FOR CENTURIES, the world economy has shaped the life of cities. This book is about that relationship today. Beginning in the 1960s, the organization of economic activity entered a period of pronounced transformation. The changes were expressed in the altered structure of the world economy, and also assumed forms specific to particular places. Certain of these changes are by now familiar: the dismantling of once-powerful industrial centers in the United States, the United Kingdom, and more recently in Japan: the accelerated industrialization of several Third World countries : the rapid internationalization of the financial industry into a worldwide network of transactions. Each of these changes altered the relation of cities to the international economy.
In the decades after World War II, there was an international regime based on United States dominance in the world economy and the rules for global trade contained in the 1945 Bretton Woods agreement. By the early 1970s, the conditions supporting that regime were disintegrating. The breakdown created a void into which stepped, perhaps in a last burst of national dominance, the large U.S. transnational industrial firms and banks. In this period of transition, the management of the international economic order was to an inordinate extent run from the headquarters of these firms. By the early 1980s, however, the large U.S. transnational banks faced the massive Third World debt crisis. and U.S. industrial firms experienced sharp market share losses from foreign competition. Yet the international economy did not simply break into fragments. The geography and composition of the global economy change so as to produce a complex duality: a spatially dispersed, yet globally integrated organization of economic activity.