FOR the last 200-300 years, the nation state has been the primary social and political unit. However, I believe there are signs that the city is resuming the role it occupied in medieval times. At that time, the city states, such as Florence and Venice, were the primary sources of energy for cultural and commercial development.

Today, as national borders lose their significance for business and the traditional nation states combine into larger entities such as the EU, there is a strong argument that the city is re emerging as the basic unit in our competitive global economy.

Among the proponents of this argument is President Bill Clinton. He has described the US economy as a "common market" of metropolitan economies which compete with each other and with urban centres throughout the world.

Again, the former prime minister of Australia, Mr Paul Keating, has argued that the efficiency of cities and regions and their infrastructure is critical to giving Australia a competitive edge.

Further evidence of the trend towards the importance of the city is provided by the successful cities of the Pacific Rim, notably Singapore, Hong Kong and Taipei, which are now major growth points in the world economy.

Closer to home we have further excellent examples. Some of the most spectacular growth areas in Europe are cities with their hinterlands. For example, Modena used to be seventeenth in per capita income in Italy. It moved to second place in the space of 10 years. Other cities, such as Barcelona, have also formed the centre of prosperous industrial districts. These cities seem to succeed by providing a centre for clusters of small and medium sized firms. These firms combine to form a strong collective economic force.

If it is true that successful cities are becoming the engine of prosperity, then we should investigate what makes a city successful. A sensible starting point is the criteria that Fortune uses for selecting its "Best Cities for Business" every year. They are:

. transport and access - a good internal transport system, with good air and sea access;

. universities and research institutes - these assist industry to grow, especially in knowledge based and fast growth industries;

. good infrastructure - a developed banking system, telecommunications, other infrastructure;

. quality of life - including cost of living, access to recreation and culture, and a low crime rate.

How does Dublin rate against these criteria?

I think we can be well satisfied with our universities and research institutions, and also with our business infrastructure. There cannot be too much wrong with the quality of life either when visitors are flocking to the city in larger numbers thank ever before.

However, there are two important; criteria against which Dublin scores - badly. These are the level of crime - and the efficiency of internal - transport.

Both have been well documented and the Chamber of Commerce has spelled out its views in detailed reports published in recent months.

It is true that there are plans in place to deal with these problems, but it is far from certain that these will be enough to propel Dublin into the front rank of successful cities.

Cities deal with these problems through their governance structure. If we wish to succeed against criteria - such as those suggested by Fortune, we need a structure which can run the city to best effect.

Do we have the right structure in place in Dublin? For example, we have to go to national government to get sanction for even the most trivial expenditure.

Web do not have a municipal authority with responsibility for health, education, social services and the police. This is the type of structure that would provide effective management at local level.

While it may be argued that Dublin is too small for such an approach, similar structures are in place in several cities in Europe.

This form of devolution to the local level could be accommodated by a reorganisation of existing services and as such, should not generate any additional costs.

We must recognise that, with one third of the population concentrated in it, capital city has quite distinct needs and problems. This should be reflected in the way we make important decisions.

There are models of city governance within the EU that we might usefully learn from. We should certainly exchange ideas on how to sustain the vitality and commercial enterprise of our cities.

The Chambers of Commerce of the EU capital cities took an important step in this direction last week by establishing a formal network to consider common concerns of this kind.

If we succeed in dealing with the problems of life in a modern city, we have much to celebrate and look forward to.

We have one of the most adventurous examples of city renewal in Temple Bar, and a growing International Financial Services Centre.

In a number of areas of culture - music, theatre, literature - it seems to me we are going through something like a cultural renaissance.

ERECO, the network of leading European economic research institutes, has forecast that the city with the highest economic growth rates to the year 2000 is expected to be Dublin.

I suggest that what we need to make the most of that growth potential is a new status for Dublin, including a reformed system of governance.