PriceWaterhouseCoopers Cities of Opportunity 2012

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  • 1. Abu Dhabi Hong Kong Madrid New York Singapore Beijing Istanbul Mexico City Paris Stockholm Berlin Johannesburg Milan San Francisco Sydney Buenos Aires Kuala Lumpur Moscow São Paulo Tokyo Chicago London Mumbai Seoul Toronto Los Angeles Shanghaiwww.pwc.comwww.pfnyc.org Cities of Opportunity 2012 Cities of OpportunityThe papers and printer used in the production of this study are certified to Forest Stewardship Council (FSC) standards,which promote environmentally appropriate, socially beneficial, and economically viable management of the world’sforests. The cover and text for this publication were printed on paper containing 10% postconsumer waste material.By printing at a facility utilizing 100% wind energy and using postconsumer recycled fiber in lieu of virgin fiber: 13 trees were preserved for the future 629 lbs of solid waste were not generated 39 lbs of waterborne waste were not created 1,239 lbs net of greenhouse gases were prevented 5,687 gallons of wastewater flow were saved 9,482,515 BTUs of energy were not consumed
  • 2. Cities of Opportunity 2012 analyzes thetrajectory of 27 cities, all capitals of finance,commerce, and culture—and through theircurrent performance seeks to open a windowon what makes cities function best. This year,we also look ahead to 2025 to projectemployment, production, and populationpatterns, as well as “what if” scenarios thatprepare for turns in the urban road.Cover image: Brooklyn Bridge and Lower Manhattan,Guillaume Gaudet Photographywww.pwc.com©2012 PwC. All rights reserved. “PwC” and “PwC US” refer to PricewaterhouseCoopers LLP, a Delaware limited liability partnership,which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. Thisdocument is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.www.pfnyc.org©2012 The Partnership for New York City, Inc. All rights reserved.
  • 3. Looking to the future of 27 cities at the centerof the world economyIn this fifth edition of Cities of Opportunity, 2.5 percent of the population. By the quarter- with some of this uncertainty, “what if”PwC and the Partnership for New York City century, they will house 19 million more scenarios test the future of our cities underagain examine the current social and economic residents, produce 13.7 million additional different conditions. The clouds hold silverperformance of the world’s leading cities. We jobs, and generate $3.3 trillion more in GDP linings for some cities in terms of greateralso add a future dimension that probes the if population follows UN projections and employment and wealth. But storms roll in forshape of city economies to come. Together, economic progress remains modest. As growth others. The differing “what if” scenarios stresslooking at 2012 results and ahead toward occurs, the symbiotic relationship between the need for flexible thinking simply to dealthe possibilities in 2025, we seek to provide East and West is likely to continue: Emerging with foreseeable changes, not to mentiona realistic framework for thought and action cities will skyrocket in jobs and population, the unexpected turns.beginning with 27 of the world’s most signifi- but developed cities will retain the spendingcant cities—on one hand, the engine of the power, as well as the consumer and corporate To flesh out the empirical picture, we spokemodern global economy and on the other, demand, to drive growth. One side will still to a broad scope of leaders on issues from thethe heart of much of our shared culture. need the other to move ahead. long range and philosophical to the practical and immediate. This includes E.O. Wilson, theIt is precisely because of the importance of Meantime, our analysis shows that each naturalist; Bill Bratton, former New York andcities and the need to deepen knowledge of city represents an economic ecosystem in its Los Angeles head of police; Narayana Murthy,urban issues that we undertake the study. The own right, built around mutually supportive founder of Infosys; Andrew Chan and Petereffort to question and understand where cities economic and social strengths as well as an Chamley, two leaders of the global engineeringare and where they are headed benefits all intertwined fabric of jobs—not just the profes- firm Arup, based in Hong Kong and London,of us in a world urbanizing like never before. sionals in bright skyscrapers but all those who respectively; Wim Elfrink, Cisco’s head ofThis includes the officials and policymakers turn the lights on every morning from retailers Smart + Connected Communities; and Davidsetting the course, businesses invested in city and teachers to nurses and cooks, from crime Miller, former Toronto mayor and Worldwell-being, and the citizens who build their fighters to street cleaners. Maintaining healthy Bank special advisor on urban issues.lives in thousands of city neighborhoods world- balance is a cornerstone of urban resilience.wide, rich or poor, picturesque or prosaic. All in all, we hope to provide insight into Our jobs analysis also reveals surprising an urban world in which all of us are “in itStatistics tell some of the story: Today, our patterns, vulnerabilities, and dependencies, together,” making as strong a case for joint27 cities account for nearly 8 percent of world as cities journey toward 2025 with more than thought and action among cities as there isgross domestic product (GDP) but only a few clouds on the horizon. To come to grips for self-interest and competition.Yours sincerely,Robert Moritz Kenneth I. Chenault Terry J. LundgrenChairman and Senior Partner Chairman and CEO Chairman, President andPricewaterhouseCoopers LLP American Express Co. Chief Executive Officer Macy’s Inc. Co-chairman Partnership for New York City Co-chairman Partnership for New York City
  • 4. What makes a city tick? “Justice remains the appropriate name for certain social utilities which are vastly more important, and therefore more absolute and imperative, than any others,” John Stuart Mill wrote in Utilitarianism in 1861. He added, “education and opinion, which have so vast a power over human character, should so use that power to establish in the mind of every individual an indissoluble association between his own happiness and the good of the whole.” Many of those we spoke with this year in developing Cities of Opportunity agree. The foundations of healthy cities remain rule of law and safety and security today, as well as strong education to foster those qualities for future generations. Overview The city tomorrow Projecting urban possibilities to 2025 10 19 24 Population in millions 30 How the cities rank From butcher to baker to The ants, the man, and Where the jobs are London moves up, memory-stick maker the city A detailed look at six big ormerging 2012 2025 Asian cities improve Projecting urban trends to E.O. Wilson views city life telling employment sectors 2025 in jobs, production, through the lenses of nature and population and reason 14 22 28 34 The study’s methodology The shape of city The 2025 baseline scenario “What if” technological economies to come unemployment dawns Refinements continue on Jobs in business services, a solid foundation Mutual self-interest unites wholesale and retail, and … in a slow growth, Mumbai developed and developing cities manufacturing anchor the cities urbanized world? And four other scenarios that explore unexpected directions Shanghai Moscow Tokyo 24 Berlin Beijing Paris 21 Seoulw York 23 3 Istanbul 13 9 London Seoul São Paulo Milan Abu Dhabi Shanghai 2 9 Tokyo 1 10 Hong Kong 9 Istanbul Mumbai 6 Kuala Lumpur Mexico City Singapore 14o Paulo 11 Johannesburg Singapore New York 6 Sydney6 27 Hong Kong 24 16 Buenos Aires Sydney 23 W  e’re quickly coming to an agreement as a nation and as Berlin a world—that we really have to improve education systems.aris Toronto We need far better methods of teaching. We need better incentives Johannesburg for teachers, and especially to include education in science and Los Angeles Madrid technology because we are now entering a techno-scientific world. Chicagouala Lumpur 5 10 15 2 | Cities of Opportunity | PwC Value of output
  • 5. The city todayResults for 201242 46 51 56Intellectual capital Booting up holistic Health, safety and security Transportationand innovation sustainability From Aristotle to Bratton and infrastructureGenerating the skills that Wim Elfrink discusses to Chan, securing citizens’ A major revision focusesgenerate growth Cisco’s and his own passage well-being is key on internal mobility to urban India44 50 52 58City gateway Technology readiness Bill Bratton transformed The ins and outs, overs and urban law and order unders, of a great cityA new indicator measures The competition for digitala city’s global connections advantage continues to intensify … in New York and Los Angeles … can be engineered for efficiency, and explains how to achieve Peter Chamley of Arup explains that fundamental priority on the toughest city streets 46 52 58 T  he biggest lesson is that you H  ealth, safety, and security is the number one requirement for a W  hat we often lack now are have to think out of the box. city. If you don’t have security, you don’t have health and safety, projects having a champion You can’t think about all and all the other pillars that support democracy will weaken, who will get hold of them these [urban] challenges in a including education and the economy. If you have a shaky and make it their sole aim traditional pattern. We can’t platform, they are all going to be shaky. to deliver them. build cities like we did in the past. A transformational shift has to happen. Partnership for New York City  |  Cities of Opportunity | 3
  • 6. The city todayResults for 201262 67 72 76Sustainability and the Demographics and livability Economic clout Costnatural environment W  e know it when we see A  sia rises, but we’ll always Comparative advantagesW eighing the effectiveness it, despite a certain je ne have Paris can keep advancedof public policy sais quoi economies competitive64 68 74Cold comfort comes Andrew Chan of Ease of doing businessin Toronto Arup engineers sees C  ompetitive cities know emerging cities how to stay competitive… from civility and economicbalance, former mayor David … through the prism ofMiller explains resilience and sustainability 64 68 T  o understand a city’s quality of life, see if you can walk around F  or the average person in a developing city, the most important at any time of day or night. You don’t want to be walking around factor is safety, health, and security. Efficiency is also important— a city at 11 at night if it’s not interesting and exciting, and that’s and that relates to transport or connectivity and how you lay a test of a neighborhood and a city as a whole. things out through good urban planning. This ability to get around efficiently is probably second in importance only to safety.4 | Cities of Opportunity | PwC
  • 7. Cities at the edge Reference Megacities, megachallenges 79 84 92 Smaller world, bigger cities Narayana Murthy Key to the variables E  merging cities will need to of Infosys links Understanding the datapoints grow, and invest, even more … India’s urban future to the that underpin the study to enhance their citizens’ power of private enterprise, quality of life leadership, governance, and transparency 83 88 On the web Forecast of investment A tale of three cities See www.pwc.com/cities for spending Athens, Dublin, and Dubai interactive modelers; videos, … shows tremendous need weather the Great Recession podcasts, and full-length in emerging megacities in different ways versions of the interviews; detailed data definitions and sourcescow Beijingl Shanghai Dhaka Tokyo Chongqing Delhi Osakaarachi Guangzhou Shenzhen Manila Kolkata 84 83 T  o bring prosperity to the T  here is terrible corruption and little public security in my city Jakarta vast majority of Indians, in Bangladesh. ... But what can we do? We are not politicians we need to enhance our or powerful people. We just want to survive. ... That’s why governance system, enhance people come to New York from all over the world. There is law our transparency and and order. —New York cab driver accountability, combat corruption, and enhance our infrastructure.unicipal population data used in the main Cities of Opportunity comparison. Partnership for New York City  |  Cities of Opportunity | 5
  • 8. HighlightsCities of Opportunity 2012 covers a broad range of findingsand ideas. Here is a selection of notable ones.London moves up markedly broad technological transformation replacing workers without the right skills. Not unexpect-but New York shows continued strength edly in this “what if” scenario, employmentLondon advances four spots from last year to a virtual lock with New York at the top and finishes and GDP growth fall across our spectrum offirst in city gateway, a new category that measures international connectivity. New York performs 27 cities. Beijing, Shanghai, and São Paulowell across the board but wins no individual category, showing diverse strengths. Paris rises four lose the most jobs, but London and Tokyospots to number four this year, coming in first in demographics and livability and narrowly second follow close behind, showing that neitherto London in city gateway, showing that despite the eurozone’s continuing economic instability, developed nor developing cities escapethe long-term investment that builds a great urban center also lends resilience to weather the sweeping transformation. London and Sydneystorms. Overall, relative bands of performance remain similar to 2011. sacrifice more annual GDP than any city except Johannesburg—all suggesting the old adage, plan for the best but prepare forBeijing and Shanghai advance the worst.The two Chinese cities move to the top 5 in economic clout and city gateway along withLondon, Paris, and New York. Balanced progress across a range of social and economic “What if” smart cities prevail?indicators represents the next step for Shanghai and Beijing in transforming exceptional The answer is anything but a no-brainer.growth into sustainable performance at the top tier of world capitals. 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—A virtuous circle of social Size does matter. But is a big city light seemingly the right stuff for the modernand economic strengths enough on its feet to dance? world. Overall, our 27 cities lose 4 millionOur thesis remains that a city’s healthy growth Continuation of the “urban renaissance” jobs compared to the 2025 baseline projection.and long-term resilience depends on “positive is no guarantee in difficult economic times. Perhaps counter-intuitively, this occursreinforcement in the network of economic and Uncertainty seems to have replaced the expec- because greater productivity will cut the needsocial development,” to borrow from scientist tation of return to a steady state of economic for workers. However, higher trade mightE.O. Wilson. When great quality-of-life factors growth, and signs of potential transformation reasonably accompany such a scenario andlike schools, healthcare, housing, and safety can be seen in everything from jobs to the generate even more jobs than productivityare balanced with strong businesses and solid weather that greets us every morning. shaves away.infrastructure, the formula is right to pave city No matter the size, wealth, or advancementstreets with optimism if not yet gold. of modern cities, flexibility will be the If we follow our urban bliss, London keyword for planners and policymakers and Sydney lie on the yellow brick road“Another factor that makes things hopeful is considering the future. In Cities of Opportunity, our measures ofwhat chemists call autocatalytic reactions,” health, safety and security, demographicsWilson adds. “That is, when you get a product It doesn’t take a perfect storm to scuttle and livability, and sustainability representcreated by putting certain ingredients city futures a good proxy for quality of life—the urbantogether, the product itself becomes a catalyst. Looking at a range of uncertainties, we tested characteristic for which many professionalsThe reaction speeds up and you get more and what it would mean for cities if technological, and businesses appear to be searching. If thatmore products like that, and it just takes off economic, and sociopolitical forces go in the proves correct and more of us follow our urbanexponentially. You won’t get it quite in a social wrong direction and hamper economic health bliss, London, Sydney, Singapore, Paris, andsystem, but you could get something like it.” and employment growth between now and Berlin benefit the most in terms of jobs gained 2025—a realistic enough scenario given the by 2025; Stockholm the most in terms ofIf there’s bad news for cities it’s the same stubborn failure of jobs to return and hints of additional GDP. Today’s developing citiesas in science: “One of the hardest things to lose the most jobs and wealth.do sometimes is to get a reaction started.”6 | Cities of Opportunity | PwC
  • 9. When it comes to the share of city makes us creative.” Cities like San Francisco, housing correlates in a highly positive wayemployment, the biggest gorillas in with its mutually supportive ties to Silicon with the attributes of an economically strongthe room throw their weight around Valley, show the dividends of collaboration. city. They may be cold, dark, or far from thedisproportionately (for better or worse) madding crowd, but Stockholm, Toronto, and Cities of invention ... or reinvention Sydney again demonstrate balanced success inFinancial and business services, manufactur- History shows the capacity of cities to build education and health, safety and security.ing, wholesale, and retail sectors anchor manycity economies in 2012. The first two account from the ground up, as many emerging cities Can the champions rest their feats?for as much as a third of jobs. That includes are doing now, and to rebuild from rubble,Shanghai, where one in three workers is in as many developed cities have done after war. The Olympic effort may be ended in London,manufacturing, and Milan, Paris, London, Success comes from collective will and the but cities worldwide require leaders with theBeijing, San Francisco, and Stockholm, where ability to align economic, governmental, and vision and drive to realize transformative proj-financial and business services predominate. social forces. Where there’s a common will, ects like Baron Haussmann in 19th-century there’s a way forward. Paris, Daniel Burnham of Chicago at the turnWholesale and retail accounts for more than of the 20th century, and Robert Moses in mid-one in five jobs in Hong Kong, Kuala Lumpur, Growing cities with growling appetites for 20th century New York. While their programsMoscow, Mumbai, Mexico City, and Istanbul. capital investment were sometimes criticized, they “certainly To keep up with the great gains in population delivered,” to paraphrase Peter Chamley,While these profiles may be changing—for head of infrastructure at Arup. Many credit and employment by quarter-century, someinstance, as emerging cities begin to diversify Singapore’s modern planners with that vision emerging cities will have to invest significantly.away from reliance on manufacturing— to see and build. Shanghai and Beijing will need to invest whatover-dependencies and imbalances can leave represents 42 percent of their GDP just tocities vulnerable. Chamley, for his part, notes a recent triumph satisfy forecast growth from 2012 to 2025. For in his home city. “The construction industrySurf (with the pack) or (defend your) turf? Mumbai, it’s 35 percent. London, by contrast, can look at the Olympics with pride. Wonder- only requires 17 percent and Stockholm 19The question of competing or collaborating ful facilities have been delivered very quickly percent to meet the forecast of investmentwithin and among communities is as old as and on budget. ... It has been a great success in spending relative to growth.the seven hills of Rome. Today’s cities need to regenerating that part of London.” But manyblend some of each strategic outlook into their Most happy cities are alike ... but every other developed and developing cities faceplanning. On one hand, cities can benefit by unhappy city is unhappy in its own way high hurdles including bureaucratic delay,aligning interests and seeking joint action in political gridlock, and systemic corruption. Athens, Dublin, and Dubai each endured the To recall the principal behind Burnham’sa world urbanizing faster and creating more same economic crisis. But each climbed out legacy, which continues to benefit Chicagoans:funding needs than cities are empowered to of the hole or stayed mired in their problems “Make no little plans, for they have no magicaddress. Yet, cities are where the buck stops in in their own way—illustrating the extent to to stir men’s blood. ... Make big plans. Aimterms of the need to get results. Competition which it is more the differences rather than high in hope and work.”with other cities, whether for a new factory the commonalities that distinguish economicor new museum, is a fact of life. breakdown and recovery in a city. Learn moreAs scientist E.O. Wilson told us: “The solution Make my city healthy, wealthy, and wise See www.pwc.com/cities for interactive modelers,to our problems is not to expect complete (not necessarily in that order) videos, podcasts, and full-length versions of theharmony among cooperating people, but torealize that group distinctions and group Most of the leaders we spoke to emphasize the interviews; detailed data definitions and sources.competition and individual-level competition need for a safe and secure city as the keystonewithin groups is just the way we are. What we of a healthy community. After that, good edu-really need to do is try to find ... a harmonious cation is most widely cited as a springboardsolution. ... It’s that ferment of the center, for future success. In fact, our own Cities ofbetween the two opposing impulses, which Opportunity analyses have shown that good Partnership for New York City  |  Cities of Opportunity | 7
  • 10. Overview8 | Cities of Opportunity | PwC
  • 11. London moves up overall, Asian cities move ahead in some areas, and the future moves in patterns we seek to understand A cityless man is like “a solitary piece in and hospitals to accommodate growth. Both checkers,”1 simply out of the game, Aristotle mature and emerging cities depend on each wrote 2,400 years ago, putting urban life in other to balance their economies. And “only by a clear social context. Then, the polis literally acknowledging our extreme interdependence meant a free city that made laws, sometimes will we make the fishbowl effect work for wars, and on a deeper level signified the com- humanity rather than against it,” in the words munal existence under the rule of morality of Li Congjun, head of China’s official news that only humans are capable of living.2 Being agency.4 Big uncertainties hang over the entire a citizen was a badge of honor for the 30,000 picture from destabilizing climate change to or so politai among Athens’s 140,000 or so political and social tension to technological men, women, children, and slaves. transformation. Realistically, continuation of the 20-year “urban renaissance” cannot be Today many more of us live in cities. Central taken as any more inevitable than the long Athens houses over 1 million people, with climb in house prices that crashed to set off about 3.8 million in the metropolitan area. the economic crisis. A considered look at the Citizenship embraces more than just men. future is in order. And the birthplace of democracy is now better known as the epicenter of the eurozone crisis. The report adds an entire section that (See “A tale of three cities,” page 88.) projects from our 2012 results the sectoral employment, production, and population of However, the foundations of urban life remain our 27 cities in 2025. We examine what might the same. City dwellers still prize living under occur if different city characteristics prove the rule of law and strive to develop the rich- more or less important in attracting invest- est quality of social and economic life they ment and driving growth, and how cities will can. How to govern justly and well—how be affected if the world economy changes best to move the city ahead—is still a point of course. We also veer away from our 27-city debate. In ancient Greece, Aristotle’s biggest study group to examine those cities at the theoretical rival on the topic, Socrates, his immediate forbear and self-described “gad- 1 Politics, I.I.9-10 as translated by I.F. Stone in The Trial of Socrates, 1989, Anchor Books, page 98. fly” of the state,3 favored governing by expert 2 The Trial of Socrates, I.F. Stone translating on page 10 from managers rather than the democratic citizenry Politics 2.1.9-10, “It is man’s ‘special distinction from other animals that he alone has the perception of good and bad and of the just he viewed as a herd. Today, political debates and the unjust.’ It is this intrinsic sense of justice that gives man his around the world appear equally as difficult social instinct, his ‘impulse’ as Aristotle calls it, to a social life, and makes man ‘a political animal in a greater measure than any bee (often lacking the intellectual rigor Socrates or any gregarious animal.’” Interestingly, E.O. Wilson, a renowned and Aristotle brought to the party). scientific observer and thinker today on sociobiology and human nature, parallels Aristotle in speaking to Cities of Opportunity (see page 24), as do a range of others we interviewed including ex-New With that look back for context, Cities of York and Los Angeles head of police Bill Bratton on the primacy of justice in community-building. Opportunity notably looks ahead this year 3 As related principally by Plato, as well as Xenophon and to frame city futures around probable direc- Aristophanes, in that Socrates left no writings of his own. tions and unforeseen turns in the road at a 4 “Frictions are hardly avoidable, but what’s important is for the crucial time. The Great Recession continues to two sides to handle their differences through coordination based on equality and mutual understanding. Only by acknowledgingA street in the Beaubourg area of Paris as hamper mature city governments. Stubborn our extreme interdependence will we make the fishbowl effectseen from the Pompidou Center. joblessness adds a serious problem. Emerging work for humanity rather than against it.” Li Congjun, president of Xinhua News Agency, China’s official press agency, wrote cities are faced with a flood of immigrants in The New York Times, July 18, 2012, in “Rebalancing the and a pressing need to build adequate roads, Global Economy.” water, waste, and energy systems, schools, Partnership for New York City  |  Cities of Opportunity | 9
  • 12. How the cities rank Intellectual capital Technology Transportation Health, safety and innovation readiness and and security infrastructurefulcrum of change today: first, the megacities 27 New York 189 91 101 97mushrooming especially throughout the 26 London 184 79 99 96emerging world; and second, Athens, Dublin, 25 Toronto 198 66 109 116and Dubai, three cities that suffered throughand managed the economic crisis, each in 24 Paris 194 65 99 89its own way. 23 Stockholm 205 89 103 119 22 San Francisco 191 93 92 107We chose to extend our investigation into thefuture because this seems a natural time to 21 Singapore 122 80 114 103stick our finger into the air and gain a sense of 20 Hong Kong 150 71 103 71the direction of things to come. After decades 19 Chicago 170 81 92 109in which overall growth led to a common,often unspoken expectation of return to 18 Tokyo 167 80 107 93healthy economic equilibrium, we’re now at a 17 Sydney 179 56 66 114moment when a few trends indicate a change 16 Berlin 147 48 95 101in the norm, if not advancement to a newplateau in the industrial/information revolu- 15 Los Angeles 171 79 59 91tion. Economic growth remains slow in many 14 Seoul 137 96 109 61places and municipal budgets strained in 119 44 99 81 13 Madridmature cities. More puzzling, employmentrefuses to bounce back to anything near levels 12 Milan 131 34 86 95before the boom years that preceded the Great 11 Beijing 82 49 71 35Recession. Joblessness, especially among 10 Kuala Lumpur 66 41 80 55the young, persists at high levels. Scientific 9 Shanghai 99 48 80 38advances could be playing a role as “techno-logical unemployment” finally dawns long 8 Moscow 109 54 73 19after Keynes coined the term. 7 Mexico City 82 24 93 42Urban immigration levels never known before 6 Abu Dhabi 87 28 89 93(certainly not beyond New World melting pots 5 Buenos Aires 63 28 93 43like New York and Chicago or Buenos Aires 4 Istanbul 45 33 67 24and São Paulo) threaten the social and politi- 3 Johannesburg 49 23 32 46cal fabric of many cities. When factors likerising income inequality and pervasive social 2 São Paulo 60 22 54 16networking are folded in, cities can become a 1 Mumbai 48 27 70 25volatile mix. And ultimately, while cities maylack the power or funding of national govern-ments, they are the ones that must act asall these forces play out in their streets,businesses, and homes. As David Miller,former mayor of Toronto, told us, “Mayors the promise that innovation offers in urban Asian cities perform very well in a number ofoften don’t have time to wait, and they are clusters. (See The city tomorrow, pages 18-39.) categories. Shanghai and Beijing move upvery practical. Mayor LaGuardia [of New York the ratings, performing in the top five inin the 1930s] quite famously said ‘there is In terms of today, the study finds that despite economic clout and city gateway, the latter ano Republican or Democratic way to pick up a revision of many of our data variables and new indicator that measures global attractive-garbage.’ You become less ideological. ... reorganization of indicator categories, relative ness and accessibility. Four of the five leadersCity governments are good at action.” bands of performance generally continue. Yet in inner-city transportation and infrastructure noteworthy changes do occur. sit in Asia—Singapore, Seoul, Tokyo, andPositive forces are at work also. These include Hong Kong—versus last year when all fivethe upside potential of globalization and the London moves up from number six last year, leaders were in America or Europe. Externalincreasing attraction of cities to travelers of doing very well in many categories and finish- city connections like air traffic also weighedall sorts, the expanding growth of urban ing narrowly as the number-two city behind on the scoring. In demographics and livability,service sectors supported by rising demand New York. The top third is rounded out by Paris moves up 7 spots from the mid-ranksand higher levels of education and training, Toronto, Paris, which advances four spots last year to number one with the indicator cat-opportunities to build new or retrofit crum- from 2011, Stockholm, San Francisco, egory recast in 2012 to stress livability. Paris,bling, old infrastructures, and, of course, Singapore, Hong Kong, and Chicago.10 | Cities of Opportunity | PwC
  • 13. Sustainability Economic Ease of doing Cost Demographics City gateway Score and the natural clout business and livability environment 83 119 182 70 59 121 1,112 65 119 181 71 72 145 1,111 101 98 175 89 75 69 1,096 86 120 137 58 82 143 1,073 88 83 161 86 73 55 1,062 101 76 154 86 76 85 1,061 69 110 202 71 75 99 1,045 59 99 198 78 78 108 1,015 72 67 158 93 67 88 997 58 92 156 51 59 111 974 103 90 147 54 78 77 964 91 68 135 124 74 72 955 79 59 160 99 65 92 954 58 81 146 108 37 82 915 82 76 136 96 55 115 903 89 90 111 71 51 69 827 65 125 80 79 48 135 769 55 64 154 106 53 87 761 44 118 56 83 40 123 729 86 95 62 77 50 87 712 53 60 117 102 43 57 673 33 68 89 90 57 16 650 74 67 60 80 48 41 597 49 61 78 102 34 85 578 55 42 102 100 46 39 534 64 67 88 57 49 50 527 58 82 59 93 23 30 515 High Highest rank in each indicatorEach city’s score (here 1,112 to 515) is the sum of its rankings across indicators. The city order from27 to 1 is based on these scores. See maps on pages 16–17 for an overall indicator comparison. Medium LowLondon, and New York also narrowly bunch of jobs in Milan, Paris, London, Beijing, San behind. Yet concentration of wealth reflectsat the top of economic clout between Beijing Francisco, and Stockholm. New York leads the inverse relationship. Among the emergingand Shanghai, first and fifth, respectively. the world with 16 percent of employment in cities, only Shanghai is expected to reach healthcare. And a third of Shanghai’s jobs lie productivity per worker (as measured by GDP)Our first detailed look at current employ- in manufacturing, even as that city is expected on a par with mature cities like London, Tokyo,ment, population, and production in our 27 to migrate more toward the service sector. Hong Kong, and Singapore.5 The Americancities shows them producing 8 percent of the cities, as well as Paris, Stockholm, Sydney, andworld’s wealth in 2012 despite being home to Looking ahead toward 2025, our baseline Toronto all remain far ahead of emerging onesonly 2.5 percent of its population. Three major scenario estimates that an additional 19 in terms of wealth. Mature cities retain thejob sectors—business and financial services, million will live and 13.7 million work in spending power, and consumer and corporatewholesale and retail, and manufacturing— our cities. They will generate an additional demand, that drive emerging economies. Indominate many city economies. The latter two $3.3 trillion gross domestic product (GDP)— fact, mutual self-interest would logically unitecategories are particularly large in emerging all predicated on a world of modest growth. emerging and mature cities as one sidecities. Business and financial services when Population and employment will surge in cities continues to need the other.grouped together account for over a third like Beijing, Shanghai, Mumbai, Istanbul, and 5 Abu Dhabi, an emerging city, is among the overall wealth leaders. São Paulo, with the pack of mature cities far But that is driven by the oil economy, hence an anomaly for broad comparison. Partnership for New York City  |  Cities of Opportunity | 11
  • 14. Yet visions of the future, like all plans put logical connection. In that case, employment Cities of Opportunity also ventures beyondon paper, are made to be altered by the would rise by 8 million versus the 2025 the 27 cities in our study to examine citiesunforeseen. We questioned what might baseline projection. at the edge of change. First, we look atoccur if the urban world takes different turns those emerging giants, the megacities with • If the industrial/information revolutionbased on the relative importance of either staggering growth and an equally impressive moves in the direction in which itcity characteristics (as represented by our 10 challenge to develop infrastructure and quality shows signs of going and technologicalindicator categories) or the direction of the of life at anything near the same speed. The unemployment kicks into higher gear, allworld economy. In looking ahead, we focused population numbers are impressive, of course. cities suffer losses in jobs and production—on understanding the possible journeys rather But the direction is more so. In 1950, seven which are especially painful set against athan the final destinations to provide leaders of the 10 largest metropolitan areas were background of sluggish economic growthin government, business, and the community in the developed world. By 2010, only New coupled with booming urban populations.a pragmatic gauge for their thinking. York and Tokyo remained on the list along Emerging cities do worst in all sectors, with with eight developing megacities. European Beijing, Shanghai, and São Paulo losing“What if” scenarios (see pages 32-38) show that: cities had vanished. By 2025, according to 2.4 million, 1.9 million, and 1.3 million jobs,• If cities succeed based on knowledge, the United Nations, the number of megacities respectively, versus the baseline 2025 projec- technology, and travel connections, the (with population over 10 million) will have tion (see chart on page 35). But London mature cities—notably London but also nearly doubled to 29 from 16 at the turn of and Tokyo also each lose approximately Paris, New York, and Tokyo—benefit the the century, with 12 of the 13 new ones in the 1.1 million jobs. most. This is a logical connection in an inter- emerging world. (See page 79, “Megacities, • If protectionism spreads as a way to coun- megachallenges.”) twined urban world: It’s easy to picture the ter lingering slow growth, all cities will lose cities that prosper as those with the deepest, Anyone who has lived in a big city for long, jobs and production, with Beijing, Shanghai, broadest, and highest-quality education; however, knows that things rarely remain the São Paulo, London, and Tokyo again suf- those that are “wired” most thoroughly and same for more than a few years. For better fering the worst. In fact, the World Trade effectively for businesses and individuals; or worse, change happens. Organization and European Commission and those with infrastructures offering easi- indicate that restrictive trade policies are on Athens, Dublin, and Dubai are three cities est access to, from, and for the rest of the the upswing now as nations seek to put their that dramatically illustrate the toll of the world. All these elements are often viewed own houses in order at the expense of the Great Recession and the differing paths to as leading indicators of urban potential. outside world. recovery. We wondered what lessons might However, the higher productivity that would likely accompany this reality also depresses • If quality of life drives city economies emerge by comparing them. It turns out that overall job numbers. The results brighten as businesses and professionals flock to each city followed its own path into the crisis, notably, though, if 3 percent greater world the most livable cities, London, Sydney, managed its own way, and dug out or sank in trade accompanies this scenario, another Singapore, and Paris benefit the most. deeper in its own way. Therein lies “a tale of three cities” (see page 88).Mature cities benefit if future success is based on knowledge,technology, and travel connections or strong quality of life. All citiessuffer if technological unemployment or protectionism takes holdin a sluggish economy. The Queen Sofia National Center of Art Museum in Madrid.12 | Cities of Opportunity | PwC
  • 15. Interviews track the big themes of urban life: • Peter Chamley digs deep into the practical vast majority of Indians,” Murthy counsels,the balance required between collaboration challenges of keeping a mature city up “we need to enhance our governanceand competition; the need for visionary lead- to speed from his hands-on perspective as system, enhance our transparency anders to drive critical transformation; the quest chief engineer for Arup Group at London’s accountability, combat corruption, andto build a virtuous circle of economic, social, Crossrail project, New York’s Second Avenue enhance our infrastructure.”and environmental sustainability; the practical Subway, and many other groundbreaking In the end, many implications arise fromtest of how to meet funding needs; and, the infrastructure initiatives. Cities of Opportunity 2012 for cityfoundation of any city, safeguarding justice in governments, businesses, and citizens. • David Miller, World Bank special advisorthe community based on shared respect for law Our goal remains helping to identify what on urban issues and former Torontoand order and quality of life. We spoke with: works for cities, framing thought and action mayor, speaks of Toronto’s ability to• E.O. Wilson, the renowned scientist, sweeten life for many on the cold shores for leaders charged with public and private naturalist, and author, addresses the of Lake Ontario with a recipe that beats decision-making, and, by doing so, bettering potential of cities, good and bad, as they hot Tim Horton’s coffee and maple sugar the lives of the 3.6 billion or so politai, urban work through humankind’s defining chal- donuts, fashioning success from a founda- citizens representing over half the world’s lenge of getting the mix right between tion of economic balance, civility, and social population today. individual and collective interest. “What we cohesion. Miller also addresses the practical- have to do,” he argues, “is make cities a lot ities of city governance in the face of limited If there is a lesson to be drawn from the study, more livable. By that I mean, more consis- power and funding. it is the continuing demonstration that cities tent with the fundamental emotional needs, face similar challenges and opportunities, • Andrew Chan, Hong Kong-based deputy and their intertwined economies depend on the instinctive needs of human beings.” chairman of Arup, dreams of “creating each other to prosper. Coordinated dialogue• Wim Elfrink, Cisco’s chief globalization a true eco city [with] infrastructure that and action around shared goals remain officer, frames the transformative possibili- works together in a holistic way so that the most effective order of the day in a ties of technology backed up by practical energy, water, transport, and waste are all challenging time. approaches to enable progress, such as public- integrated.” He also tells of some of the big- private partnerships and business consortiums. gest urban infrastructure challenges in Asia. Learn more• Bill Bratton, who spearheaded major • Finally, N.R. Narayana Murthy, founder crime reductions in New York and Los of Infosys and as much a father of India’s See www.pwc.com/cities for interactive modelers; Angeles, tells how that is done—street economic miracle as any business leader, videos, podcasts, and full-length versions of the by street with respect for citizens’ basic takes a clear-eyed look at the challenges interviews; detailed data definitions and sources. quality of life, attention to law and order, and opportunities that face a nation and ultimate trust that city dwellers are the urbanizing at the rate of 20,000 new city ones who will step up to safeguard their dwellers a day. “To bring prosperity to the own communities.
  • 16. ApproachWhile the cities and variables may change,the research method remains consistent It should be clear by now, in this fifth edition reexamine our methodology every year, and of Cities of Opportunity, that our annual report why we try to frame our data within a context is a continually evolving project, in which that illuminates the meaning behind the the only constant is the assurance that both raw numbers. its data and criteria are as tested and unim- peachable as possible, and that sufficient Last year, for example, we explored underly- thoughtfulness is invested to make it useful to ing issues such as regional management, cities, their leaders, businesses, and citizens education, cityscapes, sustainability, traffic seeking to improve their economies and congestion, and preservation. This year, we quality of life. No new report is the same as are taking an enormous leap forward by that of the previous year simply because every projecting our 27 cities 13 years into the new report is subject to careful scrutiny and future, for indicative forecasts, under several continuing improvement. scenarios, of the global urban outlook in 2025. But we also continue to focus on the pres- An entirely new future-oriented section, The ent: “A tale of three cities” reports on Athens, city tomorrow, is the biggest change readers Dubai, and Dublin, all of which have been will notice this year. We built from a founda- deeply affected—each in its own way— tion of Cities of Opportunity methodology and by the consequences of the Great Recession. results, complemented by Oxford Economics’s regional and world models, to develop a 2025 The fundamental criteria governing this baseline projection customized for our 27 report’s choices of cities remain unchanging, cities. From that 2025 baseline, we con- however. They are: structed a “what if” scenario modeling tool sensitive to changes in particular city char- Capital market centers. While many of the acteristics as represented by our 10 indicator cities included are hubs of commerce, com- categories or the world macroeconomic munications, and culture, all are the financial picture. In other words, the modeling tool centers of their respective regions. This means can reslice the Cities of Opportunity urban pie that each plays an important role not only according to the relative importance of city locally but also as a vital part of a global eco- traits that we measure, or it can make the nomic network. economic pie itself bigger or smaller depend- Broad geographic sampling. Beyond each ing on growth assumptions. Methodology city’s role as a regional, or even global, is presented in The city tomorrow section center of finance and commerce, the 27 (see page 20) along with “what if” scenarios. cities collectively form a representative Our foundational study of current perfor- international distribution. mance reaches 27 cities this year, up from 11 Mature and emerging economies. Fifteen cities when we began five years ago. But we mature cities and 12 emerging ones are don’t think that the quantity of cities covered included this year, with three new cities added is the most important aspect of Cities of and two removed. At 27 cities, the sample size Opportunity. Rather, it is the quantity and remains small enough to allow for an analysis quality of the variables we have added to that is both deep and broad, but still large— the study during those years. That is why we and inclusive—enough to be representative.14 | Cities of Opportunity | PwC
  • 17. This year’s total of 27 cities is one more than The 60 variables, down from last year’s 66, of socioeconomic advancement. This effectin last year’s report. More important, we have constituting the 10 indicator groups have might be even more pronounced in developingreplaced two cities with three new ones: changed significantly this year in order to economies and economies with larger ruralBuenos Aires, Kuala Lumpur, and Milan. develop an even more accurate image of populations. Nonetheless, because consistent city success. Indeed, only two indicators— comparisons across all cities are critical toItaly’s financial (and fashion) center was technology readiness and health, safety assure objectivity, country-level data wereadded to enhance the geographic weight of and security—remain unchanged from used when consistent, highly reliable sourcesEurope’s southern tier, to counterbalance the previous year. of publicly available municipal data could notthe continent’s northern cities. Kuala be used for all 27 cities.Lumpur joins this year’s report because it is, The most extensive revisions are in transpor-by general consensus, one of Asia’s most tation and infrastructure, which has seen its The scoring methodology was developed todynamic capitals and increasingly a major focus sharpened from nine to six variables ensure transparency and simplicity for read-global city. Buenos Aires replaces Santiago (of which only three remain the same); ers, as well as comparability across cities. Thein the Spanish-speaking Southern Cone not demographics and livability, which has been output makes for a robust set of results and aonly because of its economic growth but of its realigned around four variables with the strong foundation for analysis and discussion.cultural vitality and influence as well. Finally, emphasis on livability; and cost, which hasHouston has been dropped from this year’s four new variables. But there are substantive In attempting to score cities based on rela-report in order to more evenly balance the changes among other indicators as well, tive performance, we decided at the outsetUS with the rest of the world. including sustainability and the natural of our process that maximum transparency environment, economic clout, and ease of and simplicity required that we avoid overlyWe have also revised our indicators, drop- doing business. complicated weightings of our 60 variables.ping one and adding an entirely new one: city Consequently, each one is treated with equalgateway. In general, the indicators are con- Because Cities of Opportunity is based on importance and, thus, weighted equally. Thisstructed with a robust sampling of variables, publicly available information supported approach makes the study easy to understandeach of which has been chosen because it is: by extensive research, three main sources and use by business leaders, academics,relevant; consistent across the sample; are used to collect the relevant data: policymakers, and laypersons alike.publicly available and collectible; current;free of skewing from local nuances; and Global multilateral development Taking the data for each individual variable,truly reflective of a city’s quality or power. organizations such as the World Bank and the 27 cities are sorted from the best perform-(See pages 92-95 for a brief key and International Monetary Fund, national ing to the worst. The cities are then assignedwww.pwc.com/cities for a detailed listing statistics organizations, such as UK National a score from 27 (best performing) to 1 (worstof definitions and sources.) Statistics and the US Census Bureau, and performing). In the case of a tie, the cities are commercial data providers. The data were assigned the same score.Data this year were normalized for factors collected during the latter half of 2011 andsuch as relative geography or population in first quarter of 2012. In the majority of cases, Once all 60 variables are ranked and scored,almost all cases, minimizing the likelihood the figures used in the study refer to 2010 they are placed into their 10 indicatorsof a city doing well solely because of size or and 2011 data. (for example, ease of doing business or cityhistoric strength. This process eliminated the gateway). Within each group, the variableneed to differentiate between variables that In some cases, national data are used as a scores are then summed to produce an overallreflect a city’s raw power (such as number proxy for city data. Use of national data tends score for that indicator. This produces 10of foreign embassies or greenfield projects) to disadvantage the 27 cities in our study, indicator league tables that display the relativeand the quality or intensity of a given all of which are either national or regional performance of our 27 cities.characteristic (such as percent of population capitals of finance and business that tend towith higher education). outperform national averages in measures Partnership for New York City  |  Cities of Opportunity | 15
  • 18. Intellectual capital andand innovation Intellectual capital innovation Indicator rankings at a glance page 42 42 page London 27 Stockholm London 27 Stockholm The maps below show city rankings in each of the study’s 10 overall Toronto Toronto 22 22 11 Moscow 11 Moscow Chicago 26 26 Chicago BeijingBeijing indicators. A brief key to the 60 variables is available on pages 92-95. San Francisco 24 24 19 19 San Francisco Paris Paris 25 16 Berlin 25 16 Berlin SeoulSeoul 23 New York York 23 New 14 14 Istanbul 1 1 Istanbul 8 15 158 12 12 Interactive tools and detailed listings of definitions and source Los Angeles 20 20 Los Angeles Madrid MilanMilanAbu DhabiDhabi Shanghai 10 Tokyo Madrid Abu Shanghai 10 18 18 Tokyo documents used to develop Cities of Opportunity are offered at 8 8 9 9 17 HongHong Kong 17 Kong www.pwc.com/cities. Mexico City City Mexico 2 2 Mumbai Mumbai KualaKuala Lumpur 6 6 Lumpur Singapore 13 13 Singapore São PauloPaulo São Johannesburg Johannesburg 4 4 3 3 Sydney Sydney Buenos Aires Aires 5 Buenos 5 21 21 Health, safety andand security Health, safety security Transportation andand infrastructure Transportation infrastructure page 51 51 page page 56 56 page London 23 Stockholm London 23 Stockholm London 27 Stockholm London 27 Stockholm Toronto Toronto 20 20 Toronto Toronto Chicago 26 26 Chicago 8 Moscow 8 Moscow 19 19 Beijing Beijing Chicago 26 26 Chicago 2 Moscow 2 Moscow Beijing Beijing San Francisco 14 14 14 14 San Francisco Paris Paris17 BerlinBerlin 20 20 17 SeoulSeoulSan Francisco 23 23 24 24 San Francisco Paris Paris 14 21 Berlin 14 21 Berlin SeoulSeoul 21 New York York 21 New 11 11 Istanbul 5 5 Istanbul 7 26 26 7 20 New York York 13 13 18 Istanbul 20 New 5 11 11 5 Los Angeles 3 Los Angeles 3 20 20 18 3 3 Istanbul Los Angeles 15 15 Los Angeles 17 17 Tokyo Madrid MilanMilanAbu DhabiDhabi Shanghai 10 Tokyo Madrid Abu Shanghai 10 24 24 Tokyo Madrid MilanMilan Madrid Abu DhabiDhabi Shanghai 6 Tokyo Abu Shanghai 6 12 12 16 16 23 HongHong Kong 23 Kong 7 7 17 17 12 HongHong Kong 12 Kong Mexico City City Mexico 6 6 Mexico City City Mexico 4 4 Mumbai Mumbai KualaKuala Lumpur 10 10 Lumpur Mumbai Mumbai KualaKuala Lumpur 10 10 Lumpur Singapore 27 27 Singapore Singapore 22 22 Singapore São PauloPaulo São São PauloPaulo São Johannesburg Johannesburg Johannesburg Johannesburg 2 2 1 1 1 1 Sydney Sydney 9 9 Sydney Sydney Buenos Aires Aires 16 Buenos 16 Buenos Aires Aires 8 Buenos 8 4 4 25 25 Economic clout Economic clout Ease of doing business Ease of doing business page 72 72 page page 74 74 page London 15 Stockholm London 15 Stockholm London 22 Stockholm London 22 Stockholm Toronto Toronto 25 25 Toronto Toronto 24 24 Chicago 20 20 Chicago 19 Moscow 19 Moscow Chicago 23 23 Chicago 4 Moscow 4 Moscow Beijing Beijing Beijing BeijingSan Francisco 12 12 8 San Francisco Paris Paris 26 10 Berlin 26 10 Berlin SeoulSeoul San Francisco 18 18 20 20 San Francisco Paris Paris 14 12 Berlin 14 12 Berlin SeoulSeoul 825 New York York 25 New 27 13 13 27 25 New York York 25 New 6 15 15 6 12 12 17 17 Istanbul 4 4 Istanbul 13 13 10 Istanbul 10 5 5 Istanbul Los Angeles 2 Los Angeles 2 Los Angeles 21 21 Los Angeles Madrid MilanMilanAbu DhabiDhabi Shanghai 23 Tokyo Madrid Abu Shanghai 23 18 18 Tokyo Madrid MilanMilanAbu DhabiDhabi Shanghai 1 Tokyo Madrid Abu Shanghai 1 19 19 Tokyo 3 3 10 10 11 11 8 8 21 HongHong Kong 21 Kong 26 HongHong Kong 26 Kong Mexico City City Mexico 14 14 Mexico City City Mexico 2 2 Mumbai Mumbai KualaKuala Lumpur 5 5 Lumpur Mumbai Mumbai KualaKuala Lumpur 18 18 Lumpur Singapore 22 22 Singapore Singapore 27 27 Singapore São PauloPaulo São São PauloPaulo São Johannesburg Johannesburg Johannesburg Johannesburg 8 8 7 7 1 1 Sydney Sydney 9 9 Sydney Sydney Buenos Aires Aires 8 Buenos 8 Buenos Aires Aires 3 Buenos 3 17 17 16 16 16 | Cities of Opportunity | PwC
  • 19. City gateway Technology readiness page 44 page 50 London 24 Stockholm London 6 Stockholm Toronto 20 Toronto Chicago 17 14 Moscow Beijing Chicago 9 27 16 Moscow San Francisco 26 Paris 16 12 Berlin Seoul BeijingSan Francisco 14 Paris 26 10 Berlin Seoul 23 25 New York 10 8 7 Istanbul 13 27 17 23 New York 25 12 Los Angeles 20 22 9 14 Istanbul Madrid Milan Abu Dhabi Shanghai 12 22 Tokyo Los Angeles 18 Madrid Milan Abu Dhabi Shanghai 24 21 Tokyo 6 3 18 Hong Kong 7 1 4 20 Hong Kong Mexico City Mexico City 2 Mumbai 9 Kuala Lumpur Mumbai 16 Kuala Lumpur Singapore 22 Singapore 19 São Paulo Johannesburg São Paulo 1 Johannesburg 2 5 Sydney 3 Sydney 15 Buenos Aires 4 Buenos Aires 6 11 Sustainability and the natural environment Demographics and livability page 62 page 67 London 22 Stockholm London 20 Stockholm Toronto 13 Toronto 21 Moscow 19 10 Moscow Chicago 26 24 Berlin Beijing Chicago 23 BeijingSan Francisco 26 Paris 21 Seoul San Francisco 24 Paris 27 21 Berlin Seoul 15 19 New York 23 3 Istanbul 13 9 18 16 New York 8 Los Angeles 17 18 13 11 2 Istanbul 3 Abu Dhabi Shanghai 2 9 Tokyo Los Angeles 17 16 Tokyo Madrid Milan Madrid Milan Abu Dhabi Shanghai 4 4 1 14 10 Hong Kong 5 26 Hong Kong Mexico City 9 1 Mexico City Mumbai 6 Kuala Lumpur Mumbai 12 Kuala Lumpur Singapore 14 Singapore 23 São Paulo São Paulo Johannesburg Johannesburg 11 9 6 Sydney 6 Sydney Buenos Aires 16 27 26 Buenos Aires 8 Cost page 76 London 15 Stockholm Toronto 8 9 Moscow Chicago 16 BeijingSan Francisco 15 Paris 4 27 Berlin Seoul 19 5 New York 11 26 20 8 24 Istanbul Los Angeles 21 Madrid Milan Abu Dhabi Shanghai 13 1 Tokyo 24 17 10 Hong Kong Mexico City 19 Mumbai 25 Kuala Lumpur Map key Singapore 8 São Paulo Johannesburg High The 27 cities are sorted from the best to the worst 3 22 performing, with each receiving a score ranging Sydney Medium Buenos Aires 12 from 27 for best to 1 for worst. In ties, cities are 2 Low assigned the same score. Partnership for New York City  |  Cities of Opportunity | 17
  • 20. The city tomorrow18 | Cities of Opportunity | PwC
  • 21. Our cities in 2025 From butcher to baker to memory-stick maker; From blue skies to thunderstorms … Our approach to projecting the future lies and business decision-makers to consider in somewhere between Mark Twain, the American thinking and planning. They include scenarios satirist, and Charles Goodhart, the emeritus in which: professor of banking and finance at the London • Knowledge, technology, and travel School of Economics. Twain famously said, “It’s connections increasingly drive global difficult to make predictions, especially about investment decisions. the future.”1 More recently, Goodhart said of central bank forecasting in today’s uncertain • Urban quality of life attracts businesses and environment: “We need to refocus attention people and, in turn, fuels progress. away from point forecasts to the range of • A restructuring alters the long-term employ- possible outcomes, on potentially varying ment picture through some combination of scenarios and on the need for flexibility (not technological jobs displacement, government pre-commitment) to respond to an unknowable constraint, austerity, and a waning of future.” 2 We agree with them both. consumer spending, with market forces adding to the downdraft. Cities of Opportunity projects the future of • Protectionism spreads as a tactic to counter economic growth, population, and employ- difficult times. ment in our 27 cities in a pragmatic spirit. We establish a baseline projection to 2025 This seems the right time to take a look that assumes a continuation of urban growth at the future of our cities for a number of but at a more modest pace than the boom reasons. The world has been moving on a before the Great Recession. In that environ- fairly steady course in economics and finance ment, emerging cities skyrocket in population for some years, often with expectations of and employment, but mature cities retain continuity or even predictability. But social, much higher productivity. With average per political, scientific, and economic forces, capita wealth converging slowly over the all played out against the background of forecast period, each will still need the other to globalization and urbanization, suggest this buy and sell products and services—suggesting presumed order may be changing. Standard a continuing, mutual self-interest among our explanations do not quite unravel the persis- cities. (See chart on page 22, “The shape of city tence of high unemployment, for instance, economies to come.”) or capture the underlying technological trans- Our look at the future also suggests formation that shows signs of taking place “what ifs” that push the probable envelope (see page 34, “What if” technological unem- toward the possible. Scenarios investigate ployment finally dawns?”). These forces changes in the size of our urban pie through could play out in many ways that naturally faster or slower macroeconomic growth as concentrate their toll in cities. well as the same-sized urban pie being On the positive end of the spectrum, resliced with different winners and losers constructive forces come together in cities based on the relative importance of varying also, as demonstrated in different ways by all city qualities. (See next page for background the cities in our study. The upside potential isNew York harbor at dawn. on the methodology used.) 1 Baseball player Yogi Berra, physicist Neils Bohr, and movie mogul “What ifs” are constructed not as predictors Sam Goldwyn are also widely credited with a version of the adage. 2 Charles Goodhart, Financial Times, February 2, 2012, “Longer-term but as parameters or signposts for government central bank forecasts are a step backwards.” Partnership for New York City  |  Cities of Opportunity | 19
  • 22. enormous and extends over a wide range of intelligent way to think about the evolving To do so, we once more turn to E.O. Wilson—opportunities coming from both the mature urban world and the natural one coexisting who himself often quotes the Israeli diplomatand emerging worlds: students, travelers, sustainably is to set aside half the planet for Abba Eban—“when all else fails, men turn toand tourists increasingly drawn to cities; cities and the other half for the rest of life. At reason.” This year, Cities of Opportunity turnsprofessional service sectors connecting and the same time, we can use the technologies to reason early in trying to frame evolvingtrading across an ever more intertwined envi- we possess to build cities and communities in urban thought and action in the contextronment; engineers, designers, and builders synch with human needs (see condensed of known challenges and probable andgetting infrastructure up to speed with needs; interview on the next page, as well as possible directions.and, of course, the potential that innovation www.pwc.com/cities for the full-lengthrepresents in urban clusters. Some of human- discussion and podcast). Learn moreity’s greatest triumphs have been achieved by In the end, issues of growth, place, people,forward-looking cities that align governments, See www.pwc.com/cities for videocasts and resources, ambition, governance, collaborationbusinesses, and citizens for the common good. podcasts of interviews in addition to the full- and competition, vision and leadership feedThis will be no less so in future. length discussions. Detailed background on into any city’s vision of its own future. But no sources and definitions are also available.“If we can make what we have a lot more matter what that vision is, from cultural capitallivable, we really can develop something to manufacturing hub to biotech or informa-close to a paradise ... through rationality tion/communications technology cluster, itand an understanding of what we really are,” will be challenging to move the needle aheadrenowned biologist E.O. Wilson tells Cities of at a time of straitened financing.Opportunity. Wilson suggests that an were adjusted for the particular urban geogra-How it works phies used throughout Cities of Opportunity.The economic underpinnings of the “what if” scenario tool To assess the impact that different Cities of Opportunity indicators might have on future economic outcomes, we analyzed each sector to determine “mobile” employment shares or those jobs or economic activity not serving the local market that could most readily be located anywhere in the world. That share of mobile employment is higher in sectors such as hedge funds, legal services, or manufacturing butOur “what if?” scenario tool is designed by The “what if” scenario tool covers 22 broad lower in areas like healthcare, retailing, andPwC and the Partnership for New York City sectors1 for both gross domestic product transport. A locally dependent share wasworking in conjunction with Oxford Econom- and employment. The financial and business determined in all sectors according to threeics to create a forward-looking framework for services sector is split into 10 job subsectors to tranches of high, medium, or low employmenturban thinking and to challenge preconcep- capture the nuances of urban labor markets. mobility, with adjustments within each totions, not to predict what will occur. It was Published sectoral GDP data are used with create a dynamic scale. (For instance, wedeveloped to measure what might happen estimation techniques selectively filling gaps created a sectoral sensitivity matrix for theif Cities of Opportunity indicators were more to complete the dataset. In the absence of Cities of Opportunity indicators based onor less important in future business invest- employment data at a sectoral level, counts empirical evidence and qualitative input fromment decisions or if macroeconomic patterns of business units are used to make effective Oxford’s sectoral economists. This was used tochanged to influence the overall urban subsector estimates. The employment data in adjust future sectoral growth across the citiesenvironment. This, like all scenario tools, the model refer to total employment, that is, when scenarios are run in the model.)depends on input assumptions and underlying self-employed plus employees.relationships. We considered performance on Cities of Oppor- GDP data are sometimes unavailable at a tunity indicators as signposts of cities’ growthThe baseline economic forecasts for each city level. Where estimation was needed, city trajectories, and weighed in relative rankof the 27 cities build from a foundation of sectoral employment data and metropolitan, scores into the model. The model also linksOxford Economics’s global cities, regional, regional, or national productivity estimates individual sectors to global trade performanceand world models, all updated quarterly.Forecasts are customized to match the 1 The sectoral definitions used in this study are consistent with the UK’s 2003 Standard Industrial Classifications (SIC 03), the Statistical Classification of Economic Activities in the European Community (NACE), and the 2002 North American Industryspecific urban geographies used in Cities Classification System (NAICS).of Opportunity.20 | Cities of Opportunity | PwC
  • 23. Direct change in jobs and GDP compared with the baseline outlookThree rounds of impacts determine a “what if” Induced impactsscenario’s results: arising from Indirect or direct and indirect supply-chain jobs change and impacts in the their associated form of jobs consumer spending and GDPContinued from previous page: within cities. All this allows exploration Three rounds of impacts combine to develop of alternative economic trajectories and the results of an overall scenario. Direct(based on analysis of the historically conditions for the 27 cities. jobs change is determined by the sectoralobserved relationships). This allows differ- sensitivity matrix and Cities of Opportunityent global trade outcomes to be explored The “what if” scenario tool enables Cities scores in each indicator category. Sectoralat a city level. In addition, the scenario tool of Opportunity indicators to be flexed productivity provides an estimate of sectoraladjusts productivity assumptions across sec- individually or together with other indica- GDP change (with the model keeping thetors and locations and individually assesses tors in terms of their future importance to overall level of economic activity static ordifferent sectoral performance globally or investment decisions. allowing it to rise or fall depending on the macroeconomic scenario). Supply-chainWill the jobs relocate? or indirect effects are calculated usingRanking mobility among 22 job sectors from globally fluid to locally rooted city specific input-output tables (derived from national input-output tables and city employment structures). Induced effects HIGH mobility MEDIUM mobility are estimated using the direct and indirect Manufacturing Leisure, culture, and other impacts and consumer-spending data. Mining Transport and communications We factored in different urban productivity Financial services levels in determining overall and local city • Banking and finance LOW mobility job tallies. That is, the total value of eco- • Insurance and pension funding nomic activity might remain the same, but Agriculture, forestry, and fishing • Activities auxiliary to financial intermediation job numbers are adjusted to rise or fall based Construction Business services on a city’s productivity. The model also • Real estate and renting activities Education moves jobs within the Cities of Opportunity • IT and computer related Health universe and does not account for competi- • Research and development Hotels and restaurants tion from cities outside our 27: Shenzhen, • Architecture and engineering say, which is not in our study, taking jobs • Legal, accounting, bookkeeping Utilities away from nearby Hong Kong, which is • Advertising Wholesale and retail included. We also recognize that a city may • Professional, scientific, and technical services appear to have the right stuff in our model to NO mobility grow, but if underlying skills or infrastructure Public administration are lacking growth may be hampered. Source: Oxford Economics, Cities of Opportunity Partnership for New York City  |  Cities of Opportunity | 21
  • 24. The shape of city economies to come Growth should continue in the emerging world despite today’s risks … Population vs. employment, 2012-2025 Population in millions 12 Mature Emerging 2012 2025 9 Mumbai Employment in millions Shanghai Moscow 6 Tokyo London Seoul São Paulo Istanbul Mexico City Singapore New York Hong Kong 3 Buenos Aires Sydney Berlin Paris Toronto Johannesburg Los Angeles Stockholm Madrid Milan Chicago San Kuala Lumpur Francisco 0 Abu Dhabi 5 10 15 … While the West gets richer Value of output Economic output measured by gross domestic product (GDP), 2003–2025 2003–2011 historical GDP data 2012–2025 GDP projection$1b Abu San Stockholm Milan Kuala Paris Chicago Toronto Buenos Aires Madrid Berlin Los Johan- Sydney Singapore Hong Londo Dhabi* Francisco Lumpur Angeles nesburg Kong Productivity (GDP per worker per year) in thousands $US, 2025 $222* $230 $163 $141 $48 $153 $161 $151 $51 $94 $78 $184 $47 $160 $132 $98 $114 *GDP driven by the oil economy Source: Oxford Economics, Cities of Opportunity
  • 25. Mutual self-interest unites developed  nd a developing cities 12 Beijing A number of themes emerge charting the likely economic evolution of our 27 cities toward 2025. Foremost, the cities share as much interdependence as they do individual- ity—making as strong a case for cooperation to 9 share in a richer pie as there is for competition to grab a bigger piece of a poorer one. Our 27 cities represent disproportionate economic muscle today, generating nearly 8 percent of world GDP with only 2.5 percent of the popu- lation. Looking ahead to the quarter-century, they will house 19 million more residents, account for 13.7 million more jobs, and churn $3.3 trillion more in GDP if we continue on 6 our current course of modest growth and avert serious economic crises. But the big picture of divided East/West wealth and quality of life is unlikely to change unless transformations occur in the way we work and spend globally. Affluence is likely to remain in developed cities—whose long establishment, high productivity, and richer 3 incomes tower over developing cities. The latter have a mountain to climb to catch up in productivity (and underlying areas like open governance, lack of corruption, and stronger physical and social infrastructure), even while growing spectacularly in population and employment. 0 If those improvements occur, employment 20 25 patterns could change dramatically in developing cities, cutting labor dependency and jobs. But that issue may be upon us already as employment struggles to regain pre-recession levels and as a new phase may be dawning in the information revolution where less work is required and wealth must be shared in a more rational manner among the soon-to-be 9 billion of us. Meantime, our cities are intertwined. As long as the West pos- sesses the time and money to buy goods and the rest of the world has the labor to create theon New York Mexico Seoul Moscow São Mumbai Tokyo Istanbul Shanghai Beijing products, symbiosis will continue, each side City Paulo needing the other to prosper and making the case at least as strong for intelligent urban collaboration as it is for competition.4 $244 $77 $73 $58 $54 $16 $104 $58 $108 $42 Partnership for New York City  |  Cities of Opportunity | 23
  • 26. Asked for seven words to describe reveal that we evolved in much the E.O. Wilson takes the very long yourself in a talk at the New York Public Library, you said, “The ants same way and through the same pathway of evolution. We followed view of cities came, spoke, taught, and judged.” the same rules and we have some … and the human potential to “develop something close to a paradise … What would they say, what of the same basic principles of through rationality and understanding of what we really are” would they teach, and what organization. Then things begin would be their verdict if they to differ a great deal. But we really walked through New York or cannot understand our own Edward O. Wilson, emeritus professor of entomology at Harvard, has Johannesburg or Shanghai? origins without examining spent 60 years at the university as a pioneering scientist, thinker, and prehuman origins. I think that if you could get reason author. Wilson has written 27 books, including the groundbreaking out of what they were doing and Do you think urbanization is Sociobiology that in 1975 placed the social behavior of all animals, how they were organized, you programmed into our genetic including humans, in the context of evolution. He has been awarded would say for them that they leash and perhaps we’re a million the Pulitzer Prize twice, for On Human Nature and The Ants, a monu- came about through their higher years away from being as evolved mental study of his first scholarly love. His most recent book, The Social level of social organization, which in our cities as we might be? Conquest of Earth, examines the fundamental questions of human life is one of the very few that ever through the lens of man’s basic tension between individual and group I do not. Cities just happen to be evolved on earth, by altruistic selection. Here, Wilson extends thoughts from a lifetime of work as a the aggregate of convenience. cooperation. They would have to scientist to cities and the planet as a whole. They’re becoming more and more24 | Cities of Opportunity | PwC
  • 27. What we have to do is make cities a lot more livable. By that I mean, more consistent with the fundamental emotional needs, the instinctive needs of human beings. livable, and that means adequate You have said, “We really don’t unpleasant that we really will transport in and out and food know what on earth we’re doing want to go out to another location. channeled in and waste channeled beyond our short-term goals. out, and then within the city, We’re destroying the rest of life. Do you say that altruistically development of living quarters It’s important we keep a separate or functionally, that it’s better with sufficient privacy. And a part, half of the earth, for the rest mutually for us and the rest of furtherance of a tendency—we’re of life.” Do you think cities should the planet? beginning to see nicely in New be reserved for us humans, and we Both. I think that we owe some- York City—of greening the dwell- set aside the rest of the planet for thing to the rest of life. After all, ings themselves with balcony the rest of life? it gave rise to us. We were born gardens, rooftop gardens, with I envision a human population, in a biosphere. We arose from creative landscaping everywhere. which the United Nations esti- animals, and we owe the rest Then you can have a very livable mates if the current estimates are of life something. And that’s a city, and I believe then you have correct, stabilizing, we hope, completely human instinct or, I the great advantage, obviously, of somewhere around nine or 10 should say, moral attribute. It’s what New York has. New York is billion. That being the case, along very much in our self-interest to the greatest city in the world. It’s with the increasing urbanization have a planet—to continue living“There are areas of Central Park thatare pretty close to resembling a natural that way partly because of large and, we hope, quality of life for on a planet— that’s balanced,environment.” numbers of people and a long almost everybody, that then we that has obtained sustainability history of wealth, with a class of really could do what you just sug- through, literally, billions of yearsnecessary for high productivity in the wealthiest people willing to or gested—have a part for humans of evolution. … Leave it alone. …technologically advanced societ- wishing to build up the institu- and a part for the rest of life. Give half of the world to the resties, and also becoming a necessity tions that have led to the best of of life. Half should be more thanas natural resources, or transpor- the core of New York City today. And why is this valuable? It just enough when we’ve developedtation back and forth between So there are a lot of advantages makes good sense to leave the sufficient technology and sustain-dwellings and city centers, become to having a large city if you can rest of life alone; that is, protect ability techniques to give us a veryscarcer. All those things conspire organize it properly. it enough so that it keeps on good quality of life.to move us into cities. What we evolving the way it has, reaching But another great advantage, one its own sustainability, its ownhave to do is make cities a lot more the Germans have already put In Africa, you’re working to savelivable, and, by that, I mean more balances for 3 1/2 billion years. an endangered ecosystem at the into law, is they prevent suburban And then we can go on with allconsistent with the fundamental growth out from city and small same time Africa is the world’semotional needs, the instinctive our own craziness. Urban, sub- fastest urbanizing continent. town centers, and the result is that urban, in the sky planting spaceneeds of human beings. they have lots and lots of open What can be done to manage the vehicles to ruin some other planet, interplay of advancing urbanism countryside not far from where whatever things we do—we couldWhat do you think are the ecologi- and nature? most of the people live. And that go on without destroying so muchcal or sociobiological pluses and will become more and more of life that we eventually destroy It’s pretty clear what needs to beminuses of an urbanizing world? the case. ourselves or make the planet so done. First, various countries,It all depends on technology. Weneed to arrange cities so they’re Partnership for New York City  |  Cities of Opportunity | 25
  • 28. sovereign states, have to evolve on. And I would remind anyone and people in to enjoy them, all people, but to realize that groupaway from dictatorships and high not to look down too much on over Chicago. I think that’s a neat distinctions, and group competi-levels of corruption. They ought New York City. There are areas of program, and every city would tion and individual competitionto be encouraged or helped to Central Park that are pretty close benefit by having something within groups, is just the way wecontinue improving education to resembling a natural environ- like that. are. That’s what made our species.and economic growth—although ment. So, with parks in cities, And we really should try to findAfrica is now also the fastest combined with the improvement You’ve said, “The human condition the solutions to our problems thatgrowing in percentage increase of the purely urban aspects of city is being hung in between do not entail pushing and coursingof GDP of any of the continents. life, I think you could get a pretty individual selection and its con- toward what one group or other lovely city. sequent sin and group selection sees as the perfect harmony—How would you relate the urgency and its resulting virtue.” Can we a harmonious solution—but, I know that Chicago is another have a nondestructive relationshipof biodiversity loss to a New rather, just to abate and damp good example of this. Chicago with the natural world when weYorker who rides the subway and the differences between us in a has what is called its Wilderness ourselves seem to be at war withrarely experiences nature? manner that’s based upon human Program that 10 or 15 years ago ourselves, ranging from mundaneWe’re talking about the need for self-understanding. And that’s not started to map out all of the empty daily greed and shortsightednesstechnology and the humanities to so hard to achieve. It just takes a spaces—the road edges, the river- to actual wars?be more democratized and spread rethinking of the foundations of banks, the vacant lots, the old andmore evenly, and conservation That’s a painfully accurate ques- human science—the science about mostly neglected city local neigh-to be spread more evenly. We’re tion. It certainly looks, from all of humans. But we don’t really want borhood parks. Chicago madetalking about a city like New York the evidence, that we are eternally to go to one extreme or the other, complete maps of them. And thenthat could, in due course, clean up and naturally conflicted. Any do we? We stay somewhere in the it set out to let them come back toa lot of the more obvious defects: species that reaches the human center because it’s that ferment the wild as much as possible, cleanthe unlovely traffic, the condition level may—I don’t want to get into of the center, between the two them up, make biological surveysof the poorest parts of it, and so science fiction but it may—be a opposing impulses, our conflicted of them, and start getting kids nature, which makes us creative. It’s in the conflict that we try to move ahead? I agree. If we can make what weWe should give half of the world to the rest of life [and half to have a lot more livable, we really can develop something close to acities]. Half should be more than enough for us when we’ve paradise. By developing throughdeveloped sufficient technology and sustainability techniques rationality and an understanding of what we really are, we can getto give us a very good quality of life. a very livable planet to stay on. Can there be enlightened city policies to address the great fear that people have in a time of global migration toward conflicted species in that manner. new immigrants? And that conflicted condition Yes. Look at it the way a geneticist means that we are always torn would. We’re evolving in a way to between the two impulses of indi- homogenize the human genome. vidual survival and development Up until quite recently, a very large at the expense sometimes of part of the genetic differences or others and the nobler, the better variation in humans were the angels of our nature—the products differences from place to place: of group selection—on the other shall we say, from Stockholm to hand: the group selection that Beijing. There are a lot of genetic made us what we are. differences between those So the solution to our problems people—and they’re extraordi- is not to define the best religion narily similar, incidentally—but and try to get everybody into it; they are what differences occur it’s not to define the best ideology in the human species. That’s the certainly, as though there were difference between localities. But a perfect ideology that we are one result of globalization is that evolving; it’s not to expect complete we’re homogenizing. And now harmony among cooperating the differences between localities26 | Cities of Opportunity | PwC
  • 29. are diminishing, and the amount have to improve education interactive education that can be the chemists called autocatalyticof variation within each locality systems. We need far better adapted to classroom techniques, reactions. That is to say, when youis increasing. And I’m optimistic methods of teaching. We need the same education to a kid in get a product created by puttingto think that the result will be a better incentives for teachers, and Paraguay, Angola, Mozambique, certain ingredients together—thisgreater flourishing of genius, of especially to include education or outer Mongolia that you can is in chemistry—the product itselfspecial talents, and it’ll be a much in science and technology get in a prep school in Connecticut. becomes a catalyst. So the reactionmore interesting species the because we are now entering We could do that kind of thing speeds things up, and you getfarther along that line we go. a techno-scientific world. The with technology. I like to think more and more products like that, techno-scientific revolution is here that we can make big leaps in and it just takes off exponentially.Do you think evolution at all and it’s pervading every minute education, and it’s absolutelypushes us toward the virtuous, of our lives. People are not going necessary for the future of this Final question. How did you feeltoward logic? to be able to understand the most country and the world at large. when you learned that Björk, fundamental questions about our the Icelandic singer, named theI don’t think a genetic evolution species—things we used to call Our hypothesis in Cities of world’s first app album “Biophilia”does. What’ll happen is that it will philosophical questions, urgent Opportunity is that strong after your book?be a cultural evolution in which questions of reality—we’re not quality of life forms a virtuous I could not be more pleased to bewe have the same ferment, we going to be able to handle these circle with a strong economy. If connected with a rap operation.have the same conflicted nature. things, particularly dealing with you have jobs, you’ll have moreI think that probably now, instead That’s funny. group conflicts. That’s the part schools; if you have parks, you’llof little wars, and battles against I like to think of as something have more happy people who This conversation has been sodictators and clashes of different everybody could agree on. want to go to the schools and be pleasant for me, I hate stopping.religions, we will work out our productive. It forms a sort of virtu-energies in the area where we’ve I myself right now have a ous circle. Does that make sense?always dearly loved and exercised foundation that is setting up Learn moreour hottest instincts and great in partnership with Apple an It makes complete sense. You’repassions—team sports. People in talking about positive reinforce- A podcast of this condensed conver- online course in biology, whicha more civilized society will still ment in the network of activities sation is available at www.pwc.com/ I hope, and I know this was thebe having all those emotions but in cause and effect. Another thing cities, as is a full-length print version goal of Steve Jobs, will give theit’ll be in a tamer arena. I don’t that makes things hopeful is what of the entire discussion. opportunity for an education, anperceive the possibility of smooth-ing out and pacifying the humanspecies. I think we’ll always beconflicted and we’ll always haveour crazy games and conflicts,but we can ritualize them andmoderate them more, just aswe move toward a more stablepopulation and a more stable,sustainable planet.You’ve said, “We have Stone Age E.O. Wilson in Gorongosa National Park, Mozambique.emotions, Medieval institutions,and Godlike technology. We’lleither settle down as a species orcompletely wreck the planet.We need to evolve to a betterworld order than the currentStar Wars civilization. … Weneed to reignite the 18th-centuryEnlightenment. We now knowenough scientifically to do so.”In the context of cities, please tellme what challenges or issuesyou’d most want to attack in anEnlightenment spirit?I think that we’re quickly comingto an agreement as a nation andas a world, too—and maybe withenough urgency to actually dosomething about it. We really
  • 30. The 2025 baseline scenarioOur cities weave a surprising tapestry of jobsOur 27 cities currently produce 8 percent of The evolving percentage of employment by sector—emerging and mature citiesthe world’s wealth despite housing only 2.5 2012 and 2025percent of its population. In looking towardthe future, Cities of Opportunity assumed acontinuation of growth to quarter-century but Business services*at a more modest pace than during the boomyears before the Great Recession. This outlookrepresents good growth in the face of currentchallenges but no return to the high levels of a Wholesale and retailfew years ago for a number of reasons, notablyincluding the large overhang of debt in thedeveloped world. ManufacturingBuilding from this outlook, we developed our2025 baseline scenario as the foundation for Transport andall “what if” projections. The baseline shows communicationsthat by 2025, 19 million more people will beliving and 13.6 million more working in our Leisure, culture,cities. The 27 cities will generate an additional and other$3.3 trillion in gross domestic product.Even with growth projected to be strong in Public administrationemerging cities, Western customers are notforeseen borrowing and spending as in thepast, depriving the emerging world of keycustomers who could supply the wealth to Educationbuild their own cities—currently gaining40,000 people a day in China and 20,000 inIndia, to cite only two in the staggering array Constructionof statistics on urban growth in Asia, Africa,and Latin America. (See pages 78-91, Cities atthe edge). But consumers from mature citieswith higher relative wealth and per capita Healthproductivity will still be needed by emergingcities to buy their goods and services. In short,both families of cities, mature and emerging, Financial services**remain in it together.Broad brushes of this general picture are *Business services include:known. However, when we look closely at Hotels and restaurants Real estate and renting activitiesindividual cities and consider the different IT and computer-relatedgears in the engine needed to continue Research and development Architectural and engineeringsocial and economic prosperity, shadings of Utilities Legal, accounting, bookkeepingmeaning come into play that are relevant Advertisingto government, business, and community Professional, scientific, anddecision-makers. Agriculture, technical services forestry, and fishingWhat exactly do all those people in Shanghai **Financial services include:or New York or Milan or any of our cities Banking and financeactually do to support themselves, to drive Insurance and pension funding Miningthe economy from day to day, and to continue Activities auxiliary to financial intermediationboth the upkeep and innovation that assures 0% 10% 20%future well-being? 2012 2012 Emerging 2025 Mature 2025 Source: Oxford Economics, Cities of Opportunity28 | Cities of Opportunity | PwC
  • 31. Each city in its own right is a highly or technical services—tend to be more Those working in the very guts of the citycomplex ecosystem. The jobs at the heart dominant in developed cities with sophisti- come in fourth and sixth overall in terms ofof a functioning city typically turn out to be cated needs. Wholesale and retail account generating jobs. This includes the transportin retail, healthcare, public administration for more jobs in emerging cities with a higher and communications workers, at 9.2 percent(or government), and business services— concentration of small stores and lower of jobs, who are behind the scenes as thea diverse and fundamental cross-section overall productivity. rest of the city moves about, and the publicneeded to make a city run. At the same time, administrators in city halls and city parks,the bills are paid by exportable manufactured Manufacturing plays strongly in the mix as whose 6.8 percent of overall jobs are often nowgoods in emerging cities and globally well, employing the third most people, again threatened by austerity budgets. Workers intradable professional and financial services disproportionately stacked toward emerging the leisure and culture segment account for 6.9in mature ones. cities. However, as emerging cities grow in percent of jobs, fifth overall in 2012, with all affluence and sophistication, they are diver- our cities being major business travel and touristOur top two employment sectors, business sifying away from manufacturing (see charts destinations as well as entertainment hubs.services and wholesale and retail, account for below). Mature cities, meantime, engageda third of all jobs in 2012. This rises to 36.3 in trying to build balanced economies and All in all, well-functioning city economiespercent in 2025. Business services—including taking advantage of idled factories and depend on job sectors fitting together handreal estate, IT, and computer-related work, derelict waterfronts, are often encouraging in glove. Supporting services that keep citiesarchitecture and engineering, advertising, entrepreneurial manufacturing. churning from day to day, from the glamorouslegal and accounting, and other professional Continued on page 39The role of manufacturing continues to evolveManufacturing employment has been shifting from West to East Some emerging cities are beginning to diversify from reliance on manufacturingChange in manufacturing employment vs. Change in manufacturing GDP (2004-2012) Change in manufacturing employment vs. Change in manufacturing GDP (2012-2025) % Change in manufacturing employment 60 Abu Dhabi 35 Shanghai% Change in manufacturing employment 50 30 25 Abu Dhabi 40 Singapore 20 São Paulo 15 30 Moscow 10 Moscow Buenos Aires 20 Istanbul 5 Istanbul Johannesburg -40 -20 20 40 60 80 100 São Paulo Johannesburg 0 Stockholm Mumbai 10 Kuala Lumpur Kuala Lumpur -5 Singapore Beijing Berlin Toronto Milan -10 0 Paris Mexico City Madrid Mexico City 20 40 60 80 100 120 140 160 -15 San Francisco Mumbai Los Angeles Chicago Sydney -10 Stockholm Los Angeles -20 Tokyo Sydney Hong Kong Tokyo Toronto -25 Milan Beijing San Francisco -20 Buenos Aires Chicago Seoul New York London -30 Paris Hong Kong Berlin Shanghai -35 -30 New York Madrid -40 % Change in manufacturing GDP London Seoul % Change in manufacturing GDP Emerging Mature Emerging Mature Size of bubble = Manufacturing GDP 2012 (US$, 2012 prices) Size of bubble = Manufacturing GDP 2025 (US$, 2012 prices) Source: Oxford Economics, Cities of Opportunity Source: Oxford Economics, Cities of Opportunity Partnership for New York City  |  Cities of Opportunity | 29
  • 32. Where the jobs areCity employment today in six sectorsAn in-depth look at some of the most significant or telling job sectors among the 22 we measurecreates a city-by-city employment mosaic. Financial and business services, manufacturing,and retail anchor many economies. Construction gives a hint of urban optimism, while healthas well as hospitality and tourism add meaningful color to the shape of the local economy.Financial and business services* Manufacturing Wholesale and retail2012 2012 2012 % of total employment % of total employment % of total employmentMilan 39.9 Shanghai 33.9 Hong Kong 23.8Paris 36.3 Istanbul 28.0 Kuala Lumpur 22.9London 35.7 São Paulo 19.1 Moscow 22.4Beijing 34.2 Singapore 16.5 Mumbai 22.4San Francisco 33.4 Beijing 14.7 Mexico City 21.9Stockholm 33.3 Johannesburg 12.7 Istanbul 21.2Chicago 30.0 Mexico City 12.2 Johannesburg 19.4Toronto 27.8 Tokyo 11.1 Seoul 19.1New York 26.9 Moscow 10.2 Tokyo 18.8Buenos Aires 25.5 Seoul 10.2 Milan 17.8Berlin 24.1 Buenos Aires 9.8 São Paulo 17.7Seoul 24.1 Abu Dhabi 9.7 Toronto 15.3Sydney 22.6 Milan 9.6 Sydney 14.8Shanghai 21.6 Mumbai 8.9 Abu Dhabi 14.3Johannesburg 21.3 Los Angeles 8.3 Buenos Aires 14.2Kuala Lumpur 20.8 Kuala Lumpur 8.1 Los Angeles 14.2Singapore 20.5 Sydney 7.6 Singapore 12.8Moscow 19.9 Berlin 7.4 Beijing 12.4Los Angeles 19.6 Toronto 6.1 Madrid 12.0Tokyo 19.4 Madrid 6.0 Stockholm 12.0Hong Kong 18.9 Chicago 5.8 London 11.9Madrid 18.8 Stockholm 4.9 New York 11.7São Paulo 17.3 Paris 4.5 Berlin 11.4Mumbai 16.5 London 4.1 Shanghai 10.7Mexico City 12.4 Hong Kong 3.7 Chicago 10.3Istanbul 8.6 New York 1.9 San Francisco 9.6Abu Dhabi 8.3 San Francisco 1.6 Paris 8.6 Emerging Mature Emerging Mature Emerging Mature*Combines financial services and business services sectors, Source: Oxford Economics, Cities of Opportunity Source: Oxford Economics, Cities of Opportunity which include the 10 subsectors listed on page 28.Source: Oxford Economics, Cities of Opportunity30 | Cities of Opportunity | PwC
  • 33. Construction Health Hospitality and tourism*2012 2012 2012 % of total employment % of total employment % of total employmentSingapore 13.1 New York 15.8 Abu Dhabi 27.2Abu Dhabi 12.3 Los Angeles 12.9 Mexico City 20.3Moscow 12.2 Chicago 12.4 Hong Kong 20.0Istanbul 10.2 Berlin 12.3 San Francisco 19.3Kuala Lumpur 9.8 Sydney 11.4 Paris 18.3Sydney 8.3 London 10.9 Madrid 18.3Hong Kong 7.6 Toronto 10.2 Los Angeles 17.8Seoul 7.5 Paris 9.3 Singapore 17.2São Paulo 7.0 Stockholm 8.9 Berlin 17.0Toronto 6.5 Madrid 8.6 Chicago 14.8Johannesburg 6.5 San Francisco 8.0 London 14.6Madrid 6.3 Johannesburg 6.8 Kuala Lumpur 14.4Beijing 5.9 Moscow 6.0 Seoul 14.0Milan 5.9 Tokyo 5.6 New York 13.6Mexico City 5.3 Mumbai 5.5 Buenos Aires 12.6Buenos Aires 4.8 Seoul 5.4 Toronto 12.4Tokyo 4.7 Mexico City 5.0 Johannesburg 12.1London 4.4 Abu Dhabi 5.0 Sydney 12.1Berlin 4.4 Hong Kong 4.9 São Paulo 11.5Los Angeles 4.3 Shanghai 4.3 Stockholm 11.4Stockholm 4.0 Buenos Aires 3.8 Beijing 11.0Mumbai 3.1 Istanbul 3.3 Mumbai 10.9Shanghai 3.1 Singapore 3.0 Milan 8.6New York 3.0 Beijing 2.7 Tokyo 7.5San Francisco 2.7 São Paulo 2.7 Istanbul 7.3Chicago 1.6 Kuala Lumpur 2.3 Moscow 7.1Paris 1.6 Milan 2.0 Shanghai 6.6 Emerging Mature Emerging Mature Emerging MatureSource: Oxford Economics, Cities of Opportunity Source: Oxford Economics, Cities of Opportunity *Combines two sectors: leisure, culture, and other; and hotels and restaurants. Source: Oxford Economics, Cities of Opportunity Partnership for New York City  |  Cities of Opportunity | 31
  • 34. “What if”… Cities prosper based on knowledge, technological, and travel connections?In the context of rapid globalization and commanding lead in terms of 829,000 addi- growing an additional 3 percent per year,increasingly pervasive interconnection, it’s tional jobs gained versus the 2025 baseline translating into a total city GDP increase ofeasy to picture a world where the cities that projection. Mature city economies also grow an additional 1 percentage point annually andprosper are those with the deepest, broadest, faster in this picture, with London, Paris, and 8.2 million more jobs than the 2025 baselineand highest-quality education, those that are New York gaining nearly a point or more each projection. In this case, London and Tokyo still“wired” most thoroughly and effectively, and in GDP growth by quarter-century. Among the lead, but emerging cities that tend to be morethose with easiest access to, from, and for the cities most hurt, São Paulo, Mumbai, Beijing, sensitive to international trade gain a majorrest of the world. Shanghai, Buenos Aires, and Mexico City boost. Beijing and Shanghai, for instance, would experience the greatest “brain drain” jump from the bottom to near the top of theIf businesses, along with workers of all levels versus the 2025 baseline projection. rankings with accelerated trade. Moscowmost likely to follow demand, make their and Istanbul move up the rankings also,location decisions seeking those cities with the On the other hand, higher relative productivity but less dramatically.right stuff for an urbanizing, globalizing, and in this scenario also depresses the overall num-expanding world, cities that perform well in ber of jobs among our 27 cities by 4 million lessall three will gain a larger share of internation- than the 2025 baseline projection because theally mobile jobs. This is represented by three increasingly efficient urban economies antici-of our indicator categories, intellectual capital pated in this world would employ fewer peopleand innovation, technology readiness, and in the supply chain (even more so in maturecity gateway. cities where more workers reside outside the city jurisdiction).The cities that lead in those qualities now aremature global and regional centers, and they Continuing in this line of reasoning, we alsowould build on their strength going forward. tested a likely outgrowth of the scenario:Projected to 2025, London, Tokyo, New York, What might occur if additional economicSeoul, Paris, Singapore, Chicago, Stockholm, buoyancy tracks with an urban world in whichand San Francisco lead the way in terms knowledge and greater connectivity driveof capturing more jobs. London takes a progress? We projected international tradeLondon leaps ahead in a world where educated, connected cities count, but growth falls in emerging citiesChange in jobs and GDPChange in Change intotal jobs, % GDP per2012 to annum, 20122025 (bar) to 2025 (line) 900 London 1.5 New Paris York 600 Stockholm Tokyo 1.0 Chicago Seoul 300 San 0.5 Francisco Singapore Toronto Sydney 0 0.0 (in 000s) Hong Los Berlin Kong Angeles -300 Kuala Madrid -0.5 Lumpur -600 Moscow -1.0 Shanghai Istanbul Abu Milan Dhabi -900 Beijing -1.5 Mexico -1,200 City -2.0 Mumbai Buenos Johannesburg -1,500 São Aires -2.5 Paulo Emerging Mature Additional GDP per annum Source: Oxford Economics, Cities of Opportunity32 | Cities of Opportunity | PwC
  • 35. Comparing patterns: productivity pares jobs, trade multiplies themLondon takes a commandinglead in terms of 829,000 Combined city forecasts 120,000additional jobs gained versusthe 2025 baseline. Mature 110,000city economies also grow Total employment (000s)faster in this picture, with 100,000London, Paris, and New Yorkgaining nearly a point or 90,000more each in GDP growthin the time frame. 80,000 70,000 2003 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21 ’22 ’23 ’24 2025 Baseline Educated, connected cities Educated, connected cities plus 3% trade increase Source: Oxford Economics, Cities of OpportunityThe employment picture improves if trade rises in an educated, connected worldChange in jobs and GDPChange in Change intotal jobs, % GDP per2012 to annum, 20122025 (bar) to 2025 (line) London 2.5 2,000 Paris New Stockholm York San Chicago 2.0 1,500 Francisco Tokyo Shanghai Seoul 1.5 Sydney Beijing Toronto 1,000 Los Singapore Berlin Hong 1.0 Angeles (in 000s) Kong Madrid 500 Kuala Milan Moscow 0.5 Lumpur Istanbul Abu Dhabi 0 0.0 Buenos Aires -0.5 -500 Mexico City Mumbai São Johannesburg -1.0 Paulo -1,000 Emerging Mature Additional GDP per annum Source: Oxford Economics, Cities of Opportunity Partnership for New York City  |  Cities of Opportunity | 33
  • 36. “What if”… Technological unemployment finally dawns in a slow-growth,urbanized world of 9 billion?History has its ups and downs, from extinc- Employment and GDP growth fall across the Science appears to be playing a role intions to Great Depressions and wars, to Ages spectrum. On the jobs front, Beijing, Shanghai, the change also. While Keynes discussedof Enlightenment and Discovery. In econom- and São Paulo lose the most jobs because of “technological unemployment” 80 years ago,ics, Joseph Schumpeter referred to cycles in the size and structure of their economies, with humans have so far held their own againstcapitalism as “creative destruction.” But end London and Tokyo following. Wholesale and machines as technology has created as manyof day, history is written by the winners, as retail, the second largest employment sector jobs as it has destroyed. There are signs,George Orwell, Winston Churchill, and Napo- among our 14 categories at 16.5 percent, however, that this could be changing and thatleon said in one form or another—better to might prove especially vulnerable. Despite robotized, computerized competitors are clos-end up a flexible survivor than a magnificent the buffeting, however, Mumbai, Beijing, and ing in a little too fast for human comfort.dinosaur. The same aphorism goes for cities Shanghai are still estimated to grow signifi-caught amid transformation. Today, enough cantly in GDP through 2025 supported by “The pace [of technological innovation] hashandwriting is on the wall to question whether general growth in population (although a sped up so much that it’s left a lot of peoplea presumed return to an economic equilibrium risk remains that less favorable labor markets behind. Many workers ... are losing the raceof steady, strong growth is around the corner. in these cities could slow down population against the machine,” contend MIT professors expansion with implications for overall GDP Erik Brynjolfsson and Andrew McAfee inIn this “what if” scenario, a combination of growth). Paris, Tokyo, Sydney, and Chicago Race Against the Machine.3 “And it’s not justtechnological, economic, and sociopolitical would contract in GDP terms. workers. Technological progress—in particular,forces create something bordering on a improvements in computer hardware,perfect storm in terms of job loss. Technology A few trends suggest transformative restruc- software, and networks—has been so rapidplays a greater role in low value-added service turing could reasonably be on the horizon. and surprising that many present daysectors as companies replace labor with As Lawrence Summers, former US Treasury organizations, institutions, policies andrelatively less expensive technology (striking Secretary, notes, “the agricultural economy mindsets are not keeping up.”most visibly in retail through self-service gave way to the industrial one because prog-cashiers, online shopping, and the threat that ress enabled demands for food to be met by a Brynjolfsson and McAfee are optimistic thatcity stores may morph into showrooms); small fraction of the population, freeing large humans will not invent themselves out of aconstrained governments pare jobs in public numbers of people to work elsewhere. The day job because some of our “skills are moreadministration, health, and education to same process is now under way with respect valuable than ever, even in an age of incrediblyreduce spending and borrowing (depressing to manufacturing and a range of services, powerful and capable digital technologies.”construction as well as public infrastructure reducing employment prospects for most 1 Lawrence Summers, Financial Times, January 9, 2012,investments); consumers cut their spending in citizens.”1 Nobel economist Joseph Stiglitz “Current woes call for smart reinvention not destruction.”the face of high personal debt, more restricted adds separately, “the Great Recession is part 2 Joseph Stiglitz, Financial Times, March 13, 2012, “The Americanaccess to credit than before the recession, and of the transition from manufacturing to a labour market remains a shambles.”sustained high levels of unemployment, with service sector economy. … Markets on their 3 Erik Brynjolfsson and Andrew McAfee, Race Against the Machine: How the Digital Revolution is Accelerating Innovation,the downdraft cutting demand in retail, own do not manage such dramatic economic Driving Productivity, and Irreversibly Transforming Employment andhotels and restaurants, leisure, culture, and transformations well.”2 the Economy, 2011, Digital Frontier Press.other services.Employment and GDP growth fall across the spectrum.On the jobs front, Beijing, Shanghai, and São Paulo losethe most jobs, with London and Tokyo following. Wholesaleand retail, the second largest employment sector, suffersgreatly in those cities where it dominates.34 | Cities of Opportunity | PwC
  • 37. However, of importance to short- and Sociopolitical forces come powerfully into Even with less than a perfect storm, creativemedium-term planning in city governments the equation against the backdrop of rising destruction sounds better on paper than itand businesses, not to mention citizens, “other levels of unemployment (often dispropor- looks in real life. Cities may be in for a bumpyskills have become worthless, and people tionately high among the young), increasing ride if some of these economic, scientific, andwho hold the wrong ones find they have little income inequality in some places,5 austerity sociopolitical forces that naturally concentrateto offer employers. They’re losing the race in others, and growing popular resistance in cities move in the wrong direction simul-against the machine, a fact reflected in today’s bubbling up to a consumer-goods-driven taneously. Understanding the possible futureemployment statistics.” economy.6 Add to that the tension that urban course can help stakeholders in government, immigration, whether domestic or inter- business, academia, and the community thinkThe potential toll of technological unem- national, often stirs, and the mix offers a through policies and actions today.ployment jumps out in the second largest job wake-up call to leaders and policymakerssector among our 27 cities—wholesale and in government and business. 4 Jeff Sommer, The New York Times, August 12, 2012, “A mutual fund master, too worried to rest.”retail, where the possibilities of job displace- 5“Growing income inequality in OECD countries: What drives it andment could be immense through changes such “When distrust in a system becomes wide- how can policy tackle it?” OECD, May 2, 2011, www.oecd.org/els/as in-store mechanization and online shop- spread among small players, it throws up social/inequality.ping. Wholesale and retail now employ one something like Occupy Wall Street, or like the 6 In addition to movements such as Occupy Wall Street, other examples include the Five Star Movement in Italy, whose “envi-in six persons in our cities overall, and in a city Tea Party. Or like, for instance, the French ronmentally friendly, anti-consumerist, pro-education platform”such as Hong Kong that share rises to nearly revolution,”7 writes Margaret Atwood, Cana- is “committed to changing Italy’s entrenched political system byone in four, or roughly one in five in Mexico offering an Internet-based alternative.” From The New York Times, dian author of, among many other works, May 24, 2012, Elisabetta Povoledo, “Caustic comedian in ItalyCity, Kuala Lumpur, Istanbul, Mumbai, Payback: Debt and the Shadow Side of Wealth. fosters a movement against traditional politics.” Or, according toTokyo, and others. The think tank Demos notes populist parties Enrico Rossi, president of Tuscany, “consumerism is not the right response to the crisis. It is an insult to our cultural identity, our that “do not fit easily into the traditional politi- traditions and our history.” From The New York Times, January 7,Financial uncertainity adds to the picture. cal divides” have been growing for the past 2012, Elisabetta Povoledo, “In Italy, mom-and-pop stores worry that longer hours may hurt business.”“The economy has clouds hovering over it,” decade across Western Europe. Demos adds 7 Margaret Atwood, Financial Times, April 14, 2012, “Our faith issays John C. Bogle, founder of Vanguard that “the growth of these movements is mir- fraying in the faceless god of money.”Funds. “And the financial system has been rored online. … This nascent, messy and more 8 “The new face of digital populism,” Jamie Bartlett, Jonathandamaged. The risk of a black swan event— ephemeral form of politics is becoming the Birdwell, Mark Littler, 2011, Demos, www.demos.co.uk.of something unlikely but apocalyptic— norm for a younger, digital generation.”8is small but real.”4An employment restructuring cuts deeply as the industrial/information revolution takes a new turnChange in jobs and GDPChange in Change intotal jobs, % GDP per2012 to annum, 20122025 (bar) to 2025 (line) 0 0.0 -500 -0.5 Abu Dhabi -1,000 Mexico Toronto Mumbai City(in 000s) -1.0 Buenos Los -1,500 Aires Angeles Madrid São Tokyo Stockholm Paulo New Seoul York Singapore Paris Milan San -1.5 -2,000 Istanbul Kuala Francisco Shanghai Moscow Hong Berlin Chicago Lumpur London Kong Sydney -2.0 -2,500 Beijing Johannesburg Emerging Mature Additional GDP per annum Source: Oxford Economics, Cities of Opportunity Partnership for New York City  |  Cities of Opportunity | 35
  • 38. “What if”… Protectionism spreads as a way to counter lingering slow growth?Protectionism sits on the other side of the coin ment and therefore exposure to drops in trade.from the faster trade that might occur in a In terms of dampening GDP growth, Shanghai A highly productive urbanworld powered by urban know-how and con- leads the losers, followed closely by maturenections. And it is reasonable to consider that cities like Milan, Paris, Chicago, London, and world might destroynations struggling to energize their economies Stockholm, with large shares of employment 4 million jobs in our 27will turn to trade restrictions in a world of in internationally tradable activities. Mumbaislow or no growth and rising political pressure emerges partially insulated because of low cities. But trade shrinkageto improve conditions. In fact, reports from tradable-sector employment and high kills 10.4 million jobs andthe World Trade Organization,1 European domestic growth.Commission,2 and Global Trade Alert3 all point $1.1 trillion in gross valueto a notable uptick in protectionist measures In the end, this scenario takes away added by 2025.through the end of May 2012. 10.4 million jobs and destroys $1.1 trillion in potential GDP by 2025 relative to the 2025We took a step back and tested what might baseline projection—far worse a toll thanoccur if, in our 2025 baseline, protectionism the educated and connected “what if” inwidens globally, the recessionary slide contin- which productivity pares jobs.ues, and, ultimately, trade shrinks 2 percent 1 “The more recent wave of trade restrictions seems no longer toper year, translating into a 1 percent drop in be aimed at the temporary effects of the global crisis, but ratherGDP across our cities. at trying to stimulate recovery through national industrial planning,” according to Report on G20 Trade and Investment Measures (mid-October 2011 to mid-May 2012), World TradeHere, trade-dependent emerging cities tend Organization, OECD and UN UNCTAD, May 31, 2012.to suffer the greatest job losses, though not 2 “A staggering increase in protectionism around the world” isin a lockstep pattern. For instance, Beijing, noted in the Ninth Report on Potentially Restrictive Measures, European Commission, June 6, 2012.Shanghai, and São Paulo lose the most jobs, 3 Débâcle: The 11th GTA Report on Protectionism, Global Tradebut London and Tokyo follow closely in losses Alert and Centre for Economic Policy Research, June 2012.because of those cities’ structure of employ-A rising tide of trade restrictions broadly lowers jobs and outputChange in jobs and GDPChange in Change intotal jobs, % GDP per2012 to annum, 20122025 (bar) to 2025 (line) 0 0.0 -500 Hong Mumbai Kong Los Abu -0.5 Angeles Madrid Dhabi(in 000s) -1,000 Mexico Kuala Tokyo Istanbul Seoul New City Berlin Lumpur York San São Paulo Francisco -1.0 -1,500 Moscow Buenos Singapore Aires Sydney Johannesburg Toronto Beijing London Chicago Stockholm Paris Milan -2,000 Shanghai -1.5 Emerging Mature Additional GDP per annum Source: Oxford Economics, Cities of Opportunity36 | Cities of Opportunity | PwC
  • 39. “What if”… Quality of urban life attracts people and businesses?The businesses and professionals that build had come to New York 25 years ago from In this quality-driven world, most wealth iscities often have choices: They can vote with Bangladesh: “There is terrible corruption and gained by mature cities that perennially leadtheir feet, domestically and often internation- little public security in my city. ... But what our health, safety and security, demographicsally, following their urban bliss to whatever can we do? We are not politicians or powerful and livability, and sustainability indicators.city attracts them with the best quality of life people. We just want to survive. ... That’s Stockholm, the top performer overall in thesein which to work, start families, put down why people come here from all over the three categories this year as well as last,roots, or locate businesses. It makes intuitive world. There is law and order.” Thinkers from enjoys the greatest boost in annual GDP atsense that the three telltales of quality of life Aristotle to John Stuart Mill agree, placing 1.6 percent—little surprise in the context ofamong the 10 Cities of Opportunity indicators— justice, law, and order at the cornerstone of Stockholm’s natural beauty, outstanding socialhealth, safety and security, demographics and a healthy community. On the empirical level, benefits, and the success of the Nordic modellivability, and sustainability and the natural Cities of Opportunity correlations show that in today’s challenging times. Sydney, Paris,environment—could drive business and healthy housing tracks very positively with San Francisco, Toronto, and Berlin follow.personal decisions that directly affect the elements of a strong economy. Developing cities sacrifice the most wealth.growth of cities. Robust demographics and livability add London again gains the most jobs at 520,000,An interesting cross-section of those we spoke additional appeal. Cultural vibrancy, quality given strong performance in the three indica-to this year agree. Bill Bratton, former New of living, well-managed traffic, a healthy tors and its relatively high proportion ofYork and Los Angeles head of police; David working-age mix all have natural appeal to jobs in sectors of the economy that are mostMiller, former Toronto mayor; and Andrew businesses and people. Paris, for instance, influenced by quality of life (such as healthChan, deputy chairman of Arup engineers and leads Cities of Opportunity in demographics and high value-added service sectors). Sydney,designers based in Hong Kong, mirrored each and livability and comes in second only to Singapore, Paris, Berlin, Toronto, New York,other in stressing the preeminence of health, Beijing in global economic clout—a testament Stockholm, and Chicago round out the topsafety and security as a foundation for strong to the balanced power that the “City of Light” third. Most jobs are lost by emerging giantscities in the mature and emerging world alike retains even today in a world tilting ever Shanghai, Beijing, Mumbai, Istanbul, and São(see pages 52, 64, and 68 for excerpted inter- eastward. When a sustainable and pleasant Paulo, all still engaged in strengthening theirviews or www.pwc.com/cities for full-length natural environment, with plenty of parks, is own quality of life and infrastructure asdiscussions and video). This priority applies added into the mix, the makings of a magnetic populations and needs burgeon.beyond the privileged. A cab driver echoed the city are understandable.police chief, engineer, and mayor on why heIf we follow urban bliss, London and Sydney get a bounceChange in jobs and GDPChange in Change intotal jobs, % GDP per2012 to annum, 20122025 (bar) Stockholm to 2025 (line) San Sydney Paris 1.50 600 Francisco London Toronto Hong Chicago New Singapore 300 Berlin 0.75 Kong York Buenos Milan Madrid Tokyo Aires 0 0.00 Los Angeles -300 Seoul Abu (in 000s) Moscow -0.75 Kuala Dhabi Mexico Johannesburg Lumpur -600 City Istanbul São -1.50 -900 Paulo -2.25 -1,200 Mumbai Beijing -3.00 -1,500 Shanghai Emerging Mature Additional GDP per annum Source: Oxford Economics, Cities of Opportunity Partnership for New York City  |  Cities of Opportunity | 37
  • 40. Expect the unexpectedPreparing for a range of possibilitiesThe “what if” scenarios offer no Ouija board Mature cities like New York and Londonto foretell the urban future. Quite the opposite: that have been so successful in recentThey show the wide range of reasonable years (in fact, poster towns for the urbanoutcomes that may await cities over the renaissance) could contract painfully. Bigshort-term planning horizon. emerging cities could see their growth sidetracked. But innovation, education,The different pathways make an important connectivity, trade, and travel also openpoint: Flexible thinking is needed. Continued the door for healthy expansion.city growth and expansion are anything buta given in a world facing big question marks Optimism tempered with pragmatismin technology, economics, employment, is a good outlook today for all the plannerspolitics, climate, population, demographics, and stakeholders in urban transportation,and social cohesion. energy, water and waste, education, healthcare, and security systems worldwide.Comparing the “what if” scenarios: In good times, London makes Olympian strides, but the emerging megacities slow their paceDifference from 2025 baseline employment projection (000s) An educated, Trade booms in an Technological job loss Protectionism spreads Quality of life connected world educated, connected and slow growth to counter hard times spurs city growth page 32 world page 33 page 34 page 36 page 37 Abu Dhabi -70 -9 -100 -50 -30 Beijing -800 1,110 -2,400 -1,620 -1,250 Berlin -30 160 -340 -160 180 Buenos Aires -590 -220 -480 -310 -50 Chicago 80 230 -250 -120 80 Hong Kong 8 300 -660 -250 60 Istanbul -450 160 -990 -570 -660 Johannesburg -390 -150 -420 -200 -140 Kuala Lumpur -90 20 -190 -90 -60 London 830 1,640 -1,130 -690 520 Los Angeles 30 170 -320 -120 40 Madrid -30 110 -270 -120 30 Mexico City -500 -150 -700 -300 -320 Milan -100 40 -160 -120 30 Moscow -410 210 -1,030 -530 -270 Mumbai -1,300 -640 -940 -560 -1,120 New York 380 790 -830 -340 150 Paris 210 470 -360 -220 250 San Francisco 30 95 -110 -50 70 São Paulo -1,300 -460 -1,340 -730 -630 Seoul 330 840 -920 -430 -140 Shanghai -620 1,080 -1,860 -1,430 -1,330 Singapore 100 590 -640 -420 270 Stockholm 50 140 -110 -70 120 Sydney 30 330 -510 -260 390 Tokyo 530 1,200 -1,110 -570 -70 Toronto 7 190 -230 -150 170Source: Oxford Economics, Cities of Opportunity Top 3 scores Bottom 3 scores38 | Cities of Opportunity | PwC
  • 41. The cities weave a surprising tapestry of jobsContinued from page 29 Viewed together, financial and business could suffer much the same way if major services form the backbone of many city labor productivity improvements like virtual careto the grimy, represent the fabric of our cities markets. That tandem employs over one in take hold.and the biggest employment generators. Theexport sectors that they nurture drive the three workers in Milan, Paris, London, Beijing, San Francisco, and Stockholm, and at least Even more sobering are the challenges ofeconomy outwardly and bring in money. funding the basics of good housing, health- one in four in Chicago, Toronto, New York, and Buenos Aires. (These two categories broadly care, infrastructure, and education to keep upInteresting trends and anomalies surface include financial intermediation and auxil- with the expanding urban world. Investmentlooking at individual cities. For instance, iary activities as well as insurance in financial outlays required from 2012 through 2025retail plays a very large role in certain services. Business services embrace real estate, to support our baseline projections of futurecities—Hong Kong, Kuala Lumpur, Moscow, research and development, architecture and growth reach about $2.5 trillion in New York,Mumbai, and Mexico City, among them— engineering, legal, accounting and tax con- about $2 trillion for Beijing and Shanghai, andperhaps because of productivity improvement sultancies, advertising, and other professional around $1 trillion in Tokyo, London, Sydney,opportunities. Healthcare employs 16 percent services such as scientific and technical, and São Paulo. (See chart, “Forecast of invest-of New Yorkers, possibly because of similar as well as IT and computer services.) ment spending relative to growth,” page 81.)challenges in productivity, as well as the highrelative wealth that can be invested in health The importance of all these employmentservices. (If New York’s healthcare employ- Vulnerabilities and opportunities jump out in certain sectors. Public administration jobs are sectors, the potential for disproportionate jobment rate were projected onto the six cities losses, and the uphill climb to fund city growthwith the least healthcare employment in Cities threatened as city and national governments consider austerity measures. Retail workers all bear consideration by the stakeholders inof Opportunity, 3.2 million jobs would be the future of urban well-being. At the samegenerated in Beijing, Istanbul, Singapore, in mature cities have to wonder when a robot might stock the shelves or make fashion time, growth brings opportunities andKuala Lumpur, São Paulo, and Milan.) the rapidly urbanizing world holds out recommendations, or when online buying will simply shutter storefronts. Healthcare jobs enormous potential.Investment outlays requiredfrom 2012 through 2025to support our baselineprojections of future growthreach about $2.5 trillion inNew York, about $2 trillionfor Beijing and Shanghai,and around $1 trillion inTokyo, London, Sydney, andSão Paulo. Times Square in New York.
  • 42. The city today40 | Cities of Opportunity | PwC
  • 43. Shanghai and Beijing are pushing ahead, while Western cities continue to compete Our 10 indicators have undergone substantial Economic clout has also undergone major revision this year and are now composed of revision. Only four variables remain from 60 variables. As we do every year, however, last year and several are gone. And yet, Paris, we have “fleshed out” our quantitative research London, and New York are still in the top 5, with several interviews with leading specialists as they were last year—except that Beijing and recognized authorities from all over now tops the ranks and is joined in the five the world. best-performing cities by Shanghai. Intellectual capital and innovation saw only Ease of doing business has seen some modifi- a single change in its variables this year, and cation in its variables this year, but very little Stockholm and Toronto once again topped change in the final results, with the top 5 the rankings. remaining virtually the same: Singapore and Hong Kong swapping the top spot, followed Technology readiness proved to be a very by New York, London, and Toronto. competitive indicator, with cities from three continents in the top 4 and Seoul ranking Cost also saw a significant renovation, adding first overall. four new variables, with the result being Berlin ranking first and the next five cities— Transportation and infrastructure Seoul, Kuala Lumpur, Istanbul, Mexico City, underwent a fundamental reorganization this and Johannesburg—all coming from the year. The focus is now sharply on the role of developing world. transportation and infrastructure in integrat- ing a city, and in bringing people together Demographics and livability’s focus this efficiently but also in a manner that deepens year is very much on livability, as measured the urban experience. Because of the extensive by three of its four variables. Paris takes top revision to the indicator that notably placed spot this year replacing Stockholm, with airport traffic and connectivity into the city Sydney, Toronto, and San Francisco gateway category, the rankings have also remaining high performers. changed dramatically this year. Four of the top 5 cities are Asian. Last year, the top 5 were City gateway is the one completely new American and European. indicator in this year’s study. It seeks to measure a city’s global attraction. Interestingly, Health, safety and security remains precisely as with economic clout, Beijing and Shanghai as it was last year and, consequently, produces once again join London, Paris, and New York the same results: Stockholm and Toronto in the top 5. remain on top. Sustainability and the natural environment, Learn more as its new name indicates, has also changed See www.pwc.com/cities for interactive modelers; substantially. It keeps only two variables from videos, podcasts, and full-length versions of the last year, as it now includes elements of the interviews; detailed data definitions and sources. natural environment in its overall measure-Chuo Avenue in Tokyo’s Ginza section. ment of urban sustainability. Sydney does even better this year than it did in 2011, topping the ranks, while Berlin remains in the top 4. Partnership for New York City  |  Cities of Opportunity | 41
  • 44. Intellectual capitaland innovationGenerating the skills thatgenerate growth Classroom size1 Libraries with public access Math/science skills attainment*Of the 10 indicators in our study, intellectual 27 Stockholm 21 27 15capital and innovation consistently attracts the 26 Toronto 25 22 21attention of a wide range of readers. And that 25 Paris 18 17 17is precisely because, in a modern and globaleconomy, it is almost axiomatic that intellec- 24 San Francisco 20 21 15tual capital, and the innovation it generates, 23 New York 15 18 15is the engine of both social development and 22 London 13 24 18economic growth. 21 Sydney 17 26 20As it is so critical, Cities of Opportunity 20 Los Angeles 22 15 15continually strives to ensure as accurate an 19 Chicago 16 19 15assessment of this indicator as possible. Lastyear, we made a number of changes; this year, 18 Tokyo 9 20 22we made only one—but it was significant. 17 Hong Kong 8 11 26Percent of gross domestic expenditure on R&D 16 Berlin 19 4 19has been replaced with the Innovation CitiesIndex. This provides a more accurate picture 15 Seoul 7 12 23of each city’s actual “innovativeness” than the 14 Milan 26 14 10previous country-level measure (which gave 13 Singapore 5 5 26all five US cities an equal rank in last year’sresults, for example). In addition, the rankings 12 Madrid 24 10 9in the current variable are based on an index 11 Moscow 27 23 8of 162 different statistical components, so the 10 Shanghai 3 8 27ensuing results are both broader and deeper. 9 Abu Dhabi 14 7 6Still, there is little difference in this year’s 8 Beijing 3 2 24overall rankings, as Stockholm and Toronto 8 Mexico City 24 25 4once again finish first and second, respectively.Although there seems to be a marginal 6 Kuala Lumpur 6 9 7degree of slippage for Stockholm from last 5 Buenos Aires 12 13 2year—when it ranked first in three variables 11 6 4 São Paulo 3(including the now superseded R&D category),as opposed to finishing first this year in only 3 Johannesburg 1 16 1two—what is more worrisome for the 2 Mumbai 4 3 16Swedish capital is, again, its result in math/ 1 Istanbul 10 1 5science skills attainment. Last year, it justmissed ranking in the top 10 by only oneplace; this year, however, it ranks number13, tied with the four American cities inthis country-level measure.Toronto, however, is even more impressive cities ranked in the top 10 in research perfor- but to build, or enhance, the intellectualthis year at number two than it was in 2011, mance of their leading universities, making it infrastructure that will make that possible.finishing in the top 10 in all nine variables in clear that Asia knows what it needs to do to It is admittedly a difficult task, but certainlythis indicator. Paris also finished very well achieve competitive ranking in this area. doable, as many of these cities have long andthis year, replacing New York in third place. distinguished histories of their own. It might, Finally, in a near reprise of our previous study, however, require the assistance of nationalAll four US cities finished in the top 10 again, the 10 cities at the bottom of the rankings are governments, as with Brazil’s Science Withoutas did Tokyo, although the Japanese city home to some of the most potent economies Borders scholarship program, which hopesfell three places from last year. in the world, with annual growth that, in most to train 100,000 additional engineers andTokyo was again the only Asian city to break cases, has left the cities in developed econo- scientists by 2015 at many of the finestinto the 10 best in this indicator. The Asian mies trailing behind year after year. Their universities around the world.1cities’ remarkable results in math and science results here confirm, however, that if they areskills, however, might be a sign of substantial to really become competitive with the histori- 1 See “Education in Brazil: Studying the world,” The Economist, March 17th-23rd, 2012.advances to come, as they swept the top six cally (and still) dominant cities of Europe,places in this variable. Moreover, three Asian North America, and Asia, they have no choice42 | Cities of Opportunity | PwC
  • 45. Literacy and Percent of Research Innovation Intellectual Entrepreneurial Score enrollment2* population with performance of Cities Index property protection* environment* higher education top universities 26 26 19 18 26 27 205 25 20 18 24 21 22 198 24 25 22 26 25 20 194 23 27 15 27 17 26 191 23 24 26 25 17 26 189 18 19 27 23 24 18 184 27 11 17 19 20 22 179 23 17 23 13 17 26 171 23 21 21 12 17 26 170 19 22 25 17 19 14 167 10 13 20 21 22 19 150 17 15 16 22 23 12 147 15 16 24 14 10 16 137 14 12 13 20 7 15 131 9 6 11 15 27 18 122 16 18 9 11 11 11 119 13 23 7 4 2 2 109 3 14 10 16 9 9 99 8 9 2 9 18 14 87 3 10 12 10 9 9 82 7 5 8 2 4 3 82 4 8 2 8 12 10 66 12 7 6 4 1 6 63 11 3 14 6 5 1 60 6 1 4 1 13 6 49 1 4 5 5 6 4 48 5 2 3 7 3 9 45Each city’s score (here 205 to 45) is the sum of its rankings across variables. The city order from High Highest rank in each variable27 to 1 is based on these scores. See maps on pages 16–17 for an overall indicator comparison. Medium *Country-level data. Low1 Where average class size data were unavailable, pupil-teacher 2 Measurement of a country’s ability to generate, adopt, and diffuseratios, or the number of students divided by the number of knowledge using data from the World Bank’s Knowledge Indexteachers in primary education, were used as substitutes. category, education and human resources. The variables that compose education and human resources are adult literacy rate, secondary education enrollment, and tertiary education enrollment. Partnership for New York City  |  Cities of Opportunity | 43
  • 46. City gatewayA new indicator measures a city’s global connection Hotel roomsCity gateway is the only indicator in the study flows, New York is hampered by poor airport 27 London 24that is altogether new. It also serves a control to central business district access (especially 26 Paris 22function for the results in the demographics for a city that likes to consider itself the 25 Beijing 26and livability indicator. In fact, it is best to center of the contemporary world) andread the rankings here in conjunction with unexpectedly weak appeal to organizers 24 Shanghai 27the rankings in demographics and livability of international meetings. 23 New York 25(see page 67)—and vice versa. While city gateway measures attractiveness to 22 Madrid 19Above all, this indicator attempts to quantify a the outside world, demographics and livability 21 Tokyo 23city’s global connections and attraction beyond represents the other side of the coin, judging a 21 20 Hong Kongits local borders. By measuring a city’s global city’s quality of life through the experience of 19 Singapore 13draw, city gateway reflects the actual reality its own citizens. The cities that do well in bothof today’s networked world and takes the indicators combine global and local vitality 18 Los Angeles 20pulse of a city’s social, economic, and cultural and attractiveness; appealing globally but 17 Chicago 10magnetism internationally. still acting locally. London, Paris, Hong Kong, 16 Kuala Lumpur 9 and Singapore are the only cities that scoreIn that light, the rankings are revealing. There in the top third in both measures. Paris does 16 Moscow 18is no surprise in London clinching first place, particularly well, narrowly finishing second to 7 14 Istanbulgiven the city’s function as a hub of European London in city gateway and finishing first in 14 San Francisco 12travel (sustained by its four airports). What demographics and livability.is surprising is how, in coming a very close 12 Seoul 5second, Paris not only does very well across It is also possible to consider that city 11 Sydney 11the board in this indicator, but also beats out gateway may function as a leading indicator. 10 Berlin 17English-speaking London and New York, as For instance, Beijing and Shanghai havewell as famously business-friendly Singapore, quickly attained significant global presence, 9 Milan 15for the top rank in international association but achieving balanced and long-lasting 9 Toronto 14meetings. What is equally surprising is that vitality will also mean addressing the needs 7 Mexico City 4London, Paris, Beijing, and Shanghai beat and desires of their own residents.New York in this indicator. 6 Stockholm 3 5 São Paulo 16When it comes to the world’s most attractive 4 Buenos Aires 8cities for tourists, the popular Western con-sensus has long accepted the trinity of London, 3 Johannesburg 1Paris, and New York. But despite placing first 2 Mumbai 2in aircraft movements and second in passenger 1 Abu Dhabi 644 | Cities of Opportunity | PwC
  • 47. International tourists Number of Aircraft movements Incoming/Outgoing Airport to CBD access2 Score international passenger flows association meetings1 27 23 25 27 19 145 23 27 23 23 25 143 17 24 19 22 27 135 19 13 21 21 22 123 24 9 27 26 10 121 16 21 17 16 26 115 15 15 20 25 13 111 21 17 10 17 22 108 26 26 9 13 12 99 20 4 24 20 4 92 1 8 26 24 19 88 25 16 7 11 19 87 18 5 18 18 10 87 22 19 15 14 8 85 14 6 22 15 16 85 9 22 13 19 14 82 6 14 11 12 23 77 13 25 5 5 7 72 5 7 12 8 22 69 12 10 16 10 7 69 10 11 14 6 12 57 11 20 3 3 15 55 4 12 8 7 3 50 8 18 2 2 3 41 3 2 4 4 25 39 7 3 6 9 3 30 2 1 1 1 5 16Each city’s score (here 145 to 16) is the sum of its rankings across variables. The city order from 27 to 1 High Highest rank in each variableis based on these scores. See maps on pages 16–17 for an overall indicator comparison. Medium Low1 A cumulative count of international association meetings per city 2 A measure of the ease of using public transit to travel between aper year that take place on a regular basis and rotate between a city’s central business district and the international terminal of itsminimum of three countries from 2005 to 2010. Figures are pro- busiest airport in terms of international passenger traffic. Citiesvided by members of the International Congress and Convention with direct rail links are preferred to those with express busAssociation. services. Cities with rail links with the fewest transfers are ranked higher than those with more. Partnership for New York City  |  Cities of Opportunity | 45
  • 48. Cisco’s vision of cities transformedby technology spreads… from Wim Elfrink’s passage to India into a surrounding world ofurban possibilities million people are joining India’s a traditional pattern. We can’t middle class every year, which build cities like we did in the means you add an Australia to past. A transformational shift the market each year. If you draw has to happen. a circle of countries within a five-hour flight from India, you What innovative projects is Cisco can reach 70 percent of the involved with in India? world’s population. There’s a master plan with a budget of around $90 billion to How did living in Bangalore create a transport line between change your perspective on the Delhi and Mumbai, then to create challenges facing cities? 24 new cities around it. Cisco has We had a unique opportunity been awarded with the masterIn 2006, Wim Elfrink was named the first Chief Globalisation Officer because we were building a new ICT [information and communica-at Cisco Systems, the networking equipment giant. Instead of basing campus there for 10,000 people. tions technology] plan for two ofhimself in the company’s California headquarters, Elfrink made a In India, you have to provide these cities. And that’s new: ICTradical decision: He moved to Bangalore and established a second healthcare, transport, and educa- in city planning has always beenCisco headquarters in one of the world’s fastest-growing metropolises. tion to your employees. So we an afterthought. But now you seeNow back in Silicon Valley, Elfrink continues to lead Cisco’s globalization developed a whole vision of this conglomerates starting to workstrategy, its entry into new emerging markets, and its Smart + campus as a city of the future. together, with technology centralConnected Communities initiative. Here, he discusses the challenges Bangalore became the center for in their awareness. Elsewhere inof urbanization and the power of technology to transform cities in what we initially called “intelligent India, we’re working with a devel-ways we can barely imagine. urbanization,” which morphed oper that’s building 25 million into our concept of “Smart + square meters of apartments and Connected Communities.” It was shopping malls. In the first phase, also in India that I really started to we’re establishing real connectiv- understand what urbanization is ity from the home. It’s a triple all about. In the next decade, more play: home automation, energy Why did you decide to create a than 100 million people will move management, and entertainment. second headquarters in India from rural areas to urban areas in Many Indian families have parents after taking charge of Cisco’s India alone. In total, 700 million living with them, so you also need globalization strategy? people globally will urbanize in to consider assisted living and A lot of companies look at India the next decade. That’s 190,000 a access to healthcare. We’ve identi- because of its low labor costs. We day. If you’re in the middle of that, fied a portfolio of services you can looked at India for business oppor- you start to understand what the buy for so many dollars per square tunities, access to new talent, new challenges are. In India, where meter. We’re used to the idea of markets, new partners. India is you’re dealing with a lot of poverty getting gas, water, and electricity English-speaking, democratic, has and illiteracy, how do you give in our homes. In future, we a good legal system, IP protection, people access to education and envision that technology will a collaborative government, and healthcare, create jobs, and give be built in, so you won’t buy it, big internal markets. In a decade, people decent lives? Perhaps the but will have more and more ser- one in three workers in the world biggest lesson was that you have vices available to consume. will be Indian. Its population to think out of the box. You can’t You could even think of ICT is also getting younger, and 20 think about all these challenges in as the fourth utility.46 | Cities of Opportunity | PwC
  • 49. You have to think out of the box. We can’t build cities like we didin the past. A transformational shift has to happen.The first phase of Songdo InternationalCity Development, with Cisco Smart +Connected Communities’ home network-ing systems and TelePresence, openedin Incheon, South Korea, in 2009. Partnership for New York City  |  Cities of Opportunity | 47
  • 50. You define urban sustainability 50 billion devices in the next ture. This is happening in Korea listening to voicemails because,in a holistic way, including eco- decade; and we’ll have three and France, too. Best practices are in voicemails, you hear emo-nomic, social, and environmental billion people connected to the spreading around the world. tion. These things serve differentfactors. What’s the priority in a Internet. The other trend is that purposes. But the world willcity like Mumbai? everything will be cloud-based. Will technology change the way increasingly move to connectivity; This will create new opportunities we collaborate? social networking is happening.There has to be a balance over and business models that we’ve so Urban planners often say you We have to embrace it, make it atime between economic, social, far only dreamed of. Technology need an environment in cities tool, and use technology to enableand environmental sustainability. can be a key enabler to transform where people come together, new opportunities.Depending on the most urgent societies by giving people afford- eat together, where a cluster ofneeds, where do you start? For Should there be more emphasis able access to cloud-based services. activities comes together—thenpeople in Mumbai, giving them on the public good in urbansecurity, safety, a place to live, innovation will happen. You had How is technology changing the planning?a good sewer system, access to this in Paris, with art; in New way people work in cities? Orleans, with music; in Silicon In future, there will be more com-utilities, is the priority. In moredeveloped cities, you’re at a differ- In the past, cities were built for Valley, with technology. But now petition between cities. Cities willent phase. Take Detroit, where the work—you’d go to a city to work. you can also create clusters virtu- compete for work, investors, andpopulation has gone down from But work is now being virtual- ally. I can set up a community of talent. So, urban planners have2 million people to 700,000. The ized. I can work anyplace. You experts in five minutes. It’s not to ask questions like: How can wequestion there might be: How do don’t commute to compute. You just that I go to a pub or restau- attract more young people andyou attract new investors and start go to meet people and collaborate. rant to meet people. This will make people feel safe? You’ll alsonew industry? The starting points So the whole nature of work is mean you can start innovation in see more cities with integratedare different. But, in the end, you changing, and you’re seeing new different types of environments, operations centers. With every-want to look holistically at all three concepts coming up in terms of which will become more and thing becoming connected and allof those elements of sustainability. technology-enabled work method- more virtualized. that “Big Data” available, you’ll get ologies. Amsterdam is a fantastic more real-time scenario planning:What role will technology play showcase for what we call “Smart Is technology dehumanizing our If you have a thunderstorm andin transforming urban life? Work Centers,” which provide a lives by eliminating the nuances of need to close an airport, you can work environment that bridges the face-to-face or even voice-to-voice say, “Perhaps we should also letFrom a technology point of view, communications? gap between a central office and the children go home now, informwe see two megatrends on top a home office. By locating these Technology is a great enabler. It schools, reroute traffic.” Theseof broadband. One is what we centers close to urban areas, we’re doesn’t replace. It replaces partly, operations centers will cut costscall the “Internet of Things.” starting to decentralize work. So and it adds. It gives us a bigger and make cities more produc-Everything will be connected. We you reduce transport, improve toolkit. I love to meet people and tive. You can also monetize theseforecast that there will be utilization, and share infrastruc- have brainstorming sessions. I love data via mobile applications. TheUrban planners say you need an environment in cities where peoplecome together, eat together, where a cluster of activities comestogether—then innovation will happen. You had this in Paris, withart; in New Orleans, with music; in Silicon Valley, with technology.But now you can also create clusters virtually. By 2017, over 300,000 will either live or work in Songdo International City Development in Incheon, South Korea.48 | Cities of Opportunity | PwC
  • 51. average Parisian spends four years see your doctor for an interven- looking at the globalization of the and to see them still valuingof his life finding parking spaces; tion. Politicians buy in because corporate brain. Where’s the most life and being happy. That haswould he pay 10 euros a month they see the benefits—and need to expertise for supply-and-demand dramatically changed our lives.for a service that made this easier? provide thought leadership to get value chains? Probably Asia. So, It’s made us more humble. It alsoThis type of intelligent infra- reelected. you see many companies having further develops your communitystructure will be the new norm. a head of supply-chain manage- feeling and deepens your senseGreenfield cities will be built Tell us about your work in London. ment there. I’m always looking that your company has a corporatethat way. So, cities that want to I love cities with deadlines. If at clusters because innovation social responsibility. As a technol-compete will have to arrive at that you’re hosting the Olympics, you comes in clusters. And I look at ogy company, you’re giving peoplenew norm. know you have to make progress. how we can participate in these access to healthcare and educa- For us, in the neighborhoods innovation centers. tion, and helping to create jobs;How will these technological where you have the Olympics, the you’re not just selling what youinnovations help cities cut costs? In envisioning the future, you’ve have, but creating what people real work starts after the games. said that it helps to think more need. For my kids, it’s been life-Just look at what new technology How will the Olympic Village be like children. Why? changing, too—to understand thatcan enable in city governance. sustainable? How will we makeAbout 70 percent of the energy that a Smart Work Center? How If I look at how my children the world is big and complex, thatin the world is used in cities, 40 can you transform stadiums so learn, work, and communicate, there are a lot of unmet needs, andpercent of that in buildings. But they serve multiple functions? it’s dramatically different from that, as a human being, you have abuildings have only 40 percent If you add technology, can you the way that Generation 50-plus social responsibility to contribute.utilization. So, if you can improve make them profitable for the next thinks. So I think urban plannersutilization, a 30 percent energy decade, not just for one event? It’s have to look more through the Learn moresaving is simple. Or look at the a different way of thinking. eyes of children. I was 14 when wereduction of traffic you can got a black-and-white television Video clips from this condensedachieve through different ways Where is globalization heading? at home. So, if I’m not careful, conversation are available atof working, Smart Work Centers, I become a prisoner of my own www.pwc.com/cities, as is a We’re in the fourth phase of glo- full-length print version of thebetter planning. With cloud- balization. Columbus discovered experiences. Then I won’t think out of the box. entire, much longer discussion.based computing, you can give the New World; Vasco da Gamapeople access to education for $3 a discovered the way to the East.month. If you think about health- How has living in India changed Then we started trading for centu-care, 80 percent of doctors’ calls you and your family? ries. Then, at the end of the 20thdon’t need physical interaction. century, we started to outsource It was humbling to see theIn future, more diagnostics will work, manufacturing, R&D. extreme poverty, the malnutrition,be done remotely, so you’ll only Now, in the fourth phase, we’re the people living on the streets,
  • 52. dropped to third place, behind San Francisco— access in schools and digital economy score.Technology readiness which climbed two places from fourth last Meanwhile, Seoul continues to outrank every year. In so doing, the northern California city other city in broadband quality, as does TokyoThe competition for digital has also passed ahead of Stockholm, which in software and multi-media development andadvantage continues to intensify drops to fourth this year from third in 2011. design. This year’s results continue to raise Moreover, while Hong Kong has dropped three the question that was obvious last year: Why places to tenth this year, Tokyo has risen three does Stockholm score so low in development places, jumping from ninth last year to sixth and design, the only variable in which it doesThis indicator has seen an interesting this year. London, too, which just missed not rank first or second? A possible answer isreordering of positions in the top 10 this year. the top 10 in 2011, tied Los Angeles this year its relative lack of success in attracting foreignWhile this fact might just be the result of for eighth place, safely inside the group of technology firms, which is also reflected in itsshort-term developments, it might also 10 best. low Foreign Direct Investment (FDI) figures inpresage longer-term trends. the economic clout indicator. Everything else Basic, but intriguing, consistencies with last being equal, Sweden’s capital would easilySeoul, which came in second last year, has year’s data remain, however. Stockholm is rise to number one in this indicator if it wereovertaken New York at the very top of the still the only non-Asian city to reach the top simply competitive in this variable.rankings. But instead of simply switching ranking in any variable in this indicator, rank-places with the Korean city, New York has ing first, as it did last year, in both Internet Internet access Broadband Digital economy Software development Score in schools* quality score score* and multi-media design1 27 Seoul 25 27 18 26 96 26 San Francisco 20 22 26 25 93 25 New York 20 22 26 23 91 24 Stockholm 27 26 27 9 89 23 Chicago 20 23 26 12 81 22 Singapore 26 15 21 18 80 22 Tokyo 12 25 16 27 80 20 London 24 14 17 24 79 20 Los Angeles 20 17 26 16 79 18 Hong Kong 23 18 22 8 71 17 Toronto 22 12 19 13 66 16 Paris 9 20 14 22 65 15 Sydney 21 13 20 2 56 14 Moscow 8 24 1 21 54 13 Beijing 16 9 4 20 49 12 Berlin 11 19 15 3 48 12 Shanghai 16 9 4 19 48 10 Madrid 10 11 13 10 44 9 Kuala Lumpur 13 3 10 15 41 8 Milan 5 10 12 7 34 7 Istanbul 7 16 6 4 33 6 Abu Dhabi 14 2 11 1 28 6 Buenos Aires 1 5 5 17 28 4 Mumbai 6 5 2 14 27 3 Mexico City 4 6 8 6 24 2 Johannesburg 2 1 9 11 23 1 São Paulo 3 7 7 5 22Each city’s score (here 96 to 22) is the sum of its rankings across variables. The city order from 27 to 1 High Highest rank in each variableis based on these scores. See maps on pages 16–17 for an overall indicator comparison. Medium *Country-level data.1 The combined indices gauge a city’s performance using quality capabilities; software exports; quality of ICT infrastructure; and Low(weighted 70%) and cost (weighted 30%) assessments of the specialization in software development. For multi-media design,location, as well as 120 qualitative competitiveness measures. For measures include the size of the location’s leisure and entertain-software development, these measures include availability and ment sector; its specialization and track record; informationtrack record in ICT; availability of specialized-skills professionals technology infrastructure; quality of life; and skills availability.such as scientists and engineers; access to venture capital; R&D50 | Cities of Opportunity | PwC
  • 53. “Man when perfected is the best of animals,” From ancient Athens to modern New YorkHealth, safety and security Aristotle wrote in Politics, “but when he is and Hong Kong, there appears to be univer- isolated from law and justice he is the worst of sal agreement on a city’s responsibility toFrom Aristotle to Bratton to Chan, all. …” In the words of Kroll chairman and the its citizens’ well-being. As such, this sectionsecuring citizens’ well-being is key only man to have led both the New York and essentially tests civic viability, cohesion, and Los Angeles police departments, Bill Bratton, advanced socioeconomic achievement. Among “If you don’t have security, and you don’t have all indicators in Cities of Opportunity, this health and safety, all the other pillars that one comes closest to actually quantifying the support democracy will weaken, including qualities that constitute urban “civilization”— education and the economy. If you have a the word whose very meaning is embedded shaky platform, they are all going to be shaky.” in the notion of a city. Dr. Andrew Chan, deputy chairman of the Arup Group of global engineers and designers, That is why this indicator also rewards long- agrees: “For the average person in a develop- term stability and relative affluence. After all, ing city, the most important factor is safety, health, safety, and security were the reasons health, and security.” men and women originally gathered together Continues on page 77 Hospitals Health system End of life care2* Crime Political environment Score performance1*27 Stockholm 25 25 18 24 27 11926 Toronto 21 22 24 24 25 11625 Sydney 23 18 26 24 23 11424 Chicago 26 15 24 24 20 10923 San Francisco 24 15 24 24 20 10722 Singapore 17 26 17 27 16 10321 Berlin 11 21 25 18 26 10120 New York 20 15 24 18 20 9719 London 16 19 27 18 16 9618 Milan 19 24 13 18 21 9517 Abu Dhabi 27 16 16 27 7 9317 Tokyo 4 27 14 24 24 9315 Los Angeles 22 15 24 10 20 9114 Paris 9 20 19 18 23 8913 Madrid 12 23 12 18 16 8112 Hong Kong 5 11 15 27 13 7111 Seoul 7 17 10 18 9 6110 Kuala Lumpur 14 5 9 18 9 559 Johannesburg 18 1 11 5 11 468 Buenos Aires 15 6 3 7 12 437 Mexico City 13 7 6 5 11 426 Shanghai 8 11 5 10 4 385 Beijing 6 11 5 10 3 354 Mumbai 10 2 1 7 5 253 Istanbul 1 8 8 5 2 242 Moscow 3 3 7 5 1 191 São Paulo 2 4 3 1 6 16Each city’s score (here 119 to 16) is the sum of its rankings across variables. The city order from 27 to 1 High Highest rank in each variableis based on these scores. See maps on pages 16–17 for an overall indicator comparison. Medium *Country-level data.1 Measurement of a country’s health system performance made 2 Measurement of countries according to their provision of care for Lowby comparing healthy life expectancy with healthcare expenditures their citizens at the end of their lives taking into account the basicper capita in that country, adjusted for average years of education. healthcare environment, availability, cost, and quality of care.(Years of education are strongly associated with the health ofpopulations in both mature and emerging countries.) Partnership for New York City  |  Cities of Opportunity | 51
  • 54. What’s the role of the police in many American cities were effec-Bill Bratton transformed law today’s society? tively dying, principally because of crime, which was causing peopleand order We make neighborhoods peace- ful. We help control behavior. We to flee, leaving behind the poor… in New York and Los Angeles. Today, he says public safety is the and dispossessed. Cities were make things safe. Other societalmost critical priority for any city—and explains how to achieve it. being written off. But just as the problems can be dealt with more patient seemed about to expire, effectively when you don’t have it all began to change. fear, disorder, and crime. As aAs Commissioner of the New York Police Department from 1994 to police chief, I think of myself as How did you save the patient?1996, William J. Bratton fought crime with legendary success, spear- very much like a surgeon in aheading a national revolution in attitudes toward policing. Bratton A new philosophy of policing was trauma center. A person is broughtadopted a “broken windows” community policing strategy of zero toler- embraced by many police chiefs, in from a horrific accident. Youance for minor offenses and championed statistical analysis to prevent myself included. The medicine find out what’s going to kill thiscrimes before they occurred. His seven years as Chief of Police in Los we used was community policing, patient and what you must do toAngeles saw an equally impressive drop in crime rates. Now back in with its emphasis on partnership. save that life. In the late 1980s,New York, Bratton is chairman of Kroll, the private security company. We also returned policing to itsHe recently co-authored a leadership book, Collaborate or Perish!52 | Cities of Opportunity | PwC
  • 55. Policing is not a cost. It’s an investment. If you don’t have public safety, the money you’re apportioning to libraries and parks is wasted: If people don’t feel safe, they’re not going to use them. If you make it safe, businesses will come and invest; jobs will be created. New York and L.A. We will arrest nephews, and brothers—are two or three incidents, not when people drinking in public who unfairly treated. You also have there are 20 or 30 incidents and get drunk and then go after each to act consistently: You can’t you’re already dead. Fortunately, other with guns and knives. We police differently in rich and poor we had a lot of medicine to work will not allow people to litter. neighborhoods, white and black with: In New York, we had 38,000 We will have zero tolerance for neighborhoods. The mantra I’m cops, and it took us one to two quality-of-life crimes. At the same known for is that you put cops years to completely tip the city time, we will focus police resources on the dots: You identify where and turn it around. We had a lot on more serious crimes—the problems occur that create fear, less medicine in L.A.—9,000 murders, muggings, rapes, and disorder, and crime, and that’s cops—so it took me seven years robberies—because, otherwise, it where you put your police. Unfor- to tip the city. seems like a no-man’s land. In the tunately, that often happens in ’90s, we got it right by having zero poor and minority neighborhoods. Given the huge problems con- tolerance not only for major crime. So it’s critical that people there fronting you in L.A., did you However, if the government cleans feel they’re treated fairly and get ever have second thoughts about the area up but the community their share of resources. taking on that management doesn’t help preserve it, you’re not challenge?Today, as chairman of Kroll. How beneficial was CompStat, a going to be successful. On my first weekend there as system that uses statistical analy- Chief of Police, we had about 17 How can the police encourage the sis to allocate police resources? murders, and I was questioningfounding roots—the idea that community to help in high-crime Think of this from a medical what the hell did I get myself into.police exist primarily to prevent neighborhoods? perspective. You go to the doctor, The police department was muchcrime by our presence, activities, Police have to go into these very and he runs a CAT scan over you more demoralized than in Newand visibility. In the ’70s and ’80s, dangerous neighborhoods and to identify your illness. CompStat York. It was incredibly small andpolice were told to focus not on calm things down, handling the identifies the crime hot spots in had been literally at war with thepreventing crime but on respond- tough job of taking on the bad a particular location, and that’s African-American community foring to it. We corrected that. guys. You can’t break the law to where you want to put your cops. 50 years. There also was a horrific get them. You have to deal with A doctor does a physical exami- gang problem. In my first yearWhat’s the secret of transforming them humanely. You can’t beat nation to identify a basal cell in L.A., I think there were 676crime-ridden neighborhoods? them or wrongfully arrest them. melanoma because he under- murders. This year, there may beCommunity policing and a focus That’s critically important because stands that you’ll die if he doesn’t fewer than 300. So we took thaton broken windows are essential. even the good people in those start treating your illness right terrible situation and turned itThe concept of broken windows— neighborhoods aren’t going to away. In the same way, CompStat around. I believe in a leadershiptaking care of the little things— support you if they feel that identifies these crime problems as management system that I callwas our lynchpin strategy in these kids—who are their sons, they’re emerging—when there are the Christmas tree. You start with Partnership for New York City  |  Cities of Opportunity | 53
  • 56. a vision and surround yourself lofts, then attract patrons; then ment. If you don’t have public vice or public safety. Sometimeswith people who believe it can little coffeehouses and restau- safety, the money you’re appor- the issues are too big. New Yorkbe achieved; then spread it down rants are established. The point is tioning to libraries and parks is was tough enough in the 1990sthe tree. Your team attracts others that cities are intended to allow wasted: If people don’t feel safe, with 8 million people. Imagineuntil, eventually, you find there’s a for that socialization. But if that they’re not going to use them. If how challenging Mexico City istipping-point level where the rub- socialization is threatened, the you make it safe, they will come. with 20 million.ber hits the road. In cities, that’s revitalization of cities isn’t going Businesses will come and invest,usually the police captain, who’s to happen. And how is it threat- jobs will be created, more taxes Are gangs the same in differentclosest to the community and ened? Crime and disorder. That’s will be paid, more schools will types of cities, whether it’s Mexicothe cops and who’s under a lot of where the police come in. In a be built, more policemen will City, New York, L.A., or London?pressure from the police structure democracy, the first obligation of be hired. There are some commonalities inabove him or her. You give that government has to be the rule of that gangs always exist because ofperson power and authority but law, to ensure your physical safety Do megacities present particular a need. And that need is social-hold them accountable. This sys- and that contracts are enforced. policing challenges? ization, the desire to belong, thetem is teachable and will work in These two things that hold Everything is scalable. But the desire to be part of a family.just about any city in America. humanity together—the ability problem is that the megacities to coexist in peace and engage in have tended to grow up in some of What did you make of the policeHow do you develop a sense of relationships based on contracts our most impoverished countries response to the London riots?inclusion and shared investment that can be legally enforced— where the rule of law is not asin a city as diverse as L.A.? Britain’s government recently are the foundations of democracy. firmly established as in, say, the came out with a report that wasCities are where people of all dif- And cities are the catalysts for Western democracies. Also, a lot pretty strong in its criticisms of theferent types come together from these things. of the basic services that help to Metropolitan Police for its failuredifferent backgrounds, ethnicities, deal with human needs are not to respond quickly enough and How should today’s cash-strapped available there. So if you lookand countries to trade, to learn, to forcefully enough. The good news cities view the vast cost of effec- at those cities with enormousdevelop art. Tom Wolfe once wrote is that the police will learn from tive police work? populations, all of them are strug-a wonderful piece explaining how that. Months after the riots, theyartists are the first to recreate Public safety is the first obligation gling to deliver basic quality-of-life were still arresting people andcities that are dying: Artists go of government in a democracy. services, and none of them are making every effort to identifyinto deserted neighborhoods, into Policing isn’t a cost. It’s an invest- delivering a satisfactory police ser- everybody they could, which sendsCybercrime is the crime of themoment and the crime of thefuture. The capability to causephenomenal havoc—financial,personal, economic, or amongnations—is very real.Back in the days of black-and-white pictures andperceived black-and-white issues, CommissionerBratton (left) earned his stripes as Boston’s transitpolice chief in the early 1980s.54 | Cities of Opportunity | PwC
  • 57. Cities are intended to allow for socialization. But if socialization isthreatened, then the revitalization of cities is not going to happen.And how is it threatened? Crime and disorder. And that’s where thepolice come in.a strong message that if you phenomenal havoc—financial, great despair, the one positiveengage in this behavior in the personal, economic, or among thing we have going for us is thatfuture, you’ll be punished severely. nations—is very real. It is a foundation of safety.That’s very important: In a democ- growing problem, and a lot ofracy, you must have punishment resources are being put into play Did you want to become afor offenses. to address it. policeman when you were a boy? My earliest memories wereHow significant is the impact of Looking at the 10 indicator catego- growing up with TV shows likesocial media on urban violence ries we survey in this report, which “Dragnet” and “Adam-12” andand protest? ones seem most important for the wanting to be a policeman. Fortu-Social media played a significant long-term future of cities? nately, life was very kind becausepart in the London riots. The Arab Health, safety, and security is the I was able to get into it and go inSpring is a clear example of the number-one requirement. If you a lot of interesting directions. It’s apotential impact. Identity theft don’t have security, you don’t have very rewarding profession becausealso is an impact of social media. health and safety, and all the other every day you can have a life ofThe loss of privacy is another. In pillars that support democracy significance. Every day, if you getaddition, see these pop-up mobs will weaken, including education it right, you can have an impactin different American cities. On and the economy. Transportation on so many people.the plus side, it’s very helpful to us infrastructure also is important:in solving crimes. Oftentimes, the People in huge, emerging cities Learn morecriminal provides all the evidence often travel incredible distances towe need through use of the social work with incredibly poor trans- Video excerpts of this condensedmedia. I don’t think we fully portation systems. Also, ease of conversation are available atunderstand yet the scope or the doing business is critical. In L.A., www.pwc.com/cities, as is apotential of it, both good or bad. they’re so anti-business: The regu- full-length version of the entire,But we are learning very quickly. lations smother you to death. I had much longer discussion. lots of friends who were trying toNew technology poses an create businesses there, and theenormous challenge in terms of regulations were such a disincen-cyber-spying. How significant tive. But for me, public safety stillare the threats? is the most critical issue. We’re inWe’re at tremendous risk. At my the midst of the greatest recessioncompany, Kroll, we are rapidly since the Great Depression, andexpanding our cyber-security how do you describe Americanactivities and our data-breach politics at the moment? It’s a totalprotection. It’s the crime of the disaster area. But crime has beenmoment and the crime of the down in the US for four and a halffuture. The capability to cause years in a row. So at this time of Partnership for New York City  |  Cities of Opportunity | 55
  • 58. Transportation and infrastructureA major revision focuses on internal mobilityand the city dweller’s experience Public transport systemsAfter a fundamental reorganization and While several variables have been removed 27 Singapore 20restructuring to better reflect a city’s trans- from this indicator, some have been added 26 Seoul 20portation and infrastructure experience for or altered. The altogether new one is public 26 Toronto 27residents and visitors, the rankings in this transport systems. This variable assesses theindicator have changed dramatically. None of various systemic elements of a fully modern 24 Tokyo 22the top five this year was in the top five last and efficient public transport network, which 23 Hong Kong 22year. For instance, Singapore, which ranks are manifestly more than the sum of metro 23 Stockholm 25first this year, ranked 17th last year. Seoul and tracks or tram rails. By gauging systemicToronto, tied for second place this year, ranked coverage and connectivity (bus rapid transit, 21 New York 15ninth and 15th, respectively, last year. Tokyo trolleys, or bike share, for example, as well as 20 London 27has also moved up, albeit only two places, to conventional modes), this variable measures 20 Madrid 17number four, while number-five Hong Kong the broadest possible coverage—or the extenthas also moved up two places. In the end, to which the largest possible percentage of 20 Paris 25Toronto is the only non-Asian city in the top a city’s population has access to the widest 17 Berlin 25five—as opposed to last year, when the top five possible means of public conveyance. 16 Buenos Aires 13cities were exclusively European or American. In addition, major construction activity 16 Mexico City 3Regarding US cities, in fact, only New York is now replaces skyscraper construction activ- 14 Chicago 20in the top 10 this year, along with four Euro- ity. While vertical density is a distinguishing 14 San Francisco 12pean cities. Chicago has fallen 12 slots from (and often necessary) feature of urban life,second last year to 14th this year, tied with skyscrapers are only one aspect of symbolic 12 Abu Dhabi 5San Francisco, which has fallen 10 slots from urbanism (the café and the cabaret are oth- 11 Milan 12fourth last year. And Los Angeles does even ers). And while it is mostly European cities 7 10 Kuala Lumpurworse this year than in 2011, falling from that are identified with a less vertical defini-21st to 25th. tion of urbanism, the “Old World” actually 10 Shanghai 14 contains more than one continent. In fact, in 8 Moscow 12This indicator now reflects a rethinking, not many Asian cities that are now emblems of 7 Beijing 6simply of the category, but of the actual role skyscraping ambition, it is often the resident oftransport and infrastructure play in a city’s 6 Mumbai 2 a Beijing hutong (an alley of traditional court-development and cohesion. It now seeks to yard residences) or a Shanghai lilong (again, 5 Istanbul 9measure and assess the actual networks of a lane of traditional low-rise settlement) who 4 Sydney 17internal mobility and physical connection that is the descendant of generations of urbanites.bind a city together and maximize both its 3 Los Angeles 9 By contrast, many of the dwellers of mucheconomic efficiency and social integration. taller, “modern” structures are recent migrants 2 São Paulo 4As a result, three variables (aircraft move- from the countryside. It is precisely to stress 1 Johannesburg 2ments, incoming/outgoing passenger flows, this human dimension of infrastructure thatand airport to CBD access) have been moved we also moved the housing variable—whichto the city gateway indicator, as they measure correlates very strongly with high quality ofmovements in and out of, not within, a city. Of life—from demographics and livability tocourse, traffic congestion is certainly an issue this indicator.of internal urban mobility (or, more often thannot, immobility); but it, too, has been trans-ferred to demographics and livability primarilybecause the entire web of issues related tocongestion—and, more generally, the use ofautomobiles in a city—has become less a mat-ter of urban transport than of quality of life.56 | Cities of Opportunity | PwC
  • 59. Mass transit Cost of public Licensed taxis Major construction Housing Score coverage1 transport2 activity 12 17 20 18 27 114 22 22 21 13 11 109 18 6 6 27 25 109 9 14 18 21 23 107 17 24 11 14 15 103 26 3 22 4 23 103 23 11 7 22 23 101 15 2 13 19 23 99 20 13 19 7 23 99 27 7 23 2 15 99 24 5 9 7 25 95 14 23 26 9 8 93 10 27 25 24 4 93 13 11 10 15 23 92 25 16 8 8 23 92 2 26 24 21 11 89 21 13 14 11 15 86 11 4 27 23 8 80 6 18 15 16 11 80 19 20 3 17 2 73 8 25 17 7 8 71 16 9 16 26 1 70 3 21 5 25 4 67 7 1 4 10 27 66 4 19 2 2 23 59 5 15 12 13 5 54 2 8 1 4 15 32Each city’s score (here 114 to 32) is the sum of its rankings across variables. The city order from 27 to 1 High Highest rank in each variableis based on these scores. See maps on pages 16–17 for an overall indicator comparison. Medium1 The kilometers of mass transit track for every 100 square 2 Cost of the longest mass transit rail trip within a city’s boundaries. Lowkilometers of developed and developable land area. Bus trips are used in the cities where there are no rail systems. Partnership for New York City  |  Cities of Opportunity | 57
  • 60. The ins and outs, overs andunders, of a great city… keep economies and commuters on the right track, accordingto Peter Chamley of Arup engineers The British government has Is the challenging process in the recently announced plans for a UK of dealing with planning new high-speed rail line linking and costs unique, or is it a London with major cities to common issue? the north.What would HS21 It’s a fairly common problem, do for London? and it depends on the legislative We should not be thinking about framework that you’re working in. HS2 as a London project because Here, we have a well-developed it’s about the rest of the country. legislative framework and a very But for London, it will have a rigorous planning process. Places massive impact in that the com- like the States get embroiled in muting reach increases, the politics. Here, there’s a fairly large business reach increases, and the degree of politics, but the planningPeter Chamley, head of infrastructure at Arup, the global design and ability of the rest of the country process grinds on. You end up withengineering firm, joined Richard Abadie, his counterpart in PwC’s to get to London and then on to a very good result, but it just takesinfrastructure practice, for a conversation on the challenges of Europe is significantly improved. time to get there. In Singapore,transportation and infrastructure in the world’s great cities. The two HS2 is primarily about capacity which is much smaller, you’ve gotdiscuss commuter and high-speed rail, air access, developed versus rather than speed, and adding to one level of government, decisionsdeveloping city needs, as well as the seemingly universal struggle to the capacity of HS2 is absolutely are made, stuff happens quickly.go from planning to completion on time, on budget, and at top quality. essential for the economy.58 | Cities of Opportunity | PwC
  • 61. Digging into Manhattan’s bedrock for the new Second Avenue Subway, on which Peter Chamley served as chief engineer.Using Old Oak Common2 as an What are lessons from other cities wishful-thinking numbers be used long to come to fruition and we’veexample, how can the cost of in terms of centralized planning? in the planning process. There got a problem right now. Youdelays be reduced? are quite a number of people who won’t get a new airport out in the My experience includes many knew what the cost of the Big Dig Estuary completed for 15 years.At Old Oak Common, you’ve got years in New York working on the was going to be right from the In the meantime, we’ve got toa large area of land and you need Second Avenue Subway. There’s early days, but nobody allowed improve Heathrow.an integrated view of the whole. this slow decision-making process those numbers to be spokenHow does the land that is available and politics gets involved. If simple What impact do airport delays because the project would neverintegrate with Crossrail? Integrate decisions had been made early have on London? have gone ahead. On CTRL, therewith the Great Western route? and at the right level, you could were realistic timeframes and I think people find it difficult butIntegrate with links to Heathrow? have saved a huge amount of time realistic estimates, so there wasn’t it doesn’t deter them from comingIntegrate with High Speed 2? and money. a constant battle of costs seen to to London. Heathrow ExpressIf you want to put an HS2 station What lessons can we learn from be rising.in the way, you are going to 1 HS2 is a £33 billion ($52 billion) high-speedcause a lot of trouble. But it needs the Big Dig3 in Boston, a great How can we reduce delays in rail line approved for construction to connectsomebody to take a step back and case study on cost overruns. London to Birmingham, Manchester, and Leeds flying into London? Is it a new to the north.decide what, overall, is the right The big lesson learned in the UK airport, a new runway at Gatwick, 2 Old Oak Common is a section of London withthing to do. was from CTRL/HS1,4 which was a new runway at Heathrow? key rail connections. delivered on time and on budget. 3 A major highway tunnel project in Boston There are several answers. The plagued by cost overruns and delays. I think it is about being realistic plan for the Thames Estuary 4 HS1 is the high-speed rail line from London to at the outset and not letting the Channel Tunnel. It is also known as CTRL, airport is great, but that will take for Channel Tunnel Rail Link. Partnership for New York City  |  Cities of Opportunity | 59
  • 62. has made a fantastic change to Have the Olympics5 been good for talking about at Old Oak Com- York, you have straight widethe traveling experience to and London in terms of construction mon, which would allow London avenues, with plenty of space tofrom Heathrow. I live in central and tourism? to grow. London has to provide go underneath the avenue. YouLondon, and I can be from my additional quality office space in don’t have that in London, but The construction industry canflat, checked in from door to door, the right locations, and Crossrail we’ve found a way to thread the look at the Olympics with pride.through security, in less than will be part of that. We have to needle. So we go up and over, over Wonderful facilities have beenan hour. What I see as the issue make sure that inter-connectivity and under, in varying degrees and delivered very quickly and onwith Heathrow is the reduced between HS1, HS2, and the with varying amounts of clear- budget, and that puts the nailnumber of connections. Going to Continent really works for the ances. The approach taken on in the coffin of the story thatcertain countries is much easier rest of the country. We have to Crossrail is to do everything off British construction is always latevia Frankfurt or Schiphol rather sort out the capacity problem the street, so we don’t have big and costs too much. It has beenthan by Heathrow, and Heathrow at the airports. excavations in the street where a great success in regeneratingis possibly losing its position. Mind you would have a nightmare of that part of London. Compare infrastructure in devel-you, the flying experience into JFK dealing with the utilities.is similar, but the experience of oped cities versus developing cities. How can commuting intogetting from JFK into Manhattan Contrast that with the Second Ave- London be improved? It’s a different set of challenges.is just a nightmare. nue Subway project in New York, In a place like London, the ques- London has made some big where there isn’t space to put stuff tion is how to tweak infrastructure strides. Everybody complains, off line because it’s all multi- story high-rise buildings, and you are confined to the avenue’s alignment. A large section of the Second Avenue Subway develop- ment has to be cut-and-covered [a temporary excavation from the street cover decking]. And it hasPlaces like the States get embroiled in politics. In the UK, there’s a fairly been a nightmare just to deal withlarge degree of politics, but the planning process grinds on. You end up all of the utilities in the ground.with a very good result, but it takes time. In Singapore, with one level Is there a fundamental differenceof government, decisions are made, stuff happens quickly. between the cost-benefit analysis for Crossrail and, say, the Delhi Metro? There’s always a problem estimating ridership with new transportation infrastructure but commuting now is dramati- to keep ahead of the game. In going into a city that doesn’t have cally different than it was 20 places like Mumbai and São Paulo, it. In mature markets like London years ago. There has been a fair it’s how to get some infrastructure or New York, estimating ridership amount of investment in new in just to meet basic needs. Do we is well-proven, and we generally rolling stock and capacity, but spend our dollars on sanitation, exceed the ridership that we probably not enough. That’s or on making sure we have a anticipate. There is a long and where we’ve got to go—electrifica- metro system that serves the sad history of new transportation tion, upgrading of existing lines, city center and creates a vibrant infrastructure going into cities that upgrading of signaling, improving economic hub? have not had it before and the stations to allow longer trains. ridership projections are com- It’s in getting more out of the London is so developed, there’s pletely over-estimated. existing infrastructure. hardly any space for anyone, let alone construction activity and Compare privately financed What infrastructure should TBMs [tunnel boring machines] and publicly financed projects London invest in to be more navigating underground. Can you as they relate to quality, timetable, competitive globally? take us through that challenge? and cost overruns. Crossrail6 will make a big dif- The alignment of Crossrail, where In the past, there has been plenty ference and will allow Canary it goes and how it gets there, is to of experience of cost and schedule Wharf7 to grow. It is constrained a large degree driven by what is over-runs on public infrastructure at the moment by transport. already in the ground, and a big projects. But this is a huge Crossrail could be the catalyst challenge is avoiding building generalization and the picture is for something like we were foundations. In places like New changing. With privately financed60 | Cities of Opportunity | PwC
  • 63. St. Paul’s Cathedral as viewed from London’s Millennium Bridge, another Arup project.projects, there has been a better dealing with the politics of New Learn moretrack record of rigor being applied York at the time, Tammany Hallto making sure that we are on and all that. It’s an object lesson in Video excerpts of this condensedcost and on schedule and that the what people with vision and the conversation are available atrisk profile is managed correctly. drive to deliver can do. What we www.pwc.com/cities, as is aThese same levels of rigor are now often lack now are projects having full-length version of the entire,being applied across the board. a champion who will get hold of much longer discussion. them and make it their sole aim toDuring the Great Depression, deliver them. You might criticize 5 This interview was conducted in February 2012, before the Olympics in July-August.America had the New Deal Robert Moses, lots of people do, 6 Crossrail is a 118-kilometer (73-mile) rail lineprogram and later the interstate but he certainly delivered stuff. under construction linking London to the easthighway system, spent a fortune You might argue about whether it and west. It involves 44 kilometers (24 miles) of tunneling under the city and is described as theon infrastructure and probably was the right stuff, but he certainly largest civil engineering project in Europe, with a projected £16 billion ($25 billion) cost. It ismade a step change in its infra- got it delivered. And those private scheduled to begin service in 2018.structure. Some today would backers and their railway compa- 7 Canary Wharf is a major business and retailargue that we may have pro- nies in the UK and America that center built on former London docklands.gressed in technology but not built these big iconic projects did 8 Pennsylvania Station is a key rail hub in New York City and the largest in North America. Thevision. What do you think? it because they had a champion, original structure (demolished in 1963 and sinceWe often forget the lessons of a vision, and a drive to get things replaced above ground) was considered an architectural showcase when it was completedhistory. One of the most fantastic done. I don’t often see that happen- in 1910, and a technological marvel because ofbits of private entrepreneur- ing in public infrastructure projects the tunneling required under the Hudson and East Rivers.ship was Penn Station8 in New that get mired in politics. You need 9 Isambard Kingdom Brunel was a renownedYork. Look at the challenges that a leader at the top of his game who British engineer and railroad pioneer who,the promoters of that project is the Brunel9 saying, “I’m going to starting in 1883, became the driving force behind construction of the Great Westerntook on: Putting new tunnels build the Great Western.” Where Railway initially connecting Bristol and London.using completely new technol- are those people? If we’ve learnedogy underneath the Hudson anything, it’s that big projects needand East Rivers; building this a champion to drive them.massive station in the middle ofan already well-developed city; Partnership for New York City  |  Cities of Opportunity | 61
  • 64. We have added “natural environment” as a percent of city area in last year’s lifestyleSustainability and the to this indicator’s name in 2012 to reflect assets indicator. It has been renamed to specific variables, usually of climate (Toronto’s reflect the true scope of the measure: accessnatural environment winters) or geology (San Francisco’s seismic to public parks.Weighing the effectiveness activity), over which municipalities have littleof public policy control but which affect the daily lives of their The decidedly different profile at the top of citizens. The ongoing repercussions from last this year’s rankings, therefore, corresponds year’s Tōhoku earthquake and subsequent to the many changes in the variables. Almost tsunami illustrate that, while nature may every city in the top 10, with the exception of not be amenable to human control, its most Moscow, is a mature economy, in contrast to tragic consequences can be mitigated by last year, when four cities from the emerging public policy. world made the top 10. This was primarily because of renewable energy use, a variable Two variables remain from last year: recycled that has been removed from this year’s evalu- waste and air pollution. The last variable, ation because the available data are national, public park space, was originally green space not municipal, and are accordingly non- comparable and may be misrepresentative. Natural disaster risk Thermal comfort1 Recycled waste Air pollution Public park space Score27 Sydney 12 25 17 27 22 10326 San Francisco 7 20 26 25 23 10126 Toronto 25 7 23 26 20 10124 Berlin 25 9 19 20 18 9123 Milan 18 17 24 11 19 8922 Stockholm 26 5 12 18 27 8821 Moscow 27 1 18 15 25 8621 Paris 21 17 8 14 26 8619 New York 12 10 13 24 24 8318 Madrid 22 18 5 20 17 8217 Los Angeles 2 26 15 21 15 7916 Buenos Aires 12 21 11 14 16 7415 Chicago 21 7 7 23 14 7214 Singapore 17 13 16 16 7 6913 Beijing 19 3 20 2 21 6513 London 17 11 14 17 6 6511 São Paulo 17 27 2 14 4 6410 Hong Kong 3 17 25 9 5 599 Mumbai 12 22 21 1 2 589 Seoul 5 8 27 6 12 589 Tokyo 1 14 10 22 11 586 Johannesburg 8 23 9 5 10 556 Kuala Lumpur 17 13 6 10 9 554 Mexico City 4 24 4 8 13 533 Istanbul 17 19 3 7 3 492 Shanghai 6 4 22 4 8 441 Abu Dhabi 25 3 1 3 1 33Each city’s score (here 103 to 33) is the sum of its rankings across variables. The city order from 27 to 1 High Highest rank in each variableis based on these scores. See maps on pages 16–17 for an overall indicator comparison. Medium1 Measure of the average deviation from optimal room temperature month. A final thermal comfort score was derived by first taking Low(72 degrees Fahrenheit) in a city. January and July heat indices were the difference between a city’s heat index for each month andcalculated for each city using an online tool that integrates average optimal room temperature and then averaging the absolute valuestemperature and average morning relative humidity during each of these differences.62 | Cities of Opportunity | PwC
  • 65. In any case, the cities with highly developedenvironmental awareness—and thesustainability strategies that ensue as aresult—are well-known globally. Six of them inthe top 10 this year were also in the top 10 lastyear. Sydney, which topped the rankings thisyear, came in second last year. San Franciscoand Toronto, tied for second this year, wereseventh and fifth, respectively, last year, whileBerlin fell to fourth from first place last year.Regardless of the rankings in any given year,these cities are all recognized globally forbeing at the forefront of urban policy on issuesof environmental sustainability—and, moreimportant, for transforming that policy intoeffective action. Prussian blue skies boost sustainability in Berlin. The variables making up this indicator have consumption and unnecessary packaging not changed continually during the last several only results in less waste, but in less recyclableMeasuring sustainability years for the simple reason that “sustainability” materials as a percentage of waste. Moreover, is both difficult to define in itself and to although Sweden uses waste-to-energy implement as a coherent public policy— technology to further manage waste—and especially as cities vary widely in terms of reduce landfill—this advanced approach climate, geology, demographics, and economic to waste management is not represented in development. Making comparative analysis our recycling variable. On the other hand, in even more complicated is the fact that the developing cities such as Mumbai, community- criteria for data collection for this indicator driven and informal collection of recyclables, vary from one city to the next. Three examples which also adds income in the poorest areas, indicate the “degree of difficulty” in actually makes the actual rate of recycling far surpass determining, and measuring, sustainability. the official rate. Greenhouse gas (GHG) data are now available Finally, in the case of renewable energy, which for many cities, but the method of collection, was included in the indicator last year, there degrees of verification, and types of emissions was little available and non-comparable data included diverge considerably. Paris’s data at the municipal level, so we had to construct a comprise sources of both food and waste, for measure using country-level data. Subsequent example, while those of many cities do not research confirmed that the cities in our report (and American cities tend to exclude emissions were, in most cases, correctly represented by from agriculture, fossil fuel extraction, and the resulting data. Nevertheless, after discus- refinement and other industrial sources).1 sions with specialists in the field, it became New York meanwhile measures GHG annually clear that a few cities would have fared even while other cities may do so every five or 10 better than their respective countries as a years, or not at all. whole (which, of course, validates the general assessment that cities have become the world’s Another case in point is a city’s recycling rate, laboratories in sustainable living). In this which is not always an automatic indicator instance, therefore, we decided to remove of commitment to sustainability. In many the variable. European countries, including Germany and Sweden, a greater emphasis on reducing 1 Inventory of New York City Greenhouse Gas Emissions, September 2011, http://www.nyc.gov/html/om/pdf/2011/pr331- 11_report.pdf. Partnership for New York City  |  Cities of Opportunity | 63
  • 66. Toronto comes across as a Does that civility translate into city of unsurpassed civility. economic benefits?Toronto’s former Mayor Do you agree? Yes. The fact that we are a civilDavid Miller It’s true. We are a city of city, that we have strong envi-… discusses the civility of his city, economic development, and the newcomers; inclusion, social ronmental values, has a positivevalue of immigration. justice, and equity are core impact on the economy. Modern Canadian values. That creates companies, which can move to a city where people value each many cities, like to locate whereBy many measures, Toronto is a beacon of urban success, and from other. It has implications for it is profitable, where you’ve got a2003 to 2010, David Miller was mayor. Here, Miller talks about what whom we elect, how we govern, great labor force. Toronto has that.makes a city prosper and the interplay among the needs of business, how the city looks and feels. And the fact that we are relativelythe cultural vitality of a city, and the balance of infrastructure and the prosperous has helped fund thoseenvironment. He sees jobs, opportunity, and technology as keys to a very good public services that,city’s prosperity. Miller now serves as the World Bank’s special advisor in turn, reinforce the civility ofon urban issues as well as Future of Global Cities Fellow at New York the city.University’s Polytechnic Institute.64 | Cities of Opportunity | PwC
  • 67. Great architecture, great urban design, just doesn’t cost that much. The arts lift your spirit and your soul, and you need that even more when times are tough. regional governments haven’t How can a city balance the needs and lifestyle assets matter a lot. caught up to that yet. They are of communities, developers, If you’ve got the intellectual just starting to wake up to the architects, and preservationists? capital and innovation, you’ve got importance of cities. a livable city, and if you’ve got Development is crucial for cities, economic clout, that’s a very but growth at any cost doesn’t Could you imagine redrawn strong combination. work. First, you don’t want sprawl jurisdictions—say, here’s Toronto, because sprawl is environmentally What does urban quality of including a whole region beyond and fiscally unsustainable. Second, life mean to you? just today’s city limits? you need a coherent plan. Our Yes. A great city like New York is plan set out where the growth Can you walk around your city at the heart of an urban region that corridors were, and they corre- any time of the day or night? Is it arguably extends down the whole sponded with higher-order rapid interesting and exciting? If you go of the eastern seaboard almost transit. Third, the development to a new city, you walk it and learn as far as Washington. Toronto must be very green. it through your feet. is the heart of an urban region that includes Hamilton, probably What is the importance Can we afford aesthetics during almost all the way to Niagara of infrastructure? hard economic times?Cold comfort for a Torontonianin New York. Falls and east a third of the way Infrastructure is hugely important, Great architecture, great urban to Montreal. and now is the time to invest. But design, just doesn’t cost that it’s hard politically because you much. The arts lift your spirit andCities are growing rapidly in How do you promote stronger your soul, and you need that evenpopulation and economic power. have some constituencies saying, public-private collaborations more when times are tough.But they seem to be shortchanged “No, no, no, you can’t—spending to do more with less?often by national or regional doesn’t work. You’ve got to cut Collaboration between the public Are environmental targetsgovernments on funding, politi- back.” That’s totally wrong eco- and private sectors is essential to and economic developmentcal influence, and the power to nomically, and it’s wrong from a the health of cities. We convened mutually exclusive?self-govern. city building perspective because a group of senior business leaders we need this infrastructure. No. If you do the right thing forYes, there is a trend worldwide of to write our strategy. We also had the environment, it’s always themass migrations to cities, and as labor, non-profit, academic, and What are the most important right thing for the economy.a result, cities are acting on their cultural organizations at the table. areas for the long-term well-beingown. Mayors are very practical. We asked the group, “How can we of a city? How can cities exploit theMayor LaGuardia [of New York] ensure prosperity in this city?” advantage of density? Intellectual capital and innovationquite famously said there is no Their report, Agenda for Prosperity, You need rapid transit so people matter a lot because businessesRepublican or Democrat way to ultimately was adopted by the can get out of cars. And you need will come where there is thepick up the garbage. Cities are City Council unanimously. And great green spaces. You also need intellectual capital. Demographicsbecoming more powerful eco- it’s real recommendations—nomically, but our national and principles and then actions. Partnership for New York City  |  Cities of Opportunity | 65
  • 68. to deal with the generation of completely fitted-out labs so that an incredible opportunity for public pools that are for womenelectricity, and you need a smart small incubator companies can innovation, for entrepreneurial only. So if you’re from a Muslimgrid so you can sell power back have the same state-of-the-art labs activities, for learning from each country where it would be veryto the plant. that a large multinational does. other, for having a diverse labor uncomfortable for you to be seen force. And we’ve made it much by a man in your bathing suit, youHow does the city promote How important are art and easier for students to stay once have a place you can go. That’stechnology and innovation? culture to a city? they’ve studied, so we have this a simple example, but there areToronto is a hotbed of IT. In one The creativity that’s inherent in incredible pool of talent. hundreds of examples like that.of our initiatives, pushed by the the city not only relates to the arts. We have a history of great public You said Canadians tend to favor services, and it matters to integra-private sector, the city was a part- You need that creativity in indus- immigration. Why? tion and it matters to business.ner, and national and provincial tries like biotechnology, research,governments very strong partners, and IT. Cities that have great Eighty percent of Canadians live Judged by the number of branchesin an organization called MARS, arts and cultural life have great in cities, and that’s where the per person, or by the number ofMedical and Related Sciences. It’s research and innovation because immigrants go, so people know books circulated per person, wea biotechnology incubator, right they are creative cities. newcomers. If you’re not a new- have the best public library inbeside some of the greatest teach- comer, your neighbor is or your the world. If you go to the maining hospitals in the world, right Toronto is a huge magnet for neighbor’s parents are, and that’s reference library in Toronto andbeside a fantastic research univer- immigrants. What are the very important. Our immigration you get there when the doors opensity, the University of Toronto. benefits and the costs? policies tend to recruit skilled in the morning, people actuallyAnd it is right near our banking people so Canadians see people run in to use the computers. And It’s all benefits. We get the bestdistrict. It has venture capital right come and work hard and succeed. those people are newcomers and the brightest young peoplein it, patent offices right in it, and seeking their first job or seeking from around the world. We have to upgrade their English skills or other skills, or wanting to get their credentials recognized in Canada. You recently told a group of students that technology would play an increasing role in solving[Toronto] gets the best and the brightest young people from around urban problems. How so?the world. We have an incredible opportunity for innovation, People are moving to cities, andfor entrepreneurial activities, for learning from each other, for having cities are going to help us meet the world’s challenges of opportunity,a diverse labor force. And we’ve made it much easier for students to of equality, and of the environ-stay once they’ve studied. ment. Technology has a part to play in meeting those challenges. How are we going to meet air quality, water quality, and climate change goals? We are going to meet them through things like a What are the challenges and smart grid, things like building benefits brought by less-skilled light and heavy rail transport, and immigrants? those rely on technology. It has to do with the character of the people who come. It’s an Toronto came in a close second unbelievable thing to uproot your in Cities of Opportunity rankings family and move halfway around last year. Did that surprise you? the world. And the people who are No. Toronto is a really livable city brave enough to emigrate are the that’s successful economically kind of people who are going to and that welcomes and integrates work incredibly hard. And that’s newcomers. One day, Toronto will true whether it’s somebody be number one. who is working at a blue collar job or somebody who is a Learn more computer engineer. Video excerpts of this condensed Toronto is rich in ethnic com- conversation are available at munities. Does Toronto work to www.pwc.com/cities, as is a support that? full-length version of the entire, Yes, we are culturally sensitive. much longer discussion. We have swimming hours in our66 | Cities of Opportunity | PwC
  • 69. It is no surprise, therefore, that seven citiesDemographics and livability in the top 10 this year were also in the top 10 last year, despite the considerable changeWe know it when we see it, despite a certain je ne sais quoi in the respective variables. It is also hardly a shock that the top-ranked city in this indica- tor is Paris; even the most dyed-in-the-wool New Yorkers have a soft spot in their hearts for the City of Light, as the most recent filmsThis indicator has been substantially revised In a fundamental way, this indicator is of Woody Allen and Martin Scorsese boththis year into four variables, as opposed to very much like sustainability. Just as there confirm. (Many Parisians, it should be added,seven in 2011, with the focus clearly on seems to be a global consensus on the cities reciprocate this regard with their own“livability,” a difficult term to define but that are most environmentally conscious, fondness for New York.)one that most people instinctively feel they there is the same kind of relatively universalcan interpret for themselves. In that sense, agreement on what makes a “livable” city— The cities in the top ranks of this year’s indi-the data in this indicator as a whole seek to or, at least, on which cities are more livable cator are either all almost mythical in theirapproximate, and reflect, what most people than others. appeal—not simply Paris, but Hong Kong,mean when they speak of livability. Continues on page 77 Cultural vibrancy1 Quality of living Working age Traffic congestion2 Score population27 Paris 25 24 16 17 8226 Hong Kong 18 21 22 17 7826 Sydney 21 26 6 25 7824 San Francisco 20 16 23 17 7623 Singapore 12 16 20 27 7523 Toronto 16 27 15 17 7521 Berlin 25 22 2 25 7420 Stockholm 14 25 7 27 7319 London 26 14 9 23 7218 Chicago 18 20 12 17 6717 Los Angeles 25 18 13 9 6516 New York 27 13 8 11 5916 Tokyo 22 23 3 11 5914 Abu Dhabi 2 8 24 23 5713 Madrid 8 19 5 23 5512 Kuala Lumpur 5 7 18 23 5311 Milan 16 17 1 17 5110 Moscow 12 10 19 9 50 9 São Paulo 19 5 21 4 49 8 Beijing 3 9 27 9 48 8 Buenos Aires 10 11 4 23 48 6 Johannesburg 7 5 11 23 46 5 Mexico City 13 3 26 1 43 4 Shanghai 5 6 25 4 40 3 Seoul 6 12 10 9 37 2 Istanbul 9 2 14 9 34 1 Mumbai 1 1 17 4 23Each city’s score (here 82 to 23) is the sum of its rankings across variables. The city order from 27 to 1 High Highest rank in each variableis based on these scores. See maps on pages 16–17 for an overall indicator comparison. Medium1 Weighted combination of city rankings based on: the quality and 2 The traffic congestion measure is taken from the 2011 Mercer Lowvariety of restaurants, theatrical and musical performances, and Quality of Living Survey and adjusted using two additional sources.cinemas within each city; which cities recently have defined the This measure reflects not only traffic congestion but also the“zeitgeist,” or the spirit of the times; and the number of museums modernity, reliability, and efficiency of public transport, whichwith online presence within each city. The “zeitgeist” rankings take reflect a city’s active management of the issue.into account cultural, social, and economic considerations. Partnership for New York City  |  Cities of Opportunity | 67
  • 70. Andrew Chan of Arup engineerssees emerging cities… through the logical lens of resilience and sustainability money: It’s about creating a susceptible to rising sea levels, governance system to make extreme weather patterns, and things happen. natural disasters resulting from climate change. Hong Kong’s infrastructure is famously efficient. But are there Why is retrofitting old buildings areas of vulnerability? so beneficial in saving energy and reducing carbon emissions? We pride ourselves on everything being efficient here, but one Buildings use 90 percent of the major issue is that we don’t talk electricity in Hong Kong and in terms of “just in case.” We rely account for two-thirds of its heavily on everything working in greenhouse gas emissions. So the whole supply chain. But what retrofitting existing buildings is aAs deputy chairman of Arup Group, the global engineering company, very big opportunity. Hong Kong if one element fails or becomesAndrew Chan has played a key role in many of Asia’s largest infrastruc- has an existing stock of 50,000 less efficient and then a wholeture projects. Overseeing Arup’s East Asia region between 1996 and buildings, whereas new buildings chain reaction occurs? It’s wise2007, the Hong Kong-based engineer has helped build iconic skyscrap- are a very small percentage of the to consider these “just-in-case”ers, airports, highways, bridges, railways, subways, and even the Beijing total. You can easily cut 30 percent scenarios. Unforeseen problemsNational Stadium for the 2008 Olympics. An expert on sustainability, of a building’s energy use by retro- might be caused by climate changeChan was until recently chairman of the Hong Kong Green Building fitting, so this is low-hanging fruit. or issues over energy resources.Council. He also sat on the corruption prevention committee of the That’s why our firm is also pushing For example, many Chinese citiescity’s Independent Commission against Corruption. Here, he explains hard for retrofitting in cities like upstream—from which we pumphow farsighted planning and “integrated infrastructure” can make London and New York. our water—will need more watercities more efficient and resilient. themselves as they develop. China has a water problem and is look- Cities across Asia are growing ing to secure an alternate water explosively. How do you balance supply system for its major urban the economic benefits with the centers. So I ask, “What alterna- threat posed to environmental As an engineer, what’s distinctive tive will Hong Kong have?” We sustainability? about your approach to urban have to become more resilient. The economies driving this urban problems? We need a holistic approach, and growth can’t afford to stop because We engineers are used to mission- what I call “integrated infrastruc- then you have social problems if based tasks. We look at the risks ture.” That can’t just happen on its factories close or even slow down. a city faces, and say, “What’s own. It must be by design. When your GDP growth targets needed?” We set priorities, find are so high, you do things that are Is this need for greater resilience environmentally unsatisfactory, the solution, implement the solu- different in other cities worldwide? so sustainability is under threat. tion. In a developed city, we might talk about retrofitting buildings; in No. When you look at climate But cities around Asia often have a a city pursuing low-carbon strate- change as a driver, for example, certain life cycle: In Taiwan, cities gies, we’d emphasize looking first you see that flooding risks, energy would develop industry, pollute at existing technologies. This is risks, and natural hazards apply to the environment—then they’d a logical sequence. It’s common many places, including developing spend billions fixing it. Unfortu- sense. Money is a problem, but cities built beside riverbanks or nately, that’s being repeated in very often it’s not just about coasts around Asia. They’re very China. When you look at the68 | Cities of Opportunity | PwC
  • 71. I can’t help butbe impressed bySingapore. Thingsthere are done aspart of a grand plan.… They set a high-level target, thenplanned the social andphysical infrastructureaccordingly forthat population.Work starts at a Singapore resort, withthe city in background and a model of theMarina Bay Sands in foreground. Partnership for New York City  |  Cities of Opportunity | 69
  • 72. millions of cars being produced viability, calculate its internal systems, and some would say they How does urban developmentthere, clogging up roads and rate of return, but don’t look at it did steal or copy from the West. compare in China and India?producing pollution, you might within the context of the whole But I wouldn’t discount them I see a great parallel betweensay, “Surely, you should ban the economy. In China, high-speed rail on innovation. China is going Mumbai and Shanghai in theircars.” But you can’t because the is one element in an overall grand through pretty much what Japan stages of development. But Chinaindustry would collapse; then plan. Projects are looked at in this went through in the ’60s and ’70s: has an advantage in that it buildsyou’d have a labor problem and broader context from a very high They’re learning and modifying. infrastructure with state money,a social problem. level. That’s something the West whereas it’s often done with is missing. The NGO Transparency the help of private investmentWhat do you think of the West- International has said corruption in cities like Mumbai and Newern perception that China has an Did last year’s disastrous high- is a bigger problem in infrastruc- Delhi. When China decides itincredible ability to get infrastruc- speed rail crash in China raise ture than any other industry. needs a ring road, it gets built inture projects done, while cities questions about its ability to How challenging is this in 10 months, no questions asked.like London, Paris, and New York handle such technologically developing countries? It might be that India would bemove slowly? complex projects? In some developing countries, growing even faster than ChinaIt’s correct that China can get They have the best technology, so I corruption is so rampant that it’s if not for the corruption.these vast, ambitious infrastruc- don’t think it’s really a technology almost written down: “To do this,ture projects done. The policy problem. It’s a management prob- it’s this price; to do that, it’s that In this report, we look at 10comes down from the central lem. It’s an operating problem. It’s price. And if you don’t deliver on factors that make cities great.government: “We need this high- a people problem. time, it’ll be refunded.” It’s part of Which are the most important?speed rail network.” And it the system. Arup tries to stay away For the average person in ahappens. When the government Does China still struggle to from places where corruption is developing city, the most impor-wants a piece of infrastructure innovate when it comes to rampant, so our involvement in tant factor is safety, health, andcompleted by whatever date, thou infrastructure? certain countries is very limited. security. Efficiency is also impor-shalt do it. By hook or by crook, Yes and no. Innovative solutions But Hong Kong’s anti-corruption tant—and that relates to transportyou get there. That’s the way aren’t appreciated in the same way system is so good that almost all or connectivity and how you laythings get done in China, and it’s as in the West: In China, there has governments in Asia come here things out through good urbanvery good because much of the to be a reason to innovate, whether to learn about it. I’ve also been planning. This ability to get aroundinfrastructure is being built in it’s doing a project at a lower cost involved in conferences in China efficiently is probably second incities that are in a “need” stage or very quickly. But some of the on preventing corruption: One pre- importance only to safety. In devel-rather than a “want” stage. They big, tricky projects being built in sentation said their system is even oped cities, you need economicneed more sustainability, so they western China now are exception- better than ours, since they have activity that creates jobs: So thingshave to cut down on aviation and ally innovative: They’re doing huge books laying out even more like ease of doing business andembrace high-speed rail. major civil works like construct- stringent rules than in Hong Kong. smart technology are very impor- ing a big bridge across a deep But it’s not just about the system tant. For some developed cities,How does the West differ? valley, and difficulties in access you set up. You also need to create efficiency is a big issue because ofIn the West, people typically and machinery are forcing them total transparency and a level play- inadequate transport infrastruc-look at the viability of a single to innovate. China is still going ing field in the marketplace. They ture. In London, the transportpiece of infrastructure in isola- through a learning process when don’t have that yet. Asia still needs infrastructure is badly in needtion. They analyze its financial it comes to very high-tech control to work very hard at that. of upgrading and investment.We pride ourselves on everything being efficient in Hong Kong. Butwhat if one element fails or becomes less efficient and then a whole chainreaction occurs? Unforeseen problems might be caused by climate changeor issues over energy resources. We have to become more resilient. Thatcan’t just happen on its own. It must be by design.70 | Cities of Opportunity | PwC
  • 73. I’d like to create atrue eco city. You needinfrastructure thatworks together in aholistic way, so thatenergy, water,transport, and wasteare all integrated.We’ve planned theseprojects and providedthought leadership,but it’s very difficultto make them happen. Vanke Center, Shenzhen, China, 2010. Can urban density Of the 27 cities spotlighted What urban project do you enhance sustainability? here, which benefit most from still dream of doing? good planning? I’d like to create a true eco city. You can certainly achieve greater efficiency through density. In I can’t help but be impressed by You need infrastructure that Hong Kong, we’re so close to one Singapore. Things there are done works together in a holistic way, another—in terms of time rather as part of a grand plan. When the so that energy, water, transport, than distance—that we can get population was 3.5 million, the and waste are all integrated. to whatever we need to do within government talked about a future We’ve planned these projects and half an hour or an hour. That with 5 million or 7 million people. provided thought leadership, but facilitates many activities—eco- They set a high-level target, then it’s very difficult to make them nomic and cultural—easily and planned the social and physical happen. People say: “The IRR cheaply. The energy used per infrastructure accordingly for [internal rate of return] is this, so capita for transport is exception- that population. They also have why should I pay more for a dis- ally low here, but this density can a transportation network system trict cooling system that requires only work if the transport system where they say, “Every citizen will longer to pay back our invest- is convenient, reliable, and com- be within 400 meters of a metro ment?” If one element hits that fortable, as in Hong Kong. In that entrance.” That’s very farsighted, problem, the rest fall apart, and case, density helps, enhancing and this rail-based approach is you don’t make the integration energy efficiency and improving very sustainable. When it comes happen. I’d be ambitious enough connectivity among people. to water, they’ve also planned to aim for a new city with 50,000- But density can also cause ahead. Hong Kong plans in a more 60,000 people. At that scale, you quality of life to suffer if a city piecemeal way, solving problems can make the sums work. That’s feels overcrowded. as they pop up rather than having my dream project. a longer-term vision and being more methodical. Learn more For the full-length version of the entire, much longer discussion, go to www.pwc.com/cities. Partnership for New York City  |  Cities of Opportunity | 71
  • 74. Economic cloutAsia rises, but we’ll always have Paris Number of Global 500 headquartersThe name of this indicator says it all, and variables measuring Global 500 headquarters 27 Beijing 26concisely. What is critical in the term, how- and, especially, foreign direct investment (FDI). 25 26 Parisever, is not the adjective but the noun. What is But despite the substantial reorganization 25 London 24central to the rankings here is the actual clouta city’s economy gives it, not merely the cumu- of this indicator, certain trends observed last 25 New York 24lative potency of the economy itself. In that year are already coming to pass. In summing 23 Shanghai 17sense, this category assesses what has always up our discussion in 2011, we concluded that, “Three factors are unusually sugges- 22 Singapore 12been the historical understanding of urbanstrength: a city’s dominion beyond its borders. tive of future developments.” First of all, we 21 Hong Kong 16 noted that, although the top three cities were 21 20 TorontoWhat was once called a “hinterland” is now European or North American, Hong Kong had come in fourth and five Asian cities were in the 19 Moscow 20called a region or metropolitan area. Thelabel refers to the wider geography of which top 10; clearly, we thought that Asia was the 18 Tokyo 27a dominant city is the economic core. The continent to watch. It is certainly turning 17 Milan 15integration of the global economy, however, out that way. 17 Sydney 12now allows cities to return to prospects oftransnational influence and power that Beijing has rocketed to the very top of the 15 Stockholm 12predate the 20th century. rankings this year, from ninth in 2011. What is 14 Mumbai 20 impressive about the Chinese capital’s perfor- mance is that it ranks second in one variable 13 Seoul 22And while no one may think that any contem-porary city can (or seek to) wield the imperial and in the top five in four others. Even in the 12 Madrid 20hegemony of Periclean Athens, 16th-century one area in which Beijing performs poorly— 12 San Francisco 12Amsterdam, or Victorian London, the current ranking second to last in productivity—it has 10 Abu Dhabi 3notion of economic clout transcends national nowhere to go but up, especially givenboundaries, if only because cities perceive that China has been focused on increasing 10 Berlin 6themselves as competing with other cities productivity for many years. 8 Buenos Aires 3beyond their traditional frontiers, not only Meanwhile, the other city that has leaped up 8 Chicago 12economically but in terms of global recogni-tion and prestige. It is a sign of the times (and the table is also Chinese. Shanghai moves up 8 São Paulo 15hardly coincidental) that New York’s mayor, three places from last year, coming in just one 6 5 Kuala LumpurMichael Bloomberg, wrote in the Financial point behind London and New York, which 4 Istanbul 6Times earlier this year that “cities cannot are tied for third. It also scores at the very topafford to cede their futures to national gov- in two out of six variables—the only city to 3 Mexico City 15ernments,” while, just a couple of days later, do so in this indicator. Asia’s cities perform 2 Los Angeles 12Mayor Rahm Emanuel of Chicago, in announc- impressively this year. And while they only 1 Johannesburg 3ing a multibillion-dollar infrastructure plan to make up five out of the top 10, as in 2011, theirbuild “a new Chicago,” said that he refused to presence as a whole this year is much more“tie” his city’s future to the “dysfunction” dynamic. Mumbai, for example, has movedof state or even national politics. up four places since last year to finish in the middle of the rankings.It is this ability to translate urban strength intoa global economic presence that this indicator Paris’s continued strength is the only findingtries to measure. And, again, in order to do so that is as impressive as Asia’s dominance.as well as possible, we have engaged in a major It was number two last year; it is numberrevision for the 2012 edition, removing four two this year. It was number two the year before last. works in financial and business services:variables and adding two others. By eliminat- 36.3 percent, as opposed to London’s 35.7ing domestic market capitalization, inflation, But this consistency is hardly an accident: percent, let alone New York’s 26.9 percent.and strength of currency (and moving level As the capital of the country with the world’sof shareholder protection to ease of doing The second factor we warned readers about fifth largest economy (ahead of both Brazilbusiness), while adding productivity and rate in 2011 was the possibility that the eurozone and the UK), it naturally hosts a large num-of real GDP growth, this indicator now has crisis might negatively affect European cities, ber of Global 500 headquarters and just asa trimmer, and decidedly more recognizable, particularly Madrid, in the following year. naturally is the object of significant foreignprofile. Now a city’s appeal beyond its natural That is exactly what happened, with Madrid investment. Moreover, an inordinately largeeconomic region pops out of the data in the falling in the rankings from fifth last year segment of its (highly productive) population to 16th this year.72 | Cities of Opportunity | PwC
  • 75. Financial and business Attracting FDI: Number Attracting FDI: Productivity1 Rate of real Score services employment of greenfield projects Capital investment GDP growth2 24 23 25 2 25 125 26 22 20 21 6 120 25 26 24 16 4 119 19 20 17 26 13 119 14 27 27 9 24 118 11 25 26 15 21 110 7 24 22 12 18 99 20 10 9 18 20 98 10 21 23 5 16 95 8 19 19 17 2 92 27 14 10 19 5 90 15 16 16 22 9 90 22 7 5 20 17 83 4 18 13 1 26 82 16 11 11 10 11 81 6 17 18 14 1 76 23 1 1 25 14 76 1 13 21 27 3 68 17 8 14 13 10 68 18 5 7 7 27 67 21 2 2 23 7 67 5 15 12 8 12 67 12 12 8 4 22 64 2 9 15 6 23 61 3 6 6 11 19 60 9 3 3 24 8 59 13 4 4 3 15 42Each city’s score (here 125 to 42) is the sum of its rankings across variables. The city order from 27 to 1 High Highest rank in each variableis based on these scores. See maps on pages 16–17 for an overall indicator comparison. Medium1 Productivity is calculated by dividing the gross domestic product 2 GDP percentage growth rate from 2010-2011 in real terms Low(GDP) in 2012 US dollars by employment in the city. expressed in 2012 USD.Finally, we pointed out last year that, as Parisproves so well, a city’s cultural influencebecomes dominant only after it is reinforcedby economic power, and cities such as Berlin,Istanbul, and Mumbai need economic strengthto bolster their global cultural presence. Bythe looks of this year’s rankings, Mumbai isbeginning to meld its cultural vitality witheconomic clout. Partnership for New York City  |  Cities of Opportunity | 73
  • 76. This indicator shares with intellectual capital indicator). Another new variable, employeeEase of doing business and innovation the most number of variables, regulations, encapsulates the data that a total of nine. The reason for this substantial were previously contained in three variablesCompetitive cities know dataset is obvious: The combination of innova- that assessed ease of hiring and firing andhow to stay competitive tion and human capital with a hospitable and rigidity of hours. Still, what is most telling responsive business environment is the classic about the results this year is that, despite recipe for economic success. As opposed to the section’s considerable reevaluation and the intellectual capital indicator, however, reorganization, leading performers remain this one has been significantly enhanced largely the same, and the changes at the very and redesigned. top of the rankings concern only two cities and involve minor adjustments. It now includes two new variables: resolving insolvency and level of shareholder protection Singapore ranks first this year, up from (the latter moved from the economic clout second in 2011. Hong Kong is now second, Ease of starting Resolving Employee Ease of entry: a business** insolvency** regulations1** Number of countries with visa waiver2* 27 Singapore 25 26 26 27 26 Hong Kong 24 18 23 25 25 New York 23 22 27 8 24 London 19 24 2 23 23 Toronto 26 25 10 12 22 Stockholm 14 16 8 17 21 Los Angeles 20 22 26 8 20 Chicago 22 22 24 8 19 Tokyo 8 27 13 14 18 Kuala Lumpur 13 10 19 26 18 San Francisco 22 22 22 8 16 Sydney 27 17 16 9 15 Seoul 18 23 11 24 14 Paris 17 11 6 17 13 Madrid 5 15 17 21 12 Berlin 9 12 5 19 11 Mexico City 11 14 21 13 10 Milan 10 13 4 20 9 Johannesburg 15 6 12 22 8 Abu Dhabi 16 1 18 10 7 São Paulo 6 2 7 19 6 Beijing 3 8 15 3 5 Istanbul 12 4 4 15 4 Moscow 7 9 9 4 3 Buenos Aires 4 5 1 11 2 Mumbai 1 3 20 3 1 Shanghai 3 8 15 3 Each city’s score (here 202 to 56) is the sum of its rankings across variables. High Highest rank in each variable The city order from 27 to 1 is based on these scores. See maps on pages Medium *Country-level data. 16–17 for an overall indicator comparison. ** ata based on countries’ most populous city D Low except in the case of employee regulations and ease of starting a business, which have been differentiated for US cities.74 | Cities of Opportunity | PwC
  • 77. although it was first last year. As for numbers tally across the board is truly impressive: It There are some additional points worth not-three, four, and five, they are the same cities in finishes first in three variables, second in one, ing about the top 10 cities. First of all, whilethe same order as in 2011: New York, London, and third in two others. There is one variable US cities once again continue to rank first inand Toronto. If there is a lesson here, it is that in which it scores in a middling rank (foreign employee regulations, or the ease of hiring andthose cities that have created globally competi- embassies or consulates) and only one in which firing and setting work hours, they also consis-tive business cultures understand what it takes it truly finishes badly. Interestingly enough, tently do well in several other variables. In fact,to maintain their advantage—and that, of this one variable, flexibility of visa travel, the only areas in which American cities fall intocourse, city policies and regulations, and their would intuitively seem to be the logical exten- the bottom half (or even third) of the rankingseffects, do not change overnight. sion of ease of entry, in which Singapore tops are ease of entry and flexibility of visa travel the chart. (See “Key to the variables,” page 93, (as well as, with the exception of New York,Nowhere is this more apparent than in the for the precise definition of flexibility of visa number of embassies or consulates)—clearly aresults scored by top-ranking Singapore. Its travel, as opposed to ease of entry.) negative signal to send in a global economy. Continues on page 77 Flexibility of Foreign embassies Level of shareholder Operational Workforce Score visa travel3* or consulates protection4** risk climate* management risk 4 15 27 27 25 202 26 12 26 25 19 198 10 22 24 20 26 182 27 26 19 16 25 181 16 11 24 24 27 175 21 20 16 26 23 161 10 8 24 20 22 160 10 7 24 20 21 158 18 24 17 15 20 156 21 17 25 13 10 154 10 7 24 20 19 154 11 11 13 24 19 147 19 18 10 11 12 146 12 27 10 21 16 137 25 19 7 14 13 136 23 23 7 22 15 135 18 14 15 8 3 117 24 5 13 11 11 111 14 1 19 7 6 102 4 13 1 12 14 89 23 5 10 9 7 88 4 25 7 6 9 80 15 9 13 4 2 78 6 21 3 2 1 62 14 17 3 1 4 60 5 3 15 3 6 59 4 2 7 6 8 561 Sum of three rank scores from the World Bank’s Doing Business 3 Count of countries allowed a stay of 90 days or more for touriststudy, including: ratio of minimum wage to average value added and business travel.per worker; notice period for redundancy dismissal (for a workerwith 20 years of tenure, in salary weeks); and paid annual leave for 4 The level of shareholder protection index is the average of indicesa worker with 20 years of tenure (in working days). that measure “transparency of transactions,” “liability for self- dealing,” and “shareholders’ ability to sue officers and directors for2 Count of visa exemptions includes tourist and business travel. misconduct.” Partnership for New York City  |  Cities of Opportunity | 75
  • 78. showed the five lowest-cost cities in our rank-Cost ings coming from North America (followed by Berlin and Sydney), while seven out of theComparative advantage is the bottom line for every city, 10 highest-cost cities were in the developingdeveloping or developed, as the 2012 order tilts eastward world. What seems counterintuitive isn’t neces- sarily so. Our cost indicator, after all, measures costs for a businessperson living in our cities— which is to say, the cost of a transnational,The most difficult—and continually Economic Forum), gathering information is, in middle-class way of life.challenging—aspect of preparing Cities of fact, the easiest part of our job. The hard partOpportunity every year is ensuring that its is assessing that information. The question The point was to capture the actual costs ofanalysis is not only based on reliable and always remains: Does the analysis make sense. a middle-class lifestyle in each of our citiescredible data, but on a critical evaluation of as accurately—or, at least, as effectively—asthose data. In today’s world of international Upon examining last year’s results in this possible. In the event, we’ve restructured thisorganizations of the highest integrity offering indicator in preparation for this year’s report, indicator again. We’ve kept only two variableseasy access to their databanks (from the IMF we felt that they had inadvertently tilted from last year (total tax rate and cost ofand World Bank to the OECD and World toward the West. The issue wasn’t that they Total tax rate Cost of business Cost of rent Consumer iPod index2 Cost of Internet Score occupancy price index1 27 Berlin 14 26 24 18 18 24 124 26 Seoul 23 13 17 17 12 26 108 25 Kuala Lumpur 21 24 25 25 7 4 106 24 Istanbul 18 14 22 22 6 20 102 24 Mexico City 9 20 27 26 3 17 102 22 Johannesburg 22 27 19 21 9 2 100 21 Los Angeles 16 25 11 13 26 8 99 20 Madrid 19 21 15 16 16 9 96 19 Chicago 15 23 10 15 20 10 93 19 Mumbai 3 11 26 27 1 25 93 17 Abu Dhabi 27 22 8 19 13 1 90 16 Toronto 24 18 13 6 23 5 89 15 San Francisco 17 17 6 8 26 12 86 15 Stockholm 8 16 16 5 22 19 86 13 Shanghai 7 8 18 24 5 21 83 12 Buenos Aires 1 19 23 20 2 15 80 11 Beijing 6 4 20 23 4 22 7910 Hong Kong 26 1 3 11 14 23 78 9 Moscow 12 5 9 14 10 27 77 8 London 20 3 5 3 22 18 71 8 Milan 3 15 14 10 15 14 71 8 Singapore 25 10 2 7 11 16 71 5 New York 14 12 1 9 27 7 70 4 Paris 5 7 12 4 17 13 58 3 São Paulo 4 6 21 12 8 6 57 2 Sydney 11 9 4 1 26 3 54 1 Tokyo 10 2 7 2 19 11 51Each city’s score (here 124 to 51) is the sum of its rankings across variables. The city order from 27 to 1 High Highest rank in each variableis based on these scores. See maps on pages 16–17 for an overall indicator comparison. Medium1 A relative measure of consumer goods prices, including 2 Working hours required to buy an 8 GB iPod nano. The index Lowgroceries, restaurants, transportation, and utilities. The CPI doesn’t divides the price of the product by the weighted net hourlyinclude housing expenses such as rent or mortgage. The index is wage in 14 professions.relative to New York City (score = 100). If a city has a CPI of 120,it means it is estimated to be 20% more expensive than New York(excluding rent).76 | Cities of Opportunity | PwC
  • 79. business occupancy), while adding four new Interestingly, the ensuing rankings now reflect and cities such as Los Angeles, Madrid, andones—cost of rent, consumer price index, the 2010 results, before last year’s changes, Chicago also ranking very well—in this indica-iPod index, and cost of Internet—which also when five developing cities and five developed tor continues to prove that mature economiesincreases the variables from five to six, thus ones were in the top 10, and Johannesburg are not preordained to suffer, let alone decline,improving the total dataset. ranked first. This year, Berlin ranks first, but even in head-on competition on costs alone. the next five cities—Seoul, Kuala Lumpur, Every city can compete in cost containmentWith the exception of the iPod index, the other Istanbul, Mexico City, and Johannesburg— as long as it maximizes its own competitivethree variables all measure actual living costs are all from the developing world. Los Angeles, advantages. In the end, as with most of our(while only one variable did last year). Some Madrid, Chicago, and Mumbai complete the indicators, each city’s final ranking is, to somecosts—that of rent, most obviously—have top 10, giving developing cities six out of the degree at least, up to the city itself.become critical issues for business in recruit- 10 spots—as opposed to last year, when theying talent, from New York and Singapore to only had two.Moscow and Chicago. The iPod index itself isnot only a sure gauge (and therefore efficient The bottom 10 in this indicator now includesurrogate) of purchasing power, but it also the mature global centers that common senseallows for straightforward comparisons of that tells us instinctively, and experience confirmspurchasing power between cities (Sydney and empirically, are costly cities in which to live andBuenos Aires, for example). work. But the presence of Berlin at the top—Continued storiesHealth, safety and security Demographics and livability, Ease of doing businessContinued from page 51 Continued from page 67 Continued from page 75to form the first human communities, the San Francisco, and Singapore, as well as Berlin The other notable results in this year’searliest cities. It stands to reason, then, that and London—or have been the beneficiaries rankings come from Stockholm and Tokyo.the most developed cities are those that of a global “buzz” for several years, as in the The Swedish city has climbed the chart threecontinually top the rankings in this indicator. case of Sydney, Toronto, and Stockholm. slots to eighth this year, from 11th last year, while Japan’s capital has also moved up,Stockholm and Toronto repeat their respec- Still, a concept such as livability is infinitely from 12th last year to number 10 this year.tive performances at first and second place malleable, unusually provisional, and ulti-this year. After coming in fourth in 2011, mately subjective, with each person judging On the negative side, there is one surpriseSydney finished third this year. Chicago, it individually. Moreover, great cities such as regarding Sydney. There is also one resultwhich was third last year, dropped to fourth New York or Tokyo become great over a very involving Europe that is, unfortunately, any-in this newest edition of Cities. San Francisco long period and because of immense effort, thing but surprising. The unexpected outcomealso dropped one place, ranking fifth this year mostly for the sake of their own citizens. was Sydney’s fall out of the top 10 citiesafter tying with Sydney for fourth last year. Their standing in a ranking such as this, to 12th this year, from sixth last year. TheThese are all marginal movements. In any consequently, is simply a snapshot of a predictable development was the continuingcase, there is not one developing city in the moment in time. What is indisputable is that difficulty of European cities to compete in thistop 10 this year—just as there wasn’t last year. they, as well as most of the other cities that indicator. Stockholm is the only continental fall in the middle or even at the bottom of the European city in the top rankings this year—But there is a reason Rome wasn’t built in a rankings here, can easily climb much higher— and there were none last year. Paris, Madrid,day. The only thing that takes longer to create and probably will, sooner rather than later. Berlin, and Milan finish 14th, 15th, 16th,than urban infrastructure is the intangible and 18th, respectively (while Istanbul andsense of well-being and trust that is the most A passing glance at some of the cities at the Moscow find themselves in the bottom five ofdirect result of the very tangible systems of end of the list—Moscow, São Paulo, Beijing, the list). The data thus echo what so manysocial protection and communal order put Buenos Aires, Mexico City, Istanbul—make policymakers in Europe itself have been sayingin place by developed societies. that a relatively safe prediction. So, while for the last couple of years: that a significant Shanghai scores near the bottom of the factor in resolving the eurozone crisis is rankings, it is easy to envision a time, in the indeed making it easier to do business very near future, when that placement will in Europe. seem inconceivable. Partnership for New York City  |  Cities of Opportunity | 77
  • 80. Cities at the edge78 | Cities of Opportunity | PwC
  • 81. Megacities, megachallenges Emerging cities will need to grow, and invest, even more to enhance their citizens’ quality of life The metropolitan areas of the world’s cities century presents a vivid illustration of how currently contain 3.6 billion people,1 more much the urban world has changed. (See chart than half of the planet’s population.2 In the next page.) Of the top 10 metropolitan regions coming years, cities will constitute an ever- in 1950, three are European, two are North increasing percentage of human communities, American, and one is Latin American—for a rising both in number and size. Just to give total of six in the West—while two are Japa- one example, the number of cities with more nese, one is Chinese, and one is Indian. Move, than 750,000 residents has grown thirteenfold however, to the year 2010, and the general in China since 1950, multiplying from 10 to landscape is utterly transformed. 132, with a combined population of 290 mil- lion—or the equivalent of 360 San Franciscos.3 Europe has disappeared. And of the three Western cities, only one—New York—is in China is currently adding 40,000 people North America, with São Paulo and Mexico daily to its urban population. It is not alone. City making up the other two (and replac- India is adding 20,000, while Indonesia, ing the ostensibly more “European” Buenos Nigeria, and Pakistan are projected to add Aires). There are now not only a total of seven over 350 million urban residents during the Asian cities on the list, but five are from the next four decades. Since the end of the Second Indian subcontinent. Most telling of all, six of World War, urbanization has been the overrid- the 10 cities here were not on the list of the top ing demographic trend in every continent but 10 cities by population in 1950. especially in the developing world. In 1950, both Africa and Asia were almost completely Of course, it is naïve to believe that, as with rural, with only 14 percent of Africa’s people nations, the number of people in a city— and 16 percent of Asia’s residing in cities. By or more accurately, the weight of its demo- 2010, the number of people living in Afri- graphic presence—does not affect others’ can cities had almost tripled, making up 40 perceptions of it, and of its standing in the percent of the continental population, while world. This is not to argue simplistically that urban dwellers had increased over two and quantity equals quality. Cities of Opportunity half times in Asia, to 42 percent of the total. has proven year after year that small cities— In another 13 years, Africa will be 47 percent San Francisco, Stockholm, Toronto—can cast urban and Asia will have reached the 50 enormous shadows on the world stage. And, of percent threshold of an urban majority. Mean- course, the obverse is equally true: that many while, Latin America and the Caribbean are extremely populous cities, mostly in the devel- already 80 percent urban. oping world, are now being severely tested 1 This section measures metropolitan areas as opposed to the This tremendous—and tremendously rapid— smaller city jurisdictional or administrative boundaries that are used urbanization has led inexorably to another for the 27 cities in the main report. Except as indicated, all data in the Cities at the edge section are from research undertaken by PwC and fact: Today, Asia alone encompasses 50 Oxford Economics for Cities of Opportunity 2012. percent of the world’s urbanites. While this 2 According to the US Census Bureau, the world’s population was reality does not, of course, redefine the nature approximately 7 billion as of June 1, 2012; see the monthly figures at http://www.census.gov/population/popclockworld.html. or functions of a city, it certainly refocuses the 3 According to the US Census Bureau, the city’s population lastA street market in Lagos, Nigeria world’s attention on urban centers that were year was 805,235; see “U.S. Census Bureau Delivers California’s mostly invisible just two generations ago. A 2010 Census Population Totals, Including First Look at Race and look at the world’s largest cities since mid-20th Hispanic Origin Data for Legislative Redistricting,” March 8, 2011, at http://2010.census.gov/news/releases/operations/cb11-cn68.html. Partnership for New York City  |  Cities of Opportunity | 79
  • 82. by the massive repercussions of their largely ies. That is, having gathered in their migrant Cities, in other words, that are fully developed,unplanned expansion and have become, not populations (both domestic and foreign) and not only in terms of physical infrastructuremodels for others, but examples to be avoided. built their infrastructure—not just sewers and but, even more important, because they’ve mass transit, but hospitals and schools and created a rich and resilient social networkStill, a large population can be a major step universities—as they rose in the world, they of citizens and institutions, have built in toto development if it is seen not as a burden consolidated this immense, and very complex, themselves a natural capacity to survive andbut as an enormous resource that can provide sociopolitical and economic structure to create regenerate. As the cities of Europe and Asiacontinual generational streams of human and the singularly vital and universally admired proved after the Second World War, infrastruc-intellectual capital. It’s not coincidental that communities they are today. (Because they ture can be rebuilt with the necessary fundingthree cities with the largest populations in were major urban centers in previous ages, and will. But it’s the social glue that matters2010—São Paulo, Mexico City, and Mumbai— cities such as Istanbul or Mexico City are also above all—the feeling of common purposeare part of Cities of Opportunity. What is even much more consolidated as urban communi- among the many human beings who call themore striking, however, is that eight of the 10 ties than other cities in the developing world.) same place home: what former New York andmost populous cities in 1950 are in Cities of Los Angeles police chief Bill Bratton calls theOpportunity today, although most of them are Again, we should pause for a moment on the “socialization” that is a city’s key function andnow comparatively much smaller. five largest cities by population in 1950: New virtue (see interview, page 52). York, Tokyo, London, Paris, and Moscow. WithClearly, these cities have remained preeminent the exception of New York, the other four were Reaching that level of “socialization” requiresglobal centers because they built upon their all part of theaters of operations, to a lesser extraordinary investment, however, bothstrengths when they had the opportunity to or greater degree, of the Second World War. economic and intellectual. Leaving aside thedo so. The most enduring power of developed London, of course, was the target of the Blitz intellectual investments, which naturally resultcities is precisely the generations of planning, and of the V-1 and V-2 attacks; the Battle of from prior expenditure on education andinvestment, and building that have gone into Moscow saw one of the bloodiest encounters culture, the capital investment is substantial,them—which, of course, are very difficult to of the war, with hundreds of thousands of as a look at the overview of city investmentemulate, let alone match. Indeed, the world’s casualties; and Tokyo was completely leveled spending on the next page shows.historically established cities suffer from a by the bombing raids at the conflict’s end. Onlynaming problem. The very phrase “historically Paris was spared extensive physical damage Two figures stand out under the last column,established”—or “mature” or “developed” because of the famous refusal of the occupa- “Average annual investment”: Beijing andor even “advanced” city—implies comfort or tion authorities to follow Hitler’s orders to Shanghai will have to devote 42 percentrepose, if not complacency or even decline. torch the city (the subject of the book and of annual GDP until 2025 to accommodate theBut the truth is that what makes New York, film Is Paris Burning?)—in itself a profound cities’ necessary growth, a sum just under twoParis, and Tokyo continue to thrive through reflection of the enormous esteem in which and a half times the 17 percent of annual GDPthe decades is that they are consolidated cit- certain cities are held by most of us. London will need to meet its infrastructureTop 10 metropolitan areas by population size1950, 1980, 20101950 Population (millions) 1980 Population (millions) 2010 Population (millions)New York 12.34 Tokyo 28.55 Tokyo 36.67Tokyo 11.27 New York 15.60 Delhi 22.16London 8.36 Mexico City 13.01 São Paulo 20.26Paris 6.52 São Paulo 12.09 Mumbai 20.04Moscow 5.36 Osaka 9.99 Mexico City 19.46Buenos Aires 5.10 Los Angeles 9.51 New York 19.43Chicago 5.00 Buenos Aires 9.42 Shanghai 16.58Kolkata 4.51 Kolkata 9.03 Kolkata 15.55Shanghai 4.30 Paris 8.67 Dhaka 14.65Osaka 4.15 Mumbai 8.66 Karachi 13.12The population figures in this table are based on the larger geography of a citys urban agglomeration and not the municipal population data used in the main Cities of Opportunity comparison.Source: World Urbanization Prospects, United Nations80 | Cities of Opportunity | PwC
  • 83. Capital investment is substantial to accommodate some emerging cities’ growth. Beijing and Shanghai, for instance, will have to devote 42 percent of annual GDP, just under two and a half times the 17 percent London will need to meet its infrastructure requirements.Forecast of investment spending relative to growth2012-2025 Population Employment Investment required Average 2012 / 2025 2012 / 2025 2012-2025 annual (000s) (000s) ($ millions) investment (% of GDP 2012-2025)Abu Dhabi 790 / 960 380 / 520 366,690 27%Beijing 16,810 26,060 9,910 13,120 2,111,380 42%Berlin 3,470 / 3,580 1,730 / 1,790 348,600 20%Buenos Aires 3,000 / 3,150 2,000 / 2,410 205,960 26%Chicago 2,650 / 2,420 1,190 / 1,270 311,750 20%Hong Kong 7,200 7,970 3,650 / 3,640 478,820 20%Istanbul 13,220 14,280 4,260 5,260 814,200 26%Johannesburg 4,400 / 5,160 1,560 / 2,000 205,540 20%Kuala Lumpur 1,700 / 1,850 780 / 1,050 76,320 25%London 7,970 9,020 4,710 5,450 1,244,400 17%Los Angeles 3,820 / 3,970 1,500 / 1,770 438,780 20%Madrid 3,300 / 3,480 1,350 / 1,570 375,390 20%Mexico City 8,900 9,080 4,110 4,470 983,740 25%Milan 1,330 / 1,420 750 / 840 284,290 20%Moscow 10,710 10,920 6,180 5,830 581,860 26%Mumbai 12,530 13,210 6,490 9,510 459,250 35%New York 8,410 8,810 3,820 / 4,480 2,583,560 20%Paris 2,270 / 2,390 1,800 / 1,810 722,790 20%San Francisco 810 / 880 530 / 590 184,620 20%São Paulo 11,350 12,750 5,570 7,130 919,380 22%Seoul 9,900 9,670 5,050 5,060 653,570 24%Shanghai 14,330 15,760 7,350 8,140 1,830,600 42%Singapore 5,230 / 5,660 3,150 / 3,560 760,410 26%Stockholm 870 / 980 590 / 650 146,780 19%Sydney 4,480 / 4,860 2,350 / 2,340 944,800 32%Tokyo 13,020 12,960 6,220 6,250 1,064,650 20%Toronto 2,830 / 3,260 1,450 / 1,590 703,030 25% 2012 2025The figures in the third column ("Investment required") are based on national macroeconomic data (GDP, investment, consumer, and government expenditure, etc.), not municipal data as used in themain Cities of Opportunity comparison.Source: Oxford Economics, Cities of Opportunity Partnership for New York City  |  Cities of Opportunity | 81
  • 84. It is only when cities reachtheir maximum efficiencythat their economic andsocial payback to theirsocieties—in economies ofscale for service provisionand infrastructure costs,reduced energy use, andlabor agglomeration—are at their peak. Xiaojiahe in Beijing’s university district.requirements. Of course, not all developing economic resources needed for investment.5 bring their citizens closer to the quality of lifecities require equal investment. Only Beijing, In Asia, all five of the fastest-growing cities enjoyed by those in mature cities. In the wordsShanghai, and Mumbai need to spend sums in population are on the subcontinent. It is of Cisco’s chief globalization officer, Wimconsiderably higher than the 20-26 percent reasonable to assume, therefore, that Delhi, Elfrink, “Technology can be a key enabler toof GDP needed by most developed cities. Dhaka, Karachi, and Kolkata will probably transform societies.” (See the interview onIstanbul, Johannesburg, Mexico City, and São need annual investment closer to Mumbai’s page 46; see also the interviews with ArupPaulo, on the other hand, all fall within that 35 percent of GDP than to that, say, of São Group deputy chairman Andrew Chan, pagerange—and Abu Dhabi just goes over it. But Paulo or Abu Dhabi. In any case, given that 68, and Infosys founder N.R. Narayanathis is probably for several reasons. There are at least two-thirds of the world’s megacities Murthy, page 84.)very few cities in the world with the financial (cities with populations of over 10 million) inresources of Abu Dhabi, which has already 2025 will be in the developing world (see map But it will be a long and difficult process.been able to bring its infrastructure up to on the next page), it is clear that the invest- Just how difficult can be seen by the chartdeveloped-city levels; Istanbul and Mexico ments required to provide for their future on page 23, “Productivity (GDP per workerCity have been major urban (not to say impe- job and economic growth will not only be per year) in thousands $US, 2025.” Accord-rial) centers for hundreds of years, with basic enormous but, in many cases, of a ing to that chart, Mumbai’s per worker GDPinfrastructure built long ago; Johannesburg daunting magnitude. will be about 6.5 percent of New York’s figureis the largest city of the country with the larg- in 2025. It will be about 31 percent of thatest GDP, by far, of any other African nation The good news is that technology can and of Buenos Aires. Beijing’s per worker GDP,(including the oil producers);4 and São Paulo will help emerging cities bypass the need meanwhile, will be slightly less than that ofis the economic center of one of the most for much traditional infrastructure. Indeed, Johannesburg, and the figure for both citiesdynamic economies of the last decade. the most critical infrastructural issue in the will be less than a fifth of that of New York. mature cities of the West is the obsolescence For Beijing to catch up with New York’sMost emerging cities, and those cities of the of and urgent need to upgrade much of their projected GDP per worker in the nextdeveloping world that will grow the fastest basic infrastructure, which was built in many 13 years, in other words, it will need essen-during the next decade, do not have these cases in the 19th and early 20th centuries. tially to more than quintuple its currentlyadvantages, however. Emerging cities at least have the advantage in projected growth. That is not likely to happen. many areas of a blank slate: Mobile telephonyThe five African cities forecast by the United in lieu of landlines is an obvious example. 4 The International Monetary Fund’s World Economic OutlookNations to have the largest increases in New technology and continual innovation— Database provides GDP data for every country or region in a vari- ety of subsets at http://www.imf.org/external/pubs/ft/weo/2012/01/population—Kinshasa, Lagos, Luanda, in everything from construction materials weodata/index.aspx.Dar es Salaam, and Khartoum—do not have to urban transport to environmental reme- 5 Again, IMF GDP data and projections for Africa are available atJohannesburg’s preexisting infrastructure, http://www.imf.org/external/pubs/ft/weo/2012/01/weodata/index. diation—will increasingly allow emerging aspx.although robust growth throughout Africa cities to catch up with developed ones. More 6 Edward Glaeser, Triumph of the City, New York, 2011, p. 1.over the next few years might provide the important, it will make it possible for them to82 | Cities of Opportunity | PwC
  • 85. But it doesn’t have to. What needs to be done payback to their societies—in economies of infrastructure in many instances (see “A Taleis for emerging cities simply to understand scale for service provision and infrastructure of Three Cities,” page 88), all of them havethe dynamics of urbanization—the extent costs, reduced energy use, and labor agglom- the advantage of fully formed public sectors.to which urbanization increases wealth and eration—are at their peak. While it is true that many municipalities inenhances social well-being—in order to map the eurozone (and the US) need to reorga-out a strategy of viable urbanization, to the Seventy-eight percent of the developed nize and retrench their public services—and,benefit of the men and women who live in world’s population is urban today—almost especially, to cut excessive and insupport-those cities now and will do so in increasing twice the percentage in Africa or Asia. That able public spending—it is always easier tonumbers in the future. It is telling that even in figure will rise to 84 percent in Europe and 90 cut, or rearrange, than to start from scratch.an enormous, continental nation such as the percent in the US by 2050. By contrast, Africa Despite (and because of) their rapid growth,US, cities not only contain over 80 percent of will still be only 62 percent urban and Asia 65 living standards remain very low in develop-the population but account for three-quarters percent in 2050. Nonetheless, it will only be ing cities. But all cities go through this. Theof GDP and two-thirds of all jobs. as they approach developed-city levels that word “Dickensian” was born from the great developing cities will begin to see the eco- English writer’s descriptions of 19th-centuryThat is exactly what Harvard economist nomic and social benefits of urbanization. It London. Conditions in 18th-century Paris ledEdward Glaeser means by the “triumph of the is by increasing density and, therefore, those to Europe’s most famous revolution. For thecity.” To wander through any successful city, economies of scale mentioned above that first few decades of the 20th century, it washe writes, “is to study nothing less than human cities become efficient, and extremely self-evident why the west side of midtownprogress.”6 Because of the often seemingly productive, centers of “human progress.” Manhattan was called Hell’s Kitchen. In thatimpossible challenges to emerging cities, the sense, developed cities are no different fromreality of their extraordinary economic advan- It is, finally, precisely at the level of human developing ones. A developing city is trans-tages is often buried in a blizzard of media progress—whether the term is defined as formed into a “developed” one, in fact, theimages about slums, crime, and massive social quality of life, standard of living, or both— moment it decides, to echo Bill Bratton again,insecurity. At best, however, these images that developed cities can be models for to ensure public safety, and then health andreflect a half-truth—or, more accurately, developing ones. While many of the developed security. Once those fundamental tasks arethe facts of cities that are only half-formed. world’s urban centers have been rudely accomplished, “the triumph of the city” isBecause it is only when cities reach their maxi- shaken by the global financial crisis, with virtually preordained.mum efficiency that their economic and social unusually harsh ramifications for their socialWorld megacities are multiplyingCities with a population of 10 million or more in 2000 and 2025 Moscow Paris Beijing Lahore New York Istanbul Shanghai Dhaka TokyoLos Angeles Chongqing Cairo Delhi Osaka Karachi Guangzhou Mexico City Shenzhen Manila Lagos Kolkata Mumbai Bogotá Kinshasa Jakarta Lima Rio de Janeiro São Paulo Buenos Aires 2000 2025 The population figures in this table are based on the larger geography of a citys urban agglomeration and not the municipal population data used in the main Cities of Opportunity comparison. Source: World Urbanization Prospects, United Nations Partnership for New York City  |  Cities of Opportunity | 83
  • 86. India’s economy is growing rap- been building infrastructure,Narayana Murthy of Infosys links idly, its population is expanding at an extraordinary rate, and there’s we’re not able to keep pace with demand. That results in huge pro-… India’s urban future to the power of private enterprise, leadership, massive migration from the coun- ductivity losses and delays, mainlygovernance, and transparency tryside to cities that are already in urban areas. overcrowded. How concerned are you about the stress all of this Where do you see the most places on urban infrastructure acute strains?N.R. Narayana Murthy founded Infosys in 1981 and built it over three such as roads, the water supply, Transportation takes an enormousdecades into a global software giant with 145,000 employees. Murthy, and the electricity system? amount of time. Our roads haven’tnow chairman emeritus of Infosys, also serves on the boards of HSBC been developed as quickly as our It’s a big challenge, there’s noand the Ford Foundation. In praising his book, A Better India, A Better logistical demands require. Also, doubt at all. The country isWorld, Bill Gates said Murthy “demonstrated that it’s possible to create the average speed of our freight progressing very fast. We grew ata world-class, values-driven company in India,” while India’s Prime trains today must be about 40 8.5 percent on average over theMinister Manmohan Singh hailed Murthy as “a role model for millions mph, which is no speed in 2012. last five years. When the economyof Indians.” Here, Murthy discusses India’s urban challenges—and We’re not adding a lot more rail- grows at this rate, it’s only naturalhow to tackle them with the help of government reform, “huge foreign way lines. We’re not expanding that there’s huge pressure oninvestment,” and entrepreneurial dynamism. roads or improving their quality. infrastructure. Even though we’ve84 | Cities of Opportunity | PwC
  • 87. When the economy grows at this rate, it’s only natural that there’s huge pressure on infrastructure. Even though we’ve been building infrastructure, we’re not able to keep pace with demand. That results in huge productivity losses and delays, mainly in urban areas. 11 million two-wheelers, but the a sense of alacrity; there’s so Over the last 20 years, much roads are not expanding. When much legislation still pending of India’s progress has been I leave my home in south Banga- with the parliament. What many driven by the dynamism of the lore at 7 a.m., it takes me only 20 countries take six months to private sector—not least in the minutes to drive to Electronics City complete, we most often take technology industry, which has [the industrial park in Bangalore several years to do. Our nature, transformed Bangalore into the where Infosys is headquartered]. our natural pastime, is apathy. My so-called “Silicon Valley of India.” But if I leave at 8.30 a.m., it interpretation is that it’s because What should the government do takes an hour—and this is one of we were under foreign rule for to foster more entrepreneurship? Bangalore’s better roads. Before it the last millennium, until we got First, we have to enhance the was built, I’d spend two and a half independence from the British in quality of our higher education hours waiting in traffic to come 1947. We weren’t in control of our system by creating greater interac- to the office or get home, and this destiny, so we weren’t responsible tion with well-known universities is still the norm in many parts of for designing a better strategy for in developed countries. Second, this city and other Indian cities. our society. It’s natural for a nation we need regulations that attract These traffic conditions reduce like that to take a little time to the best venture-capital firms to your productivity and waste your bring back a sense of urgency, India in even greater numbers. time, and you’re not in a very good self-created destiny, and alacrity. Third, we have to create a business mood when you’ve just spent two environment for entrepreneurs and a half hours in traffic. Is that what entrepreneurs where there’s very little frictionSo the movement of goods takes like you have injected into created by bureaucrats. Today, ita long time. Similarly, our port In Aravind Adiga’s recent novel Indian society? takes several days to even registerinfrastructure is not as developed Last Man in Tower, an exasperated I think so. I have a fetish for quick a firm. And smaller entrepreneursas we’d like. The average time for resident of Mumbai complains: action because of the apathy I see suffer under the tyranny of pettyclearance at our ports is several “Look at the trains in this city. around me. My children make bureaucracy in terms of factorydays, whereas it’s several hours Look at the roads. The law courts. fun of me: They say, “We shouldn’t inspectors, tax inspectors, and soin many countries. For India’s Nothing works, nothing moves; it discuss anything with dad because on. We need to shield them fromeconomy to make sustained prog- takes ten years to build a bridge.” he’ll go ahead and do it immedi- this bureaucratic tyranny. Fourth,ress, we have to build good roads, Why do such things function so ately!” But there are many people we need to create an environ-build ports, bring efficiency to inefficiently in India’s cities? Is in the country, particularly in the ment in which failure is not seenthese systems, and also enhance there a cultural reason why Indi- private sector, who have now as highly negative. If you fail asour power capacity. ans accept these frustrations? realized the importance of speed. an entrepreneur in the US, it is in Yes. Somehow, the staple diet of many ways a badge of honor; weHow economically disruptive is the Indians is apathy. We see a prob- in India need to have the samelogjam on roads in Indian cities lem and don’t do much about it. mindset as in America.like Mumbai, Delhi, and Bangalore? The government doesn’t act withWe’re adding about 4 millionvehicles every year and about Partnership for New York City  |  Cities of Opportunity | 85
  • 88. India has done well to get to the current orbit. But to move to the nextorbit, we need good leadership. To bring prosperity to the vastmajority of Indians, we need to enhance our governance system,enhance our transparency and accountability, combat corruption,and enhance our infrastructure.How well has privatization the trenches who are producing and competitive on a global scale,worked in addressing economic goods and services, then creat- sell more, then pay back thesebottlenecks such as India’s inad- ing laws and rules that will make loans. There’s no other model inequate supply of electricity? them more competitive. the world. It’s happening in some areas already: India’s IT industryPower production is open to the Thomas Friedman, author of The is very competitive. But it has toprivate sector, but power distribu- World is Flat, has written that happen in many other industries.tion is still in the government’s India’s government is failing tohands in most states, so it’s not confront urgent issues like urban What advice would you giveworking that well. There are huge pollution and poor infrastruc- to foreigners looking to investlosses in transmission, and there’s ture. He warns: “As much as I’m in India?a lot of theft of electricity. Several impressed by the innovative prow-state governments give free power One of the drawbacks of our ess of India’s young technologists, system is that the rules andto farmers, which is causing some without a government to enablestrain, and the state governments regulations are not very transpar- them with the roads, ports, ent. They’re not very explicitlyaren’t able to pay power manu- bandwidth, electricity, airports,facturers on time. So, it’s a mixed written in simple English that can and smart regulations they need be understood by you and me inbag. Unfortunately, we’ve looked to thrive, they will never realizeat this situation piecemeal, not the same way. Therefore, there’s their full potential.” Is he right? an opportunity for misinterpreta-holistically. The solution is to lookat the entire supply chain and Absolutely. India has done well tion by the bureaucracy—and,bring in the participation of the to get to the current orbit. But when there’s an opportunity forprivate sector. to move to the next orbit, we misinterpretation, there’s a pos- need good leadership. To bring sibility for rent-seeking. That’sDoes the success of technology prosperity to the vast majority of something that foreign investorscompanies like Infosys suggest Indians, we need to enhance our don’t like because they’re used tothat private enterprise is the most governance system, enhance our open, clear rules. So, I’d adviseeffective driver of economic prog- transparency and accountability, foreign investors to use well-ress in India, not the government? combat corruption, and enhance known Indian lawyers and make our infrastructure. sure these lawyers look very care-The software industry is a good fully at whatever contracts they’reexample of how the private sector The government has called for writing, and also look at all thecan add tremendous value to the $1 trillion in infrastructure previous case studies.economy if the government takes spending. How can this bea back seat and acts as a catalyst. funded when India’s finances Some foreign investors are alsoIn our area, the government are already stretched? scared that corruption may stilldid a good job of promoting the be too pervasive in India. HowIndian software industry abroad. Developing nations like India need hard is it to avoid corruption?The moral of the story is that the to seek huge foreign investmentgovernment should become a and huge debt from abroad to In fairness, at Infosys, we’ve notcatalyst, listening to the people in build our infrastructure, then paid a single cent in bribes in the make ourselves more productive last 30-odd years of our existence.86 | Cities of Opportunity | PwC
  • 89. Therefore, I do believe it’s possible power, and biomass, but the companies succeeding, our banksto do business with the govern- majority of our power comes becoming smarter and smarter.ment without any bribery as from coal, and that’s not good Therefore, even though we havelong as you’re willing to accept a for the environment. We’ve been problems, there’s confidence todaycertain delay in the processing of trying to install nuclear power, that we’ll be able to solve them—applications and approvals. And but there’s been a lot of opposition if not tomorrow, then at leastif you demonstrate that you’re not because of what happened in the day after. That’s the biggestgoing to give any bribes the first Japan. I wouldn’t fault our govern- transformation I’ve seen in thetime, the second time they won’t ment on its enthusiasm for making psyche of India. This confidenceask you. So my advice to any for- alternative energy more popular. is extremely important for a nationeign investors is to be firm in being But the reality is that we’ll con- on the go.honest and not succumbing to any tinue to use more and more coalsuch bribery situations the first for quite a few years—and we’retime; the second time, you won’t also adding automobiles likehave to worry about it. there’s no tomorrow, which causes tremendous damage toOne growing challenge is urban the environment.pollution, not only in megacitieslike Mumbai, but in lesser-known India has made spectacular prog-cities like Kanpur and Ludhiana, ress over the last 20 years. Whenwhich both rank very high in you look at the next 20 years,lists of the world’s most pol- what makes you hopeful?luted places. Is the government I’ve seen a new sense of confi-addressing these environmen- dence and hope amongst Indianstal concerns—for example, by in the last 12 years as they’veembracing alternative energy? watched our country movingThe government has created forward, our GDP growth ratesincentives in wind power, solar increasing, our software Infosys Electronics City, Bangalore.
  • 90. Dhabi’s financial intervention, whateverA tale of three cities marginal job loss occurred during the city’s crisis was made up by increased hiring in theDubai recovers strongly, Dublin tries to turn the corner, public sector, which added more than 61,000 jobs between 2008 and 2010. Moreover, andand Athens slogs on wearily as counterintuitive as it may appear, although the city’s troubles originated in the real estate sector, employment in construction has actu- ally grown, by roughly 37,000 jobs during the same period. If nothing else, this confirms the wisdom of Edward Glaeser’s prediction that Dubai would indeed survive this tempo-To paraphrase Tolstoy’s famous opening to But some bubbles are less frothy than others. rary financial hiccup in its development asAnna Karenina, while most happy cities are As far back as December 1, 2009—two weeks “a great metropolis.”5alike, every unhappy city is unhappy in its own before Abu Dhabi came to the rescue of its sis-way. Although the pain and suffering (and, in ter city—Harvard economist Edward Glaeser Moving to Dublin, the second of our threesome cases, tragedy) provoked by the global was presciently warning people against a rush cities under examination, we come across afinancial crisis during the last few years have to judgment. In his New York Times blog, he decidedly grimmer landscape. Gone are thehad common causes, and certainly been mani- pointed out that while Dubai had “massively days when Dublin was toasted in think tanksfested in much the same way (unemployment, overbuilt relative to … current demand” and and investment conferences around the worldforeclosures, bankruptcies), each city that has that “extreme height” in skyscraper construc- as the capital of the “Celtic Tiger” and heartundergone these wrenching events has had tion is “a bellwether of irrational exuberance,” of the “Irish Miracle,” as Ireland averageda very different history. it was also true that “it took more than a annual GDP growth of over 7 percent from decade for the Empire State to stop being 1995-2007, and even hit stratospheric heightsDiagnostically, that means that each city the ‘Empty State Building.’” In fact, Glaeser of 10-11 percent several years during thatarrived at its crisis through a different set of reminded us, five of the 10 tallest buildings in period, while the European Union was averag-factors and causes, which is also why each New York were planned during the Roaring ing 2.2 percent.6 By 2008, and the onset ofone’s revival and future well-being will follow (and very bubbly) ’20s but were actually built the global financial crisis, Ireland’s real estatea different path. While it is true that cities in during the Depression. “Great cities,” Glae- bubble had burst and GDP had fallen bythe eurozone—from Lisbon and Madrid to ser remarked, “have long been built by great 3 percent.7Paris and Rome—share fundamental problems gamblers,” and concluded: “Even if Dubai’sarising from the single currency, each has a The consequences for Dublin have been real estate prices continue to drop, which isdifferent past (and future) that makes its spe- harrowing. In 2007, with employment certainly quite possible, there will remaincific prognosis for potential economic health expanding at an annual rate of 3.5 percent a strong incentive to fill its buildings. If thedistinctive and not comparable. Focusing on during the previous decade, the city’s unem- structures remain occupied, then DubaiAthens, Dublin, and Dubai, three of the most ployment rate stood at 4.5 percent; by 2011, it … will survive.”3conspicuous examples of urban crisis during had more than tripled to 14.2 percent. Youththe last several years, will illustrate the extent As it turned out, while Dubai experienced an unemployment has increased 150 percent,to which it is more the differences rather than 18 percent drop in GDP between 2008 and shooting up from 8,000 to almost 20,000.the commonalities that distinguish economic 2009, it actually grew 3.4 percent in 2011 andbreakdown and recovery in a city. is expected to grow 3.7 percent this year, 3.9 1 Unless otherwise stated, all data in this article are from research percent in 2013, and to return to its pre-reces- undertaken for the Cities of Opportunity 2012 report.Dubai had a prominent collapse of its real sion peak by 2014.4 Even more important, at 2 See Landon Thomas Jr., “Abu Dhabi Tightens Its Grip as It Offers Help to Dubai,” The New York Times, December 14, 2009.estate market in the late fall of 2009.1 Very least as far as the actual repercussions on the 3 See Edward L. Glaeser, “The Ascent, and Fall, of Dubai,” Econo-quickly, Abu Dhabi came to the rescue of its city’s population, Dubai has never suffered mix, The New York Times, December 1, 2009, at http://economix.sister emirate with a $10 billion bailout.2 the debilitating unemployment that has been blogs.nytimes.com/2009/12/01/the-ascent-and-fall-of-dubai.To a very real extent, Dubai was a victim of the most devastating consequence of finan- 4 For 2011, see “Dubai economy grows by 3.4 pct. in 2011,” Reuters, May 29, 2012, at http://www.reuters.com/arti-the worldwide financial crisis following the cial disaster in every other city. Thus, while cle/2012/05/29/dubai-gdp-idUSL5E8GT1LH20120529; for 2012collapse of Lehman Brothers in September the economy lost almost a fifth of its value in and 2013 projections, see the chart “Dubai Government Debt Sustainability, 2007–17,” International Monetary Fund, IMF Country2008. Although Dubai’s accumulated debt just one year, it only shed 3,000 jobs. By the Report No. 12/116, United Arab Emirates: 2012 Article IV Consulta- tion, May 2012, page 12.of about $120 billion was mostly from real following year, in fact, total employment had 5 Glaeser, “Ascent and Fall.”estate it had built and reasonably expected increased by 30,000. The city is now projected 6 See the chart, “Real GDP Growth 1993-2009,” in Nationalto lease, these investments immediately to gain an average of 45,000 jobs annually Treasury Management Agency, Ireland: Information Memorandumbecame identified with the global real estate through 2025. March 2008, page 16. The growth rate of 10-11% was achieved in 1995, 1997, and 1999.bubble that burst simultaneously in so many 7 For 2008 GDP, see Table 1, “Ireland: Selected Economic Indica-countries at the time. The reasons for this relatively benign employ- tors, 2008–13,” International Monetary Fund, IMF Country Report ment environment are unique to Dubai. First No. 12/48, Ireland: Fifth Review Under the Extended Arrangement— Staff Report; Staff Supplement; Press Release on the Executive of all, despite (or perhaps because of) Abu Board Discussion, March 2012, page 25.88 | Cities of Opportunity | PwC
  • 91. Athens, Dublin, andDubai illustrate theextent to which it ismore the differencesrather than thecommonalities thatdistinguish economicbreakdown andrecovery in a city.Riot police walk past the Attikon cinemain central Athens, just a few blocks fromConstitution Square, after it was set ablazeduring massive clashes with protesterson February 12 of this year. Opened in1912—in a neoclassical building datingfrom 1870—the Attikon hosted the annualAthens International Film Festival and wascelebrating its centenary this year as oneof the longest operating movie theaters inthe country and in Europe as a whole. Partnership for New York City  |  Cities of Opportunity | 89
  • 92. How economic growth compares among the three cities and Cities of Opportunity averages2001-2025 Forecast 500 400 GDP (2001=100) 300 200 100 2001 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21 ’22 ’23 ’24 2025 Athens Dubai Dublin Mature city Emerging city composite composite Source: Oxford Economics, Cities of OpportunityMeanwhile, since the housing bubble Constitution Square in the heart of the Greek GDP as a whole has also dropped much moreexploded, everyone for whom their home was capital are the obvious illustration of an econ- precipitously in Athens than in Dublin, losingtheir major asset has been impoverished, as omy that has crashed and continues to burn. 18 percent of its value from 2008 to 2012.current housing prices have plummeted to More ominously, while Dublin is expected tohalf their 2007 value. Of course, the cost of While neither Dublin nor Athens is projected return to its pre-crisis peak in four years,housing had almost quadrupled in the prior to return to its pre-collapse levels of unem- Athens is not forecast to get back to its peakdecade, rising from an average of €108,000 ployment until after 2025, joblessness in for at least another decade. There is, however,to €415,000, but all those who bought houses Athens started at both a higher level than in one positive area of comparison: Housingas the real estate bubble inflated (as so many Dublin—6.5 percent as opposed to 4.5 percent prices have fallen only 20 percent in Athensdid) are now underwater on their mortgages, in 2007—and is currently much worse: at the in the past four years while halving in Dublin,saddled with homes they can no longer afford. end of 2011, it stood at 20 percent, as against and most banks are restructuring loans ratherIn a story published last year, New York Dublin’s 14.2 percent mentioned above. than foreclosing. In the words of one banker,Times correspondent Liz Alderman quoted a Moreover, youth unemployment is over “Taking away the home of a particulardemoralized father of three saying, “It’s like 50 percent in Athens, while it stands at family tears apart the social fabric of anwe drew the lottery ticket made in hell.”8 29 percent in Dublin.9 already stressed society.”11The figures point to the Dantesque terrain. It is precisely this dynamic of continually In the end, the future for each of these threeDublin’s economy has lost 11 percent of its increasing unemployment that seems to be cities appears as different as their respectivevalue in the period from 2007 to 2012, or spiraling out of control in Greece, having shot pasts—although two of them, Dublin andapproximately $6.5 billion. Employment has up from 15.7 percent to 21.7 percent in justplunged 15 percent, and unemployment is the last 10 months of 2011 (as opposed to the 8 Liz Alderman, “After Bust in Ireland, Ordinary People Make Do With Less,” The New York Times, May 6, 2011.projected to remain above 10 percent until corresponding Irish increase of 14.1 percent 9 See David McWilliams, “This is a fiscal straightjacket for Ireland,2018. At the same time, the job losses over the to 14.7 percent during the same period).10 not a union,” Financial Times, May 28, 2012, for the 29% rate oflast five years have been spread across a wide Furthermore, while Dublin has managed to youth unemployment. 10 For unemployment rates from March 2011 to January 2012, seespectrum of sectors. Joblessness as a whole eke out some job gains in the last few years Eurostat’s news release, “Euro area unemployment rate at 10.9%,”is not expected to recede to pre-crisis levels in transport and communications, Athens’s STAT/12/67, May 2, 2012, at http://europa.eu/rapid/pressReleases- Action.do?reference=STAT/12/67&type=HTML. Although the figuresuntil after 2025, at the earliest. job losses have not spared any sector of the are national, they are representative of trends in the two capitals. It economy and have devastated two critical is noteworthy that Ireland shows a drop in unemployment in March 2012 of 0.2% to 14.5%.But it is surely Athens that has become the areas of previous job growth, construction and 11 See Rob Urban and Sharon Smyth, “Greek Banks Followemblem of the global financial crisis. The manufacturing, which have both shed at least Euripides To Help Borrowers: Mortgages,” Bloomberg, July 27,images on television screens throughout the 50 percent of their respective workforces. 2012, at http://www.bloomberg.com/news/2012-07-26/greek- banks-follow-euripides-to-help-borrowers-mortgages.html.world of the fires periodically raging in90 | Cities of Opportunity | PwC
  • 93. Athens, are linked in a common, supranational economic structure was put in place—and a multiple dysfunctionality—political,institutional framework (and, for the time that this structure is far from ruined and will economic, and now social—that will takebeing at least, a common currency) that will ultimately prove a haven for Dublin. many years to set right.seriously affect the extent to which they do, ordo not, recover in the coming years. As men- Athens has, by far, the most uncertain future, Having arrived at its crisis through ationed, Dubai has already left its past behind or at least the one that is most difficult to different set of factors and causes, each city’sit and is moving ahead robustly and confi- predict with any reasonable assurance other revival and future well-being will thereforedently.12 With the assistance of Abu Dhabi, it than to repeat the obvious: the city’s deadly follow a different path.ensured that its crash was of short duration, link to a Greek state that was, and remains 12 The IMF warns, however, that the “large property overhangwithout longer lasting consequences, and, (as opposed to the Irish state), inefficient, continues to be a drag on the economy” and that credit to theabove all, as painless as possible. over-indebted, and underfunded (primarily private sector has essentially remained flat for the last three years. See IMF Country Report No. 12/116, especially pages 4-7. because of tax evasion). Athens is also the 13 The averages above were calculated on the basis of Eurostat’sThe two European cities have a much more nucleus of an economy that is uncompetitive, data; see the table, “General government deficit/surplus: Percent-difficult future ahead of them and, in the risk-averse, and inward-looking (again, age of GDP,” at http://epp.eurostat.ec.europa.eu/portal/page/ portal/product_details/dataset?p_product_code=TSIEB080.case of Athens, a truly daunting one. The the very opposite of Dublin). Athens is the Interestingly, Ireland was a much more stringent observer of theoutlook for Dublin is definitely brighter than metropolitan center, in other words, of eurozone’s fiscal stability criteria than Germany, whose own deficits during the same period averaged 2.3%, or over 150% more thanfor the Greek city, even if only comparatively, Ireland’s surpluses.especially if the working hypotheses for bothcities’ futures is based on their past economicperformance—which is truly where the twocities reveal their very different selves. Sectoral employment change for Athens, Dubai, and DublinIn the ensuing disorder following the various Employment change in thousandseconomic meltdowns in the EU, it has beenforgotten (or ignored) that, from 2000 to -50 -502007, Dublin was capital of a nation whose Manufacturing -51 -51government finances were in surplus to the -18tune of an average of 1.4 percent of GDP, -50 -50whereas Athens was capital of a nation whose Construction 37budget deficits during that time averaged 5.4 -32percent.13 In addition, during the same time,Ireland’s general debt averaged an astound- -37*ingly low 29.8 percent of GDP, just under half Public sector 61the relevant EU limit, while Greece’s came -1in at a whopping 102.6 percent, 70 percent -34above EU rules. Distribution -20 & retail -22Thus, what happened in Ireland had abso-lutely nothing to do with profligate public -21 Business 3spending. The exact opposite, in fact. The services -18sovereign sacrificed its fiscal integrity, andfuture, when it decided to cover the debts that -12resulted from the truly profligate expansion Transport & 2of the private sector, in this case the banks. If communications 1nothing else, these facts illustrate that fiscal -5responsibility would be a reversion to the Financial services 0norm for the Irish. Dublin’s key weakness, -2which led to its crisis, was its asset bubble.Consequently, as it stabilizes and then slowly -3 Agriculture, 1returns to growth, Dublin, and Ireland as a forestry & fishing -0.3whole, faces the same structural challenge asDubai: to diversify its economy and ensure -2that it will never again be held hostage to this Hotels & catering -2kind of bubble (or to one particular economic -8sector). It must also be said, in all justice, that -26the “Celtic Tiger” was not all myth. The “Irish Other 12Miracle” might have turned out to be consider- services -4ably less miraculous than touted to be at thetime, but there can be no doubt that a robust Athens Dubai Dublin (2008-2012)** (2008-2010)** (2007-2012)** *The figure for Athens refers to future and expected job cuts, none of which have yet taken place. **Date range reflects years of falling employment in each city. Source: Oxford Economics, Cities of Opportunity Partnership for New York City  |  Cities of Opportunity | 91
  • 94. Key to the VariablesAir pollution Attracting FDI: Number of Cost of public transportMeasure of outdoor air pollution levels based greenfield projects Cost of the longest mass transit rail tripon annual mean concentrations of particulate Number of greenfield (new job-creating) within a city’s boundaries. The cost of a busmatter 10 micrometers (PM10) in diameters projects in a city that are funded by foreign trip is used in the cities where there are noor less, which reflect the degree to which direct investment. Data cover the period rail systems.urban populations are exposed to this fine from January 2003 through July 2011.matter. Figures are based on daily measure- Figures provided by fDi Intelligence. Cost of rentments or data that could be aggregated into Monthly rent for a one-bedroom apartment inannual means. In the absence of annual Broadband quality score the city center (in USD). Figures provided bymeans, measurements covering a more limited Measurement of the quality of a broadband Numbeo, a worldwide cost-of-living database.period of the year were exceptionally used. connection in a given country using theFigures were sourced from the World Health Broadband Quality Study. This index is CrimeOrganization’s Public Health and Environment calculated based on the normalized values of Amount of reported crimes in a city suchdatabase, which is of global scope aiming to three key performance parameter categories: as petty and property crimes, violent crimes,provide data at both national and city levels. download throughput, upload throughput, and street crimes. Data are from the Mercer and latency. A formula weights each category Quality of Living reports.Aircraft movements according to the quality requirements of aCount of air traffic movements at each of the set of popular current and probable future Cultural vibrancymajor airports servicing a city, including civil broadband applications. The Broadband Weighted combination of city rankings basedinternational and domestic passenger, cargo, Quality Study is an index produced by SAID on: the quality and variety of restaurants,and non-revenue flights but excluding Business School University of Oxford and theatrical and musical performances, andmilitary flights. Universidad de Oviedo, sponsored by Cisco. cinemas within each city; which cities recently have defined the “zeitgeist,” or the spirit ofAirport to CBD access Classroom size the times; and the number of museumsA measure of the ease of using public transit to Number of students enrolled in public primary with online presence within each city. Thetravel between a city’s central business district education programs divided by the number of “zeitgeist” rankings take into account cultural,and the international terminal of its busiest classes in these programs. Primary education social, and economic considerations.airport in terms of international passenger programs usually begin at ages five to seventraffic. Cities are separated into categories and last four to six years. Digital economy score*according to whether a direct rail link exists; Assessment of the quality of a country’s infor-if so, the number of transfers required; and Consumer price index mation and communications technology (ICT)if not, whether there is a public express bus A relative measure of the price of consumer infrastructure and the ability of its consumers,route to the airport. Cities with direct rail goods by location, including groceries, businesses, and governments to use ICT tolinks are preferred to those with express bus restaurants, transportation, and utilities. their benefit. Data were sourced from theservices. Cities with rail links with the fewest The CPI measure does not include housing digital economy rankings, “Digital Economytransfers are ranked higher than those with expenses such as rent or mortgage. Figures Rankings 2010—Beyond E-readiness,” by themore. Within categories, cities are ranked provided by Numbeo, a worldwide cost-of- Economist Intelligence Unit.against one another according to the cost of living database.a single one-way, adult weekday trip and Ease of entry: Number of countries withthe length of the trip, with each factor Cost of business occupancy visa waiver*weighted equally. Annual gross rent divided by square feet Number of nationalities able to enter the of Class A office space. Gross rent includes country for a tourist or business visit withoutAttracting FDI: Capital investment lease rates, property taxes, maintenance, and a visa. Excludes those nationalities for whomTotal value of greenfield (new job-creating) management costs. Data produced by CBRE only those with biometric, diplomatic, orcapital investment activities in USD in a city Global Office Rents. official passports may enter without a visa.that are funded by foreign direct investment.Data cover the period from January 2003 Cost of Internet Ease of starting a business**through July 2011. Figures provided by The current monthly price for Internet service Assessment of the bureaucratic and legalfDi Intelligence. (6 mbps) with unlimited data using cable or hurdles an entrepreneur must overcome to ADSL (in USD). Figures provided by Numbeo, incorporate and register a new firm. Accounts a worldwide cost-of-living database. for the number of procedures required to register a firm; the amount of time in days92 | Cities of Opportunity | PwC
  • 95. required to register a firm; the cost (as a Financial and business Hotel roomspercentage of per capita income) of official services employment Count of all hotel rooms within each city.fees and fees for legally mandated legal or Number of jobs in financial and businessprofessional services; and the minimum services activity as a share of total employ- Housingamount of capital (as a percentage of per cap- ment in the city. Financial services includes Measure of availability, diversity, cost, andita income) that an entrepreneur must deposit “banking and finance,” “insurance and pension quality of housing, household appliances, andin a bank or with a notary before registration funding,” and “activities auxiliary to financial furniture, as well as household maintenanceand up to three months following incorpora- intermediation.” Business services includes and repair. This measure is produced by thetion. Assessment scores gathered from Doing a mix of activities across the following subsec- Mercer Quality of Living reports.Business 2012, The World Bank Group. tors: “real estate and renting activities”; “IT and computer related”; “R&D”; “architectural, Incoming/Outgoing passenger flowsEmployee regulations** engineering, and other technical activities”; Total number of incoming and outgoing pas-Sum of three rank scores from the World “legal, accounting, bookkeeping, and auditing sengers, including originating, terminating,Bank’s Doing Business study including: ratio activities, tax, and consultancy”; “Advertising”; transfer, and transit passengers in each of theof minimum wage to average value added and “Professional, scientific, and technical major airports servicing a city. Transfer andper worker; notice period for redundancy services and business services where not transit passengers are counted twice. Transitdismissal (for a worker with 20 years of elsewhere classified.” Data sourced by passengers are defined as air travelers comingtenure, in salary weeks); and paid annual Oxford Economics. from different ports of departure who stayleave for a worker with 20 years of tenure at the airport for brief periods, usually one(in working days). Flexibility of visa travel* hour, with the intention of proceeding to their Ranking based on the number of visa waiv- first port of destination (includes sea, air, andEnd of life care* ers available for tourist or business visits and other transport hubs).Ranking of countries according to their the length of time for which the visa waiver isprovision of care for their citizens at the end granted. Ranking is based on the number of Innovation Cities Indexof their lives taking into account the basic those countries that grant a waiver for at least The index comprises 331 cities selected fromhealthcare environment, availability, cost, and 90 days, excluding those countries whose resi- 1,540 cities based on basic factors of health,quality of care. The Quality of Death Index dents can enter without a visa only if they have wealth, population, geography. The selectedscores countries across four categories: a biometric, diplomatic, or official passport. cities had data extracted from a city bench-Basic End-of-Life Healthcare Environment; marking data program on 162 indicators.Availability of End-of-Life Care; Cost of End- Foreign embassies or consulates Each of the benchmarking data was scored byof-Life Care; and Quality of End-of-Life Care. Number of countries that are represented by analysts using best available qualitative analy-These indicator categories are composed of a consulate or embassy in each city. Figures sis and quantitative statistics. (Where data27 variables, including quantitative, quali- sourced from Go Abroad.com. were unavailable, national or state estimatestative, and “status” (i.e.,whether or not were used.) Data were then trend-balancedsomething is the case) data. The indicator data Health system performance* against 21 global trends. The final index hadare aggregated, normalized, and weighted to Measurement of a country’s health system a zeitgeist (analyst confidence) factor addedcreate the total index score. Quality of Death performance made by comparing healthy life and the score reduced to a three-factor scoreis an Economist Intelligence Unit index report expectancy with healthcare expenditures per for cultural assets, human infrastructure, andcommissioned by the Lien Foundation. capita in that country, adjusted for average networked markets. For city classification, years of education (as years of education are these scores were competitively graded intoEntrepreneurial environment* strongly associated with the health of popula- 5 bands (Nexus, Hub, Node, Influencer,Measurement of the entrepreneurial attitudes, tions in both mature and emerging countries). Upstart). The top 33 percent of Nexus andentrepreneurial activity, and entrepreneurial Methodology adapted from the 2001 report, Hub (and selected Node cities of futureaspirations in a country using the Global “Comparative efficiency of national health interest) final graded scores were ranked byEntrepreneurship Index (GEINDEX). The systems: Cross-national econometric analysis.” analysts based on trends over two to fiveGEINDEX integrates 31 variables, including years. A Node ranking is considered globallyquantitative and qualitative measures and Hospitals competitive. The index is produced byindividual-level data and is produced by the Ratio of all hospitals within each city accessible 2Thinknow Innovation CitiesTM program.Center for Entrepreneurship and Public to international visitors for every 100,000Policy, George Mason University. individuals of the total population. Partnership for New York City  |  Cities of Opportunity | 93
  • 96. Intellectual property protection* Licensed taxis Number of Global 500 headquartersLeading business executives’ responses to Number of officially licensed taxis in each Number of Global 500 headquarters locatedthe question in the World Economic Forum’s city divided by the total population and then in each city, as per the CNN Money FortuneExecutive Opinion Survey 2010 that asks, multiplied by 1,000. Global 500 list.“How would you rate intellectual propertyprotection, including anti-counterfeiting mea- Literacy and enrollment* Number of internationalsures, in your country? (1=very weak; 7=very Measurement of a country’s ability to gener- association meetingsstrong).” The survey covers a random sample ate, adopt, and diffuse knowledge using data Number of international association meetingsof large and small companies in the agricul- from the World Bank’s Knowledge Index per city per year that take place on a regulartural, manufacturing, non-manufacturing, category, education and human resources. basis and rotate among a minimum of threeand service sectors. The variables that compose education and countries. Figures provided by members of human resources are adult literacy rate, the International Congress and ConventionInternational tourists secondary education enrollment, and tertiary Association.Annual international tourist arrivals for 100 education enrollment.cities collected by Euromonitor International. Operational risk climate*Euromonitor’s figures include travelers who Major construction activity Quantitative assessment of the risks to busi-pass through a city, as well as actual visitors Count of “under construction” buildings in ness profitability in each of the countries.to the city. the SkyscraperPage database for each city Assessment accounts for present conditions under way as of December 19, 2011. This and expectations for the coming two years.Internet access in schools* includes structures such as highrises, The operational risk model considers 10 sepa-Leading business executives’ responses to stadiums, towers, and lowrises. rate risk criteria: security, political stability,the question in the World Economic Forum’s government effectiveness, legal and regulatoryExecutive Opinion Survey 2010 that asks, Mass transit coverage environment, macroeconomic risks, foreign“How would you rate the level of access to the Ratio of kilometers of mass transit track to trade and payment issues, labor markets,Internet in schools in your country? (1=very every 100 square kilometers of the developed financial risks, tax policy, and standard of locallimited; 7=extensive).” The survey covers and developable portions of a city’s land area. infrastructure. The model uses 66 variables,a random sample of large and small companies A city’s developable land area is derived by of which about one-third are quantitative.in the agriculture, manufacturing, non- subtracting green space and governmentally Data produced by Economist Intelligencemanufacturing, and service sectors. protected natural areas from total land area. Unit’s Risk Briefing.iPod index Math/Science skills attainment* Percent of population withWorking hours required to buy an iPod nano Top performers’ combined mean scores on the higher education(8 GB). Data sourced from UBS Prices and math and science components of the Program Number of people who have completed at leastEarnings report. for International Student Assessment (PISA), a university-level education divided by the an Organization for Economic Co-operation total population. A university-level educationLevel of shareholder protection** and Development (OECD) assessment of is set equivalent to a bachelor’s degree orMeasurement of the strength of minority 15-year-olds’ academic preparedness. Top higher from a US undergraduate institution.shareholder protection against misuse of performers are defined as those studentscorporate assets by directors for their personal who scored in the top two proficiency levels Political environmentgain. The Strength of the Investor Protection (Level 5 and Level 6) on the math and science Measure of a nation’s relationship with foreignIndex is the average of indices that measure portions of the test. Comparable examinations countries, internal stability, law enforcement,“transparency of transactions,” “liability for are used wherever possible to place cities limitations on personal freedom, and mediaself-dealing,” and “shareholders’ ability to not included in the OECD assessment. censorship. Data are from the Mercer Qualitysue officers and directors for misconduct.” of Living reports.Assessment scores gathered from Doing Natural disaster riskBusiness 2012, The World Bank Group. Risk of natural disasters occurring in or near Productivity a city. Counted hazards include hurricanes, Productivity is calculated by dividing the grossLibraries with public access droughts, earthquakes, floods, landslides, and domestic product (GDP) in 2012 US dollarsNumber of libraries within each city that are volcanic eruptions. by employment in the city. Data provided byopen to the public divided by the total popula- Oxford Economics.tion and then multiplied by 100,000.94 | Cities of Opportunity | PwC
  • 97. Public park space based on the number of articles published, age morning relative humidity during eachProportion of a city’s land area designated as number of citations to published work, and the month. A final thermal comfort score waspublic recreational and green spaces to the quantity of highly cited papers. The scoring derived by first taking the difference betweentotal land area. Excludes undeveloped rugged accounts for social sciences papers but not a city’s heat index for each month and optimalterrain or wilderness that is either not easily humanities papers. The rankings favor large room temperature and then averaging theaccessible or not conducive to use as public universities, universities with medical schools, absolute values of these differences.open space. and universities that focus predominantly on the “hard sciences” rather than social sciences Total tax ratePublic transport systems and humanities. The performance ranking Measure of the total taxes and mandatory con-Measure of the efficiency, reliability, and is carried out by the Higher Education tributions payable by the business in the secondsafety of public transport networks to residents Evaluation & Accreditation Council of Taiwan. year of operation, expressed as a share of com-and visitors in each city. The extensiveness mercial profits. The total tax rate is designed toand integration of the systems are also factors. Resolving insolvency** provide a comprehensive measure of the costCities are further differentiated by the extent Gauges the weaknesses in existing bankruptcy of all taxes a business bears. The World Bankof multi-modal transport systems, including law and the main procedural and administra- Group, Doing Business 2012 reports the totalsubway, bus/bus rapid transit, taxi, light rail, tive bottlenecks in the bankruptcy process tax rate for calendar year 2010.tram/trolley/streetcar, commuter rail, and by looking at three category areas: time andbike share systems. cost required to resolve bankruptcies and the Traffic congestion recovery rate of the claim from the insolvent Measure of traffic congestion and congestionQuality of living firm. Assessment scores sourced from Doing policies for each city scored on the level ofScore based on more than 30 factors across Business 2012, The World Bank Group. congestion, as well as the modernity, reliability,five categories: sociopolitical stability, and efficiency of public transport.healthcare, culture and natural environment, Software development andeducation, and infrastructure. Each city multi-media design Workforce management riskreceives a rating of either acceptable, tolera- Combined score for each city from fDi Ranking based on staffing risk in each cityble, uncomfortable, undesirable, or intolerable Benchmark’s “Software Development Centre” associated with recruitment, employment,for each variable. For qualitative indicators, and “Multi-Media Design Centres” profiles. restructuring, retirement, and retrenchment.ratings are awarded based on the Economist Both indices gauge a city’s performance based Risk was assessed based on 25 factors groupedIntelligence Unit analysts’ and in-city contribu- on the quality (weighted 70 percent) and the into five indicator areas: demographic riskstors’ judgments. For quantitative indicators, cost (weighted 30 percent) of the location as associated with labor supply, the economy,ratings are calculated based on cities’ relative well as 120 quality competitiveness measures. and the society; risks related to governmentalperformances on a number of external data- For software development, these measures policies that help or hinder the managementpoints. Data produced by the Economist include availability and track record in ICT, of people; education risk factors associatedIntelligence Unit Liveability ranking. availability of specialized-skills profession- with finding qualified professionals in a given als such as scientists and engineers, access to city; talent development risk factors related toRate of real GDP growth venture capital, R&D capabilities, software the quality and availability of recruiting and2010-2011 gross domestic product (GDP) exports, quality of ICT infrastructure, and training resources; and risks associated withpercentage growth rate in real terms specialization in software development. For employment practices. A lower score indicatesexpressed in 2012 US dollars. Data multi-media design, measures include the size a lower degree of overall staffing risk. Rankprovided by Oxford Economics. of the location’s leisure and entertainment scores sourced from the 2011 People Risk sector, its specialization and track record, Index produced by Aon Consulting.Recycled waste information technology infrastructure,Percentage of municipal solid waste diverted quality of life, and skills availability. Working age populationfrom the waste stream to be recycled. Ratio of a city’s population aged 15-64 to the Thermal comfort total population of the city.Research performance of top Measure of the average deviation from optimal *Country-level data.universities room temperature (72 degrees Fahrenheit) **Data based on countries’ most populous city.Sum of the scores of each city’s universities in a city. January and July heat indices wereincluded in the world ranking of top-perform- calculated for each city using an online tooling research universities. Scaled scores are that integrates average temperature and aver- Partnership for New York City  |  Cities of Opportunity | 95
  • 98. For more informationOn research … On media inquiries … On business implications …Partnership for New York City Partnership for New York City PwCBrook Jackson Farrell Sklerov Hazem Galalbjackson@pfnyc.org Rubenstein Public Relations Global Leader, Cities Network+1 212.493.7580 fsklerov@rubenstein.com hazem.galal@br.pwc.com +1 212.843.8289 +55 21 3232 6168PwCSabrina McColgan PwC Jan Sturessonsabrina.y.c.mccolgan@us.pwc.com Tanja Sullivan Global Leader, Government & Public Services+1 646.471.8180 tanja.sullivan@us.pwc.com jan.sturesson@se.pwc.com +1 646.471.6959 +46 (0)46 286 93 39 Egon de Haas Global Director, Government & Public Services egon.de.haas@nl.pwc.com +31 (0) 20 5686162ContributorsStrategic direction Core teamPwC Partnership for New York City Partnership for New York CityTom Craren Kathryn Wylde Katy BelotBrendan Dougher Brook Jackson Merrill Pond PwC Dorothy JonesProject direction Lou Gabriel Adiba KhanPwC Partnership for New York City Ciara McAlisterWilliam Sand, communications Merrill Pond, research Sabrina McColganwilliam.k.sand@us.pwc.com mpond@pfnyc.org Colin McIlheney+1 646.471.4470 +1 212.493.7515 Cliona O’Beirne Tatiana Pechenik William Sand Oxford Economics Neil Gibson Graeme HarrisonPhotography:Bill Bratton, David Miller, and Times Square: Kate Örne Wim Elfrink, courtesy of Cisco Mark MagillEdward O. Wilson: Richard Perry, The New York Songdo photos, courtesy of Gale International and Cisco Neil McCulloughTimes, Redux Edward O. Wilson in Gorongosa National Park, copyrightAerial View of NYC: Todd Heisler, The New York Times, Howard W. FrenchRedux N.R. Narayana Murthy, REUTERS/Jagadeesh Nv DesignElectronics City, Bangalore: Dirk Kruell, Laif, Redux Madrid, REUTERS/Andrea Comas Odgis + CompanySt. Paul’s Cathedral: James Veysey, Camera Press, Redux Xiaojiahe in Beijing’s university district, REUTERS/Stringer Janet OdgisLagos Island: Benedicte Kurzen, The New York Shanghai Rhian SwieratTimes, Redux Getty ImagesPaul Langrock/Zenit/Laif/Redux AP ImagesDr. Andrew Chan, courtesy of Arup Corbis Images Masterfile96 | Cities of Opportunity | PwC
  • 99. www.pwc.comwww.pfnyc.orgThe papers and printer used in the production of this study are certified to Forest Stewardship Council (FSC) standards,which promote environmentally appropriate, socially beneficial, and economically viable management of the world’sforests. The cover and text for this publication were printed on paper containing 10% postconsumer waste material.By printing at a facility utilizing 100% wind energy and using postconsumer recycled fiber in lieu of virgin fiber: 13 trees were preserved for the future 629 lbs of solid waste were not generated 39 lbs of waterborne waste were not created 1,239 lbs net of greenhouse gases were prevented 5,687 gallons of wastewater flow were saved 9,482,515 BTUs of energy were not consumed