Tuesday, February 19, 2013

Importance of cities in international trade

I have blogged earlier about the relationship of cities and trade here and here.

Project Syndicate recently had this piece on "The Return of the Trading City" which highlighted the importance of the role of cities in international trade. It also highlighted a trade policy that recognizes the centrality of the city in a nation's trade future. We tend to be "nation" centric when talking about trade but this piece encourages us to look beyond the nation to cities which is actually the centre and engine of trade growth. Projecting the complementary role nations and cities play in ensuring the growth of trade, the piece stresses:
"This does not mean that countries do not play a crucial role in enabling global trade. Cities lack the geographic scale, political and fiscal capacity, and legal standing to influence broader policy debates or to capitalize on all available trade opportunities. Portland forged a new relationship with a “clean tech” firm in São Paulo, but it could not negotiate a free-trade agreement with the city or with Brazil. 
Just as trade should be at the forefront of cities’ economic policies, cities should be at the forefront of national trade strategies. Countries should support cities that are investing, organizing, and forging linkages with other cities to improve their competitive position."
 As the Global MetroMonitor report of the Brooking Institution highlighted:
"Metro areas remain the hubs of global output and growth. the 300 metro economies analyzed in this report account for 19 percent of world population, but 48 percent of world gdp, and 51 percent of world gdp growth from 2011 to 2012. yet their performance in 2012 showed the signs of a slowing worldwide recovery."
What lessons do national trade policies have to learn from the growing importance of cities in international trade? To what extent should cities be central in a national trade policy? With emerging economies being overwhelmingly rural, what implications does this have on national strategy? Would focussing on cities as the engines and centres of trade be a necessary ingredient of a new trade strategy? This would require increased co-ordination between local, municipal governments and national policy makers. A national vision with a local flavor to address global challenges!

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