New York City has been ranked number one in a list of 120 global cities for its ability to attract capital, businesses, talent and visitors.
The index, which has been devised by the Economist Intelligence Unit and was commissioned by Citigroup, places New York as the most competitive city closely followed by London and Singapore, with Paris and Hong Kong tied for fourth place.
According to the report, competitiveness, is a holistic concept. While economic size and growth are important and necessary, several other factors determine a city’s overall competitiveness, including its business and regulatory environment, the quality of human capital and the quality of life. These factors not only help a city sustain a high economic growth rate, but also create a stable business and social environment.
So just how important are the cities in this list? Well, combined they represent a population of about 750 million and generated around US$20.2 trillion dollars in GDP in 2008 – or in other words about 29% of the global total. This gives them a larger contribution to the global economy than the European Union, United States or China. What’s more, their average rate of growth from 2010-16, is forecast to be 4.8%, with double-digit rates likely across many Chinese cities in particular.
Overall, each city is assessed against eight broad categories. And while no city, holds an advantage across all the categories, the rankings give plenty of food for thought for prospective businesses and investors deciding where to expand or locate new operations in the near future.
The top trends
- US and European cities are the world’s most competitive (24 out of the top 30), despite concerns over ageing infrastructure and large budget deficits.
- Asia’s economic rise is reflected in the economic competitiveness of its cities.
- A “middle tier” of mid-size cities (with populations of between 2 million and 5 million) is emerging as a key driver of global growth –collectively they are forecast to grow by 8.7% annually over the next five years, ahead of the megacities on which many firms focus.
- The most significant advantage that developed country cities hold is their ability to develop and attract the world’s top talent.
- Infrastructure investments will drive emerging market growth, but more will be needed to secure their attractiveness to tomorrow’s talent.
- Cities of all sizes can be competitive, but density is a factor in the competitiveness of larger cities - the top 10 most competitive cities range from the world’s biggest (Tokyo) to some of its smallest (Zurich’s) with no correlation seen between size and competiveness in the Index.
- African and Latin American cities lag most on competitiveness.
The top cities
1 New York
=4 Hong Kong
A copy of the study can be downloaded here and why not listen to our webinar, with Adam Newton of Shell’s Future Scenario’s team, as he explores the impact of mass urbanization and the challenges and opportunities it represents.