The Structure of Economic Globalization: It's a Small World after All

Economic globalization is universally acknowledged as one of the most important influences on the world today. Yet, there is surprisingly little agreement on its geographic scope and granularity. While some observers have suggested that the world has been integrated into a single, cohesive global economy, others have emphasized that economic globalization has instead created a world of regions that remain largely distinct from one another. In this study, I reconcile these opposing views by proposing that the global economy has a “small world” social network structure composed of distinct regions held together by crucial hubs. Taking city-regions as my unit of analysis and analyzing patterns of multinational corporation headquarters-subsidiary relationships connecting city-regions across the world, I construct a global city network representing the structure of the global economy, and analyze this network using both exploratory multidimensional scaling visualization techniques and confirmatory regression analyses. On one hand, I find that the global economy consists of regions that largely remain distinct from one another. On the other hand, I find that these regions are nevertheless integrated into a cohesive whole by a small number of global cities such as New York, London and Hong Kong with a reach that spans across world regions. These findings not only highlight the role of global cities in economic globalization, but also suggest that economic globalization is experienced in different ways by people in different locations. While cosmopolitan elites in the global cities are connected with each other and possess a global worldview, parochial actors in more peripheral areas possess a narrowly regional worldview.