Finding urban patterns

Looking at the performance of 30 leading cities through economic, demographic and data correlation lenses provides insight on what’s working now and what directions lay ahead.


Balance works best in urban ecosystems.

Education, transit, health, economics, and governance all have to line up for a city to lead. London proves this again as its balanced strengths create distance from other advanced cities. Further, eight cities make the top 3 in two or more indicators—London, Singapore, Paris, Beijing, Sydney, Toronto, Stockholm, and New York. This confirms cities need a good combination of social and economic strengths to succeed.

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The good life is not a luxury.

It’s a basic requirement for cities and businesses to get and keep talent. Our quality of living variable shows the strongest relationship with overall success in the study, as well as with 10 other telltales of urban wellbeing.

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A great city delivers shared good.

Cities need to support real human needs to work as balanced ecosystems; a civilized society handles the tests and provides broadly. Senior wellbeing, housing, relocation attractiveness, disaster preparedness all relate strongly with overall score and top performance in a wide range of healthy measures.

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Intellectual work anchors modern city economies.

City people and business need good education to prosper. Finance and business services contributed almost half to GDP growth of our cities from 2010 to 2015. And that doesn’t count intellectual work in healthcare, life sciences, technology, communications, and other sectors.

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Greater systemic resilience can be a dividend.

A good example is offered by the top 10 cities across intellectual capital and innovation, technology readiness, and city gateway (collectively, our Tools for a Changing World). Paris and Amsterdam make the top 10 list in this grouping after almost a decade of financial turmoil in Europe. Tokyo remains in the top 10 after Japan’s “lost two decades” of stagnation. Neither Rome, nor any of our top cities, were or will be built in a day. But the work is worth it.

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A dependable workforce associates with city leadership.

A city that takes care of business on the office and shop floor has a better chance of success. Low workforce management risk relates strongly with high city productivity; ease of doing business; intellectual capital; health, safety, and security; and overall score.

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Taxes add an ingredient to the local recipe for success.

And the tax system in our three top cities, London, Singapore and Toronto, compare well. An analysis of corporate total tax rate, personal rate, and tax efficiency shows Dubai, Hong Kong, and Singapore have the lowest rates and highest efficiency collectively. But London and Toronto are not far behind. However, it’s hard to take taxes out of the context in which they are paid in terms of economic, political, social, demographic, and environmental ecosystems and the needs of cities, their businesses, and citizens.

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Modern risks add a major test.

Achieving and sustaining resilience proves a challenge today against a wide range of modern risks. Disaster preparedness must be intensified. If there is good news, it is that the most vulnerable cities can be the best prepared. Earthquake-prone Tokyo and flood-threatened Amsterdam display strong ability to manage risk. Beyond climate change, potential pandemics and manmade threats like cyber attack, market meltdown, and terrorism, all demand that cities heighten awareness, strategic and technological acumen, good governance, adaptability, and, perhaps most important, the commitment of institutions and the community to work together as one unit.

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Disaster exposure is enormous.

Powerful cities like New York, Beijing, San Francisco, Paris, Los Angeles, Shanghai, and São Paulo fall in the middle or lower ranks of our triple measure of urban resilience—natural disaster exposure, natural disaster preparedness, and security and disease risk. All are significant world centers of economics, communications, technology, and population where major disaster can cripple the city economy, cause human loss and send ripples far beyond. For instance, New York and Los Angeles have over $90 billion in annual GDP at risk.

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Lack of affordable housing could hold back cities.

While housing quality exhibits a strong relationship with success, cities with the greatest economic strength today often have housing that is priced out of reach. Five of our top 10 cities in economic clout fall in the bottom half of rent affordability (London, New York, San Francisco, Beijing, and Shanghai). This foreshadows difficulty in talent attraction, retention, and, ultimately, cities possessing critical, hands-on skills they need.

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Income distribution presents an issue.

Cities should be aware of the potential social and political impacts of polarized income distribution, and try to build and sustain resilient economies that include the wide range of occupations and salary levels that make cities run. While average, absolute income and number of middle-class households are projected to rise across our cities, they also show widely differing income distributions. For instance, US cities are among the top 10 with household income distributions earning less than 50% of median income.

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Cities are the future.

They are not only where people are moving but where young people are moving. The healthiest cities are likely to win the global competition for talent and growth.

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...But they also face demographic tests.

Aging, slowing birth rates, and migration will realign public and private demands. Almost half of the increase in our cities’ population by 2030 will be in those over 65 years old. Demographics challenge the growth and the finances of many cities with increasing pension, healthcare, and other service costs. Businesses gain opportunities to develop new services and products to respond to the changing pattern. Both the public and private sectors benefit if the city’s quality of life attracts the talent needed to build the future.

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Leading cities put together concerted strategies.

Understanding their own strengths, weaknesses, and identities helps cities orchestrate growth to suit their own profile. Because cities are complex systems of systems—economic, demographic, technological, infrastructural, governance, social, and cultural—leadership will build from local identity, not formulas.

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Businesses and governments share in city wellbeing.

Successful cites align the private and public sectors into a potent force for shared prosperity. Public and private sectors both depend on healthy urban economies for success. They need to work together actively to help shape operating environments in a world where a continued urban renaissance is not guaranteed. The market will not necessarily resolve all issues cities face. Economic pictures can change fast. And governments often face tight resources.

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Data correlations

Quality of life factors jump out

Fulfilling human needs appears as a cornerstone of successful cities in the study—notable because our 30 cities are all business and economic centers first—when we look at statistically significant relationships between groups of data. We find a well-functioning city correlates closely with the ability to deliver on its responsibility to shared wellbeing. The community stands resilient in the face of disaster and values older citizens and their needs. The city is a good place to live and hire workers. People want to move there.

Quality of living and senior wellbeing show striking relationships with excellent urban performance as reflected by 12 key measures, including overall score, six indicator categories, and five variables. Quality of living correlates at 90% to 60% (the beginnings of statistical significance) with  11 key measures, posting a 91% correlation with success in the study. Senior wellbeing—essentially, how effectively older residents are woven into the community fabric—also exceeds 60% in strength of correlations 11 times, as does city relocation attractiveness. The availability, diversity, cost, quality of housing as well as natural disaster preparedness, a new variable this year, shows a strong correlation nine times.

Economic projections

Education anchors city jobs and economies

Looking at the contribution to overall GDP growth in our cities, finance and business services drive almost half of all employment growth from 2010-2015. Other intellectually based jobs are increasingly important in areas like communications and healthcare. If current trends continue, digital and technology needs will increase. And human capital will continue to be in demand with good education.

Urban demographics

Birth rates and longevity patterns mean
cities need talent

Our cities tend to attract younger populations than their nations, but at the same time slower birth rates and longer lives are projected to realign urban dependency ratios (of the over 65 and under 15 population against the total from 15-64). This places more responsibility on a shrinking workforce to support urban growth and public finances. The pattern also means cities need to attract and retain more workers and businesses need to develop new products and services.

Income distribution

Top to bottom, and in the middle, patterns differ

We find absolute household incomes rise broadly at the top. On a relative scale, European and Asian cities show the greatest equality when comparing the lower earning 25th percentile with the wealthier 75th. Meantime, functioning cities work for people with different skill and income levels as well as needs for living, consumption and services. The health of the broad middle-income group gives a reading of the vigor needed to build and sustain a city over time. The polarity of top and bottom incomes could foreshadow social or political tensions.

"Every household has its own difficulty. That is why we want to unite them together as one community."

Basuki Tjahaja Purnama (Pak Ahok)
Jakarta, Governor

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Rollie Quinn

Global Leader, Government & Public Services, PwC US

Hazem Galal

Cities & Local Government Sector Global Leader, PwC US

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