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Urban economic clout moves east

Look to the Eastern Hemisphere for tomorrow’s top urban players in the global economy.

More than 20 of the world’s top 50 cities ranked by GDP will be located in Asia by the year 2025, up from 8 in 2007. During that same time period, our research suggests, more than half of Europe’s top 50 cities will drop off the list, as will 3 in North America. In this new landscape of urban economic power, Shanghai and Beijing will outrank Los Angeles and London, while Mumbai and Doha will surpass Munich and Denver. The implications—for companies’ growth priorities, countries’ economic relationships, and the world’s sustainability strategy—are profound.

About the Authors

Richard Dobbs is a director of the McKinsey Global Institute (MGI) and a director in McKinsey’s Seoul office; Jaana Remes, based in the San Francisco office, is a senior fellow at MGI; Sven Smit is a director in the Amsterdam office.

Recommend (116)
  • 10 OCTOBER 2011
    Andy Chen
    Manager
    MillwardBrown
    Beijing, China

    ...I consider the quality of GDP more important than the quantity....

    .
    Andy Chen
    Manager
    MillwardBrown
    Beijing, China

    There is no doubt that the number of people living in urban China will increase rapidly in the coming decades, and that GDP will expand quickly because of the booming economy and the rising exchange rate of the renminbi. But for me, I consider the quality of GDP more important than the quantity. Today, much of China’s GDP grows at the expense of the environment, with air pollution among the damaging effects of growth. I hope China’s economy can grow in an environmentally friendly way; fortunately, it seems that the government has realized this and has begun taking action to address it.

    .
  • 13 SEPTEMBER 2011
    Amit Dawra
    GM
    HCL TEchnologies
    New Delhi, India

    According to population projects made in the 1900s, the US would have been 80 percent Italian and Polish by the year 1930, if the trends of the time had continued along a linear progression....

    .
    Amit Dawra
    GM
    HCL TEchnologies
    New Delhi, India

    According to population projects made in the 1900s, the US would have been 80 percent Italian and Polish by the year 1930, if the trends of the time had continued along a linear progression. So I’m inclined to take this analysis with a healthy dose of skepticism because of the long time range.

    Moreover, GDP (or GDP per capita) is often not as good or meaningful an indicator of “economic clout” as quality of life.

    .
  • 13 SEPTEMBER 2011
    Rizvan Jaldeen
    Principal Consultant
    5th Generation International
    Muscat, Oman

    ...the concern that&38217;s now at hand is how these new cities in Asia manage health, safety, and environmental issues....

    .
    Rizvan Jaldeen
    Principal Consultant
    5th Generation International
    Muscat, Oman

    While this thinking is not entirely new, the concern that&38217;s now at hand is how these new cities in Asia manage health, safety, and environmental issues. Air pollution will be a major concern in Asian cities, among other challenges such as traffic and living conditions.

    .
  • 13 SEPTEMBER 2011
    Vicky Bahl
    Consultant
    Avalon Consulting
    Delhi, India

    While there is a clear shift from Western Europe to China, I am surprised that most of the cities in the United States are holding on....

    .
    Vicky Bahl
    Consultant
    Avalon Consulting
    Delhi, India

    While there is a clear shift from Western Europe to China, I am surprised that most of the cities in the United States are holding on. This scenario seems too optimistic an outlook for both China and the US, and pessimistic for Europe. It also leaves out Moscow, which surprised me as well.

    .
  • 13 SEPTEMBER 2011
    Islam Bhugan
    Deputy Director of Culture
    Ministry of Arts and Culture
    Port Louis, Mauritius

    China has reached its cruising speed in terms of economic development...

    .
    Islam Bhugan
    Deputy Director of Culture
    Ministry of Arts and Culture
    Port Louis, Mauritius

    China has reached its cruising speed in terms of economic development, with a population of more than one billion people and a more open economy that’s moving from manufacturing to creating its own brand name. There is no doubt that it will be an economic giant in the next decades, especially since their people are so hard-working and self-sufficient.

    .
  • 13 SEPTEMBER 2011
    Martin Gilliland
    MI Manager
    Microsoft
    Singapore

    Another thing to note is that GDP is considerably less accurate as a measure of a developing-market economy’s real size....

    .
    Martin Gilliland
    MI Manager
    Microsoft
    Singapore

    Another thing to note is that GDP is considerably less accurate as a measure of a developing-market economy’s real size. It is an economist’s best estimate at the value of the legitimate economy, but struggles to take into account the grey and black economies that lie alongside it and account for very large portions of income and business.

    .
  • 13 SEPTEMBER 2011
    Martin Gilliland
    MI Manager
    Microsoft
    Singapore

    ...Without income, a city or country doesn’t spend and save. Without spending and saving, we have no cash cycle. And without a cash cycle, we have no economy....

    .
    Martin Gilliland
    MI Manager
    Microsoft
    Singapore

    While many comments have suggested GDP is a little simplistic as a measure of “clout” it cannot be ignored. Without income, a city or country doesn’t spend and save. Without spending and saving, we have no cash cycle. And without a cash cycle, we have no economy.

    Everyone should aspire to grow in a sustainable way, but it is also naive to think that all of these cities in Asia will consider the urban planning requirements that have been put forth in Northern Europe. As many Asian nations are now better equipped to deal with people’s needs, their overall purchasing power has increased—and so has their economic “clout,” especially when you compare with the recent falls in the US economy. As developed economies struggle, Asian cities continue to gain economic strength and companies looking grow are more likely to invest there.

    Hopefully, the more established cities that have passed through this massive growth in development can now settle into a nice rhythm and get to that next level of sustainable development.

    .
  • 12 SEPTEMBER 2011
    Chhaya Aiyer
    Founder, MD
    BC Web Wise
    Mumbai, India

    The Indian cities do have infrastructure issues, but the outskirts of the main metropolitan centers...as well as the country’s new emerging cities, are either already in better shape or are better geared to make sufficient improvements....

    .
    Chhaya Aiyer
    Founder, MD
    BC Web Wise
    Mumbai, India

    The Indian cities do have infrastructure issues, but the outskirts of the main metropolitan centers (Mumbai and Delhi), as well as the country’s new emerging cities, are either already in better shape or are better geared to make sufficient improvements. So while Mumbai and Delhi may find it difficult to make a giant infrastructure within this time frame, other areas of the country will become key destinations for the satellite business world.

    .
  • 12 SEPTEMBER 2011
    Brad Hall
    Vice President
    Human Capital Systems
    Shenzhen, China

    This assumes that these trends will be sustained, but they never are—the yuan is appreciating and inflation is climbing. Does China really have the sufficient leadership to run global industrial or services enterprises?

    .
    Brad Hall
    Vice President
    Human Capital Systems
    Shenzhen, China

    This assumes that these trends will be sustained, but they never are—the yuan is appreciating and inflation is climbing. Does China really have the sufficient leadership to run global industrial or services enterprises?

    .
  • 12 SEPTEMBER 2011
    Rajesh Raheja
    CEO
    First Canvas Training Ventures
    London, UK

    Pure economic growth does not reveal much; any future analysis should consider multiple dimensions—economic, quality of life, environmental impact—to give this greater meaning.

    .
    Rajesh Raheja
    CEO
    First Canvas Training Ventures
    London, UK

    Pure economic growth does not reveal much; any future analysis should consider multiple dimensions—economic, quality of life, environmental impact—to give this greater meaning.

    .
  • 16 JULY 2011
    Maxon Tuya
    Operations Manager
    Tiger Brands
    Polokwane, South Africa

    ...China has promised and has actually begun building infrastructure in the countries mentioned in the article, which is enabling accelerated urbanization....

    .
    Maxon Tuya
    Operations Manager
    Tiger Brands
    Polokwane, South Africa

    Edwin, I think quite a number of sub-Saharan countries are benefiting from bilateral agreements and trade with China. China has promised and has actually begun building infrastructure in the countries mentioned in the article, which is enabling accelerated urbanization. Bear in mind that this is a partnership set-up, where China is also extracting resources and establishing businesses in those countries. There has been some negative talk that Africa will not benefit at all in this situation, which spread further once South Africa joined BRIC (now “BRICS”), that China and other BRIC members will benefit while South Africa will lose. I do not buy this, believe with no doubt that the China-African relationship is beneficial for both parties, and think that cities like Lusaka in Zambia will eventually flourish.

    .
  • 29 JUNE 2011
    Edwin Setzpfand
    Circle of CRM
    Netherlands

    I would be interested to hear Maxon Tuya’s (or anyone else’s) views on the impact of African urban development on China’s emerging role on that continent—any thoughts?

    .
    Edwin Setzpfand
    Circle of CRM
    Netherlands

    I would be interested to hear Maxon Tuya’s (or anyone else’s) views on the impact of African urban development on China’s emerging role on that continent—any thoughts?

    .
  • 16 MAY 2011
    Sourav Kundu
    Webcon Ltd.
    Kolkata, India

    ...Only proper planning, management, and development of the urban and rural capabilities will result in effective and sustainable urban development, no matter if it is in the East or West....

    .
    Sourav Kundu
    Webcon Ltd.
    Kolkata, India

    With India’s growing socioeconomic, geopolitical and technocommercial capabilities, coupled with the “Look-East” policy of the government, it is imperative to include the ever-growing urban agglomerations in the East such as Kolkata, Siliguri, Gangtok, and Guwahati as integrated and connected sustainable agglomerations. Moreover, recent sociopolitical changes in the eastern Indian states of West Bengal and Assam are also encouraging as growth initiatives are pursued. The ecological sensitivity of these areas and those that are adjoining will call for proper planning in terms of carrying capacity, transport requirement, energy conservation and use of renewable energy, optimized resource deployment and usage, and sustainable employment and capacity building in these societies, in tandem with the citizens’ aspirations of holistic development and access to better living standards.

    Efforts should be made to ensure that basic amenities such as health, education, civil services, transportation infrastructure, connectivity, and telecommunication services are made available to far-away towns and villages as well as rural agglomerations, to arrest the exodus of manpower to urban hubs that have an ever-increasing load and an ever-reducing capacity. Only proper planning, management, and development of the urban and rural capabilities will result in effective and sustainable urban development, no matter if it is in the East or West. A synergistic approach must be adopted by the global community to ensure a balanced development and growth.

    .
  • 11 APRIL 2011
    Milo Jones
    Visiting Professor
    IE Business School
    Madrid, Spain

    Statistics about urbanization in China have to be treated with caution....

    .
    Milo Jones
    Visiting Professor
    IE Business School
    Madrid, Spain

    Statistics about urbanization in China have to be treated with caution. Often, people begin by citing figures from an “authoritative” source, the UN Statistics Division, that says China is only 47 percent urban. Usually, they go on to discuss a wonderful convergence story for productivity and wealth in China compared to the US’s 82 percent urban figure, or Germany’s 74 percent.

    But the UN uses each country’s individual definition of urban. Dig into the details of the UN statistics and it turns out that the Chinese definition of a city is 1,500 people per square kilometer (though the overall definition is complex), and the US and German definition of a city is 400 people per square kilometer!

    In short, China is already a lot more urban than you’d think looking at the “authoritative” UN Statistics Division headline figure (which people assume are comparable because they all come from the “same” UN source).

    .
  • 7 APRIL 2011
    Yogendra Kumar
    Manager
    Renault India
    Chennai Tamil Nadu India

    The above list should include Chennai, also, as it is going to surpass Mumbai very soon....

    .
    Yogendra Kumar
    Manager
    Renault India
    Chennai Tamil Nadu India

    The above list should include Chennai, also, as it is going to surpass Mumbai very soon.

    In the future, Mumbai will have head offices only, and Chennai will have the manufacturing and service industry due to low labour and land cost compared to other metros. In addition, Chennai provides easy access to east Asia.

    .
  • 7 APRIL 2011
    Maxon Tuya
    Operations Manager
    Tiger Brands
    Polokwane, South Africa

    There is no doubt it is crystal clear that emerging markets will dominate or take a lead in the upcoming years. My concern, though, is that this research did not include African cities...

    .
    Maxon Tuya
    Operations Manager
    Tiger Brands
    Polokwane, South Africa

    There is no doubt it is crystal clear that emerging markets will dominate or take a lead in the upcoming years. My concern, though, is that this research did not include African cities, such as Johannesburg, Cape Town, and Durban and Lagos in Nigeria; or if it included them, then there is a concern that African cities will not be growing at the same pace compared to the BRIC and Asian cities.

    .
  • 6 APRIL 2011
    Tim Harrap
    Bridport Dorset England

    Robert Jacobson’s comment above is welcome in trying to give some perspective on the changing economic climate. However, the blunt instrument of this article’s diagnosis...suggests that the balance of power has clearly shifted...

    .
    Tim Harrap
    Bridport Dorset England

    Robert Jacobson’s comment above is welcome in trying to give some perspective on the changing economic climate. However, the blunt instrument of this article’s diagnosis and a similar portrayal of the car industry in a recent FT article suggests that the balance of economic power has clearly shifted eastwards. However much the historical and social analysts would wish for maintenance of the status quo, it will not stop mercantilists using this limited information to justify their decision to head east.

    .
  • 24 MARCH 2011
    Shyamadas Banerji
    Independent Consultant
    Arlington, VA USA

    It is notable that most of the top cities in 2025 will be in China and two in India. But I do hope that these cities are going to be livable. Already Mumbai and Delhi are choking on traffic...

    .
    Shyamadas Banerji
    Independent Consultant
    Arlington, VA USA

    It is notable that most of the top cities in 2025 will be in China and two in India. But I do hope that these cities are going to be livable. Already Mumbai and Delhi are choking on traffic with terrible infrastructure. They are practically unlivable. Governments need to develop different spatial urban plans that would improve the lives of residents.

    .
  • 24 MARCH 2011
    Robert Jacobson
    Principal
    Bluefire Consulting
    Tucson, AZ USA

    Fascinating theses, but they treat cities as so many machines populated by so many cogs. You count up the cogs and then determine which machines clatter the loudest. Victorian thinking....

    .
    Robert Jacobson
    Principal
    Bluefire Consulting
    Tucson, AZ USA

    Fascinating theses, but they treat cities as so many machines populated by so many cogs. You count up the cogs and then determine which machines clatter the loudest. Victorian thinking.

    What about sectoral differences? What about cities that, as they did in the mercantile days (to which we seem to be returning), specialize in doing one or a few things very right, rather than becoming significant merely by becoming crowded?

    We mustn’t have too much regard for economics divorced from Earthly reality. The reality is that devolution is happening, cities are increasingly on their own or at least allied in leagues rather than subordinate to central governments, and the order of the day is innovation.

    When you additionally factor in the penalties for growth in a declining-energy-resource world, you get a very different picture of what is important to cities’ well being and what can be done about it.

    For me, the jury’s still out on where the global “center” will be in this century. Or perhaps there will be many centers, so that East/West and North/South coordinates, like economic statistics, become too gross for accurate, precise forecasting.

    .
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