WorldCity Business Magazine

Pecking Order

by Jan Nijman

South Florida could have problems standing on its own two feet as it finds itself reliant upon cities up and down the chain of command for its future.

In academic studies of global cities and their role in the world economy, Miami is recognized as an unusual but important place. Miamis importance lies not so much in the corporate command and control (the likes of big company headquarters or stock markets) that characterize other major world cities, but in its ability to connect business flows.

These are flows of finance capital, trade, people and corporate communication. Examples include the huge share of U.S. trade with Latin America and the Caribbean that flows through the Miami Customs District, the centrality of Miami International Airport in hemispheric airline traffic, the overwhelming importance of Miamis banks to the financial affairs of Latin American countries and the exceptionally large numbers of multinational companies in the city.

Detailed studies show that Miami is hooked directly into to the top echelons of power in the world economy, as measured through corporate network analysis. The most significant connections upward are to New York, London, Paris and Tokyo. The most important downward corporate connections are with major cities in the region: Sao Paulo, Mexico City, Buenos Aires and Caracas.

This means that Miami takes its orders from the pinnacle of the global economy and, in turn, has a very powerful influence on Latin America. Miami serves as the premier router, so to speak, between the corporate capitals of the world and Latin America. There is no other large region in the world where one single city so monopolizes the transaction of flows.

But there is a flipside. Miami is much less important in terms of command and control functions. Headquarters of large companies are scarce and many executives in Miami still have to make that call to New York or London before closing on a major business deal. In addition, Miami is less important than most other world cities as a production site. With the emergence of new urban economies since the early 1980s, many major world cities received a makeover that was reminiscent of the industrial revolution a century earlier except this time it was information-age products, not manufactured goods. Think financial products, consulting, advertising, accounting and marketing. The jobs that came along with this rebirth are now at the core of many major urban economies. But much less so in Miami, where corporate offices tend to be many but small and service-oriented, often with a focus on customer relations.

Miami’s potential weakness, then, is that its global economic role is relatively superficially embedded, not deeply rooted, highly dependent on developments and decision-makers in other places and vulnerable to corporate relocation. Large corporate headquarters are less likely to move. Large production units are less likely to move. But the kind of small service-oriented corporate activity that is so characteristic of Miami can shift location without great difficulty, as we have seen so often in recent years.

The most immediate challenge is to maintain this remarkable relational capacity by creating optimal local conditions. Miamis greatest competitive advantage in the Latin American region is, of course, that it is located inside the United States, an immutable advantage so profound that it seems naturally to attract business and wealth. But there are other cities in the United States with Latin American connections and, even more importantly, there are real and potential competitors in Latin America itself.
Global business has come to Miami because of its hybrid, bilingual and well-educated workforce that has affinity with North and South American cultures and markets; a sophisticated and efficient transportation and communication infrastructure; good schools; and a (relatively) safe, pleasant and affordable living environment.

If these assets start to erode, business flows will wane. Hence, it is vitally important to cherish education and particularly Spanish and English language skills; to celebrate multiculturalism; to have a superbly functioning airport, seaport and other transport facilities; and to foster sustainable urban development including the provision of affordable housing for lower and middle income households. Clearly, much remains to be desired. WC