London moves up markedly but New York shows continued strength. Beijing and Shanghai advance to the Top 5 in economic clout and city gateway along with London, Paris and New York.
Size does matter. But is a big city light enough on its feet to dance?
Continuation of the “urban renaissance” is no guarantee in difficult economic times. Uncertainty seems to have replaced the expectation of return to a steady state of economic growth, and signs of potential transformation can be seen in everything. No matter the size, wealth or advancement of modern cities, flexibility will be the keyword for planners and policymakers considering the future.
It doesn’t take a perfect storm to scuttle city futures.
Looking at a range of uncertainties, we tested what it would mean for cities if technological, economic and sociopolitical forces hamper economic health and employment growth between now and 2025. Not unexpectedly in this “what if” scenario, employment and GDP growth fall across our spectrum of 27 cities. Beijing, Shanghai and São Paulo lose the most jobs, but London and Tokyo follow close behind, showing neither developed nor developing cities escape sweeping transformation.
“What if” smart cities prevail?
London, Tokyo, New York, Seoul and Paris fare best in employment growth if cities prosper based on knowledge as well as technological and travel connections. Overall our 27 cities lose 4 million jobs compared to the 2025 baseline projection. Perhaps counterintuitively, this occurs because greater productivity will cut the need for workers. However, higher trade might reasonably accompany such a scenario and generate even more jobs than productivity shaves away.
There’s a reason protectionism earned a bad name.
Trade restrictions can look good in an economic pinch, but when we ask “what if” global trade shrinks 2 percent annually until 2025, over 10 million jobs and $1 trillion in gross domestic product will have vanished from our 27 cities.
When it comes to the share of city employment, financial and business services, manufacturing, wholesale and retail dominate (for better or worse).
Financial and business services, manufacturing, wholesale and retail sectors anchor many city economies in 2012. The first two sectors account for as much as a third of jobs in some cities. Wholesale and retail accounts for more than one in five jobs in Hong Kong, Kuala Lumpur, Moscow, Mumbai, Mexico City and Istanbul.
Compete or collaborate?
The question of competing or collaborating within and among communities is as old as the seven hills of Rome. Today’s cities need to blend some of each strategic outlook into their planning. On one hand, cities can benefit by aligning interests and seeking joint action in a world urbanizing faster and creating more funding needs than cities are empowered to address. Yet, cities are where the buck stops in terms of the need to get results. Competition with other cities, whether for a new factory or new museum, is a fact of life.
Cities of invention ... or reinvention.
History shows the capacity of cities to build from the ground up, as many emerging cities are doing now, and to rebuild from rubble, as many developed cities have done after war. Success comes from collective will and the ability to align economic, government and social forces. Where there’s a common will, there’s a way forward.
Growing cities with growling appetites for capital investment.
To keep up with the great gains in population and employment by quarter-century, some emerging cities will have to invest significantly. Shanghai and Beijing will need to invest what represents 42 percent of their GDP just to satisfy forecast growth from 2012 to 2025. For Mumbai, it’s 35 percent. London, by contrast, only requires 17 percent and Stockholm 19 percent to meet the forecast of investment spending relative to growth.
Make my city healthy, wealthy and wise (not necessarily in that order).
Most of the leaders we spoke to emphasize the need for a safe and secure city as the keystone of a healthy community. After that, good education is most widely cited as a springboard for future success. In fact, our own Cities of Opportunity analyses have shown that good housing correlates in a highly positive way with the attributes of an economically strong city. Stockholm, Toronto and Sydney demonstrate balanced success in education and health, safety and security.