Canadian geographer Mario Polèse's book, The Wealth and Poverty of Regions: Why Cities Matter, is not new. It was originally published in 2010. But it's perhaps a good follow-up to yesterday's post about the untethering of wealth. Here's an excerpt from a review of the book by Jeb Brugmann:
All cities, Polèse explains, share the same basic economic causes and effects. These are economies of localization (i.e., locating activities close together) and of urbanization (i.e., clustering lots of diverse activities together at scale). Polèse shows how these urban economies—usefully distinguished and defined in detail as economies of scale, proximity, diversity and concentration—combine with unique natural features and resource endowments, technology and infrastructure investments, national boundaries and market controls, and historical events to create quintessentially local and unique places. Every time he explains the status of another place—New York, London, Chicago, Paris, Montreal, the northern Mexico border, the North American west coast—he demonstrates again how the source code of geography combines with specific local and historical conditions to create a momentum of wealth or poverty.
The rich may have the means to tax-optimize through physical mobility, but the draw to established urban clusters remains strong, which is why it can be a challenge to stay away from them for more than 183 days. There is a "stickiness" to established cities that is the result of momentum and compounding over centuries.
Still, nothing is guaranteed, and there's only so much that can be done if you're swimming against a global landscape that is shifting away from you. Geography does matter. And today, the world's economic center of gravity is rapidly shifting toward Asia. This is good for some cities and bad for others.
Cover photo by Zhu Hongzhi on Unsplash
This year, 88 companies delisted or transferred their primary listing away from the London Stock Exchange. Only 18 new companies listed. This, according to FT, marks the biggest net outflow of companies since the financial crisis.
A lot of these companies are, of course, moving their listings over to the US. The New York Stock Exchange and the Nasdaq are, by far, the two largest stock exchanges in the world by market cap. And so many companies believe that they'll generally have a better time being listed over there -- better access to capital, greater liquidity, etc.
This is not a new trend. Last year, the FT also called out the London Stock Exchange as being the European stock exchange with the greatest risk of seeing companies depart for the US. Here's what's been happening since the financial crisis:
"...the pandemic and its aftermath have also created a rare openness to doing things differently. Seizing this opportunity won’t be easy, or a short-term affair. But if we can be certain of anything, it’s that cities will adapt and evolve, and that they have the potential to come back stronger."
- Kearney 2020 Global Cities Report
The Kearney 2020 Global Cities Report is out and it incorporates two main rankings: their Global Cities Index (GCI) and their Global Cities Outlook (GCO).
The former is intended to be a snapshot of where things stand today and the latter is intended to be a forecast of where things might be heading.
Here's their GCI:
And here's their GCO:
Note: The big mover in their GCO is Toronto, jumping nine spots to take second place behind London.
The full report can be downloaded over here.
Canadian geographer Mario Polèse's book, The Wealth and Poverty of Regions: Why Cities Matter, is not new. It was originally published in 2010. But it's perhaps a good follow-up to yesterday's post about the untethering of wealth. Here's an excerpt from a review of the book by Jeb Brugmann:
All cities, Polèse explains, share the same basic economic causes and effects. These are economies of localization (i.e., locating activities close together) and of urbanization (i.e., clustering lots of diverse activities together at scale). Polèse shows how these urban economies—usefully distinguished and defined in detail as economies of scale, proximity, diversity and concentration—combine with unique natural features and resource endowments, technology and infrastructure investments, national boundaries and market controls, and historical events to create quintessentially local and unique places. Every time he explains the status of another place—New York, London, Chicago, Paris, Montreal, the northern Mexico border, the North American west coast—he demonstrates again how the source code of geography combines with specific local and historical conditions to create a momentum of wealth or poverty.
The rich may have the means to tax-optimize through physical mobility, but the draw to established urban clusters remains strong, which is why it can be a challenge to stay away from them for more than 183 days. There is a "stickiness" to established cities that is the result of momentum and compounding over centuries.
Still, nothing is guaranteed, and there's only so much that can be done if you're swimming against a global landscape that is shifting away from you. Geography does matter. And today, the world's economic center of gravity is rapidly shifting toward Asia. This is good for some cities and bad for others.
Cover photo by Zhu Hongzhi on Unsplash
This year, 88 companies delisted or transferred their primary listing away from the London Stock Exchange. Only 18 new companies listed. This, according to FT, marks the biggest net outflow of companies since the financial crisis.
A lot of these companies are, of course, moving their listings over to the US. The New York Stock Exchange and the Nasdaq are, by far, the two largest stock exchanges in the world by market cap. And so many companies believe that they'll generally have a better time being listed over there -- better access to capital, greater liquidity, etc.
This is not a new trend. Last year, the FT also called out the London Stock Exchange as being the European stock exchange with the greatest risk of seeing companies depart for the US. Here's what's been happening since the financial crisis:
"...the pandemic and its aftermath have also created a rare openness to doing things differently. Seizing this opportunity won’t be easy, or a short-term affair. But if we can be certain of anything, it’s that cities will adapt and evolve, and that they have the potential to come back stronger."
- Kearney 2020 Global Cities Report
The Kearney 2020 Global Cities Report is out and it incorporates two main rankings: their Global Cities Index (GCI) and their Global Cities Outlook (GCO).
The former is intended to be a snapshot of where things stand today and the latter is intended to be a forecast of where things might be heading.
Here's their GCI:
And here's their GCO:
Note: The big mover in their GCO is Toronto, jumping nine spots to take second place behind London.
The full report can be downloaded over here.
Some people may not think that this is a big deal, but it certainly undermines London's position as a pre-eminent global center. Most rankings of the world's best or most global cities have London and New York out front. But from an economic prosperity standpoint, the US hegemony is real and feels even stronger right now.
Naturally, this decline will also trickle through other parts of the economy. On the real estate side, prime central London is seeing the biggest buyer's market since the financial crisis. (Presumably this is true of other submarkets as well.) On the new construction side, sales and starts are falling, and unsold homes sitting as developer inventory are increasing:
It is tempting to say that London will always be London. But:
“The UK market does not have any god-given right to be a leading listing venue, [but] it requires nurturing and support to be successful in a market that is increasingly global,” said Hall, adding that “more companies will depart” unless action is taken.
This is true of every city and every industry. There are no guarantees. Cities need to compete, just as companies compete. I am also of the opinion that Brexit has and will continue to be a drag on the UK economy. Disclaimer: I'm not an economist. But the UK is a relatively small country. So intuitively, I would think that the way to compete with the scale and dominance of the US is through a more unified Europe.
Are you bullish or bearish on London right now?
Some people may not think that this is a big deal, but it certainly undermines London's position as a pre-eminent global center. Most rankings of the world's best or most global cities have London and New York out front. But from an economic prosperity standpoint, the US hegemony is real and feels even stronger right now.
Naturally, this decline will also trickle through other parts of the economy. On the real estate side, prime central London is seeing the biggest buyer's market since the financial crisis. (Presumably this is true of other submarkets as well.) On the new construction side, sales and starts are falling, and unsold homes sitting as developer inventory are increasing:
It is tempting to say that London will always be London. But:
“The UK market does not have any god-given right to be a leading listing venue, [but] it requires nurturing and support to be successful in a market that is increasingly global,” said Hall, adding that “more companies will depart” unless action is taken.
This is true of every city and every industry. There are no guarantees. Cities need to compete, just as companies compete. I am also of the opinion that Brexit has and will continue to be a drag on the UK economy. Disclaimer: I'm not an economist. But the UK is a relatively small country. So intuitively, I would think that the way to compete with the scale and dominance of the US is through a more unified Europe.
Are you bullish or bearish on London right now?
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