Effects of Changes in the International Economy, in the Development of London as a World City, since 1960s - Essay Example

Effects of Changes in the International Economy, in the Development of London as a World since 1960s Introduction London is the capital ofthe 5th largest economy in the world (Bernería, 43). It is a major centre for commerce and international business and commands the global economy together with Tokyo and New York cities. London is a political, physical, moral, intellectual, literacy, artistic, social and commercial centre in Europe and the entire world1. It is the only city in the world that possesses the importance, wealth and abounding population that makes it so unique. It is the true centre of the world, that receives ships of nature’s production, labour results, prince merchants, commerce fruits, and its financiers determine the destiny of empires and make and unmake nations. One of the major backdrops to London’s economy is urbanization. In the 1960s, planning proliferated sociologists and architects were determined to change the world, town halls and campuses supported by modernization, morphology, networks and central places. It was therefore confidently believed that London provided a good key to creating a future city and an environment that was wholly planned (Sassen, 106). Since 1960s, changes in the international economy have greatly affected the development of London as a world city. The success of London in business and service industry is founded on its native language, English. The city also had a good track of openness and space for the other dominant international business languages used in Europe and major business destinations across the globe. Coincidentally, it was the choice of the British Empire for the headquarters as it is situated strategically in relation to other countries of the European Community central time zone thus acting as a bridge between Asian and US markets. Perhaps the international image and symbol held by the city regarding the country’s diplomatic ideology contributed to its popularity among the international community as well. The strong relationship between US and United Kingdom, and the UK’s good historical relationship with Middle East, African and Asian countries have boosted its success. It is therefore in line to refer to London as victor regarding business positioning in both local and international domains. As such, its status in this context must be considered as an occupant of rare niche held only by a few elite cities whose fortunes can be observed from different angles illustrating how class and might can surpass limitation. Effects of Changes in International Economy to the Development of London Despite the earlier fame and grandeur that London boasted of within a promising prospect of brilliance into the future, especially at a time many other European cities lagged behind, its downfall was too soon in the offing. Flanked by its strategic location that tapped from a myriad of industries, London was not prepared for the bad news of a possible decline. Apparently, as discussed below, it was difficult to tackle early indicators of a decline, partly due to the fact that the city’s leadership was oblivious of any strong force that would bring down such a mighty project in Europe. Decline in the docklands was caused by negative cumulative processes like development in infrastructure, leaving its ships and harbors outdated. This has had a negative effect in the development of London as a world city. The closure of the docks negatively impacted on London’s economy. According to Inwood (43), in the late 1990s, 20% population decline unemployment increased due to job losses and the wider area was in a horrendous situation. Such severe social and economic problems led to the formation of docks regeneration program. The aim of the program was to improve the public amenities and social infrastructure too. London has become the number one city in the world in tourism for several times and has managed to maintain its status as one of the leading destinations in the entire industry. A trip to London by foreign tourists as well as domestic tourists must be one a kind considering the status that it occupies in the tourism domain. Nearly every prominent tourist would have London as first choice destination to match with the status and accolade it possesses. This is because of its stable economic nature, mailing it a very developed city in the world. In 2006, London was visited by 15.6million visitors, the number one city visited in that year (Bremner, 1)2. Port of London is the largest port in the world. This is because it is able to import a lot of raw materials from other unstable economies of the world. Since the cost of raw materials is very cheap, it is able to enjoy a surplus in the balance off payment, from the high sale of expensive finished goods and services. The scope of business platform can be used as a marker of the level of sophistication and elegance that a city enjoys. This is particularly so when the economy of a country or city is analyzed in terms of the revenue foundation. Globalization is a major aspect in international economy that has had an impact in the development of London. Aspects of globalization are industrial, economic, financial, job market, political, health policy, information, language, cultural, technical, and religious among others. Industrialization has led to mass production in world markets and increased the accessibility of foreign goods for companies and consumers. Movement of goods and materials within and between national boundaries has also been made much easier. International trade has increased more than a 60 times, in manufactured goods (Roy, 115). The profile of a city’s economic foundation can be used to reveal how responsive it to different economic forces of the market, especially in a global picture. Labor or capital intensive economies are descriptive terms of the balance that exists in the sources of revenue with regard to industrial or service wings of the economy. In Doreen (82), it is recorded that London was the first European country to shift to service-based economy. With the recent changes in the economy of many developing countries, the economy of London has been developing. This is because, the developing countries are usually unable to process their raw materials and therefore export them to service based economies like London. Unfortunately, they sell the primary products at throw away prices while London processes them up to tertiary levels and then sell them at very high prices. This positively leads to the development of London’s economy. Another effect of changes in international economy to the development of London as a world city is exploitation of impoverished workers from foreign countries. The protection for economically weak countries by stronger and industrialized countries is deteriorating resulting into exploitation of people from such countries. London uses cheap labour from poor countries, whose economy is deteriorating. With cheap labour force, the cost of production becomes very cheap while the out put is very expensive. This greatly benefits the development of London economy. Changes in international economy have made London take advantage outsourcing. In this case, it has moved its service and manufacturing jobs to locations with low cost of wages from locations with cost of wages and benefits of workers. However, this has resulted to job losses in the high cost locations. In such a situation, the middle class is forced into the lower class, which is very hard to climb to climb from poverty. This creates two distinct and extreme classes in this economy; the elites and low classes. Free exchange of capital and goods has been triggered by changes in international economy. Therefore, collapse of one economy could affect another economy. Additionally, it has led to competition in the job market because with changes in international economy, the workers are not tied to the fate of economies of their nations. London has negatively been affected by this. This is because; they now compete in a global market and can move to the country offering the best wages. Therefore, London has had to equally increase its wages so as to attract and maintain its labor force. Changes in the world economy have left many countries in an unstable economic situation. An unstable economy means high cost of living and unemployment. People will therefore move to more stable economies like London. This consequently increases the population density of London city due to the high influx of foreigners. These people positively influence growth and development of London economy, since they offer cheap and ready labour in the manufacturing and service sectors. In the wake of strong economic shakeups at the global economic front, London, Just as many mega cities of the world of today has therefore not been spared. Interesting news is the relatively better recovery progress when compared to some of the leading cities in the pack of great modern cities. Whether the status remains is a fact of time. Furthermore, influx of people into London city has increased the cultural diversity of this city. Sharing among people from different cultures has increased the development of the economy of London. People share ideas, foreign products, adopt new practices and technology and take part in a world culture. Furthermore, it makes London city a metropolitan city, hence attractive to different races. It also acts as an incentive to tourism and this positively impacts on the development of the economy. However, the international economic crisis in 1960s onward has had a major blow in the manufacturing and industrial sectors of London. In 1960, London was a major industrial town but this has been declining from then onward. Today the only plant remaining in London, that is substantial, is Ford Dagenham which manufactures diesel engines, and body panels. During this period, London had a 2.8% employee’s proportion, which was the lowest percentage in manufacturing in UK (Shaxson, 53). Changes in the world economy have made many affected economies so unfriendly to foreigners. However, London has remained very friendly to foreigners that it charges them lower taxes while the domiciled non UK residents are never taxed on their foreign earnings. London offers a friendly environment and hence, London is a city of democracy. In London, the local government is elected by business as opposed to resident population. With economic crisis in many countries, especially developing countries, the economy of UK has financially remained stable. This has contributed to surpluses in the balance of payment, thus developing the economy (Bernería, 61). London has largely invested in finance and its exports. It is the home to insurers, banks brokers, legal and accounting firms. In 2005, London handled transactions of global currency, which was about 31% (Roy, 174). Its daily turnover amounted to an average of US$753 billion with more Euro and US dollars traded, more than any other European city. Works Cited "Top 150 City Destinations: London Leads The Way." Euromonitor International, Bremner, Caroline, 2007. Web. 15 March 2011. Bernería, L. Gender Development and Globalization: New York, NY: Routledge, 2003. Print Inwood, Stephen: A history of London, Oxford, UK: Oxford Publishers, 1998. Print Massey, Doreen, B. World City. Cambridge, UK: Polity Press, 2007. Print. Roy, P. London: A Social History. Cambridge, MA: Harvard University Press, 1998. Print. Sassen, S. The Global City: New York, London, Tokyo (2nd edn.) Princeton, NJ: Princeton University Press, 2001. Print Shaxson, Nicholas. Treasure Islands: Tax Havens and the Men Who Stole the World. UK: Random House UK, 2011. Print. Read More