Selective investments of foreign transnational firms in the French system of cities revealed by scaling laws

Many economic links connect the cities embedded in systems of cities (for example commercial links, financial ownership links…). They participate in the intrinsic complexity of these systems. The interactions and connections between places due to the economic stakeholders can substantially impact the shape and the dynamics of any system of cities. Especially, networks built up by transnational firms by the ownership of subsidiaries located beyond their territorial borders into foreign systems of cities, could shape the future of related cities. These foreign investors can provide these cities new jobs by the creation or extension of establishments but also sometimes weaken them through a massive control on their total employment, transnational investments being expected to be more volatile than national investments. A new source of data providing interesting insights on the effective location of these impacts on French cities is now available (see box below).


An original database

Three data bases were combined to assign the establishments (physical location of production, selling points) controlled by foreign capital in French cities (=“aires urbaines” i.e. SMAs):

  • the ORBIS data base (produced by Bureau van Dijk, augmented by Céline Rozenblat – UNIL – GeoDiverCity) that contains all financial linkages between companies into the 3,000 major groups worldwide,

  • the LIFI data base (produced by INSEE), a French data base similar to the previous one yet extended to smaller groups,

  • the CLAP data base (also produced by INSEE), to add the level of establishments (the most suitable one for our geographical approach, whereas ORBIS and LIFI are limited to companies).


 

A strong hierarchical effect…

Our first analyses outline the high concentration of foreign-controlled employment in the biggest cities of the system (figure 1). We could expect this result by observing these networks at the level of the companies, as it is known that their headquarters are more concentrated than their physical locations. Yet even when these jobs are located at the level of establishments, the foreign-controlled activities scale superlinearly (as indicated by the scaling law exponent higher than 1). Foreign-controlled employment is consequently much more concentrated in largest cities. The distribution of these establishments is not proportional to the size of the cities, as it benefits first and foremost to the biggest cities of the system.

Figure 1: Important role of the urban hierarchy in the distribution of foreign-controlled jobs in the French system of cities

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and regional effects

Taking into account the power law relationship and the quality of fit which remains nevertheless medium, another major trend appear in our first analysis. The amount of foreign-controlled jobs in the smallest cities is highly variable, some of them being deeply invested by the transnational firms while some others are almost avoided. A more detailed study of this variability show strong regional effects in addition to the hierarchical ones (figure 2). Cities with higher amounts of foreign-controlled jobs than expected by the scaling law are almost always located in Northern and Eastern parts of the country or located near Paris; cities where this amount is lower than expected are located in Southern and Western parts of the country. Thus foreign investors adapt to former spatial trends of urban functional specialization in France.

Figure 2: Regional effects in the distribution of foreign-controlled jobs within the smallest cities of the system

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Further analyses

As urban hierarchy doesn’t explain the distribution on its own, further analyses will investigate the effects of the economic specialization of cities, the closeness to bigger cities, or the shape of the networks where these cities are embedded or not. Our intention is to formulate some stylized facts identifying emerging properties and network dynamics that characterize the distribution of the foreign transnational firms into the French system of cities at an unprecedented level of detail. Besides classical multivariate analysis and networks analysis, scaling laws will constitute one of our main analysis tools, as they shed new light on the connection between urban functions, city sizes and economic innovation cycles (Pumain et al., 2006). This thesis, part of the GeoDiverCity program, will contribute an approach historicizing the scaling laws parameters relating them to the innovation cycles and the hierarchical diffusion of innovations theory in the system of cities.

Olivier Finance, PhD student under the supervision of Denise Pumain and Fabien Paulus.

Cities and Transport relations in South Africa over the long-term

The aim of my study 1 is to understand the role of South African cities in the transport flux and networks, and how cities and transport are interacting, from colonization in the 17thuntil nowadays. If cities and transport interactions are a particularly interesting approach to understand the metropolisation process and the urban system building, the South African context makes it even more relevant. Indeed, South Africa is a young country and national transport networks such as the railway network, have been built while the urban system was formed.

Co-evolution of urban system and railway network in South Africa

The arrival of European settlers in 1652 to the Cape of Good Hope marked the beginning of South African modern history, in particular by initiating the urbanization process. Until then, no city, strictly speaking, existed yet (Coquery-Vidrovitch). The implementation of a settlement engaged the constitution of an urban system well connected with Europe, but not very well between cities (Vacchiani-Marcuzzo).

The discovery of the goldfields and diamond mines in the 1860’s overturned that system. In the heart of the mining region, Johannesburg faced a fast growth to become the biggest metropolis in the country. The emergence of this new centre deeply modified the urban structure by switching the country’s centre of gravity from the coast to the Witwatersrand. Indeed, the British Empire decided to experiment inner-city railways in Cape Town and Durban in the 1860’s. But given the mining revolution, the decision to extend it to the entire country was quickly made in order to dispatch the mining extractions from the Witwatersrand plateau to the shoreline before having them exported to Europe. Hence, in a bit less than 100 years, a 20 000 km railway network has been built.

The implementation of such a network whereas the urban system was formed enables us to talk about a co-evolution of urban system and transport network in South Africa. Citie’s growth has largely been influenced by their position on the railway network. Large cities benefitted from a better accessibility, which reinforced their centrality while small towns had to deal with the simplification of urban hierarchy. As in many other countries, we can notice the strong interaction between cities and transport and its effect on the process of cities selection, particularly reinforced  by the railway network in the South African example.

I started my research by focusing on the railway network given it seemed easier to start with an historical approach at the larger scale. To observe and study this co-evolution we decided to cross two databases created in Geographie-Cités. The first one, built in the research program Harmonie-Cités, gathers data about the evolution of South African cities (of more than 5 000 inhabitants) over almost a century. To create this database, South African censuses have been used. The second one, made up in the frame of Geodivercity research program, contains data about the railway network’s development in South Africa and has been built thanks to the SARH archives. By crossing these databases, we created maps over 60 years which show the concomitant evolution of the urban system and railway network.

Now, I intend to deepen my analysis and enlarge my focus to the implementation of transport in metropolitan areas on one hand, and the position of South Africa in global networks on the other.

Solène Baffi

Notes:

  1. PhD project of Solène Baffi, under the supervision of Anne Bretagnolle, Olivier Ninot, Denise Pumain and Celine Vacchiani-Marcuzzo (founded by ERC GeoDiverCity)

The Integration of the cities in the networks of multi-national firms in the agri-business industry

The development of the agrofood sector has always taken place alongside the process of urbanisation (Bairoch, 1988).  The agrofood sector, today the primary global manufacturing sector, offers evidence of former processes of integration of cities undergoing globalisation.  Each city, according to its size, its attractivity, its power in the network, its capacity or lack of capacity to connect with the economic actors, occupies a particular position in these agrofood companies’ networks

Starting from original information about the networks of the subsidiaries of the largest agrofood companies, we developed indicators describing the weight and the centrality of the cities in these networks . Data about the financial linkages between agrofood firms deriving from the Orbis base, 2010, that we prepared (Orbis, Bureau Van Dijk, 2010 ; Rozenblat, 2010).  To highlight the position of each city in the global strategies of agrofood companies we carried out a principal component analysis and an ascendant hierarchical classification according to six variables:

  • The population;
  • The number of subsidiaries present in each city;
  • The intra-urban connectivity corresponding to the mean number of the relations of a subsidiary in a city;
  • The centrality of intermediarity (betweenness centrality)
  • The degree (total number of relations), In-Degree (relations entering) and Out-Degree (relations going out);

An indicator of power as being the difference between relations going out and relations entering, relativised by the total number of relations.

The principal component analysis brings out two main dimensions, which focus on 80% of the information contained in the data.  The first factor, representing 62.5% of the information, distinguishes between the cities according to their attractivity and their local and global centrality in the network (inter-urban dimension).  The second factor summarizes 16.5% of the information, opposing small and middle-sized cities benefiting from a strength associated with their strong intra-urban connectivity to cities with a large population but less attractive (intra-urban dimension).

The ascendant hierarchical classification identifies 6 classes of cities, and a Chi2 test confirms a significant relationship between the continental membership of the city and its classification.

  • Class 1 is represented by small to middle-sized cities with weak centrality and weak attractivity This class brings together 70% of the cities in our sample.  All the continents are represented in it in a homogeneous fashion.
  • Class 2 is made up of cities with a strong population and weak scores for attractivity and centrality in the network. It brings together 33 cities ; the Asian cities are over-represented in this class :  they represent 2/3 of the  group, followed by the cities of South America, also over-represented (7 cities).
  • Class 3 describes small to middle-sized cities, controlling (strong indications of power) with a strong intra-urban connectivity. The European cities are largely over-represented, as they represent 70% of the group (119 cities). The Asian and South American cities are under-represented.
  • Class 4 represents middle-sized cities with strong indications of centrality. Once again the European cities are over-represented, they represent 70% of the group.
  • Class 5 defines cities with very strong centrality indications of degree and of ‘intermediarity’ (Betweenness). 12 cities belong in this class:  5 European cities, 3 Asian cities and 3 North American cities; 1 African city (Johannesburg).
  • Class 6 describes the cities of Paris and London, which have an exceptional position in the network, with a very strong betweenness centrality, and of relatively weak ‘in-and-out’ degrees.

These results demonstrate that the cities do not have the same attractivity in relation to their population size.  With equal populations, the parameters of the power functions of the scaling laws of the systems of the North American and European cities are twice as strong as those of the system of Asian cities.  These relationships demonstrate that the economies of agglomerations are superior in the North American and European cities, which is probably linked to the quality of their infrastructures, to the diversity of their economic actors, and to their position in the global value chains.

This typology also brings to light a strong centre-to-periphery structure, with at its head, London, the cradle of the food-processing industry, the most attractive and central city; then Paris, less attractive than London, but which plays the particular role of international bridge in the agrofood companies’ networks. In the second position are found some international cities that are integrated and central, but whose influence varies from the intra-continental scale to the national scale.  The periphery is defined by the cities of Groups 1 and 2.  Not surprisingly, the cities of this group are for the most part located in poor countries : most of them being Asian cities, cities of Africa, South America, and the Pacific coast of the North American continent.

Bérengère Gautier

BAIROCH P. (1988) Cities and economic development: From the dawn of history to the present, University of Chicago Press, 596 pages

GAUTIER B. (2012) « Intégration et développement des villes méditerranéennes par les réseaux de firmes multinationales du secteur agroalimentaire », Université de Lausanne, Thèse de doctorat, 322 pages. http://serval.unil.ch/?id=serval:BIB_942F9B17ECDC

ROZENBLAT C. (2010) “Opening the Black Box of Agglomeration Economies for Measuring Cities’ Competitiveness through International Firm Networks”, Urban Studies, Vol 47, n°13, pp  2841-2865

From SimpopLocal to SimpopClim: Three stages of urban growth dynamics under resource accessibility constraints

  The aim of this series of models 1 is to study growth regimes of systems of cities, which are defined by the nature of the interaction between the cities. Three different stages of urbanisation are considered as resource accessibility, which plays a major role in growth dynamics, takes different forms. For each stage, a set of stylized facts characterizing the state of the system and urban growth dynamics is proposed and defines the structure of an ABM model.

The SimpopLocal model tries to characterise a stylised dynamics of urban emergence.  This first urban regime is defined by the role of local environmental constraints on growth. Central to this model is the notion of landscape carrying capacity. Settlement sizes and their growth are controlled by the amount of resources locally available.  But innovations and their diffusion in the system thanks to interactions between settlements help to overcome those limitations, eventually producing the proto-structure of urban systems.

The SimpopNet model characterise the progressive networking of urban economies. Innovations in communication and transport networks allow the trade and long distance diffusion of goods and techniques which enables cities to overcome, by importing what was lacking, the local constraints and climatic hazards that limited their growth. In this regime, the resource accessibility of each city is defined by its situation in the network. The SimpopNet model simulates the co-evolution of urban systems and transportation networks.

The SimpopClim model will represent a dynamic regime that takes into account the impact of global environmental constraints on urban dynamics.

This PhD is made possible thanks to interdisciplinary work with computer researchers participating in the GeoDiverCity programme, hired after previous collaboration with ISC-PIF (Romain Reuillon and Mathieu Leclaire, http://www.iscpif.fr/) and a PhD in geomatics conducted by Sébastien Rey Coyrehourcq. The SimpopLocal and SimpopNet models are used as case studies for the development of grid exploration procedures and protocols with OpenMole (http://www.openmole.org/). Those explorations and validating tools are designed to meet the validation and reproducibility requirements and to be generic and adapted to the exploration of spatial simulation models.

Clara Schmitt

Notes:

  1. PhD project of Clara Schmitt, under the supervision of Denise Pumain (founded by ADEME, The French Agency for Environment and Energy)

The dispersion of added value in Russia through multinational networks

This map is made out from an analysis of the multinational firms’ networks in Russian cities (ORBIS database, Bureau van Dijk, 2010; C. Rozenblat). The links between owners and subsidiaries are aggregated into urban agglomerations, and differentiated by activity sectors (NACE). Company groups working in Russia have been constituted : chains of ownership were formed where subsidiaries are owned with a share of at least 50%. The map shows mean points and standard distances of head groups’ locations in Russia. The more we travel East from Moscow, the less the share of added value in production: The barycentre for finance, information and communication activities (that is : advanced or metropolitan services) is the most western one, the closest to Moscow, and their standard distance is 2000km;  further to the East is the barycentre of trade groups, similarly scattered, followed by manufacturing industries, that are less concentrated; eventually, mining and transport groups have a remote gravity centre located at thousand kilometres to the East, with the largest spatial dispersion.

Cyril Jayet and Clémentine Cottineau

The global hierarchy of port cities in 1890 based on steamer vessel traffic

The enormous concentration of traffic upon a few large cities confirms the paramount importance of the Atlantic area (London, Liverpool, Cardiff, and New York) as well as of specific poles such as Hamburg and Buenos Aires, the latter being at the time a growing rival of European capitals. Other cities stand out less by their traffic than by their important share of steamer traffic, among which Antwerp, Bombay, Baltimore, and New Orleans. Asia is the region outside Europe hosting the largest number of cities specialized in steamer traffic.
For more information on data and further analyses (in French):
http://www.cnrs.fr/inshs/recherche/reseau-maritime-mondial.htm

César Ducruet

Flows of steamer vessels among world regions in 1890

Based on the circulation of 4,772 merchant vessels on the period January-April 1890 (Source: Lloyd’s Weekly Shipping Index), the map reveals a trading system highly polarized by Europe and the United States – the main commercial centres at the time. The proportion of most modern vessels (steamers) in total traffic (including sailing vessels propelled by wind) concentrate on the most beneficial and frequent routes (Europe-USA) but also highlight the deployment of this recent innovation towards Asia and Africa in a context of reinforced colonial interests following the opening of the Suez canal (1869).

César Ducruet