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.

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