The main objective of this paper is to explore relations between competitiveness and social cohesion in Istanbul. It mainly questions whether it is possible to expect a positive change in socio-spatial inequalities if increasing competitiveness generates not only international business and high-level services, but also traditional low-cost production activities. The findings show that competition in different types of activities has generated large numbers of jobs, but has not been able to overcome existing income disparities. The increasing income differences, however, do not mean an increase in socio-spatial segmentation, since the non-market processes and policies related to education, gender and the urban land and housing markets have played important roles in the redistribution of different social groups within urban space, in addition to the endogenous dynamics of labour markets.