The decline in trade barriers, the vast improvements in transportation and communication systems and networks over the last few decades have enhanced the volume of international trade in goods and services. Accompanying these are the enhanced international mobility of human resources, short and long-term capital and the growth in the number, strength and influence of transnational companies. The world economy has consequently become more integrated and global in nature. Major economic activities especially manufacturing have become more dispersed globally as processes within the production chain of increasingly more complex consumer and capital goods move to places that offer the best competitive advantage.
The global dispersion of production and marketing activities of transnational companies requires the global dispersal of management, control and support. This is achieved by the establishment of regional headquarters offices in strategically located cities which can offer suitable infrastructure, supporting services, living environment and other ancillary activities. Many cities that have assumed an important role by providing a base for the efficient conduct of international business have attained the status of ‘global’ or ‘world’ cities. Examples of top ranked global city are London, New York, Paris and Tokyo. Others that play more of a regional or sub global role within the Asia Pacific Region are cities such as Hong Kong, Singapore and Sydney.
In addition to the globalisation trend, another factor that is and will influence the growth of the nation and that of Kuala Lumpur is the increase in the importance of the knowledge-based economic activities especially those relating to the development of information and communication technology (ICT). Industries that generate knowledge such as research and development in biotechnology, computer software multimedia applications, new technology for the computer and other hardware and industries that process, distribute and manage information such as educational institutions, telecommunication and Internet systems, advertising and professional services are the key drivers of the Knowledge-Based Economy (K-Economy).