I admit I am fascinating by these type of stories, and projections and since much of the anticipated world growth (and hence investment) will be headed along these lines it fits perfectly with what we analyze here. According to PriceWaterhouseCoopers, over the next 15 years the top 5 cities in the world shall remain the same but joining them will be a new class of entrants. It will be interesting to look back in a decade or two to see how accurate this becomes... i.e. are we making the same mistakes forecasters did in 1989 when it seems Japan would take over the world?
It appears the measurement tool is a gross domestic product per capita.
The PwC estimates of city output are based on combining United Nations population estimates for cities in 2008 with estimates of GDP per capita at purchasing power parities, which equalise the approximate costs of living.
First an overview with the UK Guardian:
- New York, London and Paris may trip off the tongue as the world's top cities in terms of wealth but over the next 15 years emerging cities like Sao Paulo, Shanghai and Mumbai will give them a run for their money, says new research.
- According to consultant PricewaterhouseCoopers, the economic growth of many cities in the emerging world is so much stronger than that in many developed economies that the league table of the world's great cities is going to change radically between now and 2025.
- Shanghai is set to rise from 25th place to 9th by then, with Mumbai likely to storm to 11th in the global gross domestic product per capita rankings from its current slot at number 29. Similarly, Beijing will leap from 38th to 17th place. Sao Paulo in Brazil is in 10th place but is likely to rise to 6th by 2025, ahead of Paris but still behind the current and projected top five of Tokyo, New York, Los Angeles, London and Chicago.
- If you look at the projected percentage GDP growth from 2008 to 2025 of the top emerging and the top advanced economy cities, the comparison is stark, said John Hawksworth, head of macroeconomics at PwC. Cities such as Shanghai, Beijing and Mumbai, for example, are projected to grow at around 6-7% per annum in real terms, whereas cities such as New York, Tokyo, Chicago and London grow only at around 2% per annum on average.
- In absolute terms, the projected rise in Shanghai's GDP between 2008 and 2025 is greater than the combined GDP increase for London and Paris together.
- Thomas Hoehn, an economics partner at PwC, added: Global economic activity is concentrated in the world's largest cities and it is important to understand how those cities compare, especially when many developed economies are experiencing economic difficulties while countries like China and India continue to grow.
Some changes in the bottom half of the top 30:
- Delhi, Guangzhou and Rio de Janeiro are all likely to rise rapidly up the table between now and 2025, PwC says, as are Istanbul and Cairo. Lots of American and European cities, however, are set to slide sharply over the same period, with cities like Sydney, Singapore and Madrid likely to drop out of the top 30 altogether.
Fascinating statistic below in terms of concentration of production/wealth in the world's largest cities:
- The research shows that the largest 100 cities accounted for about 30% of global GDP in 2008 and some have bigger economies than medium-sized countries like Sweden or Switzerland.
Being curious, I headed over the PriceWaterhouseCoopers website to see if more data could be located and we have this snazzy chart, showing the full list of 30 now, v projections in 2025. Definitely some surprises even in the current top 30 - Mexico City was one but part of this is HOW the projection is done... population has a lot to do with it. To that end, despite a huge economy Germany does not have 1 single city in the list.
- Aside from London and Paris, only two other European cities (Moscow and Madrid) made the top 30 in 2008. This reflects the fact that countries like Germany and Italy (which only became unified nation states in the 19th century) have several major cities that are medium-sized in global terms, rather than one dominant capital city as in the UK or France.
Top 30 urban agglomeration GDP rankings in 2008 and illustrative projections to 2025
(using UN definitions and population estimates)
Rank in 2008
Cities ranked by estimated 2008 GDP at PPPs
Est. GDP in 2008 ($bn at PPPs)
Rank in 2025
Cities ranked by projected 2025 GDP at PPPs
(% pa: 2009-2025)