1. A Tale of Three New Global Cities: Their Origins and Significance
The expansion of the capitalist economy worldwide features, as a major characteristic, the unevenness of the process including the uneven penetration of capitalist institutions, markets, and patterns of consumption in different countries and regions. This characteristic is well-known and underlies the academic distinction among “core”, “semi-peripheral”, and “peripheral” regions of the world system [1
] (Hopkins and Wallerstein, 1997), as well as those enshrined by the World Bank and International Monetary Fund’s distinction between “advanced”, “emerging”, and “developing” nations.
More importantly, and as Saskia Sassen (1991) [2
] originally noted, while the organization of commodity production and commercialization are increasingly dispersed worldwide, the command-and-control functions of global capitalism are centralized in a few places. These are termed by Sassen “global cities” and she identifies New York, London, and Tokyo as the central ones in the contemporary world economy. Yet, a second feature of this global system is its constantly changing character, along with attempts by different geographical and political units to move forward in it. Indeed, it is a commonplace to note that “what the West is, the rest of the world seeks to become”. The entire field of development studies in economics, political science, and sociology is dedicated to scrutinizing those factors that either prevent nations and cities to move ahead or actually enable them to do so (Acemoglu et al., 2001; Portes and Nava, 2017) [3
An interesting sub-field of this general enterprise is the identification of localities which, with relative independence of broader national and regional trends, have managed to position themselves in places of centrality in the global economy. As it happens, it is not the case that New York, London, and Tokyo exhaust all the command-and-control functions of global capitalism, since its very dynamism apparently requires the emergence of new such centers at least at the regional level. Sheer size is not sufficient since there are a number of enormous cities that are not global, it is rather the positioning of certain cities intersecting points in commercial traffic, banking networks, and external investments that mark them as unique.
The three cities that are the subject of this paper have, in various ways, accomplished the feat of inserting themselves in the global capitalist economy in positions of centrality, managing and coordinating trade routes, capital investments, and resource flows on a regional basis. None of the three can match New York or London in the scope of the corporate and financial coordinating functions centered in those cities, but they have increasingly come to play a comparable role in their respective geographic spheres of influence.
Dubai, Miami, and Singapore have been compared pair-wise in the past, the most common comparison being between Singapore and Dubai. This is not surprising since both show a number of similar features, including the relative timing of their economic emergence and a proactive authoritarian government leading to this notable success. They are city-states or, in the case of Dubai, quasi-states, in marked contrast with Miami that is a subordinate part of a much larger political entity. Yet, despite these differences, the three cities have in common that they have succeeded in attracting increasing trade and capital flows to themselves and persuading players in the international economy that they are the “places to be” in order to coordinate commercial and capital transactions in their broader regions or to negotiate decisions affecting states, firms, and populations in their respective hinterlands [5
] (Nyarko, 2010; Henderson, 2012; Portes and Armony, 2018).
Not surprisingly, the three cities are major ports and they also host large international airports. These characteristics will be discussed below. For the time being, what is important to emphasize is that the emergence of the three cities as new centers in the global economy was not the product of chance, not even of a suitable geographical location, but of a concatenation of events leading to the emergence of a proactive government leadership, or, alternatively, an effective and determined business class. While many other cities aspire to a similar role in the world economy, none have managed to do so, at least to the degree that the three cities featured in this article have. As background for the following discussion, Table 1
presents an updated economic profile of these cities.
My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son rides a Land Rover…but his son will ride a camel
. Attributed to Sheikh Rashid bin Saeed Al Maktoum [5
] (Nyarko, 2010:10).
Dubai is the second largest emirate of the seven that compose the United Arab Emirates [9
]. Under the enlightened leadership of Sheikh Zayed of the long ruling Al Nahyan dynasty in Abu Dhabi, the seven emirates came together in the late nineteen sixties agreeing to form a single federal entity. Abu Dhabi remains the single largest emirate and concentrates the bulk of oil reserves that turned the country into one of the richest in the world (Herb, 2009) [10
]. The rulers of Abu Dhabi, including the current Sheikh Khalifa bin Zayed Al Nahyan have focused on transforming oil wealth into sustainable industrial, commercial, and cultural development, financing a number of high-profile projects—from a brand new airport to vast commercial malls, branches of the world-renowned Louvre and Guggenheim museums, and campuses of the Soborne and New York universities (Davison, 2005; Herb, 2009; Nyarko, 2010) [5
That effort pales by comparison with that undertaken by the ruling of Al Maktoum family of Dubai to transform the empty desert into a glittering city angling toward global status. The list of expensive, high-profile projects in Dubai is interminable, ranging from the soaring needle-like Burj Khalifa—the tallest building in the world at 2726 feet, re-named in honor of Abu Dhabi’s ruler—to Dubai Mall, the largest in the world, to the extraordinary sail-shaped Burj Al-Arab Hotel, the Jebel Ali Portland two spanking new airports.
The Al Maktoum family, in particular the present ruler Sheik Mohammed bin Rashid, appears obsessed with winning the race against time before oil runs out or the demand for it drops drastically. Before that happens, it is set on transforming the city into a world-class commercial and financial center, as well as a major tourist destination [5
] (Nyarko, 2010). To this end, no effort or expense is spared, with the Sheikh appointing himself chair of practically all key institutions in the Emirate—from its planning corporations to its international airports and the flagship carrier, Emirates Airlines (Khan and Khan, 2016) [12
]. The Dubai International Finance Center (IDFC) have become the largest in the region, managing transactions of over USD 100 billion a year; the 2020 Dubai World Expo is planned as a culmination of these efforts aimed at global prominence (Cheung, 2010) [13
Dubai is ultimately a family-enterprise run by a benevolent despot for the perpetuation and enhancement of his rule and, secondarily, for the benefit of the native population. In the course of advancing their enterprise, the Al Maktoums have managed to enlist the participation of a vast number of global financial, commercial, and real estate corporations that have sunk vast amounts of capital in commercial and real estate developments. Although the serious downturn of the world economy has paid to many of the planned projects, including the cancellation of the pivotal 2020 Dubai World Expo, the expectation of the Emirate’s leaders is that the present challenges will disappear in a year or two.
Persuading foreign investors of the trustworthiness and durability of Emirati institutions has been a major feat because it runs counter to several facts deeply embedded in the history and culture of the place. First, the Emirates, including Dubai, are not democracies but hereditary monarchies with institutions run entirely at the will (or the whim) of its rulers. Therefore, who is to say that successors of Dubai’s current ruler do not turn away from his hard work and development vision into a life of pleasure and dissipation? There are no judicial or legislative institutional checks and balances that could prevent this from happening, as the rule of the Al Maktoums is absolute. Second, the UAE legal system confronts a perennial tension between two ultimately opposite goals: One is to Westernize it in order to render it compatible with globally-accepted judicial procedures, while the other is to Islamize it in order to render it compatible with VIII century Shari’a Law, grounded on Prophet Mohammed’s teachings. Shari’a courts exist today next to civil courts administering justice on the basis of codified law borrowed from the French legal system via Egypt (Al-Muhairi, 1996a) [14
]. Shari’a Law is not codified and efforts to do so have met with resolute opposition among religious authorities (Al-Muhairi, 1996b) [15
For foreign residents and investors, the question is how to cope or avoid a medieval code that, among other things, forbids charging interest in commercial transactions and prescribes harsh physical punishments, including mutilations and lashings for a number of transgressions. The struggle to retain Shari’a rules as a way to appease a religiously-inclined population, while simultaneously persuading Westerners of the safety of their investments and personal lifestyles in the country has required numerous legal contortions and remains unresolved, and ultimately unresolvable (Herb, 2009; Al-Muhairi, 1996b) [10
]. The challenges presented by the 2020 pandemic has aggravated the situation as a rift has opened between the Emirati population that remains in place and a significant number of expatriates that have left because of the collapse of investment opportunities.
Despite these drawbacks, the Dubai rulers have so far persuaded international capital that investments in the Emirate are safe and profitable. Legal and commercial law has been transferred explicitly to the civil courts although, in cases of commercial disputes, a possibility still exists that Shari’a rules may apply (Carballo, 2007) [16
]. In reality, Dubai has grown increasingly secular, and with the exception of drug use, which is harshly punished, the individualistic and even hedonistic lifestyles of the West have been tolerated (Lincoff, 2011) [17
]. In the past, investors have been further re-assured by the aggressive pursuit of development objectives by the ruling family. Nothing but the best would do—the tallest buildings, the largest commercial malls, the most up-to-date port facilities, the sparkiest airports. The national airline, Emirates, fiercely pursued international recognition, refusing to join any global alliance. In this pursuit, its major rival is the corresponding airline of our second emerging global city, Singapore International (SIA) (Lohmann, 2009; Masarrat and Jha, 2014) [18
]. Both airlines have been seriously challenged by the 2020 economic downturn (The Economist
, 2020a: 59) [20
] although they sustain their competitive rivalry.
In its quest for world supremacy, Singapore Airlines (SIA) engages in a strenuous training program, that includes role-playing by different groups of its personnel of the work done by others —pilots learn to play cabin crew, mechanics play pilots, and cabin crew play the ground personnel. Especially intensive is the training of cabin crews that involves learning delicate etiquette rules and becoming embedded with the goals and values of the airline. The result is the “Singapore girl”—flight attendants exquisitely clad in native sarongs attending to the passengers’ every wish (Chong, 2007) [21
The commitment to excellence at SIA is but one of the many visible manifestations of the city-state’s development model. Unceremoniously pushed out of the Malaysian Federation in the late sixties, Singaporeans found themselves crammed in a little island with no natural resources. Even drinking water had to be piped in from the mainland. Singapore Island is just 279 square miles in size. In its favor, it had a long commercial tradition, a privileged geographical position at the entrance of the Singapore Strait, and a strong institutional tradition inherited from British rule. Building on these assets, the political leadership of Singapore, grouped around the People’s Action Party (PAP) and its charismatic leader Lee Kuan Yew, set out not only to improve the lot of what had been a collection of poor fishing villages, but to transform them into a world-class city (Lim, 1998; 2004; Phang, 2000) [22
A great deal has been written about the Singaporean model of development, and not all of it laudatory. From the start, the PAP and its leaders imposed a top-down authoritarian structure where the citizenry was made to conform to strict norms in exchange for full employment and the promise of a better future. There were elections in the model of Western democracies, but the results were a foregone conclusion—the PAP never lost them (Rodan, 2006) [25
]. Aside from politics, the basic engines of success of the Singapore model were threefold: First, the creation of an effective, corruption-proof bureaucracy by combining high salaries for government officials with strict supervision of their probity and performance. Second, an open and friendly regime for foreign capital investment, transforming the Island into one of the easiest places to register enterprises and conduct business. Third, a proactive government stance toward foreign investment, exploiting first the geographical advantages of the Island and then its growing capacity to partner with international banks and corporations through its sovereign investment funds (Kien Sia and Boon Siong, 1998; Tan 2005; The Economist
]). As seen in Table 1
, Singapore has, by far, the largest GDP of the three cities studied.
Singapore exemplifies, like no other country, the conclusion in the sociology of development that the prime determinants for sustained national growth are the creation of an efficient state apparatus immune to corruption and its engagement with key sectors of the private economy to guide investment in strategic sectors (Evans, 1995; Portes and Smith, 2012) [29
]. Singapore’s capitalism has never been laissez faire
capitalism; on the contrary, a dirigiste
state has taken a very active part in guiding its successive phases of development (Henderson, 2012; Portes and Nava, 2017) [6
Singapore started its development path as a manufacturer of toys and other cheap consumer goods but rapidly graduated to high-tech industry and then to commercial and financial services. A number of foreign corporations established its Asian headquarters in the Island and that development brought, in turn, an influx of professional expatriates. Today, 28% of the population of 5.3 million are foreign-born. Three other unique and important features characterize the Singaporean model. The first is a resolute official effort to dispel ethnic conflict among various sectors of the population. Seventy-four percent of Singaporeans are of Chinese origin; 14% are Malay; and 9% Indian; the rest is made up of multiple nationalities. The government simultaneously supports and celebrates the different ethnic cultures, while proclaiming at all times that citizens are, above all else, Singaporean (Gopinathan, 1996; Ho, 2009) [32
This message is conveyed repeatedly to elementary and secondary school students. In Social Studies courses, secondary school students are exposed in detail to the experiences of ethnically-fractured countries at war with themselves because of these divisions. Northern Ireland and Sri Lanka are studied from this perspective, and their experiences contrasted with the successful management of ethnic divisions in Singapore (Koh et al., 1995; Ho, 2009) [33
]. Another strategy to achieve the same purpose is to deliberately prevent the emergence of isolated ethnic enclaves. Housing for the entire Singaporean working-classes is provided through government built and run projects. The state allocates housing through a deliberate mixing policy that insures the proportional presence of the different ethnic groups in the same buildings and in the same neighborhoods (Rodan, 2006; Tan, 2005; Ng, 2010) [25
The second feature of the Singaporean model has been to reject advice by international agencies and experts focused on narrow cost-benefit considerations in favor of long-term goals. An example is the decision to locate the international airport at Changi, a former British Royal Air Force base. In the early seventies, a series of international consultants recommended the addition of a second runway to the existing Paya Labar airport, close to the central business district, as the least costly and fastest way to alleviate air traffic congestion in the city. The Singaporean Cabinet initially accepted these recommendations, but then Prime Minister Lee Kuan Yew intervened:
I was not satisfied and wanted the option of moving to Changi to be reconsidered. I had flown over Boston’s Logan Airport and been impressed that the noise footprint of planes landing and taking off over water. A second runway at Paya Labar would take the aircraft right over the heart of Singapore City (Yew, 2000:230; Phang, 2003:5) [37
In June 1975, the Singapore government approved the move of the international airport from Paya Labar to Changi, about 9 km east of downtown. In Yew’s words, it was “the best USD 1.5 billion investment we ever made” (Yew, 2000:231) [37
]. A second illustration of the same trend has been the policy of the Civil Aviation Authority to deliberately build overcapacity against immediate cost-benefits calculations and advice. Within three years of Changi’s inauguration and even when capacity at its Terminal 1 was still ample, the government approved the construction of a new terminal. Even as the Civil Aviation Authority was celebrating the inauguration of Terminal 2, it announced plans to build a third terminal (Phang, 2003; Bok, 2014) [38
]. The intent of that policy was to signal to airlines flying to South Asia, that Singapore was their natural hub because of superior facilities and capacity, besting its competition in Bangkok and Kuala Lumpur.
The third distinct element of the Singaporean model is the effective state effort to overcome the poor natural endowment of the island. With the growth of the population and the economy, the city literally ran out of space. The government met this challenge by simply creating more land, either by importing sand from abroad or by resorting to the Dutch polder
method of encircling parcels of sea and drying them up thus creating new land under sea level (Ng, 2018) [40
]. Similarly, the lack of water was met by piping water from Malaysia, but when the Malaysian government attempted to raise the price to a usurious level (from $
0.008 per cubic meter to $
45), Singapore responded by creating spanking new water re-cycling and water desalination plants (Upson, 2010) [41
Through these policies, Singapore has succeeded in growing its economy steadily, reaching a Gross Domestic Product of USD 447.2 billion in 2017 and a GOP per capita of almost USD 80,000 in the same year, higher than many European countries (Singapore Department of Statistics, 2018) [28
]. The flip side of such achievements is an authoritarian state that seldom tolerates opposition, either through organized parties or through the press. Though formally a democracy, the ruling PAP has resorted to every device to prevent other parties from seriously challenging it. That is the key reason to why it has never lost an election (Rodan, 2006; Sim, 2011) [25
]. Of late, the Singaporean political leadership has resorted to the judiciary as a tool to silence the opposition. While formally independent, graft-free and very efficient in handling criminal cases and commercial disputes, the courts are still very much under the thumb of the political leadership. Government authorities have resorted to suing domestic opponents and foreign journalists for defamation in the courts. Almost without exception, judges have ruled for the plaintiffs awarding them hefty compensations, as well as major fines for defendants (Rodan, 2006:14) [25
As in the case of Dubai, the Singaporean political leadership has implemented a social contract with its population where steady economic progress, social peace, and multiple amenities have been made available in exchange for political quiescence. There is no democracy in either country but, while the Dubai hereditary monarchy freely admits this, Singapore denies its resorting to a variety of judicial and political subterfuges. A number of authors have written, however, about the similarities in socio-economic models and political practices in both cities.
A key similarity is the question of what will happen in the future once the energetic and charismatic leadership that led the rise of both cities passes from the scene. In Singapore, that situation is already a reality. Lee Kuan Yew died in March 2015 and the mantle of leadership passed to his descendants and the PAP. The process, known in political sociology as the “routinization of charisma” (Weber, (1922) 1947) [43
] is already in full swing. This process can lead to the replacement of the charismatic leader by a younger one; the embodiment of the charismatic tradition in a series of symbols and rituals, or the disappearance of the charismatic movement altogether (Weber, (1922) 1964; Bendix, 1962: Ch. 10) [43
In Singapore’s case, the first outcome is not likely since the successors, including the sons of the leader, Lee Hsien Long and Hsien Yang, are quite distant from the unique political qualities of their father. In this instance, routinization of charisma is proceeding apace by the embodiment of charismatic symbols in the structure of this ruling party and the struggle to avoid its transformation into a series of self-seeking fiefdoms. This has not happened yet, but the experience of a number of post-charismatic, post-authoritarian states elsewhere suggest that it is still a possibility (Centeno and Ferraro, 2017; Centeno; Eckstein, 2003) [45
Miami is quite distinct from the other two cities and its ascent to a global status has been due to very different circumstances. It is the odd third of the trio and comparing it with Singapore and Dubai would, in principle, seem far-fetched. Miami is not an independent city-state nor a semi-independent part of a federation; nor is it ruled by a monarch or an authoritarian party. It is instead an integral part of a much broader national democracy, subordinate to its constitution and laws. Hence, neither local nor regional government in this case possesses the freedom of action to implement a far reaching developmental plan aimed at the heights of the world economy. Whatever catapulted Miami to its present status, it was not its “rulers”, but rather the play of other historical forces.
Before delving into what these are, let us pause to consider the similarities among the three cities. They are all ports that have been singled out as strategic hubs for both sea and air transportation by major global corporations. Port Miami is the only logistical hub in the Caribbean capable of handling fully laden post-Panamax vessels up to twenty-two containers wide. As such, it is the natural entry point for hemispheric trade, playing a similar role as Singapore does for Southeast Asia. By 2017, Port Miami was receiving six super post-Panamax vessels per week; only New York was in the same league. In addition, it is the largest cruise port in the world, hosting more cruise ships than any other. In recent years, more than 4 million passengers per year have travelled to Miami to embark on their dream vacation [7
] (Portes and Armony, 2018:70–71).
Miami International Airport (MIA) plays a similar role in air transport. By 2014, it was the largest US airport in terms of freight tonnage, processing 96% of all air exports and imports in Florida. The total airfreight value reached USD 45.8 billion in 2017 [7
] (Portes and Armony, 2018:72). The bulk of air traffic, both in passengers and cargo at MIA, plays a similar hub role for the hemisphere as Changi Airport does for South Asia and the duo of Dubai International and Maktoum International for the Middle East. MIA’s main partner is Brazil, followed by Colombia and Chile. Outside the hemisphere, the principal contributors to its trade are China and Switzerland (Miami-Dade Metropolitan Planning Organization, 2014) [47
A second key convergence is the role of all three cities as centers for banks and other financial entities. The geographical location of Miami plays an obvious role in its emergence as a sea and air hub, but its emergence as a financial center required much more elaborate prodding, a role not
played by government but by private actors. Their achievements are physically crystallized in the Brickell Financial District, that today boasts the largest concentration of international banks in the country and the second largest bank concentration in the East Coast, next only to New York [7
] (Portes and Armony, 2018: Ch. 4). The bulk of financial transactions in Miami involves partners in Latin America, although the traffic is not exclusively north-south. A number of Western European banks have also headquartered their hemispheric operations in Miami. Its role as a global finance center again parallels that played by Singapore and, to a large extent, Dubai in their respective regions. The Florida International Bankers Association (FIBA) plays a central role in this process (interview with the president of FIBA conducted by the author in Miami, January, 2020).
Tourism rounds the picture with the three cities increasingly relying on this industry and making determined efforts to expand it. The Persian Gulf (or Arabian Sea), the Atlantic and Indian oceans endow them with pristine beaches joined by a warm tropical climate year-round. Dubai is building the largest man-made islands and largest hotels in the world, all marketed toward wealthy foreign visitors and investors. Singapore has launched a new vast gambling operation in the islet of Santosa, rivalling Macao in China and catering to rich expatriates (informant interviews conducted by the author, July 2018. A notable feature of the Santosa gambling complex is that the native Singaporean population is discouraged from visiting it by a high entry fee. Foreigners are exempted).
In 2017, Miami received 38 million tourists who spent approximately USD 17 billion. This is in addition to its role as the cruising ship capital of the world (the pandemic of 2020 brought the cruising industry, heavily concentrated in Miami, to its knees. While no major cruising company has gone bankrupt so far, the danger is there since none are receiving a steady income and all are dependent on the Federal government subsidies for survival). Through these various economic activities, the Miami metropolitan area, which is home to 5.5 million people, achieved a Gross Metropolitan Product of USD 334.9 billion in 2017; lower than that of Singapore and more than double the figure for Dubai—USD 111.8 billion (see Table 1
). In the same year, Miami hosted the Latin American operations of more than 1400 multinational corporations. Its skyline features 300 high rises, the third tallest in the United States, and in a comparable league with the other two cities. Unlike Singapore, however, Miami has so far resisted gambling as a major tourist attraction (Lewis, 2016) [48
5. Political Roots
In exploring the various paths that took the three cities to their present position, the first thing to note is the roots of the process. Such roots took different forms, but they have in common the accumulation and use of power—in other words—politics. In the Emirates, British power and its use in first neutralizing the pirates in the Persian Gulf and then imposing a series of truces on the various Arab sheikhdoms was the first chapter in the process. British colonial influence extended, as well, to the construction of a legal and economic framework and to the careful deliberations that led to the creation of the UAE (Davison, 2005; El Mallakh, 2004) [11
]. Since its emergence, and until recently, there have been no conflicts among the gulf states and the powerful ruling houses in Abu Dhabi and Dubai have cooperated steadily in the construction of their respective development models. This cooperation and balance is what allowed the Al Maktoum emirs to forge ahead with their vision of a global city, built out of sea and sand, and comprising elements of both hard economic reality and fantasy (Herb, 2009; The Economist
, 2020b: 38–39) [10
The British colonialism and political power were also decisive in the emergence of Singapore, less out of a deliberate development project by the colonial authorities than by the extension of their legal framework and economic institutions. When Singapore was expelled from the newly created Malaysian Federation, few would put any faith in the future of that impoverished island. However, it possessed a unique combination of Chinese entrepreneurial grit and British institutions and laws. The iron-willed political leader of the newly-independent state was trained in Britain, as were many of his PAP comrades [5
] (Nyarko, 2010). In the first desperate years following independence, these leaders abided by two guiding principles. First, that British legal institutions were the appropriate framework for launching capitalist development (until recently, the Privy Council in London remained the highest judicial authority in the Island). Second, that Western-style democracy was not
feasible and had to be replaced by a dirigiste
state that demanded political quiescence from citizens in exchange for an effective state apparatus and sustained economic growth (El Mallakh, 2004) [49
In both, Dubai and Singapore, the power and durability of the British institutional legacy is almost palpable. It is evident in the clean, safe streets, predictable exchange rates, and full guarantees for property rights. At the same time, that legacy clashes repeatedly with the realities of an authoritarian state. There is no free press in either place, no organized opposition, and the penalties meted out on both political dissidents and violators of drug legislation are draconian. Of late, the Privy Council has ceased to be the ultimate appeals court in Singapore, that role devolving to the pliant local judiciary.
Contrary to the other two cities, the transformation of Miami was not due to any deliberate program on the part of the authorities. The Federal government had no plan for Miami other than to stop or at least control cocaine money-laundering in it. The local government had neither the vision nor the plan, except perhaps self-enrichment by elected officials. The level of corruption in various local municipalities was enough to bring in a Federal Task Force in the nineteen eighties that resulted in a number of indictments and prison sentences for local officials (Nijman, 2010; Allman, 2013) [51
]. The political sources of Miami’s transformation in the last quarter of a century were not internal, but external and had their roots in another country. The Cuban Revolution was the decisive event that transformed Miami, the two becoming profoundly intertwined to this day.
The entire displacement of the upper-and middle-class from a small, but economically dynamic country such as Cuba in the 1950s was the key historical event that did away with the image of Miami as a provincial winter resort. Experienced Cuban bankers, in particular, were key to this transformation. Indeed, some observers date the beginnings of the change to the arrival in South Florida of Felix Reyler—Cuban banker and former judge—in 1968. Hired first at Mercantile Bank, he created its first personal banking department specializing in Latin American clients (Kerbel and Westlund, 2004) [53
]. He then moved to Pan American Bank, assuming the leadership of its international division and travelling extensively to Colombia, Venezuela, and other countries to promote Miami as the place to do business in the United States [7
] (Portes and Armony, 2018:75).
Other Cuban exile bankers, such as Eduardo Benes at Sun Trust, Luis Botifoll and Aristide Sastre at the Republic National Bank, and Gonzalo Valdes-Fauli at Bankers’ Trust followed Reyler’s lead, jointly creating a critical mass of international financial activity in Miami. What these bankers did was to pivot Miami away from its exclusive past focus on New York, and other northern cities, and into new areas of money-making activity (Kerbel and Westlund, 2004) [53
]. Wealthy Latin Americans no longer had to travel to New York to do business with distant, English-speaking bankers. They now could do this closer by Miami and in Spanish. Reyler et al. were instrumental in creating the Florida International Bankers Association (FIBA) that became central in passing legislation, which converted the State of Florida and the City of Miami into global banking centers (Allman, 2013; Florida Dept. of Financial Services, 2015) [52
The Cuban exile bankers continued their efforts, persuading correspondent banks in Latin America to establish branches in Miami. By 1984, there were forty-five foreign banks with offices in the city—including not only Latin American, but also British, Spanish, French, and Israeli entities. They added to the forty-three American banks with branches or headquarters in the city. In less than fifteen years, Miami had become an international financial hub (Allman, 2013 [52
]; Portes and Armony, 2018 [7
]). By 2014, the number of banking offices in Miami had grown to one hundred and five, turning the Brickell Financial Center into the largest one in the East Coast, second only to New York (Florida Department of Financial Services, 2015) [55
The enviable geographic position of the city was an important factor in its transformation, but, as noted previously, it was not enough by itself. The key ingredient was the Cuban Revolution in the form of expelling its most dynamic economic classes. Had they remained in Cuba, they could not have accomplished the miracle that they achieved in Miami because they could never have persuaded other Latin American and European firms to invest there. It was the combination of their diligence over many years, together with the political stability and solid protection of property rights provided by the American legal system that accomplished that feat. Thereafter, Miami became known as the financial capital of the hemisphere, with its banks channeling financial and real estate investments not only from Latin America but from the entire world (Allman, 2013; Kerbel and Westlund, 2004) (interview with FIBA president in Miami, January 2020) [52
Processes of social change are path dependent so that one thing follows another (Campbell, 2004) [56
]. The early generation of Cuban exile bankers and executives have now passed from the scene, but the dynamics that they created goes on. At the Brickell Financial Center, one encounters Cuban-American, other Latin, European, and American bankers and investors in a polyglot, but so far a harmonious mix. English and Spanish are the languages of business. Spurred by the rising economic stature of their city, local officials have become more future-oriented, better informed, and less corrupt. While shady practices are still common, especially in the smaller and poorer municipalities, the metropolitan government and City of Miami authorities are several cuts above what they were before. “What’s the point of taking a bribe now?”—remarked a recent mayor of the City—“You’re running a world-class place and you’re gonna lose everything for a few dollars? Doesn’t make any sense” (interview at Miami City Hall, February, 2016. Author’s notes).
6. Future Prospects and Challenges
Despite their economic and even social similarities, the different historical paths that led to these cities’ present position also points toward a future of mixed prospects. It is not within the power of contemporary urban sociology to predict specific outcomes, but key trends as well as steady states can be identified with relative ease. Path dependence is a powerful historical force, in the form of past events and processes defining what will happen next (Campbell, 2004; Evans, 1995) [29
]. Capitalism thrives on stability and investors like nothing better than a predictable social and economic environment. To the extent that these cities can preserve their solid guarantees for private property and stable legal systems, the future should be a mirror and continuation of the recent past.
However, history is also made of surprising turns and unpredictable events. In that regard, the inevitable demise of the royal and charismatic leaders that have presided so effectively over the growth and development of Singapore and Dubai should give us reason for pause. The hereditary kingdoms of the UAE show no signs of being transformed into constitutional democracies. Hence, the passing from the scene of the present effective and charismatic leaders leaves open the question of what will happen next. Wayward or less effective successors can seriously compromise the present development model. What is currently happening next door in Saudi Arabia with the transfer of power to a motivated, but inexperienced and rash prince can serve as an object lesson of how the Dubai road to global prominence could be compromised in the future.
With oil gone, the fate of the Emirate depends entirely on its ability to continue attracting foreign investors, visitors, and deposits. The long-term tension between a legal system constitutionally patterned after Shari’a medieval precepts and modern Western law continues and could lead to serious consequences in the hands of a religiously-militant, and less tolerant leadership. More immediately, the 2020 pandemic has wreaked havoc with Dubai’s real estate and tourist sectors. Already challenged by a crisis of oversupply, residential real estate is seeing its worst years with hundreds of condominium apartments sitting empty (interviews with expatriate businessmen, executives of the Abu Dhabi investment company (Mubadala) and members of the ruling family of Ajman conducted by the author in Dubai, September, and October 2018). Empty as well are the luxury hotels as few tourists would venture this far today (The Economist,
2020c: 59–61) [57
The situation in Singapore is different, as the passing from the scene of the charismatic leader that engineered its transformation, has given way to a process of bureaucratization of the ruling party. “Routinization of charisma”, is as common in political as in religious history, leading to the likely transformation of the original vision and energy of a movement into a collection of self-seeking interest groups (Weber, 1915 (1958) [58
]. The PAP continues to rule Singapore with an iron fist, but it is less clear whether, in the absence of real democratic competition and electoral succession, it will not devolve into what single-party states generally become—change-avoiding regimes, increasingly vulnerable to corruption [45
So far, the PAP leadership has avoided that fate, preserving a steady balance among the ethnic components of the population, investing heavily in top-tier educational and health systems, and maintaining political quiescence among the population by dint of its economic success. As in the case of Dubai, however, that success is dependent on the trust of foreign capital and its continuing willingness to invest in the Island-state. An ageing leadership, along with an ageing population, will call for replacement in the foreseeable future, opening up the question of where such replacements will come from and how they will conduct themselves. As in Dubai, the 2020 pandemic has led to crisis in the tourist and residential real estate sectors as long-distance travel from Europe and North America makes visiting the remote island a less-than-appealing proposition.
Ironically, the least charismatic of the three city models may be the most politically stable. As seen before, Miami’s rise was not dependent on the vision of an enlightened ruler but was instead a collective project by a foreign financial and entrepreneurial elite. The stability of that project does not depend on monarchical succession or on the successful routinization of charisma; it is guaranteed instead by an American legal system, among the strongest in the world. No major player in the capitalist global economy doubts the safety of property rights in the United States or the continuity and stability of the American dollar. To that extent, the Miami model runs on wheels—the achievements of the past ushering those of the future. In this scenario, the possibility of corrupt practices by some local officials can safely be brushed aside. If corruption gets out of hand, the Federal government will intervene, as in the past, ensuring that wayward mayors and commissioners lose their jobs and face the courts [51
More immediately threatening are the effects of the global economic crisis that, as in Dubai and Singapore, have literally wiped out the tourist sector in South Florida. As seen previously, the cruising industry, headquartered in Miami, is in a state of near-terminal crisis being kept alive only by federal support. Less affected, however, has been the construction and real estate industries, as a drop in demand for luxury residences in 2018–19 have led to a re-orientation of the industry to middle-class residential projects, geared primarily to local demand (interview with a senior partner of a major real estate firm in Miami conducted in the Brickell District by the author, January 2020).
The principal long-term threat confronting Miami at present does not arise from politics but from the sea. A rising Atlantic threatens to swallow the city in less than a century. Built on porous limestone and rising only a few feet above sea level, the city has experienced regular and increasing floods in recent years. Already Miami Beach, re-baptized as “ground zero for climate change” by former President Obama, has invested USD 100 million in a system of giant pumps to take seawater from city streets and dump it back into the Ocean or in Biscayne Bay (Kolbert, 2015; Delgadillo, 2016) [59
]. The remedy is only temporary, as the rising sea will turn such floods into a regular and increasingly disturbing event.
So far, no one has come up with a viable solution to the problem. Building dikes to hold back the ocean, as in the Netherlands, will not work because porous limestone will allow the water to filter and come up from underneath (Viglucci, 2017; Wanless, 2015) [54
]. Nevertheless, many continue to put their faith in science, betting that a newly invented miracle will save the place. In the interim
, the local growth machine has kept building and marketing high-rise condominium towers right by the water. In a trip along Biscayne Bay in April 2017, one could count no less than thirty-six building cranes, most of them erecting new luxury residential towers [7
] (Portes and Armony, 2018; 169). The decline in luxury housing demand in the following two years (2018–19) is probably what saved the Miami real estate industry from the dire situation confronted by the same sector in Dubai. Real estate prices have not declined significantly in Miami, although demand has shifted to less expensive, more affordable middle-class housing.
7. Conclusions: The Challenges of Globalization
Despite the challenges now confronting the cities which are the subject of this study, there is no question that their rise to positions of prominence in the global economy has been extraordinary and that it has not been due to mere accident or luck. A difficult-to-achieve combination of factors has been required to bring out this outcome. How difficult it has been can be appreciated by two other considerations. First, there are few cities in the world today that approach the emerging global status achieved by Dubai, Miami, and Singapore in this century. Second, the removal of one of the preconditions that underlie this position can lead to its demise in the short-to-medium term.
A perusal of a world map today will lead promptly to the conclusion that there are few places that approach this emerging global city position. There are much larger cities—exemplified by Djakarta, Sao Paulo, Buenos Aires, Mexico City, Cairo, etc.—but their economic and political influence and weight is confined to their respective nation-states and not to an entire region of the world economy. Cities in the interior of large nations or blocks of nations such as the United States, Canada, China, and the European Union are also disqualified by their lack of ports and hence, the impossibility of serving as hubs for maritime commercial traffic.
Even coastal cities in geographically strategic settings may be disqualified from becoming international entrepots
by other considerations. Consider the case of Panama City, strategically located next to the canal linking the two largest oceans and right in the midst of the Americas. Panama has deliberately attempted to imitate, and perhaps surpass Miami by taking advantage of its enviable geographic location and climate. It has promoted large-scale tourist facilities as well as an economic free trade zone in the model exemplified by Dubai (Castaño, 2019) [62
]. Yet, the success of this development strategy has been hampered by a key non-geographic consideration: Major international banks and global corporations do not trust Panamian law or its legal system sufficiently to place their regional headquarters there. A long tradition of political instability in Panama and in Latin America as a whole, renders the city and the Free Zone less than attractive as a reliable setting for world-spanning transactions.
The Panama Free Zone can be considered a success insofar as the absence of taxation and a very light supervisory regime have attracted a large number of financial operators to it. Its reputation as a tax haven brought over 35,000 foreign holding companies and tax sanctuary operations to Panama earning the country the nickname of “Switzerland of Latin America” (Cooper, 2018) [63
]. Yet, serving as a tax haven is not equivalent as a coordinating and centralizing decision-making center for large international banks and multinational corporations. While Panama has been successful in marketing its low tax, lax supervision regime, its status in the global capitalist system remains that of a “flag of convenience” rather than a genuine command-and-control hub (Cooper, 2018; Castaño, 2019) [62
On the other side of the world, Hong Kong exemplifies the same point, although in a different fashion. For years, Hong Kong has had all the attributes of a regional global city, being second-only to Tokyo in Asia. However, the status of Hong Kong has been contingent on the maintenance of British common law and British-based regime for the protection of financial transactions of a property. Starting in 2018, the attempt of the Chinese communist government under Xi Lingpin to take political control of the island has seriously compromised its status as a legally reliable financial and commercial center. Banks, corporations, and international law offices have started moving away from the city. If this exodus were to continue in the future, the global city status of Hong Kong could effectively disappear (The Economist, 2020d: 17–10).
These examples serve to illustrate the point that the achievement of an international entrepot status in the world capitalist economy is both difficult to achieve and delicate to sustain. Major capital players in that economy avoid unpredictable and authoritarian political environments that compromise either their holdings or their decision-making. That is why neither Russia nor China boast a single global city. The three pre-conditions identified in this article—a strategic coastal settling, a reliable legal regime for commercial and financial transactions, and a leadership resolutely committed to the capitalist system as the only viable path to development—are rather difficult to bring together. That is why the rise of new regional-level global cities has been exceptional during the last century and is likely to remain so in years to come.