Derek Hyra

Economic Globalization and the World

Cities Hypothesis: The Global/Local Distinction*

Draft Version
January 11, 2005

Do not cite without author’s permission

Paper Submitted for Presentation at the American Sociological Association’s

100th Annual Meeting, Philadelphia, PA, August 13-16, 2005

Please send correspondence to:

Derek S. Hyra
102 Gainsborough Street, Apt. 107E
Boston, MA 02115
Email: dshyra@uchicago.edu
Phone: (617) 859-5927

Key Words: World Cities, Economic Globalization, Inner-City Development, Ethnography

* I acknowledge Allison Deschamps, David Kirk, Saskia Sassen, Richard Taub and Carmi Schooler, whose
comments and feedback improved this paper. In addition, I thank the Rockefeller Foundation, the Social Science
Research Council’s Program in Applied Economics, the U.S. Department of Housing and Urban Development, the
Center for the Study of Race, Politics and Culture and the Joint Center for Poverty Research for supporting this
research.

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Derek Hyra

Abstract

Economic globalization and its impact on inner city development is a debated topic. A certain
camp of scholars declares processes stemming from the global economy are the primary drivers
of the changing urban geography in world cities. However, another academic faction maintains,
that despite increasing international economic transactions, local city policies remain central to
redeveloping inner city areas. This chapter attempts to bring greater clarity to the global/local
debate. Through exploring the economic revitalization of Harlem in New York City and
Bronzeville in Chicago, historic transitioning African-American neighborhoods, this
investigation highlights the association between downtown growth and adjacent neighborhood
gentrification. As the central business districts (CBD) of NYC and Chicago grow, Harlem and
Bronzeville are green-lined, as banks pour capital into these areas due to increased market
demand. Using the world cities hypothesis as a theoretical guide, I demonstrate that an increased
importance of locating in the CDB, due to the global economy, is related to downtown
centralization and subsequent inner city development. However, I also show that local political
action, such as tax incentives continue to be important. Thus, I argue that global and local forces
interact to produce centralization and neighborhood gentrification. This study supports the
notion that the geography of the inner city is shaped by the complex interplay between abstract
global dynamics and more tangible local political decisions.

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Economic Globalization and the World

Cities Hypothesis: The Global/Local Distinction

One Saturday, I head out to a coffee shop to study. I stop at a brand new Starbucks on

the Near North Side of Chicago. Unlike most Starbucks that are in middle-class communities,

this one is located right across the street from Cabrini Green, an infamous public housing project.

The large windows of the coffee shop face out upon two, 16-story, grayish, concrete public

housing high-rises. As I begin to read, I notice that there are groups of white people sitting

around tables holding strategic business meetings in the coffee shop. They all have PDAs (palm

pilots), laptop computers, and cell phones. One group works on marketing strategies while

another focuses on real estate transactions. They are, in a sense, the workers of the information

age and the global economy. As I turn back around to look at the high-rises, I cannot help but

think that the high-wage service employees of the global economy inside the shop and the lives

of the Cabrini Green residents, mostly low-income African-Americans, are connected. The

influx of the high-wage workers, who probably live in the new $400,000 town homes that are

being constructed next to public housing projects, is related to the plan to remove all the high-

rise projects in Chicago. As I sit in Starbucks and watch the business consultants, the

simultaneous demolition of the public housing and the construction of $400,000 town homes in

their place, I realize the international economy is influencing the redevelopment of poor urban

communities.

In the last several decades, we have witnessed the emergence of an international

economy. This worldwide economy arises out of three interrelated circumstances: the opening

up of international financial markets, an increase in foreign direct investment (DFI), and the

expansion of multinational corporations. In the 1970s many foreign stock markets open

themselves up to international capital. Individuals and institutions, described by Friedman

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(2000) as the “electronic herd,” today literally invest 24 hours a day by placing their money in

international money markets. As electronic transactions occur all over the world, investors make

direct capital investments in foreign countries by financing the development of manufacturing

plants and other production related infrastructure. A United Nations report indicates that the

world’s stock of foreign direct investment skyrocketed from $213 billion to $4.1 trillion between

1972 and 1998 (cited in Sassen [1991] 2001: 38). The DFIs set the stage for the proliferation of

multinational companies. Multinational, U.S. based corporations such as Nike, Wal-Mart,

Disney, General Motors, IBM, Intel and Cisco, manufacture and assemble their products all over

the world in order to achieve the lowest production costs (Friedman 2000). In 1970 there were

approximately 7,000 transnational corporations; today that number reaches nearly 60,000 with

800,000 subsidiaries scattered throughout the world (Ranney 2003: 64). The magnitude of these

investments leads to increased interdependency among national economies. Today, more than

ever, national economies all over the world are linked. For instance, economic events in Mexico

and Argentina or Thailand and Japan can have a direct and rapid effect on the United States,

since U.S. funds and direct investments are spread throughout these countries.1 Forces stemming

from this global economic system affect inner city areas in the United States.

Although there is a distinct lines of scholarship concerning the relationship between

economic globalization and inner city gentrification and development (e.g., Sassen 2000), most

non-academics have a nebulous understanding of economic globalization. For example, Robert

Rubin, the Secretary of Commerce under President Bill Clinton states, “For most Americans, the

global economy remains an abstraction, with little meaning in their daily lives” (Rubin and

Weisberg 2003: 15). While I was investigating the revitalization of Harlem in New York City

1
Some argue that one of the largest single day point drops in the U.S. stock market in October of 1997 is associated
with the East Asian financial crisis (Rubin and Weisberg 2003).

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and Bronzeville in Chicago, historic African-American communities embedded in two global

cities, no one mentions that their neighborhood is changing because of economic globalization.

Further, few posit that the international context is important in their daily experience. Most point

out more tangible and concrete forces such as national legislation, city policies, the

encroachment of chain stores, the development of high priced condos and the influx of the black

middle-class. As I will show, these tangle events and actions relate to globalization.

While international forces can play a large role in determining urban geography, several

authors note the importance of understanding how local actions mediate the development of

global structures and processes (Abu-Lughod 1999; Beauregard 1995; Swyngedouw 1997).

Swyngedouw (1997) expresses the complex, reciprocal nature of “local” and “global” dynamics

for he posits that “local actions shape global money flows, while global processes, in turn, affect

local actions” (137). For example, processes originating at the global level might sway

multinational companies to locate in or around large cities. However, a local municipality may

foster the emergence of global processes by giving tax breaks that allow multinational firms low-

cost access to the central business district (CBD). Further, a city could use local or federal funds

to subsidize the development of high priced condominiums to alleviate the housing demand

created by the movement of multinational companies. These local actions, in turn, might

promote increased land value and facilitate gentrification. Beauregard (1995) states, “To speak

of a relatively autonomous local level impacted by global forces is to skirt a number of important

theoretical considerations” (241). A deeper understanding of the nexus between global and local

forces helps conceptualize and formulate more precise theories about economic globalization and

its connection with emergent conditions in inner city areas.

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This chapter attempts to bring more clarity to the global/local debate. For instance, to

what extent are global dynamics altering the conditions and configurations of urban poverty?

More importantly, how do distinct political contexts mediate broader processes of economic

development stemming from the global or national level? Using the “world cities hypothesis”2

as a theoretical framework, I explore whether global structures and processes directly and/or

indirectly affect community development. I investigate the extent to which global structures and

related local actions concerning centrality in New York City and Chicago result in the

gentrification of Harlem and Bronzeville.

I argue that processes originating at the global level interact with local actions to

stimulate market investment and neighborhood gentrification. Both cities are experiencing

downtown centralization, which I argue is directly tied to the global economy. However, local

mechanisms, such as city housing initiatives and business incentives, help to reduce investment

risk and stimulate capital flows into adjacent communities. The local economic and political

landscapes of Chicago and New York City mediate and reconstitute the forces of globalization

upon Bronzeville and Harlem. Based on these circumstances, I argue that, while global

processes have become more important, so too has the mediating effects of local city structures:

highlighting the paradox that as the world becomes ever more global, local economic and

political circumstances are increasingly central.

Inner Cities and the World Cities Hypothesis

The international economy facilitates two interconnected processes, deindustrialization

and centralization, which impact conditions in inner city areas. Deindustrialization, the process

by which companies close factories in the U.S. and transfer manufacturing to developing

2
Also known as the “global cities thesis.”

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countries where labor costs are cheaper, contributes to the downward spiral experienced by inner

city ghettos in the 1960s, 70s and 80s (Wilson 1996). With less manufacturing jobs in U.S.

cities, unemployment and poverty skyrocket in many African-American urban communities.

Although other forces such as institutional racism (Massey and Denton 1993) and African-

American middle class flight to the suburbs are important factors, deindustrialization is central.

Wilson (1999) states, “Despite African Americans’ strong focus on the effects of racial

discrimination in domestic U.S. employment, their economic fate is inextricably connected with

the structure and function of a much broader, globally influenced modern economy” (45).

In the 1990s the related process of centralization begins to affect certain inner city areas

but in the exact opposite manner. While in the 1960s, 1970s and 1980s, many Northern and

Midwest urban areas lost firms and population, in the 1990s certain U.S. cities, especially ones

considered important to the function of the global economy, experience centralization, defined as

population and employment resurgence. This population influx, particularly in the central

business district (CBD), has consequences for the real estate values in adjacent inner city

neighborhoods. As the CBD prospers and expands, economically abandoned neighborhoods

experience commercial and residential investments, threatening to displace low-income

residents.

The “world cities hypothesis,” as articulated by Saskia Sassen, provides a useful

theoretical lens to investigate global phenomena, particularly the relationships among

deindustrialization, centralization and neighborhood gentrification. An important component of

the world cities hypothesis is the notion that the decentralized manufacturing process is coupled

with “a new geography of centrality” (Sassen [1991] 2001: 123). The world cities hypothesis

claims that a set of “world cities” are the “command and control centers” of the international

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economy.3 The decentralization of manufacturing creates the need for transnational firms to

locate in strategic places to finance, coordinate, and manage their global activities. Large

companies that manufacture and assemble products in different countries, spanning several

continents, need a centralized space for global coordination. Fainstein ([1994] 2001: 33)

explains that when large multinational firms expand and merge globally, lawyers, investment

bankers, insurers and marketing specialists and others are needed to accomplish these deals.

These transactions usually occur within a global city, even if the firms are headquartered in other

areas. Thus, the central business districts of global cities are flooded with high-wage jobs in

fields such as law, advertising, finance, and accounting, which in a post-Fordist era of production

help multinational companies perform global coordination and mergers. In addition, smaller

service-based companies that bid for contracts to perform the outsourced work of the large

transnational firms flock to the central city. Thus, global cities, based on their function as the

managers of the international economy, experience employment and population growth in

service sector occupations (Sassen 1994).

The new centrality, based on command and control functions, has two important

consequences for world cities: rising income inequality and neighborhood gentrification. The

world cities hypothesis predicts that world cities proliferate with high-wage and low-wage

laborers. Since world cities are no longer sites for material production (manufacturing), they are

to become major markets for the production of knowledge or non-material products, such as

business plans, marketing strategies, or financial tools. Sassen (1998) states that world cities

experience “a demand for highly specialized and educated workers alongside a demand for

3
Examples of global or world cities include Tokyo, Frankfurt, Sydney, Singapore, Shanghai, Hong Kong, Bombay,
Sao Paulo, Paris, Zurich, Chicago, London and New York (Friedman 2000). For more on the worldwide geography
of global cities see Beaverstock, Smith and Taylor (2000).

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basically unskilled workers” (146). The low-wage jobs created in supportive businesses, such as

restaurants, hotels, cleaning services, and other occupations, maintain the lifestyle of the high-

wage workers. The simultaneous need for high-wage and low-wage jobs leads to a bifurcated

labor market.

As the CBD expands, neighborhood gentrification occurs due to the increased demand

for high cost housing close to the CBD. Sassen (1999) states that, “central to the development of

this core in these cities [is]…high income commercial and residential gentrification” (6). In

accordance with Sassen’s theory, Fainstein ([1994] 2001), in The City Builders, a comparative

study of real estate development in New York and London, states, “Central business district (CBD)

expansion has increased property values in areas of low-income occupancy, forcing out residents,

raising their living expenses, and breaking up communities” (5). The central business district of

Chicago, as well as NYC, in the 1980s and 1990s, attracts the well-to-do and this relates to the

economic revitalization and gentrification in Bronzeville and Harlem.4

New York and Chicago as Global Cities

By most standards, New York City and Chicago are considered global cities. New York

and Chicago, as Abu-Lughod (1999) declares are urban “nodes…through which a

disproportionate fraction of national and international interactions flow” (400). During the

1980s, the amount of foreign direct investment in the New York/New Jersey area increased

198%, while in Illinois it skyrocketed 245% (see appendix A). With an increasing amount of

foreign direct investment, processes originating from the international economy affected these

metropolitan areas. Specifically, deindustrialization and new forms of centralization, related to

command and control functions, impacted the central business districts of these two major cities.

4
In the context of this paper, gentrification is defined by the movement of high-income people to an area, which
leads to the displacement of low-income individuals (see Smith [1996] 2000).

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While manufacturing fled these metropolitan regions, their central business districts grew with

increasing service sectors employment, middle-class population and high priced real estate.

Starting in the 1980s, New York and Chicago experienced an expansion of their service

sector economy with a simultaneous decline in manufacturing. Table 1 displays the changing

percent of these sectors in New York and Chicago from 1981-1996.

Table 1.

New York and Chicago: Percent Employed in Selected Industries, 1981-1996

1981 1985 1996
Sector New York Chicago New York Chicago New York Chicago
Manufacturing 16.0 28.4 14.0 20.9 8.1 17.6
TCU* 6.5 5.4 6.5 5.8 6.2 7.0
FIRE** 11.5 6.1 12.4 7.4 23.2 10.3
Services 23.3 21.1 26.5 24.6 43.5 37.1
Source: Taken directly from Sassen ([1991] 2001: 156)
* Transportation, communications and utilities
** Finance, Insurance and Real Estate

In New York manufacturing plummeted 50%, while in Chicago it decreased by 40% between

1981 and 1996. As the percent of manufacturing decline, the services and FIRE sectors

increases. The service sector grew from 23% to 44% in New York and 21% to 37% in Chicago.

The financial, insurance and real estate (FIRE) sector in both cities nearly doubled.

Additionally, the absolute number of jobs increased, as the regional economies of these cities

become dominated by service employment. In NYC, 232,000 jobs are added to the economy

between 1980 and 1998 and in Chicago 147,992 are added between 1981 and 1997 (see appendix

A).

As the number of employment opportunities climb, the population, after decades of

decline, begins to increases in these cities, especially within their central business districts. The

population in Chicago and New York City increased 4% and 9% respectively, between 1990 and

2000 (see appendix A). Although these percents might seem small, in comparison to the

population declines in the 1970s, these gains are not insignificant. Consonant with a population

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influx and downtown expansion, Harlem and Bronzeville, which occupy spaces abutting the

edges of their respective CBDs, begin to gentrify in the late 1990s.5

New York as a Global City

Any analysis of world cities ranks New York as a preeminent powerhouse on the global

scene. Today, New York City’s top ten banks maintain approximately 1.2 trillion dollars in

assets (Gladstone and Fainstein 2003: 84). It is home to two major international exchanges, the

New York Stock Exchange (NYSE) and the National Association of Securities Dealers

Automated Quotations stock market (NASDAQ). Additionally, the city and its suburban ring are

home to the corporate headquarters of 65 large firms, including those in the financial and media

sectors (Fainstein [1994] 2001: 35). New York is truly a cosmopolitan city where people from all

over the world come to visit and do business. In the year 2000, of the 18.4 million tourists that

come to NYC, 6.8 million (37%) are international tourists (Gladstone and Fainstein 2003: 81).

In the 1990s, New York City as a whole prospered. In Remaking New York, Sites (2003)

examines the global/local distinction and the gentrification of the Lower East Side. Commenting

on the fiscal health and growth of NYC in the 1990s, he states:

Soaring employment growth in the service sector, fueled by job increases in the business services, was finally
helping to diminish the city’s high unemployment rate to its lowest level since 1980s. Wall Street enjoyed profits of
$16.3 billion in 1999, up more than one third from the record of $12.2 billion registered two years earlier. The
commercial real-estate market was also operating at record levels, driven in part by leasing activity from the high-
flying Internet, news-media, and high technology firms in the business-service sector (63).

5
It is not my intent to test the world cities hypothesis. This is well beyond the scope of this research. There are
many alternative hypotheses to the population increase such as the movement of suburban retirees to the CBD,
which is a domestic, demographic trend rather than a global phenomenon. In addition, many suburban markets
(commercial and residential) are saturated, thus the central city has a comparative advantage. Again this might not
be linked to globalization. However, it does appear that population influx and inner city gentrification is primarily
occurring in U.S. cities that are considered global (i.e., Chicago, New York, Charlotte and Washington, D.C.). This
evidence does add credence to, although by no means does it prove, the global cities hypothesis.

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Sites’ remarks effectively illustrate the relationships among the stock market, the high-tech

industry and rising real estate boom in the city.

In order to fully understand the connection between the centralization process and

neighborhood gentrification, it is important to sketch out the spatial geography of New York

City. The city is comprised of five boroughs: Manhattan, the Bronx, Queens, Brooklyn and

Staten Island. Manhattan is the principal borough surrounded by the other four. It is comprised

of 12 community areas and most of the major commercial and financial activity occurs in mid

and lower Manhattan. While wealthier than the other boroughs, Manhattan does have

concentrated poverty in three areas, the Lower East Side, Hell’s Kitchen (west of mid-town), and

Northern Manhattan. In contrast, the rest of Manhattan contains some of the most expensive real

estate in the world.

While employment prospects increased throughout the city, the centralization process

disproportionately affects Manhattan. In the early 1990s, Manhattan’s population rises, as other

boroughs, such as the Bronx and Brooklyn experience a decrease. According to the 1996 New

York City Housing and Vacancy Survey (HVS), Manhattan experienced the largest percentage

(7.1%) of population influx compared to the other four boroughs (Schill and Scafidi 1999).

Additionally, vacancy rates for both residential and commercial spaces decreased in the 1990s.

According to the 1996 Housing and Vacancy Survey, the vacancy rate of residential, rental units

in Manhattan stay virtually the same, moving from 3.52% to 3.47%, incredible low rates,

between 1993 and 1996, while all other boroughs experienced a slight increase (Schill and

Scafidi 1999). In lower and mid Manhattan commercial space tightens as vacancy rates decline

from 17.6% and 14.5% in 1990 to 4.9% and 5.0% in 2000, respectively (Fainstein [1994] 2001:

43).

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The economic boom, exacerbated by a bullish stock market, leads to a bifurcated labor

market and polarizes the city’s income structure. “During the 1990-97 period…earnings in the

city’s finance, insurance, and real estate (FIRE) industries accounted for 57 percent of all

earnings growth in Manhattan and nearly half of the city’s total increase in earnings,” note

Gladstone and Fainstein (94). The changing employment and compensation structure,

throughout the 1980s and 1990s, results in income polarization; both the number of rich

households and number of poor households grew (Gladstone and Fainstein 2003).

Property values in Manhattan soared and neighborhood gentrification persisted, as the

percentage of service sector employment increased and the gap between the rich and the poor

spread. Median home values skyrocketed in Manhattan, from $500,000 to over $1 million

between 1990 and 2000. In the 1990s, many working class neighborhoods in lower and mid-

Manhattan including the Lower East Side (Mele 2000; Sites 2003), Chelsea and Clinton,

formerly known as Hell’s Kitchen, and Times Square (Sagalyn 2001), turned into high rent

commercial and residential districts. With these low rent neighborhoods developing, affordable

housing in Manhattan becomes increasingly scant; the numbers of low rent areas, as well as the

percent of affordable dwellings decrease (New York City Economic Development Corporation

2004). Sites (2003) comments, “Shifts in the city’s income structure (economic inequality),

coupled with the booming land economy, created growing affordability problems for New York’s

low-income residents” (64).

The redevelopment of neighborhoods below 96th Street has consequences for Harlem.6

The bifurcated labor market, with an increase in the number of affluent households, puts market

6
When using the word Harlem I refer to Central Harlem, which is community district 10 in Manhattan. It is located
towards the northern tip of Manhattan and is bounded by Central Park at 110th Street to the south, 155th Street to the
north, 5th Avenue on the east and Morningside and St. Nicholas Park on the west.

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pressure on the real estate market in Harlem. This new housing demand first hits undervalued

parts of lower and mid Manhattan but it eventually moves uptown to Harlem, one of the last low

rent areas in this borough. David Patterson, a New York State Senator from Harlem, explains:

Well, between October 10th, 1990 and June 8th, 1998, the Dow Jones on the stock market quadrupled from about 2,500 to
over 10,000. In the year of 1999 the NASDAQ increased 81% by itself, there was – by 1994, 1995, big numbers [and]
nobody knew what to do with it. People started investing and their investing turned this neighborhood into a giant
scaffold, which is where we are now.

One expert on economic development in NYC, proclaims, Harlem is gentrifying but “all of

Manhattan is gentrifying.” Harlem’s recent development can only be understood within the

broader context of Manhattan. Two vignettes from my field notes illustrate the new market

pressures uptown.

I attend a real estate event, intended for those interested in buying brownstones in

Harlem. The gathering takes place in a private VIP room of a bar/restaurant. The room has

about seven little tables, decorated with leopard skin print tablecloths and votive candles. On the

walls hang African masks and other artwork. There is a flat screen T.V. on the wall, which at

has on music videos from Black Entertainment Television’s (BET) 106th and Park. The room

has a full bar and catered crab cake appetizers are served. Even though the bar is on 72nd Street

in the Upper West Side, an affluent, homogenous and white area, most of 30 or so people

attending are African-American bankers, lawyers, doctors and insurance agents. I get myself a

beer and sit down at one of the tables. An African-American woman in her mid-forties, sitting

next to me, introduces herself. She explains that she has been looking in Harlem for a while,

almost two years, but has not found anything in her price range. She tells me that she is

currently living near Central Park West in a one-bedroom condo, which she bought for $400,000

on the 18th floor of a high-rise. She says she likes her unit because of the beautiful view of

Central Park, but she is looking for more space. She explains that she hopes to find a

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brownstone with three or four levels for around the same price. I then understand why she has

been looking for so long. In the early 1990s, $400,000 might have afforded a brownstone in

Harlem, but today most rehabilitated brownstones cost much more. In Manhattan’s high priced

real estate market, many two-bedroom condos below 110th Street cost almost nearly $1 million.

As lower, mid and parts of upper Manhattan become affordable only for the very wealthy, the

market price for brownstones in Harlem accelerates.

One afternoon, I am strolling across one of the beautiful brownstone lined blocks, near

Strivers Row in Harlem, and notice a cardboard, “for sale” sign in the window. As I walk by, I

see the door of the building is wide open. I approach the stoop and holler into the house,

“Hello.” A woman, in her early to mid 50s, who has dreadlocks and is wearing a red

handkerchief around her head, comes out. We introduce ourselves and shake hands. She says,

“Are you interested in buying or just looking?” I tell her that I am not interested in buying but

that I live on the block and am curious about the house and would like to see the inside. She

replies, “Sure,” and takes me through the three-story structure. Although most of the

brownstones on the block are rehabilitated, this house is really, as they say, a “shell.” There is

no running water. There are holes in the roof and the stairs look as if they might cave in at any

point and, in fact, I am a little nervous going up them. Most of the original wood has been

removed and the floors are all torn up. Even though the inside of the house is in bad shape, the

front exterior is unblemished and with a lot of work this home will become a stunning residence.

When I finish viewing the dwelling, Anne and I talk on her stoop. I tell her I am studying

at Columbia University. She says, “Are you in urban planning?” I said, “No, sociology.” She

then asks, “Who owns the place you live in?” I respond, “Chet.” She says, “I know Chet. His

place is beautiful, right, with all that cherry wood.” I agree. I ask her how long she’s owned the

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house. Anne obtained it from the city 32 years ago when she was a college student at City

College. She explains that she never really had the money to fix it up. I ask her what she is

selling it for. She quickly replies, “$600,000, that’s how much these things are going for these

days. Things around here have really changed in the last three years.” I ask, “How much would

you have asked for three years ago? She says, “$350,000.” I say, “So the market has almost

doubled in three years,” and she replies, “Yeah, just about.” Although the house is a “shell,” in

need of much repair, brownstones in Harlem now command prices between $600,000 to over $1

million, depending on their condition and location. Three days later the sign is removed; rehab

begins a month later.

Those looking to own a house in Manhattan for less than one million dollars must look to

Harlem. I spoke with one of Harlem’s few black developers about the conditions affecting the

housing market. He mentions that “as properties values are increased south of Harlem, there is

this great desire [for]…the properties up here…because people are paying $2,500 [a month] for a

one bedroom apartment below 110th Street. So they come up here; they can afford [to rent] a

brownstone for $2,500 and you have 4,000 - 5,000 square feet of space. So, it’s just

economically feasible to come here. You know, there’s value.” The former director of the

Empowerment Zone explains, “Harlem is the only place in Manhattan where you [can] get a

brownstone shell for between $300,000 and $400,000. Anywhere else in Manhattan the shell

alone might cost a million.” From these accounts, it is apparent the centralization process, in

Manhattan, below 96th Street is associated with increases in Harlem’s properties.

With soaring property values, gentrification occurs in Central Harlem. A staff member

from one of Harlem’s leading political officials, declares, “We have a big problem of

displacement here. There are many land speculators out there… and very little vacant land so

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there is nowhere to put people who are displaced.” He continues, “The gentrification in Harlem

has two sides to it, one is the small businesses and the other is the resident population.” Terry

Lane, the former head of the Upper Manhattan Empowerment Zone (UMEZ), when asked about

whether recent economic development in Harlem would lead to displacement, bluntly states,

“Displacement is a by-product of development.” Favorable market pressures lead to the

rehabilitation of many of the brownstones. Once improvements are made, the landlords either raise

the price of the rental units or sell the entire building to someone who wants the brownstone as a

single family home. This forces renters who cannot afford the increases to look for housing

elsewhere.7 While living in Harlem and working for one of Harlem’s high raking politicians, I

witness several low-income residents and small businesses being forced out due to mounting

market pressures and rising real estate prices.

In addition to interviewing political and economic elites, I speak with affordable housing

activists. When discussing the current housing circumstance, one of the organizers declares,

“There are many people who are being displaced here with the improvements…rents at $1,000 a

month are not affordable to many people here.” I inquire about where people are going. One

explains some people are heading back down South, while another tells me that others are

moving to parts of the Bronx and over to New Jersey. A similar process of centralization and

neighborhood gentrification affects Chicago.

Chicago as a Global City

The international processes of deindustrilaization (Ranney 2003; Wilson 1996) and

centralization (Sassen [1991] 2001) affect the metropolitan landscape in Chicago. However,

Chicago is not on the same “global scale” as New York City. It has a smaller population and is

7
For more details on displacement in Harlem read Taylor (2002).

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less recognized as an international tourist destination. Despite these differences, there are many

indications that Chicago is a global city. In terms of financial capacity, Chicago has 130

domestic and 70 international banks and two major exchange markets (i.e., the Chicago Board of

Trade [CBOT], the Chicago Mercantile Exchange [MERC]). The CBOT and the MERC are

international exchanges where agriculture and debt futures and options are traded. Although

Chicago is known for regional and domestic interactions, it exports and imports to and from

areas all over the world. For example, according to a report by the Chicago Department of

Development and Planning (1993), the value of exports from Chicago to Japan is $7.6 billion,

while imports are $5.9 billion. In terms of foreign direct investment, it is estimated that there are

over 1,600 foreign-owned enterprises in Illinois, mostly in Chicago. Chicago’s metropolitan

region has approximately 55 “Fortune 500” companies (Feagin 1998). It is also the fourth

largest advertising market in the world with sales of approximately $11.2 billion (Short and Kim

1999). To establish high-speed worldwide connections, in 1991 Chicago substantially expanded

its telecommunications systems with an investment of $1 billion by Ameritech (now SBC).

Chicago, unlike NYC, has no boroughs. It is comprised of 77 community districts that

radiate to the north, south and west around the Loop, Chicago’s central business district (CBD).8

Lake Michigan prevents any eastward expansion. In Chicago, the community areas (i.e., Gold

Coast, Lincoln Park) just north of the Loop, are primarily white and wealthy, while the near west

and south sides are mostly comprised of low-income African-Americans. Chicago’s transition

from an industrial center to a more service oriented high-tech economy had repercussions for its

central business district and the low-income, black neighborhoods just west and south of the

Loop.

8
Chicago’s CBD and Loop are used interchangeable and identify the same area.

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In Chicago during the 1950s, 1960s and 1970s industries fled and the CBD depopulated.

The number of manufacturing jobs in Chicago, as indicated by Squires et al. (1987), fell from

668,000 to 277,000 between 1947 and 1982. This circumstance had a disastrous affect on the

ghettos that surrounded the Loop. Wilson (1996) argues that disappearance of relatively high-

paid, low-skilled manufacturing jobs created conditions leading to the demise of Chicago’s

Black Belt. Wilson shows that employment rates in Bronzeville, a five-minute drive south of the

Loop, drastically declined during this time period; in 1950, 69% of men (>14 years) work, while

in 1990 the percent of teenage and men employed dropped to 37%.

In Chicago, new forms of centralization follow the deindustrialization process. Data

from the 1980s and 1990s provide evidence about the growing importance of Chicago’s CBD

and its impact on the real estate values and population demographics in contiguous south and

west side neighborhoods. Between 1972 and 1982, the number of employment opportunities

increased in the CBD by 7.9%, while the rest of the city’s areas lost 17.4% of their jobs (Squires

et al. 1987). Another indication of the emergence of the CBD is the fact that between 1980 and

1990, the CBD had an 85% increase in population, the highest of all community areas in the city

(Chicago Planning and Development 1997). The CBD’s (i.e., the Loop) median home value

during this time soared from $55,250 to $218,182, nearly a 300% increase. In the 1990s the

Loop’s property values stabilized, however the population influx continued and increased by

40% (see appendix B).

This process of centralization is accompanied with a polarized labor structure. An article

by Evanoff et al. (1997) of the Federal Reserve Bank of Chicago indicates that Chicago’s

financial markets are leading the area’s transformation from a manufacturing hub to a service

center by adding an ample number of financial jobs to the local economy. However, Abu-

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Lughod (1999), who investigated Chicago as a global city, finds evidence that the expanding

financial institutions may not be producing benefits for all residents of the Chicago. She states,

“Becoming a ‘global city’ via the MERC has not contributed general prosperity to the region’s

population; indeed, if anything, it has widened the gap between the ‘haves’ and the ‘have nots’”

(329).

After the reemergence of the Loop in the 1980s, gentrification begins to occur in many

near by low-income, black neighborhoods in the 1990s. For example, after forty years of

population decline, the Near South area, directly south of the Loop, has a nearly 40% increase in

its population between 1990 and 2000. The new population inhabiting both the CBD and the

Near South area is made up of mostly high-wage earners, evidenced by the high cost of the

apartments and new commercial spaces being built. The Near South area, at one point, contained

several single room occupancy (SRO) buildings, which housed the homeless and those of modest

income. However, most of these units have recently been demolished or converted to luxury

condos and rentals. One SRO building, that housed a check-cashing outlet, has been converted

into a luxury rental building with an expensive breakfast spot on the first floor. Across the street,

where another SRO building once stood, now stands a large chain grocery store, a Starbucks and

a dry cleaner. As commercial and residential investments are made in this area, home values

skyrocket. Some of the recently constructed lofts and condos command prices from $500,000 to

$800,000. In 1990, household income in the Near South area was $6,804, well below the

poverty line. By 2000 the household income jumped over 400% to $34,329, a clear sign of the

Loop’s expansion and gentrification.

As the Loop and Near South areas develop, the market pressure mounts in Bronzeville.

During the 1990s, Bronzeville, which is directly south of the Near South area, had large

20
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increases in its home values. Between 1990 and 2000, real estate prices in Douglas and Grand

Boulevard, the two contiguous districts that make up Bronzeville, rose 67% and 192%,

respectively. Today in Bronzeville, it is virtually impossible to miss the construction of luxury

housing developments in the $350,000 to $600,000 range. Many of the vacant lots in the

community have large posted signs illustrating the new developments to be constructed.

Although residential construction has been similar to Harlem, commercial development has yet

to move into Bronzeville.

Today gentrification and displacement are occurring in Bronzeville. As luxury homes are

constructed, large high-rise public housing complexes scattered throughout the community are

coming down and their tenants are being relocated to the more distant south side neighborhoods

and inner suburbs (Fischer 1999; Venkatesh et al. 2004). One director of a community based

organization estimates that 17,000 individuals have already been displaced from the State Street

Corridor, an area where many large public housing high-rises once stood. Displacement is also

occurring to those living in the private housing market; several private rental units have been

converted to luxury condos and tenants that are unable to buy are cleared out. In addition,

landlords that once accepted Section 8 housing vouchers, a housing subsidy for low-income

individuals, now prefer to rent to market rate tenants.

The centralization of the downtown is associated with the increased market demand for

housing in Bronzeville. A program officer from one of the foundations heavily involved in

grantmaking in Bronzeville explains:

Affordability has to be a real issue because the Near North Side is so unaffordable. So even with the Near South
developments, where…[people] come up pretty quickly with $300,000 to $500,000 to buy some little postage stamp
size condominium with a black wrought iron patio, stapled into the side of the building, it still works, it’s still a
draw. I worked in the South Loop when Printers Row and Dearborn Park were all getting built next to the financial
district….So I think it is a natural pattern, although I haven’t studied this, that cities sort of revitalize around the
core…and we are in that kind of pattern, and the Mid-South Side [i.e. Bronzeville] has just been an undiscovered
jewel for lots of people who were looking for new housing. Now, [they] see it and find that the city is really making

21
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it a safer place to live and understand the inevitability of the private market in making this place unaffordable for
those who aren’t like them.

The program officer outlines the relationship between the development of the South Loop, which

contains Dearborn Park and Printers Row, middle-class enclaves, the subsequent development of

the Near South area and then the gentrification process in Bronzeville. He points out that the

areas in the South Loop that initially developed are located directly across from the financial

district. Dearborn Park, Printers Row and now the Near South area are spaces that house the

high-wage service works. Housing these workers near the “inner core” is associated with the

demand for properties in Bronzeville.

A leader of a resident driven association, comments on the rising property values in the

GAP, a middle-class and professional enclave in Bronzeville:

It’s been remarkable what has occurred on a scale when you look at property values and some people, 17 years ago,
paid $15,000 for a house. That same house with nothing done to it, can sell for anywhere up to $250,000. There is
one house that is on…Calumet. That house has been boarded up [for years]; it’s on the market for $360,000.
Someone is going to come in and put another $100,000 [in repairs], so it’s a $400,000 house. Someone [else] just
built a house in the 3400 block of Calumet and the house is…just shy of $500,000, half a million. I remember
talking to one of my neighbors, and we were saying, we’re not going to move out until we can sell our house for half
a million dollars. That was 17 years ago, that’s not far from being off. Would we have ever thought that [our]
houses would have increased in value in that amount of time? No.

As property values in the Loop and in Bronzeville increase, the link between downtown

centralization and the neighborhood gentrification becomes evident to one community leader.

Ron Carter, a former merchant association leader and newspaper editor who grew up in the

Robert Taylor Homes, a public housing project in Bronzeville, asserts:

The Loop can only grow so much without expanding. So Bronzeville, which is really next door to the Loop, is
getting that attention. It’s just, to me, a normal pattern of a city development when you’re close to Loop. You can
look at what contributes to that idea, as the Loop or the surrounding Loop [area] develops, those people of affluent
financial status do not want to be next door to people in public housing. So in order to attract those people of
affluent financial status, you’re going to have to get rid of the public housing or the menace that would not attract
new buyers. So those folks of lower-income had to go.

Carter expresses the notion that development of the Loop and its surrounding neighborhoods is a

“normal pattern.” This is an understandable assertion since most cities attempt to develop their

22
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downtowns. However, Chicago’s Loop and its adjacent south side neighborhoods have been

experiencing population loss and economic decline for so long that the Loop’s reemergence is far

from the norm. Although Cater does not use terms that engender ideas of economic

globalization, clearly he perceives that market forces affecting the downtown are impacting the

redevelopment of Bronzeville.

The data on job growth, population flows, and housing prices in the New York and

Chicago support the predictions of the world cities hypothesis in relation to notions of centrality

and resulting neighborhood gentrification. While the CBD expands, adjacent inner-city

neighborhoods are being redeveloped. Although my evidence does not is distinguishes whether

the new employment opportunities and populations are directly connected to the global

economy, the data strongly support the patterns of increased centrality and its effects on the

gentrification of once economically abandoned urban communities.9 But before concluding that

globalization alone is leading to the revitalization of Harlem and Bronzeville, we must consider

the extent to which the downtown centralization and neighborhood redevelopment is a product of

tangible city action. In following sections, I explore the dynamic interaction between global and

local actions in structuring notions of centrality and neighborhood gentrification.

Global-Local Interaction: Chicago’s TIFs

In Chicago, strong evidence suggests that the actions of the city government and

corporate elites facilitate the processes of centralization and gentrification. For instance, Feagin

(1998) describes a course of action underway in Chicago among its top 100 business elites to

plan “large scale government infrastructure projects to bring the city to the level they require to

9
Alternative hypotheses are the empty nesters returning to the central city, however if this was the case we should
see inner city development in every major city area. Cities that are experiencing the development of the inner core
are ones that are considered to have global structures, such as Washington, D.C., Charlotte and Boston, as well as
New York City and Chicago. We are not seeing cities such as Kansas City or Detroit develop as much.

23
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do this global business profitably” (15). For example, the city invests huge sums of public

money to improve the downtown area and its surrounding communities through the use of Tax

Increment Financing (TIF), a local economic development tool (see Schwartz, Leavy and Nolan

1999). TIF is a state statute that allows municipalities to direct local taxes to support public and

private developments, usually by providing funding for land clearance (for detailed description

of TIF see Paetsch and Dahlstrom 1990; Ranney 2003).

The implementation of TIF is an example of the nexus between global and local forces

since local decisions channel public funds to develop critical, global infrastructure. Schwartz et

al. (1999), in their comprehensive review of Chicago’s TIF programs, indicate that much of the

new construction in the CBD and Near South area is financed through city bonds issued by local

TIF authorities. In the city of Chicago, TIFs are the mayor’s primary economic development

tool. The city has 69 TIF districts that encompass $2.6 billion worth of property (Schwartz,

Leavy and Nolan 1999).10 TIF funds have been given to developers to improve the Loop’s

entertainment district and for the construction of luxury high-rise apartments in the Near South

area.11 As indicted by Schwartz et al. (1999), the value of the TIF subsidy in the CBD is $143

million, while the private developers who receive these funds invest $931 million. In the Near

South area, the value of the subsidy to developers is $19 million, while private investment is

$118 million. There are at least six TIF districts, which support business and housing

construction, in Bronzeville.12

10
As of April 2002 the city had 119 TIFs that were approved by City Council (Source City of Chicago Department
of Planning and Development).
11
Mayor Daley lives in one of these lavish housing developments in the Near South area.
12
The Chicago Housing Authority is using TIFs funds to subsidize the construction of mixed-income housing
developments that are to replace the demolished public housing high-rises (see CHA Board of Directors’ meeting
minutes from Fed 18, and May 20, 2003).

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Derek Hyra

TIFs exacerbate the process of gentrification because they are based on increasing

property taxes. In a TIF district, property values are assessed prior to development. This

measure is called the “tax increment base value.” Then an evaluation predicts what the increase

(i.e., increment) in the tax base would be if particular development projects are to occur in the

area. This predicted tax value is called the “tax increment.” Based on the prediction of the

increment, bonds are usually issued to subsidize the cost associated with development. The

difference between the tax increment base value and the tax increment is the “captured assessed

value” and is used to pay back the bonds. Therefore, a successful TIF raises property values. As

is often the case when property values increase, residents are forced to pay higher property taxes

or increased rents. Schwartz et al. (1999) exclaim that in Chicago, “The problem of

displacement cuts to the heart of who wins and who loses as a result of the TIF program” (21).

Ron Carter comments on the TIF program and displacement in Bronzeville. He explains

the TIF is just “another funding project that’s being used against the people.” He declares, “I

don’t think TIFs are all that needed, I think they’re just more of how to control the economics of

a community, opposed to really benefiting it.” He acknowledges that TIFs are being used to

subsidize housing, which helps to “stabilize the community” but asserts that homeownership

“don’t produce no real economic base.” According to Carter, a real economic base produces job

creation. He comments that new housing makes the community “look good” and beautifies it,

but it does little to stimulate “business development.” Carter recognizes that bringing in higher

income people might eventually attract commercial developments that can hire low-income

residents but he questions whether this population will be in the community long enough to reap

those benefits. He declares, “Again, it’s going back to all of these programs and funds that are

25
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supposed to benefit the people that live in the community...How’s it going to benefit…people

when they don’t live there anymore?”

Local political decisions are deploying public funds to entice private capital to the inner

core of the city. These investments promote features of centrality, seen as critical to creating a

global city, while at the same time assisting gentrification. The city’s actions, through the

implementation of the TIF program, facilitate the development of the CBD, the Near South area

and Bronzeville. But it would be foolish to claim that local policy alone brought investments

into these areas, since businesses and housing developers rarely relocate, expand or build based

primarily on the availability of public subsidies (Riposa 1996). A plausible argument is that

favorable investment conditions are created by both an increased importance of locating in the

CBD and local political actions.

Global-Local Interaction: BIDs and New York City’s Housing Plan

New York City uses an equivalent local economic tool called the Business Improvement

District (BID). There are 46 active BIDs in New York City. BIDs are quasi-governmental

associations that require a levy from for-profit businesses in a designated district (see National

Council for Urban Economic Development 1988). BIDs can also function much like TIF districts,

in that they are granted, by the state, the authority to issue bonds and thus, tend to increase property

values. Some BIDs use the money to hire security, while others employ funds to increase garbage

collection services or to make improvements in lighting fixtures or sidewalks. All enhancements

are paid for by area establishments as a way to promote a business friendly environment. Times

Square is an example of an extremely successful BID that transformed the area from its seedy days

to its recent “disneyfication.” Many sections of lower, mid and upper Manhattan, including 125th

26
Derek Hyra

Street in Harlem, have their own BID. The BIDs facilitate centralization in Manhattan by making

certain districts more attractive to investors and increasing property values.

BIDs harness private interests to improve certain areas, however ample public resources also

contribute to the centralization process in Manhattan. Throughout Manhattan, but particularly in

Central Harlem, the city’s housing policy plays an important role. In the late 1970s, the city of New

York became the default manager of nearly 40,000 occupied units and 60,000 vacant apartments

(see Branconi 1999). During this time, numerous landlords abandoned their buildings and refused

to pay property taxes. The city repossessed these properties, and either boarded them up or turned

them into housing stock for homeless and low-income individuals. These properties are known as

in-rem, the legal term for tax delinquent properties. Starting with the Koch administration in the

mid-1980s and persisting through the Dinkins and Giuliani administrations, there is a push to return

these buildings back to the private market. The push to empty the in-rem housing stock is part of

the city’s comprehensive Ten-Year Housing Plan (Schill, Ellen, Schwartz and Voicu 2002). The

rationale is to have developers rehabilitate these buildings, and sell them to middle and upper

income individuals, thus generating tax revenues for the city.

The Department of Housing Preservation and Development (HPD) is implementing three

strategies to rid the city of its management and ownership duties of the in rem housing stock.13 It

turns the management and ownership of the buildings over to the tenants. Under the HPD’s

Division of Alternative Management, the agency attempts to promote homeownership through its

Tenant Interim Lease (TIL) program. By 1996, 600 buildings have been sold to tenant co-

operatives, with mixed success. Some remained viable but many go into fiscal deficits. The

second approach is to sell the housing stock for a minimal price, usually a dollar, to non-profit

13
Supported through the Community Development Block Grant from HUD (see Braconi 1999: 109).

27
Derek Hyra

organizations, with the hope that they rehabilitate the buildings and them out to moderate-income

tenants. As of 1996, 23% of the dispositions are given to non-profits. The last strategy, and

most controversial, is the Neighborhood Entrepreneurial Program (NEP), which turns the

buildings over to private, for-profit developers. After his election in 1993, Mayor Giuliani

appoints a new Housing Commissioner, Deborah Wright, to implement this program. To the

surprise of many, the initiative focuses on placing the buildings in the hands of minority-owned,

private developers. The move partly silences advocacy groups because of the goal to improve

minority businesses, but it does little to secure affordable housing, since few income restrictions

are placed on the units. Many of the newly redeveloped high priced brownstones and condos in

Harlem are financed through the city’s Neighborhood Entrepreneurial Program.

During the 1980s, the city controls approximately 65% of the residential properties in

Central Harlem (Wylde 1999). Since the city owns such a large proportion of Harlem properties

any HPD action greatly accelerates the development of the community. HPD invests over $400

million in the greater Harlem area from 1994 to 2000, resulting in a 68% reduction of the number

of city-owned vacant buildings (New York City Department of Housing Preservation and

Development 2002). The city’s investments are noticed by the private sector, and major banks

begin financing the rehabilitation and development of newly constructed luxury condos and town

homes. The once redlined areas of Harlem essentially become green-lined, as every major bank,

including J.P Morgan/Chase, Fleet and Citibank, invest in residential and commercial

construction. In fact, one bank alone invests approximately $400 million in Harlem between

1999 and 2004.

The head of the community real estate division of one of the large commercial banks,

during a walk through of Harlem with me, describes the community as, “an under served

28
Derek Hyra

market,” compared to areas below 96th Street. He declares the housing “demand outweighs the

supply.” He then mentions something quite important. He says that in 1996 and 1997 the city

put numerous subsidies into Harlem to “reduce the risk of investments.” He speaks about how

the city provided funds for land clearance and that the bank made an agreement with the city

that, if homeownership fails, the city would turn the properties back into rentals and buy the

mortgages from the bank. He indicates that the initial public subsidies facilitated the bank’s

decision to invest in Harlem. He then explains how today fewer public subsidies are available

and that the bank carries more of the risk. Therefore, the bank now supports the construction of

more market rate and luxury housing in Harlem, which provides a greater return on their

investments.

The policy decision to rebuild the city’s abandoned housing stock, and the reaction of

banks to partner with the city and real estate developers, are local actions. However, the process

of centralization stemming from economic globalization, I argue, facilitates this circumstance.

Banks do not finance housing construction or rehabilitation unless there is strong evidence that

the units will sell. I posit that the rise of real estate prices in lower and mid-Manhattan

encourages greater market demand in Harlem.14 This new housing demand, created by an

interaction between global and local forces, helps to reduce investment risk in Harlem but at the

same time increases the threat of displacement.

Conclusion

The intersection of global and local forces is changing the conditions of the inner core of

certain urban areas. First, patterns of centralization, linked with the global economy, are altering

the geography of marginal communities. Initial growth in Chicago’s and New York City’s

14
Although I am arguing that economic globalization and investment patterns of the city are associated with the
market demand for housing in Harlem, I am well aware that a lower crime rate is also contributing.

29
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CBDs has led to the subsequent gentrification of adjacent low rent neighborhoods. In

conjunction with the global economy, my evidence suggests that cities’ actions, the use of

various public subsidies, facilitate the development of the CBDs. My argument is that an

increased importance of locating in the CBD, due to the global economy, and local political

actions are interacting to produce centralization and neighborhood gentrification. Through

exploring the altering conditions of Bronzeville and Harlem, we witness the complex nature of

the global/local relationship. The importance of locating in the CBD and local political action

(the subsidies), effect private capital flows that impact the conditions and configurations of

poverty. My line of reasoning coincides with Sites (2003), who posits that “globalist approaches

can overemphasize the unmediated impact of the international economy on cities, [while] localist

frameworks often fail to address the dynamic interplay between [broader forces]…and local

politics” (67). This study highlights the notion that centralization and resulting gentrification,

although influenced by a global dynamic, is largely mediated by local political action.

One major problem with the evidence presented is the possibility that centralization is due to

national instead of global forces. In the subsequent chapter, I deal with urban national policy.

However, there is another argument that must be addressed. For instance, there are accounts of

empty nesters from the suburbs that retire or buy a second home in the city in order to experience

the amenities that a city offers. 15 In response to this argument, I point out that if this is the case, we

should witness an increase of population and inner city gentrification in most major cities across the

United States. However, the redevelopment of inner city African-American neighborhoods is only

occurring in cities that are considered global cities, including Charlotte, Washington, D.C. and Los

15
Chicago Journal: April 15, 2004.

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Angeles. The development of the inner core is not happening in cities that lack the properties of a

global city, such as St. Louis, Kansas City and Detroit.

The pattern of centralization and subsequent neighborhood gentrification illustrated in

this chapter has drastic repercussions for globalization and urban development theory. Some

argue that globalization is a supra-national force, affecting countries and cities. However, this

pattern of central city expansion and community development is by no means a “supra-national”

process. With the cases of Bronzeville and Harlem, we witness that a combination of global

forces and tangible city actions structure their development. The high-wage workers of the

global economy need to be housed and they are buying homes, subsidized with public monies, in

and near the central business districts. Although population increase is associated with the role

of New York City and Chicago as command and control centers, specific policy tools, such as

the TIFs, BIDs and housing plans, also relate to the centralization process and resulting

neighborhood gentrification. The redevelopment of Harlem and Bronzeville is a product of the

interaction between an abstract external force and concrete city actions.

The notion of natural urban development goes back to the ideas of Park and Burgess ([1925]

1967) and the early “Chicago School” of sociology. A substantial amount of research on urban

community change theory promoted by the Chicago School during the first half of the 20th Century

explored the roles of ecological or natural forces within the metropolitan space. According to

traditional ecological theory, urban neighborhoods are an inevitable by-product of natural processes

by which residents select neighborhoods based on their individual preferences. Park argued that

residential selection patterns neighborhood formation leading to “a mosaic of little worlds,” within

the city. According to the ecological theory, resident selection is the key to understanding

neighborhood conditions. I argue the new functions of Chicago and New York, as command and

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control centers, lead to an increased preference for businesses and workers to locate in central

business district. However, this development is not one sided: a dialectical process shapes

business and resident preferences. Tangible city action facilitates the centralization and

neighborhood gentrification process. Just as the suburbs became preferable in the 1950s due to

large government subsidies (Jackson 1987), certain central cities are becoming desirable again

based on municipal action.

This study is relevant beyond New York City and Chicago and the communities of

Harlem and Bronzville. For instance, centralization and neighborhood gentrification is occuring

in other major cities, such as London (see Fainstein [1994] 2001). The global/local framework

outlined in this chapter provides a useful paradigm to explore community transformation in

various cities connected to the global economy. Further, this study helps explain emerging

patterns of metropolitan poverty. In NYC and Chicago, low-income people inhabit the inner

city, however, now these areas are developing and displaced residents are moving to

neighborhoods farther from the central business districts. Thus, New York and Chicago are

becoming more like Western European cities in that poverty pockets are now burgeoning on the

city’s outskirts and in certain declining inner suburbs (Fischer 1999; Venkatesh et al. 2004).

This study highlights important dynamics leading to relocation of poverty in and beyond these

cities.

Processes engendered by economic globalization are mediated through local action. Even

though global dynamics affect the city, metropolitan policies facilitate centralization and

neighborhood development. Sites (2003) argues that local “government power…far from simply

eroding in the response to globalization, plays a powerful and often destructive role in facilitating a

distinctive, ‘neoliberal’ path of economic development” (xii). The redevelopment of Harlem and

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Bronzeville illustrates the interaction of forces originating from the global and local level. In certain

cities, centralization occurs as a consequence of a decentralized production process worldwide. As

the central business districts in global cities expand, development moves to untapped markets and

neighborhood gentrification results. However, the destructive, yet creative, forces leading to the

development of inner city neighborhoods are as much determined by the deployment of city

resources. Thus, in an era of increased economic globalization, city politics remain central.

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Appendix A

Table 1.
Foreign direct investments (in millions of gross book value dollars)
in the United States and in Illinois and New York/New Jersey
Place 1981 1988 % increase
1981-1988
NY/NJ 14,444 43,092 198%
Illinois 5,646 19,491 245%
U.S. total 178,003 385,734 117%
Source: Abu-Lughod (1999): p 409.

Table 2.
Population Flows in New York and Chicago*
% Change
Place 1980 1990 2000 1990-2000
NYC** 7,072,000 7,323,000 8,008,000 9%
Manhattan** 1,428,000 1,456,000 1,537,000 6%
C. Harlem 105,641 99,519 107,109 8%

Chicago 3,005,072 2,783,726 2,896,016 4%

Loop 6,462 11,954 16,388 37%
Bronzeville 89,441 66,549 54,475 -18%
*Source: Census data.
**Source: Fainstein ([1994] 2001): p 232.

Table 3.
Changing employment in New York and Chicago
Place 1980 1990 1998 Total jobs
added

NYC* 3,302,000 3,595,000 3,534,000 232,000

1981 1987 1997

Chicago** 2,247,119 2,213,434 2,395,111 147,992

1981-1987 1987-1993 1993-1996

U.S.** 85,483,800 94,789,444 102,198,864 1,6715,064

*Source: Fainstein [1994] 2001: p. 233.
** Source: Sassen [1991] 2001: p. 151 and 131.

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Appendix B

Chicago

Table 1. Changing Median Home Values in Selected Communities

Community 1980 1990 2000 % Change
area 1990-2000
Loop $55,250 $218,182 $202,476 -7%
Near South $32,500 $283,333 $335,101 18%
Douglas $25,900 $124,632 $208,449 67%
G.B. $23,400 $61,601 $179,849 192%
Chicago Ave. $47,200 $78,700 $132,400 68%
Source: Census data.

Table 2. Changing Median Household Income

Community 1980 1990 2000 % Change
area 1990-2000
Loop $19,596 $48,331 $65,128 35%
Near South $10,197 $6,804 $34,329 405%
Douglas $14,536 $12,993 $24,835 91%
G.B. $9,092 $7,146 $14,178 98%
Chicago Ave. $25,644 $26,301 $38,625 47%
Source: Census data.

Table 3. Changing Population

Community 1980 1990 2000 % Change
area 1990-2000
Loop 6,462 11,954 16,388 40%
Near South 7,243 6,828 9,509 39%
Douglas 35,700 30,652 26,470 -14%
G.B. 53,741 35,897 28,006 -22%
Chicago % - - - 4%
Source: Census data.

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New York City

Table 4. Changing Median Home Values in Selected Manhattan Districts

Community 1980* 1990 2000 % Change
area 1990-2000
3 Lower East $13,449 $268,750 $192,000 -27%
Side/Chinatown
4 Chelsea, $78,733 $500,001 $1,000,000+ 100%
Clinton/Hell’s
Kitchen
5 Mid-Town $170,710 $500,001 $875,000 75%
10 C. Harlem $53,873 $199,025 $250,000 26%
Manhattan Ave. $146,731 $487,300 $1,00,000+ 105%
NYC Ave. $82,894 $189,600 $211,900 12%
Source: Census data.
*In 1990 constant dollars.

Table 5. Changing Median Household Income

Community 1980* 1990 2000 % Change
area 1990-2000
3 Lower East $14,707 $20,007 $28,745 44%
Side/Chinatown
4 Chelsea, $20,442 $30,450 $50,580 66%
Clinton, Hell’s
Kitchen
5 Mid-Town $27,213 $42,050 $69,075 64%
10 C. Harlem $10,872 $13,252 $19,920 50%
Manhattan Ave. $23,305 $32,262 $47,030 46%
NYC Ave. $23,221 $29,823 $41,887 40%
Source: Census data.
* Adjusted to 1989 dollars.

Table 6. Changing Population

Community 1980 1990 2000 % Change
area 1990-2000
3 Lower East 154,848 161,617 164,407 2%
Side/Chinatown
4 Chelsea, 82,164 84,431 87,479 4%
Clinton, Hell’s
Kitchen
5 Mid-Town 39,544 43,507 44,028 1%
10 C. Harlem 105,641 99,519 107,109 8%
Source: Census data.

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