Opening the Black Box of Agglomeration Economies for Measuring Cities’ Competitiveness through International Firm Networks

Abstract

The ability of cities to operate in global networks is usually measured according to their central position within multinational firm linkages. These measures are often used at the interurban level and neglect the intraurban processes of multiplier effects. The present study demonstrates that this affects the measurement of city centrality in business networks. Intraurban capabilities of interaction are considered in the measurement of interurban indices. The study is based on hypothetical networks at a micro level between long-range links and it mobilises processes as agglomeration economies, social capital developments and transaction costs. These processes at the intraurban level strengthen the efficiency of interurban linkages. It is suggested that the indices used to measure city centrality should include these local effects. Applied to a small sample of six firm networks, the methodology shows advantages for emerging large metropolises, but insufficient local effects for specialised clusters. The multilevel approach offers improved perspectives for the comparison of city centralities.