The wealth and power nexus: will megacities revolutionize global governance?

By Dr. Peter Engelke

The rapid growth of cities in Asia, Africa, and elsewhere has shifted the world’s center of wealth, altered global production and consumption patterns, and increased pressures on natural resources. Moreover, the dramatic increase in the number of megacities—the colossal heavyweights of the urban world—has inspired talk of a revolution in how the world is governed. Megacities, so the argument goes, are the locus of innovation, of wealth formation, of material production and consumption, and not least are home to enormous numbers of human beings. These conditions have prompted many to assert, as has New York’s mayor Michael Bloomberg, that cities cannot wait for national leadership on economic policy. Rather, megacities like New York have to attract foreign investment, intellectual talent, and other resources in a competitive global system consisting mainly of other cities. The writer Parag Khanna asserts that megacities increasingly bypass national governance structures in preference for their own ad hoc, city-to-city alliances. The new realities of globalization require that governance shift from nations to cities, from control of territory to control of transnational flows of capital, goods, and people. No megacity, Khanna argues, “is waiting for permission from Washington to make deals.”

These arguments speak to an underlying impression that the Westphalian governance system (wherein the world is run by sovereign nation-states) has been eroding since at least the end of the Cold War. As Khanna indicates, other actors such as megacities have emerged within the international system; together, they possess enough clout to challenge existing global political structures. Indeed, the post-Cold War world has been characterized by economic and ecological flows of money, goods, services, people, matter, energy, and pollutants within complex and multilayered actor networks. Traditional interstate competition, especially military rivalry among great powers within clearly delineated global hierarchies, has faded but not disappeared. Technologically-driven globalization processes, combined with non-traditional security threats (e.g., asymmetric warfare and terrorism, climate change, and resource scarcity), are likely to remain foundational characteristics of the twenty-first century world.

A fair number of theorists and practitioners have placed much hope in the ability of megacities to forge new global governance structures for an uncertain age, one in which nation-states appear to be unable or unwilling to take on these multiple challenges. Benjamin Barber’s forthcoming book, If Mayors Ruled the World, rests on Barber’s observation that cities have an “inherent disposition to cooperate,” from which it follows that cities are in a strong position to create democratic, bottom-up, and cooperative global governance structures.

One can view such processes at work in the context of global environmental governance. For some time, local authorities have been leading coordinated responses to environmental problems, in particular to climate change.  Mayors and other local leaders recognize that their cities generate a large fraction of global GHG emissions and, simultaneously, that they are highly vulnerable to climate change disruptions (storm surges, drought, heat waves, etc.). Yet, cities largely have been excluded from interstate negotiations about climate change—the Kyoto Protocol, for instance, gave no role to cities, nor did the Kyoto negotiation process itself. Until 2005, city leaders had to hold parallel summits during the UNFCCC negotiating sessions; after 2005, they were included as observers. Given the inability of nation-states to forge binding climate agreements resulting in deep emissions cuts, local governments have worked to occupy this policy space through forging their own cooperative structures. Dense global networks of such structures now exist, wherein local governments work with private and non-profit actors such as ICLEI (International Council for Local Environmental Initiatives) to share information, shape norms and expectations, and set GHG reduction standards.

Megacities have been at the forefront of these efforts. Two well-known examples are the C40 Cities network and the Tokyo emissions trading scheme (ETS), both of which show that megacities can create or influence global norms, processes, and governance structures. Founded in 2005 under the leadership of London’s then-mayor, Ken Livingstone, C40 is an example of how large cities can create effective governance structures to combat global problems. Led by large-city mayors (New York’s Bloomberg is the current chair), C40 is now among the highest-profile actors in the global debate about climate change. Its activities include annual summits, partnerships with international organizations such as the World Bank, and the development of tools for measuring and reporting GHGs. Tokyo’s ETS, in contrast, illustrates how a single megacity’s innovative efforts can shape events elsewhere, including at national and international scales. Over the past decade, Tokyo’s metropolitan government has created the first urban CO2 emissions cap and trade program. Since implementation, Tokyo has produced a practical, workable emissions program that has reduced energy consumption faster than designers of the scheme anticipated. Conversely, Japan’s national government has been unable to create a mandatory trading scheme of its own, owing to political obstacles (a proposal for a Japanese ETS, based on Tokyo’s scheme, was shelved in 2010 on the familiar grounds that it would make Japanese exports less competitive). For the time being, Tokyo’s ETS is Japan’s carbon-reduction policy innovation. Because Tokyo is the world’s largest megacity and one of the richest, its experiment has set an important precedent for others to emulate. There is little reason why New York or Shanghai or Buenos Aires or any other megacity would not be interested in copying Tokyo’s model, even if such adoption meant contradicting national GHG emissions policies.

Before concluding, one caveat deserves highlighting. While this essay focuses on how megacities can leverage their strengths for purposes of global governance, the world’s megacities are hardly uniform. Tokyo and London are not the same as Lagos and Cairo. The former have greater aggregate and per-capita wealth, technological and industrial might, infrastructural assets, and access to foreign direct investment, hence their citizens on average enjoy better health, longevity, and well-being. This short essay is not meant to paper over the real problems facing the world’s fastest-growing, majority-world megacities, problems that other essayists are addressing during this week’s Global Trends 2030 blog series. In the simplest terms, the world’s megacities possess different capabilities for projecting power onto the global stage, capabilities that are shaped but not determined by the above factors. Yet at the same time, we would be remiss if we failed to recognize that even the poorest megacities have much capacity for altering their development trajectories through self-governance. (Lagos, for instance, long has had a reputation for being one of the world’s most dangerous and polluted megacities, yet in recent years local leadership has received plaudits for innovative yet practical reforms across multiple sectors. Lagos’s story is regarded as an example of how the devolution of power from national to local governments can benefit majority-world megacities.)

To answer the question of whether megacities will revolutionize global governance, in my opinion the answer is a strong “it depends on what we mean by revolution.” In my opinion, it is premature to declare that the world is heading toward a governance system that is dominated by megacities as opposed to one dominated by nation-states. Historically, large cities and powerful nation-states have coexisted, with the former often being sited within the latter. Indeed, after the onset of the Industrial Revolution, rapid urbanization proceeded in tandem with nation building rather than in spite of it. During the nineteenth and twentieth centuries, London, Beijing, Moscow, Delhi, Paris, Berlin, and Tokyo all emerged as large, powerful capitals of large, powerful nation-states, suggesting that megacity growth and national development were more synergistic than competitive processes. As has been true of the post-Cold War era, the decades on either side of 1900 were also characterized by much enthusiasm for globalization and its liberating effects, yet the nation-state and its dominance of the global system hardly withered away in the century that followed. The leading cities of fin-de-siècle Europe—Vienna, Berlin, Paris, London—might have been the centers of commerce, culture, and technical innovation, but they did not displace nation-building, national rivalry, or great power warfare.

Having said this, a governance revolution is still underway, albeit one that is likely to stop short of replacing the Westphalian model. As the emerging climate regime shows, megacities are likely to build structures that parallel, overlap with, and inform interstate forms of global governance. These structures will be characterized by cooperative, voluntary, and non-hierarchical arrangements. Megacities will aim to fill in global governance gaps and otherwise provide leadership on politically difficult issues such as climate change. For their part, states would be wise to treat megacity development as integral to their own objectives. Not only are megacities not going anywhere, they will be increasingly important for securing global prosperity and stability.


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Dr. Peter Engelke is a Senior Fellow with the Atlantic Council of the United States. 

By Howard Passell Posted in GT2030

One comment on “The wealth and power nexus: will megacities revolutionize global governance?

  1. Pingback: “Global Trends”- CIA: Asia will as before be the center of economich development – Europa and US will losse their postions. Middleclass will be soon most important globally, but consume more and more, which will be a big problem for envi

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