Information without frontiers: Financial services,EC regulation and European cities

Using Castells' notion of the informational mode of development, this briefing investigates the changing hierarchy and function of European cities in the light of EC policies. The EC regulatory regime is identified as an integral part of the informational mode of development, setting the parameters within which the corporate sector operates. It is argued that the purpose of information flows is mainly control. A new constellation of European cities is anticipated which depends to a large extent upon the degree to which cities, competing against one another, are able to establish central urban complexes. These are based on the agglomeration economies between corporate headquarters, financial institutions and producer services at the urban level, and information flows at a global level of communications. Among the vast array of EC policies the paper identifies those in support of innovation and telecommunications, the deregulation of financial services, and regional policy as crucial for urban development. Given the requirements of infrastructure, institutions, professional skills and regulatory competence, existing metropolitan centres will capitalize on their comparative advantage and attempt to build on these in the future. These developments are likely to foster further concentration of capital and investment in a few major centres, thus counteracting other EC policies of regional equalization and harmonization. It is argued that these and other contradictions are an amplification of those already afflicting the capitalist state at both national and local levels. The paper also offers an opportunity to reassess aspects of traditional location theory, in particular central place models, in the light of these developments and finds them wanting. The same conclusion is reached regarding the cost‐benefit calculus of the Cecchini Report.