks which indicators were used to calculate the "financial flow" and "business center" rankings. Financial flow is pretty straightforward: it's the volume of equity, bond, derivates and commodities trading, plus the "presence and intensity of" global banking, insurance and securities companies. London beats New York on this dimension mainly because of much higher bond-trading volumes. New York is No. 2 in the world in financial flow, and Chicago No. 3.
The business center ranking measures a whole bunch of things including how easy it is to start or close a business and hire or fire workers, the availability of credit, shipping traffic, air passenger traffic, international air passenger traffic, air cargo traffic, the amount of commercial real estate, amount of convention and meeting business, and number of five-star hotels. Hong Kong ranks tops in the world in all this, just ahead of London.
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1
This simply isn't true.
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2
Which part?
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Justin, could you give us some detail in terms of what comprised "financial flow" and "business center" rankings.
From those criteria, I'm assuming a couple of things went into the terms. For example for financial flow, I imagine, that the number of global corporation stock listings, volume of loans to 'global' corporations and non-UK based businesses, and other items that demonstrate that the non-US based businesses turn increasingly to the markets in London than NY. Which I believe contributes to the concept of 'business center' as a criteria, in turn, is probably leading to the thinking going on at the NYSE to consider removing the NY from the name - can't find the link to that story, sorry.
There's no doubt that London has some advantages, it's connections and access to Western and Eastern Europe, access to Africa, the Middle East and Asia. Just the time difference between itself and those markets vs NY and those markets make a difference. I would also be interested in looking at how much of an effort London financial companies are making to develop staff specifically to work in those markets outside the UK, either with naturalized, fluent personnel, or individuals trained specifically for those markets. It seems that while NY has an advantage in a people market - I really think this, though I'd have to find census and education data to provide it - NY businesses have been very ineffective at bringing in people into their ranks instead of the usual White Anglo-Saxon male. Anyway, I'm not surprised by the rankings, I think NY has only itself to blame. And I'm from NY and love this town!
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4
I am pleasantly surprised at Los Angeles' inclusion in the top ten!!!!!!!!!!!
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5
Although London “supposedly” beat out NYC in economic importance, NYC beats London in every other aspect of anything you can think of besides history, of course.
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6
New York City is one of the nation's leading centers of business and commerce, but, as already mentioned, is especially strong in the financial and media industries. Some of the major companies with their headquarters in New York City include Accenture, Alcoa, Altria Group, American Express, American International Group, Bristol-Myers Squibb, CBS, Cendant, Citigroup, Fox Entertainment Group, Goldman Sachs, Hess, JPMorgan Chase, Lehman Brothers, Loews, Merill Lynch, Morgan Stanley, News Corporation, New York Life Insurance, Pfizer, Schlumberger, TIAA-CREF, Time Warner, Verizon Communications, Viacom and Wells Fargo.
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7
Neah... I think that NYC is no.1!! i'm sure it is. of course, London is a very important city but NYC is still over London. I LOVE USA! greetings from Romania
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8
Stop being so overly patriotic.
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