Capitalist Globalisation’s Impact on Urban Spaces: Sassen’s Global City Theory

Walk through Nariman Point in Mumbai, Canary Wharf in London, or Pudong in Shanghai, and you are standing inside the machinery of global capitalism. These districts do not just house banks and corporate offices. They function as control rooms where capital, information, and decisions about factories, supply chains, and investments thousands of kilometres away are made. Understanding how cities became these command centres is central to urban anthropology, and no one explains it better than sociologist Saskia Sassen.

Cities as carriers of capitalist globalisation 🔗

Mega, global, and world cities are the most effective carriers of capitalist globalisation. They give a handful of cities a transnational character that lets them compete directly with each other rather than only with cities inside their own country. A firm deciding where to open a regional headquarters is comparing Mumbai against Singapore, not Mumbai against Nagpur.

This competition is driven largely by Foreign Direct Investment (FDI) from North America and Europe. Multinational firms weigh several factors before committing capital to a location: availability of raw materials, cost of labour, ease of accessing capital, how simple it is to do business, and the specific advantages a location offers over its rivals. Older UNCTAD research on FDI determinants in developing countries shows that labour costs and market-related factors consistently shape where transnational corporations choose to locate operations, and this logic still guides investment decisions across service and manufacturing sectors today.

This global economic integration does not distribute benefits evenly. It creates interconnectedness and structural dependence between cities, so that cash flows steadily toward a small set of mega-cities in middle and low-income countries that specialise in providing services to global capital. A handful of Indian cities absorb a disproportionate share of the country’s incoming investment, while the rest of the urban system is left largely outside this circuit.

Decentralisation and technology-driven control 🔗

Globalisation involves decentralising control. Firms gain flexibility to locate factories, back offices, and service centres almost anywhere, since production no longer needs to sit next to a firm’s headquarters. But this flexibility does not mean control has disappeared. It has simply moved.

Most decisions today are shaped by technology-driven systems, meaning the real centre of control exists in digitally generated spaces rather than in one fixed physical address. A trading algorithm in a London server room can move capital out of an Indian company within seconds. This shift has increased the polarisation of economic forces across urban spaces worldwide. Digital infrastructure lets economic activity transcend geography, but it concentrates the actual decision-making power in a small number of cities that host the servers, exchanges, and specialist firms capable of managing this complexity.

Saskia Sassen and the idea of the global city 🔗

Saskia Sassen, one of the most influential urban theorists working today, coined the term global city in her 1991 book on New York, London, and Tokyo. Her explanation moves global cities beyond the older idea of a “world city,” which described major imperial or trading centres across earlier centuries. According to Sassen’s own framing in her 2005 essay for the Brown Journal of World Affairs, a global city is defined by its position within the global finance system rather than by its size or national importance alone.

A global city works as a hub where information and wealth flow through, not just to. Cities like New York, London, and Shanghai concentrate financial and specialised business services within tight geographic clusters, which makes them the central nodes of the global financial network. This matters for how we understand Indian metropolitan regions too. India’s own Economic Survey chapter on urbanisation notes that while Mumbai, Delhi, Bengaluru, Chennai, and Hyderabad rank among the world’s largest urban agglomerations by population, this scale has not translated proportionately into the level of global economic influence held by established global cities such as New York, London, Shanghai, or Singapore.

Sassen’s seven hypotheses on global cities 🔗

Sassen organised her theory around seven interlinked hypotheses, laid out in detail in her original paper. Together, they explain how global cities function and why they behave differently from ordinary large cities.

Dispersal feeds central control 🔗

As firms spread their economic activities across more countries, the work of coordinating, financing, and managing that network grows more complex. This geographic dispersal, paired with tight integration, is what feeds the growth of central corporate functions concentrated in a few cities.

Outsourcing of complex functions 🔗

Corporate headquarters increasingly outsource these complex central functions to specialised service firms handling accounting, legal work, public relations, and telecommunications, rather than managing everything in-house.

Agglomeration economies 🔗

The specialised firms handling this outsourced work benefit from being clustered near each other, since complex, fast-turnaround projects require quick access to a wide range of expertise. This clustering is what economists call agglomeration economies.

Freedom to relocate headquarters 🔗

Once the most complex, unstandardised functions are outsourced, corporate headquarters gain greater freedom to choose their own location, since they no longer need to sit physically close to every support function.

Global networks of affiliates 🔗

Meeting the service needs of globally active clients requires networks of affiliated offices across multiple countries, which strengthens transaction flows between global cities and deepens their interdependence.

Disconnection from the national economy 🔗

A global city’s economic fortunes become disconnected from its surrounding region and even from its national economy. Its prosperity is tied more to its position in international finance than to how the rest of the country is performing.

Growing informalisation 🔗

This dynamic produces an expanding informal economy: activities that find demand within the global city but cannot compete for resources against high-profit formal firms operating at the top of the system.

Global cities and the marginalised working class 🔗

The concept of the global city draws a sharp line between it and neighbouring cities that lack global status, even within the same country. A global city runs on a distinctly capitalist logic, where capital stays concentrated among a small number of firms and individuals. Most working people are pushed to the margins, since they lack the specialised skills or capacities that financial hubs demand.

This concentration of economic power produces real social and economic stratification. The wealth generated inside a global city’s financial core rarely spreads evenly across its own metropolitan population, let alone its wider region. A construction worker or domestic help employed in South Mumbai’s business district is physically inside the global city but structurally excluded from the prosperity it produces.

Informalisation and economic inequality 🔗

Sassen’s seventh hypothesis is where this inequality becomes most visible on the street. Global city dynamics generate growing informalisation: economic activities that meet real demand within the city but cannot compete for capital, real estate, or regulatory protection against high-profit formal firms.

The scale of this is enormous. ILO data highlights persistent wage gaps between workers in the formal urban economy and those in informal and rural work, alongside a long-term decline in labour’s share of overall income in most countries. Research compiled for the WIEGO network goes further, estimating that 79 percent of urban workers in developing countries earn their living within the informal economy.

This informal sector is not separate from the global city. It provides the domestic help, food delivery, construction labour, and street vending that keeps the formal economy running smoothly. But it operates without the legal protections, social security, or bargaining power available to formal-sector workers. The result is a cycle where the same city that generates enormous financial wealth also sustains large pockets of working poverty, with little structural movement between the two economies.

What do you think? 🔗

What do you think? Does a city like Mumbai or Bengaluru function more as a genuine node in the global financial network, or mainly as a low-cost service base for wealth generated elsewhere? And as digital infrastructure lets economic control sit further away from physical location, will informal workers gain new opportunities, or become even more disconnected from the formal city around them?

References

1. https://unctad.org/system/files/official-document/iteiitv5n2a5_en.pdf
2. https://bjwa.brown.edu/11-2/the-global-city-introducing-a-concept/
3. https://www.indiabudget.gov.in/economicsurvey/doc/eschapter/echap15.pdf
4. https://www.ilo.org/resource/statement/ilo-warns-rising-levels-inequality
5. https://www.wiego.org/wp-content/uploads/2019/09/HDR%202019%20-%20Chen%20Paper%20-%20May%2022%202019.pdf