Dawn of the global cities

The places have an economic, cultural and social significance that goes beyond their size

WE ARE going to be hearing a lot more about Sydney, Australia's largest city, in the coming months. Just over a year from now it will host the Olympics, an event that is guaranteed to give it wall-to-wall coverage in the world's media. And it won't just be the sport that gets into the press and on to television. Expect a deluge of reports about life down under as an army of journalists test-drives the best restaurants. Expect, too, much comment about the way in which Sydney is propelling itself into the premier league of "world cities".

The emergence of these world cities is a fascinating phenomenon of our times: cities that have an economic, cultural and social significance that goes beyond their domestic size. It is one of the features of the present wave of globalisation that perhaps a dozen cities should quite suddenly start to outpace the domestic economies of the countries in which they happen to exist.

London is a prime example, with an economy quite different from that of the UK and an importance that goes far beyond the country in which it is located. But there are others; the list is subjective, but among the big cities New York clearly belongs there, while Chicago, although a wonderful place, does not; Paris is hanging on, while Tokyo is slipping off the list. Hong Kong was on, but may not be for much longer, while Shanghai may join. It is not just a question of size; no one would claim that Mexico City carries global clout, whereas Barcelona could make a good pitch that it does. It is more a question of whether the new baronies of global power - financial institutions, multinational companies, international consultancies - have chosen to locate there. That brings both money and global recognition. These attract cultural and other services, which in turn make the city yet more attractive to internationally minded companies and people around the world.

Enter Sydney and the Olympics. There is a Sydney story, and a more general Australian one. The Sydney story is that it has, over the last 15 or so years, pulled away from its arch rival, Melbourne. Population has grown rapidly, to about 3.7 million, several big domestic companies have transferred their headquarters here, most foreign companies have chosen to locate in Sydney, and the city has seen a great cultural renaissance. This has been driven not just by the physical investment in the arts - the famed Opera House is now more than 25 years old - but more by the waves of immigrants, many from Asia, who have created a much more cosmopolitan ambience.

The two main weaknesses have been creaking infrastructure and lack of international awareness. The property people here, CB Richard Ellis, reckon that the city is now getting the equivalent of 15 years' normal investment in only four years: rail links to the airport and to the Olympic stadium, new roads, new pavements in the city centre, and so on.

As far as awareness is concerned, the key market is the US. In Britain we know about Australia; we may well have relatives there, and our children watch Aussie soap operas on the box. Americans don't. But in commercial terms, as tourists or business visitors they are a much more important market than we are. The Olympics last only two weeks, but they are a great opportunity to sell Australia to the US.

The main thing, then, is to learn the lessons of past Olympic cities and not make the same mistakes. These include loading the municipality with a pile of debt that then has to be repaid for a generation (Montreal), failing to get the facilities ready on time (Atlanta), and simply not having anything in the city that is attractive to the rest of the world (Seoul).

It is difficult, a year ahead, to make a judgement on how well Sydney will perform, but at least the stadium is finished - it hosted a big rugby match earlier this week, and I am told that things went fine. Funding has been by a sensible mix of money from both the public and the private sectors. Public and private enterprise have also combined to try to draw in yet more foreign investment, using the Olympics as a sort of calling- card to get Sydney into discussions with international businesses. If everything is, so to speak, all right on the night, Sydney will certainly have a "world city" story to sell.

The city, and Australia generally, benefit from two further global trends: the rising importance of the English language, and the declining cost of communications.

You can see Australia in two ways. On the one hand it is less than 1.5 per cent of the world economy, and is only the fourth largest English- speaking economy. On the other hand it is the largest English-speaking economy (and Sydney is the largest English-speaking city) in the East Asian time zone. That time zone accounts for nearly 30 per cent of world output. The people promoting Australia to the business community, Investment 2000, quite rightly stress the multilingual and multicultural characteristics of Australia, but the fact that Australians speak English is a powerful attraction. If you want to run a global call centre you need people who can speak lots of languages, but you also need those who can speak good English. Put it this way: you are not gong to site an international call centre in Tokyo, are you?

The growth of English over the last decade as the global standard for commercial communication is reinforced by the communications revolution. Australia, for centuries the most isolated large community of human beings on Earth, is now the click of a mouse away. As anyone who uses the Internet knows, it often comes as a bit of a surprise when the suffix "au" comes up at the end of the address. You didn't know the info came from down there.

Couple the rapidly falling cost of telecommunications with the slower but still significant falls in the cost of air transport, and Australia is suddenly no longer on the fringe of the world economy. There is no such thing as a fringe. Australians are pretty highly wired, in the sense that Internet use is higher than, for example, it is in the UK. But I don't think even most Australians have come to appreciate the way in which distance is disappearing, or the opportunities that this creates for their country.

At a retail level, however, the message is getting home. An example: a businessman I spoke with saw a picture he was interested in buying. A few clicks of the mouse, and he had located and ordered it from the artist (who happened to be in the north of England). It arrived three days later. Now turn that round. Any artist in Australia could also deliver a picture anywhere in the world within two or three days. All that is needed is marketing.

I suppose you should see the Olympics, or indeed any other major world sporting event, such as the World Cup, as a gigantic marketing exercise. It is a way of getting a message across to people through the cacophony of communications that bombard us all. It is a specific marketing exercise for the sponsors, which is why they shell out so much, but it is also a general marketing exercise for a country and a city.

For reasons that have nothing to do with the Olympics, Australia is poised to become more important in the world economy. Its location, which has tended to be a disadvantage, is suddenly becoming an advantage. As for Sydney, it has most of the elements that could propel it from being an important and attractive regional city - the largest city in a medium- size country - to world city status. It has the physical attributes of a brilliant location, swish buildings and a mass of multicultural human capital. And the games come at just the right time.

All cities that host the Olympics try to hype themselves. Three years on, that hype can look absurd; two weeks do not make any place, however prosperous and interesting, materially different. But if a place is suddenly outpacing its rivals anyway, then maybe something special and lasting does result. Clearly there is a lot to play for - and not just at the games themselves.