The response of urban economy to North America Free Trade Agreement: planning for competitiveness

Abstract

For log time cities have been economically limited by national borders; the liberalization of trade, which is part of globalization, has broadened the potential economic space of the cities. Besides, technologic change has also led to the increase of links between cities.

This way, for international economy, the cities that were ignored have started to increasingly appear in the global economy. For instance, one can mention the internationalization of urban economies.

The restructuring supposes the change from “large industrial districts” to outsourcing and globalized production; thus, economies of agglomeration have lost importance. Industrial enterprises can now be disassembled, while the economic activities are more mobile and can be relocated more easily than in the past.

The traditional factors of localization (resources, production factors, proximity to transport, and agglomeration) are no longer decisive; nowadays policies are increasingly decisive as locational factors.

In this context, the article analyzes three hypotheses. The first states that, as an effect of liberalization and technologic change, cities have become first-order economic actors, at the time that Nation-states have withdrawn. The second hypothesis is that cities can design strategic responses to challenges and opportunities. Finally, we state that cities can set policies into motion and make investments that allow them to develop their potential.

In both cases, the cities require institutional changes and investments; both of them are strategies in competitiveness. However, a third option is also possible: cooperation between cities.