Where are Business Services Distributed? Key Issue 3 Where are Business Services Distributed?

All large settlements provide a range of consumer services, but not every large settlement has the same number/types of business services.  

Business services are disproportionately clustered in a handful of specific urban settlements.

Hartford insurance companies Many cities specialize in one/a few particular areas of business services, hosting many related companies. Hartford insurance companies

‘GLOBAL CITIES’

These are called GLOBAL CITIES, or WORLD CITIES. A few cities play an especially important role in global business services. These are called GLOBAL CITIES, or WORLD CITIES.

GLOBAL CITIES lay at the center of the flow of information and capital. Business services of all types are highly concentrated in these places.

The most important world cities typically host the headquarters of many LARGE CORPORATIONS- as well as the STOCK EXCHANGES they are traded on. Comcast center, Philly

These decisions impact factories and industries around the globe. Decisions made in global cities affect the world; f/e: executives in corporate headquarters determine how much of a certain product is made- and where. These decisions impact factories and industries around the globe.

To serve corporate HQs, a wide array of business services of every type can be found in world cities- everything from advertising to legal services.

HQs of banks and other financial institutions are commonly found in global cities. Here, corporations store and obtain the capital needed for their operations.

Global cities are RANKED in a three-tiered system: alpha, beta, and gamma. This ranking is based on a confluence of political, economic, cultural, and infrastructural factors.

Alpha++ cities: London & NYC Alpha+ cities: Hong Kong, Paris, Singapore, Tokyo, Shanghai, Dubai, Sydney, Beijing, Chicago FIGURE 12-20 Global Cities Global cities are centers for the provision of services in the global economy. London and New York, the two dominant global cities, are ranked as alpha++. Other alpha, beta, and gamma global cities play somewhat less central roles in the provision of services than the two dominant global cities. Cities ranked alpha++ and alpha+ are labeled on the map.

United States global cities FIGURE 12-21 Global Cities In North America Atop the hierarchy of business services are New York and Chicago.

Because they are home to so many wealthy people, global cities typically host high-end consumer services that are too expensive to be profitable elsewhere.

They are also centers for entertainment services They are also centers for entertainment services. NYC has nearly as many theatres as the rest of America’s cities combined.

BUSINESS SERVICES in DEVELOPING COUNTRIES

Particular business services are conducted in developing countries because they tend to offer supportive laws, weak regulations, and low-wages.  

Primarily, there are two main types of business services found in developing countries: offshore financial services, and business-process outsourcing.  

Offshore Financial Services Corporations looking to protect their capital from high taxes and strict regulations in developed countries hide money ‘offshore’ in specific countries.

These places offer two advantages: NO/LOW TAXES on capital, and STRICT PRIVACY LAWS protecting the contents of accounts. The SWISS, for example, are known for strictly protecting the contents or owners of bank accounts from being revealed.

Offshore financial centers are typically small countries with sizeable English-speaking communities. FIGURE 12-22 Offshore Financial Service Centers Offshore financial service centers include microstates and dependencies of other countries.

CAYMAN ISLANDS With only 40k inhabitants, the Caymans hold more than $1 TRILLION in offshore capital from companies all over the world. Foreign companies pay almost no taxes, and it is ILLEGAL to discuss foreign business matters aloud- with extremely harsh penalties.

Business-Process Outsourcing Some of the more mundane parts of business operation, from data entry to customer service, can be done using cheap foreign labor.

Though these jobs are once done in the ‘back offices’ of company HQs, modern communications has removed any need for proximity to central operations.

The CALL CENTER industry is an excellent example. These jobs- considered dead-end in the developed world- represent a road to higher wages and valuable language skills for workers abroad.

Offshore locations attract business services through two factors: LOW WAGES, and the ABILITY TO SPEAK ENGLISH- the lingua franca of business.

Investment in COMMUNICATIONS INFRASTRUCTURE is another way countries attract business services from the developed world.

BASIC and NONBASIC INDUSTRIES

A place’s distinctive economic structure derives from its BASIC INDUSTRIES, which generate wealth from consumers outside the settlement.   The Las Vegas Strip draws people from a wide area and employs thousands

This is called the MULTIPLIER EFFECT. BASIC industries bring money and workers into a settlement, necessitating the growth of NONBASIC industries – those which serve the local community. This is called the MULTIPLIER EFFECT. WESTFARMS (1000s of jobs)

If the % of workers in an industry is considerably higher than the national average, it is a BASIC industry in that settlement. In Las Vegas, Gambling is a major basic industry, attracting thousands of workers – and bringing services to serve those workers!

A community's unique collection of basic industries defines its ECONOMIC BASE.   United Technologies in Farmington employs thousands of high-wage workers

As a postindustrial society, many American cities today have shifted to economic bases in business and consumer services. San Jose, California has become one of the leading TECHNOPOLES in the world.

Economic bases in many cities are rapidly transforming along with the wider economy. Northeastern cities like Pittsburgh and Baltimore that once served as steel producers are today leaders in the medical services, research, and biotechnology fields.

Distribution of Talent Talented individuals- those with high degrees of education and desirable skills- are disproportionately concentrated in large cities.

Blue cities are more diverse, and more attractive to talented workers Such individuals are not evenly distributed, however; cities that are HIGHLY DIVERSE tend to attract the highest proportions of talented individuals. Researcher Richard Florida has noted a near-direct correlation between talent and diversity in American cities. Blue cities are more diverse, and more attractive to talented workers