PARIS “It is Paying the Price for Being a Global City”

In this volume, Paris the capital city of France, which is also the fifth strongest economy of the world, has been examined in detail from a globalisation perspective.

BY FATIH EREN | June 2012

Paris is located at the north of France. With its 12 million population, it is the biggest metropol of the country as well as it is one of the most populated metropols in Europe. Paris is usually remembered as one of the most historic, culturally vital and physically beautiful global city by the world society. It has a significant role in making France as the most attractive country for tourists in the world. In 2009, in total 76,8 million tourists came to France and the fifteen million of these tourists visited Paris (Paris Convention and Visitors Bureau, 2010). The Paris region, which is also called as one of the world’s leading business, culture and tourism destination, accounts for almost a third of France’s gross domestic product (GDP).   

France, which is one of the leading playmaker actors of the globalisation process, is naturally a member of the world’s first and strongest global organisations such as G20, NATO, WTO, OECD and UN. It is clear that France benefited very much from the globalisation process as two-sided thanks to its playmaker role. On one hand, France is the fourth country which attracts foreign direct investments in the world at the most. International companies were recently invested in Research & Development (R&D), energy and recycling sectors in the country in general. On the other hand, the number of French companies is at the highest among European-origin companies in the Top 500 Global Companies list (Fortune Magazine, 2011). International French-origin companies (For example Renault, Peugeot, Danone, Carrefour, Axa, Groupama, BNP Paribas, GDF Suez and so on)  mainly invested in strategic sectors such as automotive, retailing, insurance, food and cement in other countries. 

France has an advantageous geographical position in Europe. In recent decades, using this advantage in a good way, it established a strong transportation and logistical infrastructure and network for itself in the European Union. In this way, it achieved to attract huge foreign capital. In 2010, 70% of all foreign investments in France were made by European countries especially by Germany and UK. France makes both import and export trades mostly with Germany, Italy, Spain, Belgium, UK and USA. Therefore, it can be said that France is getting its economic power mainly from the European Union.

Due to changing world economic conditions, France’s share in the world trade decreased gradually in the last 10 years. 2008 global crisis became a turning point for the country. USA and Europe, which are the main trade partners of France, were affected badly from this crisis so the French economy entered in a harsh rocky road after this year. The number of investment projects with foreign capital decreased about 31% in 2010 when it was compared with the year 2008. This fall showed its direct impact quickly on the country’s unemployment rates. The unemployment rate rose to 9.8% in 2011 where it was 8% in 2007. The unemployment rate among young population was measured over 22% in the country (INSEE, 2011). The French government then took some measures to increase employment and to fire non-financial sector. The cost of these measures was very high so the government went into debt of a high percentage. The government planned an important and large project, which is called ‘the Great Paris Project’, for national economic recovery and development. It decided to borrow 35 billion euros for the realisation of this project. It then borrowed another 8 billion euros in May 2012 for other purposes. The public budget deficit went beyond 150 billion euros in 2012 where it was 60 billion euros in 2004 (France Economy Profile, 2012). The only way to get over this crisis was to attract more foreign direct investments into France according to the government. In this context, the government started a new practice, which is called ‘single window implementation’, to facilitate fiscal and administrative operations for foreign investors in the country. Incentives for FDIs were also increased.

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BEIJING: Humanistic City

In this volume, Beijing which is the capital city of the most populous country of the world has been examined in detail from a globalisation perspective.

 BY Dr. FATIH EREN | APRIL 20, 2012

Beijing is located at the north of China. With its 19 million population, it is the second largest city of the country. Beijing is one of the four cities which the national government (Communist Party of China) controls directly in China. It is the political, cultural and educational centre of the country as well as a rich, well-developed and vibrant city.

Before focusing on Beijing specifically, let’s first look at the globalisation and liberalisation adventure of China.

China, which was involved in the United Nations (UN) in 1971, started its market-based economic reforms in 1978. The national government followed a mixed economy model (i.e. a mixture of the planned economy and the market economy) which was titled ‘market socialism’. After this date, economic reforms, capital formation and structural changes were carried on progressively and systematically by the government. Five-year development plans for the country and twenty-year master plans for Chinese cities were prepared; these plans were applied strictly. Particularly, master plans played a role to promote Chinese cities connecting with the global urban system, and supporting infrastructure for the development of the world's factory (Chaolin, et.al., 2010). China decided to be a member of many formal and informal international associations in this process such as World Trade Organisation (WTO), Asia-Pasific Economic Cooperation (APEC), BRICS, The Shangai Cooperation Organisation, G-20 and The Chinese-funded Africa Union (AU). As a result of all these efforts, the country became modernized; it has been integrated with the world economic system and its economy grew dramatically.

China was considered as ‘the factory of the world’ exactly after 1992 by global capitalists. Because of cheap land prices and labor market, open technology and product markets, many global companies established their manufacturing factories at the south-east coastal region of the country. Almost every kind of commodity (for example electronics, textiles, electric equipment, garment, leather products, metal products, transport equipments, chemicals, machinery, plastics) started to be produced for the world in the factories of China in the 1990s and the 2000s.

Foreign direct investment inflows increased regularly during the globalisation process in the country. In 2010, $105.7 million foreign direct capital entered in China where it was only $46.4 million in 2004. Global investors especially came from Hong Kong, Thailand, Philippines, Malaysia, Indenosia, Japan ve United States to China in the last 30 years (Ali and Guo, 2005). 

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Published in Political Reflection Magazine (PR) Vol. 3  No. 2

BAKU “Baku’s Planning: for what and who?”

Baku, the capital city of Azerbaijan, has been examined in this volume.

BY FATİH EREN | DECEMBER 11, 2011

Azerbaijan stands at the crossing point of Western Asia and Eastern Europe. It is a resource-rich country and it is located on very important energy and transportation corridors; so Azerbaijan is one of the most attractive centres for global investors in the Eastern European and South Caucasus Region. Almost all foreign direct investments are made in Baku in the country.

Azerbaijan made a fortune and started to extract oil and gas from the Caspian Sea in 1995. After this date, due to revenues coming from oil and gas extraction, the country’s economy started to grow rapidly (the annual average GDP growth of Azerbaijan became 13% between 2000 and 2011). The government of Azerbaijan changed its national economic policy in 2001 and passed from planned-economy to a market-oriented system. Many liberal reforms were committed in this context. Thanks to these reforms, global investors became involved in some sectors of the country. Global investors were mostly invested in oil and gas industry, construction and transport sectors. Recently, global investors started to interest in agricultural and tourism sectors as well.

The government of Azerbaijan gives weight to big transportation and energy projects very much. For example, three big projects (Baku-Tbilisi-Ceyhan Pipeline, Baku-Tbilisi-Erzurum Pipeline and Baku-Tbilisi-Kars Railway) were put into practice after 2006 in the country. After the realisation of these large-scale projects, the strategic importance of the country increased significantly. Azerbaijan’s political ties with international organizations are being stronger every year. The country is a member of many international organizations such as United Nations, the Organization on Security and Cooperation in Europe, European Council, Organization of Islamic Conference and Commonwealth of Independent States. Importantly, Azerbaijan was one of the cofounders of the Organization for Democracy and Economic Development (GUAM). The government also gives weight to international partnerships in its foreign policy. Azerbaijan has concluded 35 bilateral treaties on the mutual protection of Investments up to now. According to 2009 data, the leading investor countries for Azerbaijan were UK (45,6%), USA (15,8%) and Japan (8,3%) in turn.

• The impact of global concern for Baku: Analysis

The globalisation and liberalization processes firstly and mostly had a physical impact on Baku. Gorgeous sea fronts, wide and brillant boulevards, impressive skyscrapers and buildings emerged in the city in just 10 years. Many large-scale residential, commercial and cultural property development projects for Baku are in the pipeline, now (For example Baku Eco-Cultural Master Plan, Zira Island/Nargin Project, White city and so on). The size and ostentation of planned projects are increasing day-to-day in the city.

International commercial property development and investment companies are using a common campaign slogan in Baku, today: ‘build it bigger!’. This slogan should be changed with this slogan: ‘build it smaller!!’ because most of things are getting smaller in the world, today. For example, today’s mobile phones and computers are smaller than the past ones. Smilarly, smaller cars are now produced by automobile factories for easy drive in crowded cities. Again, people are moving to smaller houses for energy efficiency and low management costs. More importantly, it is very common to see small-sized and middle-sized global companies who have worldwide networks but also who use very small office units and buildings in every country. In short, technological developments let global companies to run their businesses in smaller office spaces. Therefore, public authorities should promote global investors to develop small-scale commercial and business buildings for efficiency in Baku.

Baku’s new projects are oftenly designed by European Architects and are developed/financed by American-based or European-based property development and investment companies so the city is under the strong influence of occidental (western european) urban developments, now. Here is a proof for this influence. Interestingly, the street names of London (such as Belsize Park, Notting Hill, Pimlico, Broadgate, Canary Wharf, Paddington, Covent Garden, May Fair) were given to the names of buildings in one of the prestigious large-scale project of Baku (the White city). It is very hard to understand why they did so.

In the context of the market-oriented policy, Mayoralty of Baku does not intervene the planning and design processes of the city’s new projects in general. In other words, it can be said that decisions about the content and context of Baku’s new development projects are made by global companies in a free way, today. As a result of this situation, highly ambitious residential and business complexes emerges in Baku but they are all in western style. Azerbaijan is going on the way of being a regional power. In 2022, it will be involved in the category of developed countries (Fourth United Nations Conference on Least Developed Countries, 2011) so Baku, the leading city of the country, should produce/create a unique and brand new urban planning system which is based on the deep-rooted history and rich culture of Azerbaijan. This new planning perception and approach can be a model for the other cities of both the country and the world. Azerbaijan’s intellectuals, planning and property professionals have to start considering on this matter from now on without being late.

Baku’s new development projects incorporate luxury and environmentally-friendly complexes; that is fine but these projects target only higher-income class in the city. It should be noted that all citizens belong to either higher-income or lower-income classes in Baku at the moment ( middle-income class is absent). However, the wealth of Azerbaijan society is increasing every year so probably most of today’s lower-income families will rise to middle-income class in the future. A very large middle-income class may emerge in Baku in the 2020s. Therefore, the needs and expectations of today’s lower- but future’s middle-income families should be met (at least) to a certain extent in every new project in the city. In order to do this, Mayoralty of Baku has to be involved in the planning and financing processes of all urban projects using public-private partnership tools. Solely market-oriented and private sector-led development may damage the social peace in Baku in the middle/long term.

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Published in Political Reflection Magazine (PR) Vol. 2  No. 4

Fatih Eren is Doctoral Researcher in Department of Town and Regional Planning, University of Sheffield.

NAIROBI: “Needs to Feel the Positive Effects of Globalisation…”

Kenya is the gate of the East Africa region. This unique position makes Nairobi, that is the leading city of the country, a natural attraction centre for  all global players who are closely interested in this region. More globalisation studies should be conducted on Nairobi because the city, as different from many other global cities in the same cathegory, connects to the world via specific and interesting channels. Nairobi became the top-ranked city among 25 global cities in the list which was developed by the Globalization and World Cities Research Network (GaWC) using NGO (Non-Governmental Organization) network connectivity indicators in 2004.  In other words, Nairobi is the most connected city to the world with respect to NGO activities; it connects to the world through international NGOs.

The financial and commercial ties of the city with other countries speeded up after 2005. Main reasons for this acceleration were the realisation of successful structural and economic reforms which were performed by the Kenyan Parliement and the increasing memberships of Kenya to international unions and trade organizations (e.g. Africa Union (AU), East African Community (EAC), Common Market for Eastern and Southern Africa (COMESA), The Indian Ocean Rim-Association for Regional Cooperation (IOR-ARC) and so on).

Today, Nairobi is fighting against severe drought which has started in 2008 and affected all Sub-saharan Africa. Due to drought, migrations from the city’s rural areas, other cities and other countries to Nairobi increased significantly in the last 3 years. Many people are now trying to survive in the refugee camps and in the slums of the city. Therefore, the city is subject to an interest of international NGOs for help rather than international investors. The headquarters of more than 75 international NGOs are located in Nairobi right now and these NGOs conduct their aid activities (main aids are on food, health, environment and education) towards the East Africa from here.

• The impact of global concern for Nairobi: Analysis

There are about 473,000 registered refugees in Kenya according to UNHRC April 2011 data. A 100,000 of these refugees are accomodated in Nairobi (Humanitarian Policy Group Working Paper 2010). These refugees are living in refugee camps which are spreaded all over the country (e.g. Dagahaley, Kakuma and so on) or in Kenyan cities as urban refugees.  The current situation of the refugee camps is very problematic; they are all over-crowded and their resources (i.e. doctors, nurses, food, water, medicine, volunteer staff and so on) are inefficient and poor. The Government of Kenya is reluctant to open new refugee camps in the country not to encourage new migrations. Despite this, migrations are still going on from neighbour countries to Kenya. For example, 15,000 people migrate every month from Somalia to Kenya according to United Nations data. It is a big possibility that immigrants who are spreaded all over the country will move to Nairobi to survive in the next years because all Kenyan youngs moved to Nairobi  in the last 10 years to survive and to make their livings. The urban population rose about 1 million due to internal migrations between 1999 and 2008; the present spreaded immigrants may follow the same route.  If it goes like that, the city’s urban population may rise to 10 million; 30 new slum districts may be added to the city’s fringes and so the 90% of the city population may be accomodated in the city’s slums in the next 5-10 years (there are already 66 slums in Nairobi (e.g. Kibera, Mathare Valley, Mukuru Kwa Njenga and so on) and 60% of the city’s population is living in slums, today).

The country is dependent on foreign financial credits and aids in terms of infrastructural investments (United Nations(UN) provided $284 million and European Union(EU) provided $145 million financial aid to Kenya for infrastructural investments in 2011). The severe problems of East Africa ( i.e. drought, starvation, waterlessness, sheltering and diseases) are in the agenda of the world for a while so international financial aids are now flowing into Nairobi, which is the financial centre of the region. A significant share of these aids are spent for infrastructural investments in the region (The World Bank provided $1.3 billion financial aid to the East Africa region to strengthen its  highway, railway and harbour infrastructures. Again, China and India are providing long-term credits for their international companies to promote them to invest in infrastructural projects in the region). Nairobi has benefited from these international aids a certain extent, of course.  However, the city still needs all type of infrastructural projects (i.e. buildings, transport, water and power supplies). Recently, some international property development and investment companies (e.g. Renaissance, Garun Real Estate Investment, Translakes Limited and so on)  have started some residential and commercial property development projects in the city benefiting from the long-term credit advantages of international banks and funds (e.g. Tatu City). Therefore, foreign capital inflows have speeded up property construction and  development activities in Nairobi. It is possible to see many construction sites in Central Nairobi at the moment. However, the land prices increased dramatically in Central Nairobi. 1 acre land whose price was less than $2,000 before 2008 rose to $50,000 now due to new infrastructural investments in Central Nairobi. For this reason, international property development and investment companies moved their new residential and commercial projects  to small towns near Central Nairobi and started to develop new gated communities (safe and luxury neighbourhoods) for middle and higher income class in these towns (e.g. Nakuru, Naivasha). This trend will continue increasingly in the next years.

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Published in Political Reflection Magazine (PR) Vol. 2  No. 3

Fatih Eren is Doctoral Researcher in Department of Town and Regional Planning, University of Sheffield.

CAIRO

“Ready to change its fortune…”*

Egypt is a transcontinental country which is located at the intersection of the North Africa and the Southwest Asia. The country has a 80 million population in total and about 20 million of this population is living in Cairo city.

The globalisation(better to say westernisation) process of Egypt started in 1979 (i.e. Camp David Accords). After this date, the country turned its face from the North(communist bloc) to the West (US and EU). In this westernisation process which has been going on for the last 30 years, Egypt became very close to the United States (US) and the European Union(EU) politically and financially, but it moved away from the countries of the North Africa and the Middle East, which are actually the places much more similar to the Egypt than US and EU in socio-cultural terms. US and EU financially and politically supported the Egypt government in a systematic and regular way during this 30-year period (e.g. The US Agency for International Development (USAID) has provided $1.3 billion financial aid to the Egyptian government every year since 1980 to support economic growth and to establish security in the country. Again, EU provided €558 million to the government between 2007-2011 under the European Neighbourhood and Partnership Instrument (ENPI) to support political and economical reforms in the country. EU has just declared that they are going to provide an additional €449 million financial aid to Egypt for the same purposes under the same program between 2011 and 2013).

The year 2007 became an important date for Egypt in terms of coming closer to the western world. Egypt became the first country in the Middle East-North Africa Region (MENA) which signed the OECD’s  Declaration on International Investment and Multinational Enterprises. After 2007, Egypt applied many new financial and economical liberal reforms in the context of this decleration and as a result the country passed to a full open economy. The OECD’s Regulatory Restrictiveness Index score for Egypt was 0.191 in 2006 and it became 0.104 in 2010 (On a scale where 0 denotes a fully open economy and 1 a totally closed one). This score is close to the scores of some developed countries such as Japan, Denmark and South Korea in this index. This means that Egypt’s less developed economy (the 26^th biggest economy of the world in 2010 according to IMF data) is now competing with the world’s most developed countries on equal terms in the global economic system.

The Egyptian government, which opened the door of the country fully to global investors, was insistently trying to attract foreign investments into the country’s all economic sectors (i.e. Agribusiness, Communication&Information Technologies, Education, Financial, Healthcare, Logistics& Transportation, Petrochemicals, Renewable Energy, Retail, Textile and Tourism) via Public-Private Partnerships, Privatisations and Foreign Direct Investments recently. However, the government was overthrown in a social explosion in 2011.

This social explosion (i.e. Revolution in Cairo at the beginning of Feb 2011) showed that the Egyptians were not happy about the  present order and progress of the country. They considered all these liberal economic and political reforms as a part of an imperialist process towards the country and wanted to stop this unfair globalisation process with a social revolution. After the overthrow of the government in Feb 2011, the dictatorial regime in Egypt was finalized and the country took an important step towards democracy.

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*Published in Political Reflection Magazine (PR) Vol. 2 | No. 2

** Fatih Eren is Doctoral Researcher in Department of Town and Regional Planning, Uni-versity of Sheffield.