As America’s “third” city, Chicago competes for international attention against the usual rivals: New York and Los Angeles. Even San Francisco, next to Silicon Valley, claims prominence for its cutting-edge industries and progressive culture. Ultimately, though, Chicago’s domestic peers have global status through definitive leadership in industries with visibility and impact (New York in finance, Los Angeles in entertainment, Houston in energy, and San Francisco in technology and innovation). Chicago has dim prospects of replicating such undisputable competitive advantages, but it may not need to.
Global status in the 21st century favors international collaboration over industry dominance, for three reasons. First, the innovative nature of emerging industries and modernizing traditional industries shifts competitive determinants from resources to ideas. This equalizes the international knowledge race, with companies seeking ideas regardless of geographical origin. Second, technology-enabled connectivity integrates previously isolated regions into the global economy, creating what a recent Foreign Affairs article labels a “unified global marketplace for labor.” Third, the dynamic knowledge sector rewards flexibility over size; footloose over big and rigid. Accordingly, local workforce size loses relevance, good news for small cities. The digital revolution enables geographic dispersal of talent through “internet-based globalization.” In short, collaboration enables flexible capacity, while international collaboration taps a vastly more diverse and hungry talent pool.
Is Chicago prepared to abandon pursuit of industry dominance and seek global status in the hyper-connected knowledge economy? The city already boasts corporate prominence and diverse lifestyle amenities, and has even seen post-recession growth in emerging creative industries like high-tech and film. Chicago also has a lively private sector, and visionary, pro-developmental planning from both its recent and distant past. In 2013 the city committed US$ 3 billion to revive urban neighborhoods, through a public-private initiative that Mayor Rahm Emanuel insists will help Chicago “live up to its potential as the global city that it should be.” Such factors make a city great, but do they make it global?
Despite being a paragon of economic diversification, Chicago lacks an undisputed position in any transformative and globally relevant industry, as enjoyed by its coastal rivals. The city is even perceived by some as a striver whose influence is more regional than global. For example, in a 2012 New York Times article, a relocation expert stated that global business and political leaders “have an idea of Chicago that is 20 or 30 years out of date.” Indeed, Chicago has a development history that is steady but not exceptional. Before its recent struggles, the city’s plodding, linear economic progress was a product of the typical determinants: population growth and path-dependent agglomeration. Outdated theories recommend that Chicago aim for inimitable dominance in an emerging industry. However, such efforts would be misplaced in the current global economy.
In practice, a growth approach favoring industry dominance has two problems. First, it ignores the fact that the most elite global cities acquired prominence the hard way: through gradual institutional evolution. Dominance across multiple industrial eras is only the shiny product of underlying economic, social, and political circumstances that generated structural flexibility. These circumstances, rather than industry prominence itself, should be the focus of urban growth strategies prioritizing prepared opportunism over industrial roulette.
Second, the industry dominance approach unduly emphasizes competition, with a zero-sum philosophy that marginalizes collaboration. No industrial windfall or shock-opportunity has fundamentally transformed Chicago’s competitive position since the 19th century, when connectivity through railroads, canals, and westward expansion made the city a trading and logistics hub. Chicago can now develop global status through connectivity of a new sort, as a collaborative leader in emerging global networks for trade and production. It can even anchor an inter-governmental urban network addressing economic challenges in large inland cities lacking inimitable competitive advantages.
Historically, an unchallenged advantage in trending industries generates global visibility and relevance. However, modern embodiments of the dominance model are fundamentally unstable, in particular due to sector cyclicality. Only three cities have historically maintained near-permanent global status: Tokyo, London, and New York. Their type of competitive advantage is institutionally entrenched and therefore largely inimitable, although Tokyo has struggled throughout Japan’s multi-decade economic slump. Aside from these mega-cities, Chicago’s global aspirations face significant competition from ambitious secondary cities. Rapid economic growth in Asia has attracted capital to places whose names were just decades ago scarcely recognizable in the West (e.g. Wuhan and Guangzhou, both with populations comparable to New York’s).
A 21st century growth strategy should not assume zero-sum economic competition, but instead emphasize membership in the right “clubs.” Inter-urban cooperative networks are increasingly common; for example, Singapore is collaborating with Indian cities on “smart” development. This type of soft-diplomatic relationship is a form economic symbiosis that emerges from a “flattening” world. Networks also emerge around industry complementarity (e.g. Los Angeles-Nashville-Austin in entertainment, Oklahoma City-Dallas-Houston in energy, and Singapore-New York-Frankfurt in finance). Chicago must contemplate what it offers as a network partner, and move early in establishing inter-urban relationships to jointly capture global opportunities.
Recent history is littered with failed urban growth strategies derived from outdated models. For example, to quickly garner status many cities have made grandiose commitments such as Olympic bids, sports stadiums, and ambitious megaprojects. Such efforts are cheap and politically expedient to announce, but drain municipal coffers during implementation. Chicago can alternatively stake its future on the more sustainable and farsighted growth model of networked interdependence. An internationally connected economy may not be glamorous, but it is certainly “global” and can also be diverse and stable, as quietly proven by some of the world’s more creative secondary cities (e.g. Toronto, Sydney, Amsterdam, and Bangalore). Chicago must decide first what kind of status is wants, and ultimately whose company to keep.
Kris Hartley is a Visiting Researcher at Seoul National University and PhD Candidate at the National University of Singapore. He focuses on economic policy, urban planning, and governance innovation, and has a decade of experience with government agencies, community development corporations, and research institutes. His book Can Government Think? Flexible Economic Opportunism and the Pursuit of Global Competitiveness proposes a model for urban economic growth through the alignment of institutional structures and administrative processes supporting evidence-based policy. His work is available at www.krishartley.com.