Over the past three decades, the world has witnessed a radical shift in power maps. Political and economic influence is no longer confined within the boundaries of traditional nation-states, and megacities have begun to emerge as autonomous units with the ability to produce economic decisions, direct investment flows, and influence global policies.This shift cannot be understood solely through demographic growth or urbanization, but rather through a profound shift in the nature of the global economy and a shift in the center of gravity from "the state as the main driver of production" to "the city as a dense platform for wealth and innovation."The World Bank estimates that cities are now home to more than 56% of the world's population, but produce nearly 80% of the world's GDP, a difference that clearly reveals that the economic weight of cities far exceeds their population weight, and that cities are now measured by their ability to create value rather than by their population size (World Bank, 2024).This extraordinary capacity has made cities such as New York, London, Singapore, Seoul, and Dubai into political-economic entities that exceed in influence some developing countries, and sometimes even some middle-income countries, giving rise to what is called in contemporary literature the "City-State" in its new paradigm.
The global economy has reshaped itself in a way that gives cities a central position in the capitalist system. While heavy industry has retreated from its previous position, finance, technology, advanced services, and creative industries have advanced to become the main engine of growth. These sectors by their very nature require a dense urban environment that allows for rapid interactions, knowledge transfer, and the building of production networks.The economic literature has shown that urban agglomerations create so-called "Agglomeration Economies", an advantage that makes firms and workers more productive when they are in a large city with advanced infrastructure, and that these cities are able to attract talent and investment compared to less urbanized areas (Glaeser, 2011).Therefore, cities are no longer just "places to live", but have become "economic nodes" that control supply chains, interact directly with multinational corporations, and indirectly determine the direction of monetary and fiscal policies through their influence on markets.
Global financial centers such as New York, London, Hong Kong, and Singapore have become a typical example of a city's ability to transcend state boundaries in influence. The New York Stock Exchange, for example, is larger than the economies of entire countries in Latin America and Africa, and capital flows through London make it a major player in the global financial system even after Brexit. Several studies indicate that these cities are no longer just geographical regions, but global networks that connect investors, sovereign funds, banks, and technology companies, making an economic decision made in London capable of
The rise of cities cannot be understood without reference to the technological revolution that has transformed the global economy. Digital technology, artificial intelligence, and giant data chains have created a new environment centered on innovation and creativity as the primary source of wealth. In this context, cities such as San Francisco, Boston, Berlin, and Bangalore have emerged as incubators of tech innovation and startups.According to OECD data, 75% of high-value startups are concentrated in fewer than 40 cities around the world, meaning that knowledge and future economies are built in specific cities, not entire countries (OECD, 2023). This concentration has given cities that house tech companies great political clout, as they control world-changing innovations: artificial intelligence, 3D printing, renewable energy, and digital services. Technology is no longer produced within state borders, but within sophisticated urban ecosystems that transcend national borders.
With the growing economic and technological influence of cities, a new phenomenon has emerged: the direct diplomatic role of cities, what some literature calls "Urban Diplomacy." Cities such as Paris, Seoul, Barcelona, and Dubai now have direct networks with cities on other continents without going through state channels, whether in the fields of trade, transportation, culture, or the exchange of expertise.Global City Networks have also emerged that serve as spaces for policy exchanges between cities, such as the C40 Climate Network, which includes more than 90 cities responsible for a quarter of the global economy.UN-Habitat studies indicate that cities are signing memoranda of understanding, participating in international conferences, and running cross-border projects, making them a semi-autonomous player in the international system (UN-Habitat, 2022). This shift reflects that cities are gaining political will beyond the traditional role of municipalities, sometimes approaching that of higher governmental institutions (UN-Habitat, 2022).
These developments have allowed cities to become economic and political entities capable of long-range strategic planning, enhancing their power compared to states plagued by bureaucracy or political divisions. For example, Singapore, a city-state, relies on a highly efficient administrative model that has made its GDP per capita one of the highest in the world. Although its case is unique, it is an example of what major cities can become when given broad administrative autonomy and a clear development vision.
On the other hand, many countries face challenges that prevent them from fully tapping into the economic potential within cities, most notably extreme centralization, poor regional planning, and a lack of investment in infrastructure that allows cities to grow. World Bank analysis indicates that cities in developing countries often suffer from "unplanned growth" that leads to traffic jams, haphazard expansion, and poor services, making them unable to attract major investments or compete on the global stage (World Bank, 2021).This raises the question of the role of governments: do they allow cities to grow into political and economic powers, or do they remain in a centralized grip that weakens their ability to compete? The question of sovereignty arises: the rise of cities may be seen as a threat to the traditional authority of states, while others see it as an opportunity to promote national growth through the empowerment of urban units.
The phenomenon of the "city as a political force" poses challenges to social justice. The concentration of wealth in big cities means a widening gap between wealthy cities and rural areas or smaller cities, which is called "Urban-Regional Inequality" in the literature.2 billion people live in cities but without access to adequate infrastructure, and this disparity can lead to social and political divisions that may weaken a country's overall capacity for development (UN-Habitat, 2020). However, some researchers argue that cities are not the cause of the issue, but a natural consequence of the shifting global economy that rewards innovation, connectivity, and organization, all of which are more available in cities than in rural areas (UN-Habitat, 2020).
In light of these shifts, it seems that the rise of cities is not a passing phenomenon but a profound reshaping of the global order. Cities today are the primary drivers of wealth, centers of knowledge and innovation, and political actors with the ability to move both above and within state borders.As global urbanization continues, the digital economy becomes increasingly complex, and artificial intelligence advances, cities are likely to become increasingly powerful in the coming decades, reshaping the meaning of sovereignty, the roles of governments, and how wealth is produced. The question is no longer: "Will cities overtake states?" but rather: "How will cities and states coexist in a new world order in which power is distributed among multilevel units?"
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