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2012 cities-of-opportunity

2012 cities-of-opportunity



London moves up markedly but New York shows continued strength ...

London moves up markedly but New York shows continued strength
London advances four spots from last year to a virtual lock with New York at the top and finishes first in city gateway, a new category that measures international connectivity. New York performs well across the board but wins no individual category, showing diverse strengths. Paris rises four spots to number four this year, coming in first in demographics and livability and narrowly second to London in city gateway, showing that despite the eurozone’s continuing economic instability, The long-term investment that builds a great urban center also lends resilience to weather the storms. Overall, relative bands of performance remain similar to 2011.



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    2012 cities-of-opportunity 2012 cities-of-opportunity Document Transcript

    • Abu DhabiBeijingBerlinBuenos AiresChicagoHong KongIstanbulJohannesburgKuala LumpurLondonLos AngelesMadridMexico CityMilanMoscowMumbaiNew YorkParisSan FranciscoSão PauloSeoulShanghaiSingaporeStockholmSydneyTokyoTorontoCities of Opportunity
    • 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.
    • Looking to the future of 27 cities at the centerof the world economyRobert MoritzChairman and Senior PartnerPricewaterhouseCoopers LLPKenneth I. ChenaultChairman and CEOAmerican Express Co.Co-chairmanPartnership for New York CityTerry J. LundgrenChairman, President andChief Executive OfficerMacy’s Inc.Co-chairmanPartnership for New York CityYours sincerely,In this fifth edition of Cities of Opportunity,PwC and the Partnership for New York Cityagain examine the current social and economicperformance of the world’s leading cities. Wealso add a future dimension that probes theshape of city economies to come. Together,looking at 2012 results and ahead towardthe possibilities in 2025, we seek to providea realistic framework for thought and actionbeginning with 27 of the world’s most signifi-cant cities—on one hand, the engine of themodern global economy and on the other,the heart of much of our shared culture.It is precisely because of the importance ofcities and the need to deepen knowledge ofurban issues that we undertake the study. Theeffort to question and understand where citiesare and where they are headed benefits allof us in a world urbanizing like never before.This includes the officials and policymakerssetting the course, businesses invested in citywell-being, and the citizens who build theirlives in thousands of city neighborhoods world-wide, rich or poor, picturesque or prosaic.Statistics tell some of the story: Today, our27 cities account for nearly 8 percent of worldgross domestic product (GDP) but only2.5 percent of the population. By the quarter-century, they will house 19 million moreresidents, produce 13.7 million additionaljobs, and generate $3.3 trillion more in GDPif population follows UN projections andeconomic progress remains modest. As growthoccurs, the symbiotic relationship betweenEast and West is likely to continue: Emergingcities will skyrocket in jobs and population,but developed cities will retain the spendingpower, as well as the consumer and corporatedemand, to drive growth. One side will stillneed the other to move ahead.Meantime, our analysis shows that eachcity represents an economic ecosystem in itsown right, built around mutually supportiveeconomic and social strengths as well as anintertwined fabric of jobs—not just the profes-sionals in bright skyscrapers but all those whoturn the lights on every morning from retailersand teachers to nurses and cooks, from crimefighters to street cleaners. Maintaining healthybalance is a cornerstone of urban resilience.Our jobs analysis also reveals surprisingpatterns, vulnerabilities, and dependencies,as cities journey toward 2025 with more thana few clouds on the horizon. To come to gripswith some of this uncertainty, “what if”scenarios test the future of our cities underdifferent conditions. The clouds hold silverlinings for some cities in terms of greateremployment and wealth. But storms roll in forothers. The differing “what if” scenarios stressthe need for flexible thinking simply to dealwith foreseeable changes, not to mentionthe unexpected turns.To flesh out the empirical picture, we spoketo a broad scope of leaders on issues from thelong range and philosophical to the practicaland immediate. This includes E.O. Wilson, thenaturalist; Bill Bratton, former New York andLos Angeles head of police; Narayana Murthy,founder of Infosys; Andrew Chan and PeterChamley, two leaders of the global engineeringfirm Arup, based in Hong Kong and London,respectively; Wim Elfrink, Cisco’s head ofSmart + Connected Communities; and DavidMiller, former Toronto mayor and WorldBank special advisor on urban issues.All in all, we hope to provide insight intoan urban world in which all of us are “in ittogether,” making as strong a case for jointthought and action among cities as there isfor self-interest and competition.
    • 2 | Cities of Opportunity | PwCBeijingSeoulTokyoShanghaiHong KongKuala LumpurSingaporeSydneyMumbaiAbu DhabiIstanbulJohannesburgBerlinParisMilano Paulow York61311614109321232427621995 10 15ShanghaiIstanbulTorontoChicagouala LumpurSydneyarisSingaporeTokyoMoscowSeoulNew YorkMexico CityHong KongMadridLos AngelesBuenos AiresBerlinJohannesburgLondon São PauloMumbaiPopulation in millionsValue of outputmerging 2012 2025What makes a city tick?“Justice remains the appropriate name for certain social utilities which are vastly moreimportant, and therefore more absolute and imperative, than any others,” John Stuart Millwrote in Utilitarianism in 1861. He added, “education and opinion, which have so vast a powerover human character, should so use that power to establish in the mind of every individual anindissoluble association between his own happiness and the good of the whole.” Many of thosewe spoke with this year in developing Cities of Opportunity agree. The foundations of healthycities remain rule of law and safety and security today, as well as strong education to fosterthose qualities for future generations.24Overview The city tomorrowProjecting urban possibilities to 202519From butcher to baker tomemory-stick makerProjecting urban trends to2025 in jobs, production,and population10How the cities rankLondon moves up,Asian cities improve14The study’s methodologyRefinements continue ona solid foundation28The 2025 baseline scenarioJobs in business services,wholesale and retail, andmanufacturing anchor the cities22The shape of cityeconomies to comeMutual self-interest unitesdeveloped and developing cities24The ants, the man, andthe cityE.O. Wilson views city lifethrough the lenses of natureand reason30Where the jobs areA detailed look at six big ortelling employment sectors34“What if” technologicalunemployment dawns… in a slow growth,urbanized world? And fourother scenarios that exploreunexpected directions2316 We’re quickly coming to an agreement as a nation and asa world—that we really have to improve education systems.We need far better methods of teaching. We need better incentivesfor teachers, and especially to include education in science andtechnology because we are now entering a techno-scientific world.
    • Partnership for New York City  |  Cities of Opportunity | 3The city todayResults for 201242Intellectual capitaland innovationGenerating the skills thatgenerate growth50Technology readinessThe competition for digitaladvantage continues to intensify56Transportationand infrastructureA major revision focuseson internal mobility44City gatewayA new indicator measuresa city’s global connections46Booting up holisticsustainabilityWim Elfrink discussesCisco’s and his own passageto urban India51Health, safety and securityFrom Aristotle to Brattonto Chan, securing citizens’well-being is key52Bill Bratton transformedurban law and order… in New York and Los Angelesand explains how to achievethat fundamental priority onthe toughest city streets58The ins and outs, overs andunders, of a great city… can be engineered for efficiency,Peter Chamley of Arup explains46 5852For the average person in adeveloping city, the mostimportant factor is safety, health,and security. Efficiency is alsoimportant—[the] abilityto get around efficiently isprobably second in importanceonly to safety.What we often lack now areprojects having a championwho will get hold of themand make it their sole aimto deliver them.Health, safety, and security is the number one requirement for acity. If you don’t have security, you don’t have health and safety,and all the other pillars that support democracy will weaken,including education and the economy. If you have a shakyplatform, they are all going to be shaky.
    • 4 | Cities of Opportunity | PwC62Sustainability and thenatural environmentWeighing the effectivenessof public policy68Andrew Chan ofArup engineers seesemerging cities… through the prism ofresilience and sustainability64Cold comfort comesin Toronto… from civility and economicbalance, former mayor DavidMiller explains67Demographics and livabilityWe know it when we seeit, despite a certain je nesais quoi74Ease of doing businessCompetitive cities knowhow to stay competitive72Economic cloutAsia rises, but we’ll alwayshave Paris76CostComparative advantagescan keep advancedeconomies competitiveThe city todayResults for 20126864For the average person in a developing city, the most importantfactor is safety, health, and security. Efficiency is also important—and that relates to transport or connectivity and how you laythings out through good urban planning. This ability to getaround efficiently is probably second in importance only to safety.To understand a city’s quality of life, see if you can walk aroundat any time of day or night. You don’t want to be walking arounda city at 11 at night if it’s not interesting and exciting, and that’sa test of a neighborhood and a city as a whole.
    • Partnership for New York City  |  Cities of Opportunity | 583Forecast of investmentspending… shows tremendous needin emerging megacities84Narayana Murthyof Infosys links… India’s urban future to thepower of private enterprise,leadership, governance,and transparency79Smaller world, bigger citiesEmerging cities will need togrow, and invest, even moreto enhance their citizens’quality of life88A tale of three citiesAthens, Dublin, and Dubaiweather the Great Recessionin different ways92Key to the variablesUnderstanding the datapointsthat underpin the studyCities at the edgeMegacities, megachallengesReferenceunicipal population data used in the main Cities of Opportunity comparison.ShanghaiarachiDelhiKolkataDhakacowTokyoOsakaJakartaShenzhenGuangzhouManilalChongqingBeijing83On the webSee www.pwc.com/cities forinteractive modelers; videos,podcasts, and full-lengthversions of the interviews;detailed data definitionsand sources84There is terrible corruption and little public security in my cityin Bangladesh. ... But what can we do? We are not politiciansor powerful people. We just want to survive. ... That’s whypeople come to New York from all over the world. There is lawand order. —New York cab driverTo bring prosperity to thevast majority of Indians,we need to enhance ourgovernance system, enhanceour transparency andaccountability, combatcorruption, and enhanceour infrastructure.
    • 6 | Cities of Opportunity | PwCHighlightsCities of Opportunity 2012 covers a broad range of findingsand ideas. Here is a selection of notable ones.A virtuous circle of socialand economic strengthsOur thesis remains that a city’s healthy growthand long-term resilience depends on “positivereinforcement in the network of economic andsocial development,” to borrow from scientistE.O. Wilson. When great quality-of-life factorslike schools, healthcare, housing, and safetyare balanced with strong businesses and solidinfrastructure, the formula is right to pave citystreets with optimism if not yet gold.“Another factor that makes things hopeful iswhat chemists call autocatalytic reactions,”Wilson adds. “That is, when you get a productcreated by putting certain ingredientstogether, the product itself becomes a catalyst.The reaction speeds up and you get more andmore products like that, and it just takes offexponentially. You won’t get it quite in a socialsystem, but you could get something like it.”If there’s bad news for cities it’s the sameas in science: “One of the hardest things todo sometimes is to get a reaction started.”Size does matter. But is a big city lightenough on its feet to dance?Continuation of the “urban renaissance”is no guarantee in difficult economic times.Uncertainty seems to have replaced the expec-tation of return to a steady state of economicgrowth, and signs of potential transformationcan be seen in everything from jobs to theweather that greets us every morning.No matter the size, wealth, or advancementof modern cities, flexibility will be thekeyword for planners and policymakersconsidering the future.It doesn’t take a perfect storm to scuttlecity futuresLooking at a range of uncertainties, we testedwhat it would mean for cities if technological,economic, and sociopolitical forces go in thewrong direction and hamper economic healthand employment growth between now and2025—a realistic enough scenario given thestubborn failure of jobs to return and hints ofbroad technological transformation replacingworkers without the right skills. Not unexpect-edly in this “what if” scenario, employmentand GDP growth fall across our spectrum of27 cities. Beijing, Shanghai, and São Paulolose the most jobs, but London and Tokyofollow close behind, showing that neitherdeveloped nor developing cities escapesweeping transformation. London and Sydneysacrifice more annual GDP than any cityexcept Johannesburg—all suggesting theold adage, plan for the best but prepare forthe worst.“What if” smart cities prevail?The answer is anything but a no-brainer.London, Tokyo, New York, Seoul, and Parisfare best in employment growth if citiesprosper based on knowledge as well astechnological and travel connections—seemingly the right stuff for the modernworld. Overall, our 27 cities lose 4 millionjobs compared to the 2025 baseline projection.Perhaps counter-intuitively, this occursbecause greater productivity will cut the needfor workers. However, higher trade mightreasonably accompany such a scenario andgenerate even more jobs than productivityshaves away.If we follow our urban bliss, Londonand Sydney lie on the yellow brick roadIn Cities of Opportunity, our measures ofhealth, safety and security, demographicsand livability, and sustainability representa good proxy for quality of life—the urbancharacteristic for which many professionalsand businesses appear to be searching. If thatproves correct and more of us follow our urbanbliss, London, Sydney, Singapore, Paris, andBerlin benefit the most in terms of jobs gainedby 2025; Stockholm the most in terms ofadditional GDP. Today’s developing citieslose the most jobs and wealth.London moves up markedlybut New York shows continued strengthLondon advances four spots from last year to a virtual lock with New York at the top and finishesfirst in city gateway, a new category that measures international connectivity. New York performswell across the board but wins no individual category, showing diverse strengths. Paris rises fourspots to number four this year, coming in first in demographics and livability and narrowly secondto London in city gateway, showing that despite the eurozone’s continuing economic instability,the long-term investment that builds a great urban center also lends resilience to weather thestorms. Overall, relative bands of performance remain similar to 2011.Beijing and Shanghai advanceThe 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 economicindicators represents the next step for Shanghai and Beijing in transforming exceptionalgrowth into sustainable performance at the top tier of world capitals.
    • Partnership for New York City  |  Cities of Opportunity | 7When it comes to the share of cityemployment, the biggest gorillas inthe room throw their weight arounddisproportionately (for better or worse)Financial and business services, manufactur-ing, wholesale, and retail sectors anchor manycity economies in 2012. The first two accountfor as much as a third of jobs. That includesShanghai, where one in three workers is inmanufacturing, and Milan, Paris, London,Beijing, San Francisco, and Stockholm, wherefinancial and business services predominate.Wholesale and retail accounts for more thanone in five jobs in Hong Kong, Kuala Lumpur,Moscow, Mumbai, Mexico City, and Istanbul.While these profiles may be changing—forinstance, as emerging cities begin to diversifyaway from reliance on manufacturing—over-dependencies and imbalances can leavecities vulnerable.Surf (with the pack) or (defend your) turf?The question of competing or collaboratingwithin and among communities is as old asthe seven hills of Rome. Today’s cities need toblend some of each strategic outlook into theirplanning. On one hand, cities can benefit byaligning interests and seeking joint action ina world urbanizing faster and creating morefunding needs than cities are empowered toaddress. Yet, cities are where the buck stops interms of the need to get results. Competitionwith other cities, whether for a new factoryor new museum, is a fact of life.As scientist E.O. Wilson told us: “The solutionto our problems is not to expect completeharmony among cooperating people, but torealize that group distinctions and groupcompetition and individual-level competitionwithin groups is just the way we are. What wereally need to do is try to find ... a harmonioussolution. ... It’s that ferment of the center,between the two opposing impulses, whichmakes us creative.” Cities like San Francisco,with its mutually supportive ties to SiliconValley, show the dividends of collaboration.Cities of invention ... or reinventionHistory shows the capacity of cities to buildfrom the ground up, as many emerging citiesare doing now, and to rebuild from rubble,as many developed cities have done after war.Success comes from collective will and theability to align economic, governmental, andsocial forces. Where there’s a common will,there’s a way forward.Growing cities with growling appetites forcapital investmentTo keep up with the great gains in populationand employment by quarter-century, someemerging cities will have to invest significantly.Shanghai and Beijing will need to invest whatrepresents 42 percent of their GDP just tosatisfy forecast growth from 2012 to 2025. ForMumbai, it’s 35 percent. London, by contrast,only requires 17 percent and Stockholm 19percent to meet the forecast of investmentspending relative to growth.Most happy cities are alike ... but everyunhappy city is unhappy in its own wayAthens, Dublin, and Dubai each endured thesame economic crisis. But each climbed outof the hole or stayed mired in their problemsin their own way—illustrating the extent towhich it is more the differences rather thanthe commonalities that distinguish economicbreakdown and recovery in a city.Make my city healthy, wealthy, and wise(not necessarily in that order)Most of the leaders we spoke to emphasize theneed for a safe and secure city as the keystoneof a healthy community. After that, good edu-cation is most widely cited as a springboardfor future success. In fact, our own Cities ofOpportunity analyses have shown that goodhousing correlates in a highly positive waywith the attributes of an economically strongcity. They may be cold, dark, or far from themadding crowd, but Stockholm, Toronto, andSydney again demonstrate balanced success ineducation and health, safety and security.Can the champions rest their feats?The Olympic effort may be ended in London,but cities worldwide require leaders with thevision and drive to realize transformative proj-ects like Baron Haussmann in 19th-centuryParis, Daniel Burnham of Chicago at the turnof the 20th century, and Robert Moses in mid-20th century New York. While their programswere sometimes criticized, they “certainlydelivered,” to paraphrase Peter Chamley,head of infrastructure at Arup. Many creditSingapore’s modern planners with that visionto see and build.Chamley, for his part, notes a recent triumphin his home city. “The construction industrycan look at the Olympics with pride. Wonder-ful facilities have been delivered very quicklyand on budget. ... It has been a great success inregenerating that part of London.” But manyother developed and developing cities facehigh hurdles including bureaucratic delay,political gridlock, and systemic corruption.To recall the principals behind Burnham’slegacy, which continues to benefit Chicagoans:“Make no little plans, for they have no magicto stir men’s blood. ... Make big plans. Aimhigh in hope and work.”Learn moreSee www.pwc.com/cities for interactive modelers,videos, podcasts, and full-length versions of theinterviews; detailed data definitions and sources.
    • 8 | Cities of Opportunity | PwCOverview
    • Partnership for New York City  |  Cities of Opportunity | 9A cityless man is like “a solitary piece incheckers,”1simply out of the game, Aristotlewrote 2,400 years ago, putting urban life ina clear social context. Then, the polis literallymeant a free city that made laws, sometimeswars, and on a deeper level signified the com-munal existence under the rule of moralitythat only humans are capable of living.2Beinga citizen was a badge of honor for the 30,000or so politai among Athens’s 140,000 or somen, women, children, and slaves.Today many more of us live in cities. CentralAthens houses over 1 million people, withabout 3.8 million in the metropolitan area.Citizenship embraces more than just men.And the birthplace of democracy is now betterknown as the epicenter of the eurozone crisis.(See “A tale of three cities,” page 88.)However, the foundations of urban life remainthe same. City dwellers still prize living underthe rule of law and strive to develop the rich-est quality of social and economic life theycan. How to govern justly and well—howbest to move the city ahead—is still a point ofdebate. In ancient Greece, Aristotle’s biggesttheoretical rival on the topic, Socrates, hisimmediate forbear and self-described “gad-fly” of the state,3favored governing by expertmanagers rather than the democratic citizenryhe viewed as a herd. Today, political debatesaround the world appear equally as difficult(often lacking the intellectual rigor Socratesand Aristotle brought to the party).With that look back for context, Cities ofOpportunity notably looks ahead this yearto frame city futures around probable direc-tions and unforeseen turns in the road at acrucial time. The Great Recession continues tohamper mature city governments. Stubbornjoblessness adds a serious problem. Emergingcities are faced with a flood of immigrantsand a pressing need to build adequate roads,water, waste, and energy systems, schools,and hospitals to accommodate growth. Bothmature and emerging cities depend on eachother to balance their economies. And “only byacknowledging our extreme interdependencewill we make the fishbowl effect work forhumanity rather than against it,” in the wordsof Li Congjun, head of China’s official newsagency.4Big uncertainties hang over the entirepicture from destabilizing climate change topolitical and social tension to technologicaltransformation. Realistically, continuationof the 20-year “urban renaissance” cannot betaken as any more inevitable than the longclimb in house prices that crashed to set offthe economic crisis. A considered look at thefuture is in order.The report adds an entire section thatprojects from our 2012 results the sectoralemployment, production, and population ofour 27 cities in 2025. We examine what mightoccur if different city characteristics provemore or less important in attracting invest-ment and driving growth, and how cities willbe affected if the world economy changescourse. We also veer away from our 27-citystudy group to examine those cities at theA street in the Beaubourg area of Paris asseen from the Pompidou Center.1 Politics, I.I.9-10 as translated by I.F. Stone in The Trial ofSocrates, 1989, Anchor Books, page 98.2 The Trial of Socrates, I.F. Stone translating on page 10 fromPolitics 2.1.9-10, “It is man’s ‘special distinction from other animalsthat he alone has the perception of good and bad and of the justand the unjust.’ It is this intrinsic sense of justice that gives man hissocial instinct, his ‘impulse’ as Aristotle calls it, to a social life, andmakes man ‘a political animal in a greater measure than any beeor any gregarious animal.’” Interestingly, E.O. Wilson, a renownedscientific observer and thinker today on sociobiology and humannature, parallels Aristotle in speaking to Cities of Opportunity (seepage 24), as do a range of others we interviewed including ex-NewYork and Los Angeles head of police Bill Bratton on the primacyof justice in community-building.3 As related principally by Plato, as well as Xenophon andAristophanes, in that Socrates left no writings of his own.4 “Frictions are hardly avoidable, but what’s important is for thetwo sides to handle their differences through coordination basedon equality and mutual understanding. Only by acknowledgingour extreme interdependence will we make the fishbowl effectwork for humanity rather than against it.” Li Congjun, presidentof Xinhua News Agency, China’s official press agency, wrotein The New York Times, July 18, 2012, in “Rebalancing theGlobal Economy.”London moves up overall, Asian cities moveahead in some areas, and the futuremoves in patterns we seek to understand
    • 10 | Cities of Opportunity | PwC189 91 101 97198 66 109 116194 65 99 89205 89 103 119191 93 92 107150 71 103 71122 80 114 103170 81 92 109167 80 107 93179 56 66 114147 48 95 101171 79 59 91137 96 109 61119 44 99 81131 34 86 9582 49 71 3566 41 80 5599 48 80 38109 54 73 1982 24 93 4228 93 4387 28 89 936345 33 67 2449 23 32 4660 22 54 1648 27 70 25184 79 99 96Intellectual capitaland innovationTechnologyreadinessTransportationandinfrastructureHealth, safetyand security16131186New YorkLondonTorontoParisStockholmSan FranciscoSingaporeHong KongChicagoTokyoSydneyBerlinLos AngelesSeoulMadridMilanBeijingKuala LumpurShanghaiMoscowMexico CityAbu DhabiBuenos AiresIstanbulJohannesburgSão PauloMumbai2120191817151412109754321222324252627How the cities rankfulcrum of change today: first, the megacitiesmushrooming especially throughout theemerging world; and second, Athens, Dublin,and Dubai, three cities that suffered throughand managed the economic crisis, each inits own way.We chose to extend our investigation into thefuture because this seems a natural time tostick our finger into the air and gain a sense ofthe direction of things to come. After decadesin which overall growth led to a common,often unspoken expectation of return tohealthy economic equilibrium, we’re now at amoment when a few trends indicate a changein the norm, if not advancement to a newplateau in the industrial/information revolu-tion. Economic growth remains slow in manyplaces and municipal budgets strained inmature cities. More puzzling, employmentrefuses to bounce back to anything near levelsbefore the boom years that preceded the GreatRecession. Joblessness, especially amongthe young, persists at high levels. Scientificadvances could be playing a role as “techno-logical unemployment” finally dawns longafter Keynes coined the term.Urban immigration levels never known before(certainly not beyond New World melting potslike New York and Chicago or Buenos Airesand São Paulo) threaten the social and politi-cal fabric of many cities. When factors likerising income inequality and pervasive socialnetworking are folded in, cities can become avolatile 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, “Mayorsoften don’t have time to wait, and they arevery practical. Mayor LaGuardia [of New Yorkin the 1930s] quite famously said ‘there isno Republican or Democratic way to pick upgarbage.’ You become less ideological. ...City governments are good at action.”Positive forces are at work also. These includethe upside potential of globalization and theincreasing attraction of cities to travelers ofall sorts, the expanding growth of urbanservice sectors supported by rising demandand higher levels of education and training,opportunities to build new or retrofit crum-bling, old infrastructures, and, of course,the promise that innovation offers in urbanclusters. (See The city tomorrow, pages 18-39.)In terms of today, the study finds that despitea revision of many of our data variables andreorganization of indicator categories, relativebands of performance generally continue. Yetnoteworthy changes do occur.London moves up from number six last year,doing very well in many categories and finish-ing narrowly as the number-two city behindNew York. The top third is rounded out byToronto, Paris, which advances four spotsfrom 2011, Stockholm, San Francisco,Singapore, Hong Kong, and Chicago.Asian cities perform very well in a number ofcategories. Shanghai and Beijing move upthe ratings, performing in the top five ineconomic clout and city gateway, the latter anew indicator that measures global attractive-ness and accessibility. Four of the five leadersin inner-city transportation and infrastructuresit in Asia—Singapore, Seoul, Tokyo, andHong Kong—versus last year when all fiveleaders were in America or Europe. Externalcity connections like air traffic also weighedon the scoring. In demographics and livability,Paris moves up 7 spots from the mid-rankslast year to number one with the indicator cat-egory recast in 2012 to stress livability. Paris,
    • Partnership for New York City  |  Cities of Opportunity | 11Each 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.HighLowMediumHighest rank in each indicatorLondon, and New York also narrowly bunchat the top of economic clout between Beijingand Shanghai, first and fifth, respectively.Our first detailed look at current employ-ment, population, and production in our 27cities shows them producing 8 percent of theworld’s wealth in 2012 despite being home toonly 2.5 percent of its population. Three majorjob sectors—business and financial services,wholesale and retail, and manufacturing—dominate many city economies. The latter twocategories are particularly large in emergingcities. Business and financial services whengrouped together account for over a thirdof jobs in Milan, Paris, London, Beijing, SanFrancisco, and Stockholm. New York leadsthe world with 16 percent of employment inhealthcare. And a third of Shanghai’s jobs liein manufacturing, even as that city is expectedto migrate more toward the service sector.Looking ahead toward 2025, our baselinescenario estimates that an additional 19million will live and 13.7 million work inour cities. They will generate an additional$3.3 trillion gross domestic product (GDP)—all predicated on a world of modest growth.Population and employment will surge in citieslike Beijing, Shanghai, Mumbai, Istanbul, andSão Paulo, with the pack of mature cities far83 119 182 70 59 121101 98 175 89 75 6986 120 137 58 82 14388 83 161 86 73 55101 76 154 86 76 8559 99 198 78 78 10869 110 202 71 75 9972 67 158 93 67 8858 92 156 51 59 111103 90 147 54 78 7791 68 135 124 74 7279 59 160 99 65 9258 81 146 108 37 8282 76 136 96 55 11589 90 111 71 51 6965 125 80 79 48 13555 64 154 106 53 8744 118 56 83 40 12386 95 62 77 50 8753 60 117 102 43 5774 67 60 80 48 4133 68 89 90 57 1649 61 78 102 34 8555 42 102 100 46 3964 67 88 57 49 5058 82 59 93 23 3065 119 181 71 72 145Demographicsand livabilityEconomiccloutCost City gatewayEase of doingbusinessSustainabilityand the naturalenvironmentScore1,1121,1111,0961,0731,0621,0611,0451,0159979749649559549159038277697617297126736505975785345275155 Abu Dhabi, an emerging city, is among the overall wealth leaders.But that is driven by the oil economy, hence an anomaly forbroad comparison.behind. Yet concentration of wealth reflectsthe inverse relationship. Among the emergingcities, only Shanghai is expected to reachproductivity per worker (as measured by GDP)on a par with mature cities like London, Tokyo,Hong Kong, and Singapore.5The Americancities, as well as Paris, Stockholm, Sydney, andToronto all remain far ahead of emerging onesin terms of wealth. Mature cities retain thespending power, and consumer and corporatedemand, that drive emerging economies. Infact, mutual self-interest would logically uniteemerging and mature cities as one sidecontinues to need the other.
    • 12 | Cities of Opportunity | PwCYet visions of the future, like all plans puton paper, are made to be altered by theunforeseen. We questioned what mightoccur if the urban world takes different turnsbased on the relative importance of eithercity characteristics (as represented by our 10indicator categories) or the direction of theworld economy. In looking ahead, we focusedon understanding the possible journeys ratherthan the final destinations to provide leadersin government, business, and the communitya pragmatic gauge for their thinking.“What if” scenarios (see pages 32-38) show that:• If cities succeed based on knowledge,technology, and travel connections, themature cities—notably London but alsoParis, New York, and Tokyo—benefit themost. This is a logical connection in an inter-twined urban world: It’s easy to picture thecities that prosper as those with the deepest,broadest, and highest-quality education;those that are “wired” most thoroughly andeffectively for businesses and individuals;and those with infrastructures offering easi-est access to, from, and for the rest of theworld. All these elements are often viewedas leading indicators of urban potential.However, the higher productivity that wouldlikely accompany this reality also depressesoverall job numbers. The results brightennotably, though, if 3 percent greater worldtrade accompanies this scenario, anotherlogical connection. In that case, employmentwould rise by 8 million versus the 2025baseline projection.• If the industrial/information revolutionmoves in the direction in which itshows signs of going and technologicalunemployment kicks into higher gear, allcities suffer losses in jobs and production—which are especially painful set against abackground of sluggish economic growthcoupled with booming urban populations.Emerging cities do worst in all sectors, withBeijing, Shanghai, and São Paulo losing2.4 million, 1.9 million, and 1.3 million jobs,respectively, versus the baseline 2025 projec-tion (see chart on page 35). But Londonand Tokyo also each lose approximately1.1 million jobs.• If protectionism spreads as a way to coun-ter lingering slow growth, all cities will losejobs and production, with Beijing, Shanghai,São Paulo, London, and Tokyo again suf-fering the worst. In fact, the World TradeOrganization and European Commissionindicate that restrictive trade policies are onthe upswing now as nations seek to put theirown houses in order at the expense of theoutside world.• If quality of life drives city economiesas businesses and professionals flock tothe most livable cities, London, Sydney,Singapore, and Paris benefit the most.Cities of Opportunity also ventures beyondthe 27 cities in our study to examine citiesat the edge of change. First, we look atthose emerging giants, the megacities withstaggering growth and an equally impressivechallenge to develop infrastructure and qualityof life at anything near the same speed. Thepopulation numbers are impressive, of course.But the direction is more so. In 1950, sevenof the 10 largest metropolitan areas werein the developed world. By 2010, only NewYork and Tokyo remained on the list alongwith eight developing megacities. Europeancities had vanished. By 2025, according tothe United Nations, the number of megacities(with population over 10 million) will havenearly doubled to 29 from 16 at the turn ofthe century, with 12 of the 13 new ones in theemerging world. (See page 79, “Megacities,megachallenges.”)Anyone who has lived in a big city for long,however, knows that things rarely remain thesame for more than a few years. For betteror worse, change happens.Athens, Dublin, and Dubai are three citiesthat dramatically illustrate the toll of theGreat Recession and the differing paths torecovery. We wondered what lessons mightemerge by comparing them. It turns out thateach city followed its own path into the crisis,managed its own way, and dug out or sank indeeper in its own way. Therein lies “a tale ofthree 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 Centerof Art Museum in Madrid.
    • Interviews track the big themes of urban life:the balance required between collaborationand competition; the need for visionary lead-ers to drive critical transformation; the questto build a virtuous circle of economic, social,and environmental sustainability; the practicaltest of how to meet funding needs; and, thefoundation of any city, safeguarding justice inthe community based on shared respect for lawand order and quality of life. We spoke with:• E.O. Wilson, the renowned scientist,naturalist, and author, addresses thepotential of cities, good and bad, as theywork through humankind’s defining chal-lenge of getting the mix right betweenindividual and collective interest. “What wehave to do,” he argues, “is make cities a lotmore livable. By that I mean, more consis-tent with the fundamental emotional needs,the instinctive needs of human beings.”• Wim Elfrink, Cisco’s chief globalizationofficer, frames the transformative possibili-ties of technology backed up by practicalapproaches to enable progress, such as public-private partnerships and business consortiums.• Bill Bratton, who spearheaded majorcrime reductions in New York and LosAngeles, tells how that is done—streetby street with respect for citizens’ basicquality of life, attention to law and order,and ultimate trust that city dwellers are theones who will step up to safeguard theirown communities.• Peter Chamley digs deep into the practicalchallenges of keeping a mature city upto speed from his hands-on perspective aschief engineer for Arup Group at London’sCrossrail project, New York’s Second AvenueSubway, and many other groundbreakinginfrastructure initiatives.• David Miller, World Bank special advisoron urban issues and former Torontomayor, speaks of Toronto’s ability tosweeten life for many on the cold shoresof Lake Ontario with a recipe that beatshot Tim Horton’s coffee and maple sugardonuts, fashioning success from a founda-tion of economic balance, civility, and socialcohesion. Miller also addresses the practical-ities of city governance in the face of limitedpower and funding.• Andrew Chan, Hong Kong-based deputychairman of Arup, dreams of “creatinga true eco city [with] infrastructure thatworks together in a holistic way so thatenergy, water, transport, and waste are allintegrated.” He also tells of some of the big-gest urban infrastructure challenges in Asia.• Finally, N.R. Narayana Murthy, founderof Infosys and as much a father of India’seconomic miracle as any business leader,takes a clear-eyed look at the challengesand opportunities that face a nationurbanizing at the rate of 20,000 new citydwellers a day. “To bring prosperity to thevast majority of Indians,” Murthy counsels,“we need to enhance our governancesystem, enhance our transparency andaccountability, combat corruption, andenhance our infrastructure.”In the end, many implications arise fromCities of Opportunity 2012 for citygovernments, businesses, and citizens.Our goal remains helping to identify whatworks for cities, framing thought and actionfor leaders charged with public and privatedecision-making, and, by doing so, betteringthe lives of the 3.6 billion or so politai, urbancitizens representing over half the world’spopulation today.If there is a lesson to be drawn from the study,it is the continuing demonstration that citiesface similar challenges and opportunities,and their intertwined economies depend oneach other to prosper. Coordinated dialogueand action around shared goals remainthe most effective order of the day in achallenging time.Learn moreSee www.pwc.com/cities for interactive modelers;videos, podcasts, and full-length versions of theinterviews; detailed data definitions and sources.
    • 14 | Cities of Opportunity | PwCApproachWhile the cities and variables may change,the research method remains consistentIt should be clear by now, in this fifth editionof Cities of Opportunity, that our annual reportis a continually evolving project, in whichthe only constant is the assurance that bothits data and criteria are as tested and unim-peachable as possible, and that sufficientthoughtfulness is invested to make it useful tocities, their leaders, businesses, and citizensseeking to improve their economies andquality of life. No new report is the same asthat of the previous year simply because everynew report is subject to careful scrutiny andcontinuing improvement.An entirely new future-oriented section, Thecity tomorrow, is the biggest change readerswill notice this year. We built from a founda-tion of Cities of Opportunity methodology andresults, complemented by Oxford Economics’sregional and world models, to develop a 2025baseline projection customized for our 27cities. From that 2025 baseline, we con-structed a “what if” scenario modeling toolsensitive to changes in particular city char-acteristics as represented by our 10 indicatorcategories or the world macroeconomicpicture. In other words, the modeling toolcan reslice the Cities of Opportunity urban pieaccording to the relative importance of citytraits that we measure, or it can make theeconomic pie itself bigger or smaller depend-ing on growth assumptions. Methodologyis presented in The city tomorrow section(see page 20) along with “what if” scenarios.Our foundational study of current perfor-mance reaches 27 cities this year, up from 11cities when we began five years ago. But wedon’t think that the quantity of cities coveredis the most important aspect of Cities ofOpportunity. Rather, it is the quantity andquality of the variables we have added tothe study during those years. That is why wereexamine our methodology every year, andwhy we try to frame our data within a contextthat illuminates the meaning behind theraw numbers.Last year, for example, we explored underly-ing issues such as regional management,education, cityscapes, sustainability, trafficcongestion, and preservation. This year, weare taking an enormous leap forward byprojecting our 27 cities 13 years into thefuture, for indicative forecasts, under severalscenarios, of the global urban outlook in 2025.But we also continue to focus on the pres-ent: “A tale of three cities” reports on Athens,Dubai, and Dublin, all of which have beendeeply affected—each in its own way—by the consequences of the Great Recession.The fundamental criteria governing thisreport’s choices of cities remain unchanging,however. They are:Capital market centers. While many of thecities included are hubs of commerce, com-munications, and culture, all are the financialcenters of their respective regions. This meansthat each plays an important role not onlylocally but also as a vital part of a global eco-nomic network.Broad geographic sampling. Beyond eachcity’s role as a regional, or even global,center of finance and commerce, the 27cities collectively form a representativeinternational distribution.Mature and emerging economies. Fifteenmature cities and 12 emerging ones areincluded this year, with three new cities addedand two removed. At 27 cities, the sample sizeremains small enough to allow for an analysisthat is both deep and broad, but still large—and inclusive—enough to be representative.
    • Partnership for New York City  |  Cities of Opportunity | 15This year’s total of 27 cities is one more thanin last year’s report. More important, we havereplaced two cities with three new ones:Buenos Aires, Kuala Lumpur, and Milan.Italy’s financial (and fashion) center wasadded to enhance the geographic weight ofEurope’s southern tier, to counterbalancethe continent’s northern cities. KualaLumpur joins this year’s report because it is,by general consensus, one of Asia’s mostdynamic capitals and increasingly a majorglobal city. Buenos Aires replaces Santiagoin the Spanish-speaking Southern Cone notonly because of its economic growth but of itscultural vitality and influence as well. Finally,Houston has been dropped from this year’sreport in order to more evenly balance theUS with the rest of the world.We have also revised our indicators, drop-ping one and adding an entirely new one: citygateway. In general, the indicators are con-structed with a robust sampling of variables,each of which has been chosen because it is:relevant; consistent across the sample;publicly available and collectible; current;free of skewing from local nuances; andtruly reflective of a city’s quality or power.(See pages 92-95 for a brief key andwww.pwc.com/cities for a detailed listingof definitions and sources.)Data this year were normalized for factorssuch as relative geography or population inalmost all cases, minimizing the likelihoodof a city doing well solely because of size orhistoric strength. This process eliminated theneed to differentiate between variables thatreflect a city’s raw power (such as numberof foreign embassies or greenfield projects)and the quality or intensity of a givencharacteristic (such as percent of populationwith higher education).The 60 variables, down from last year’s 66,constituting the 10 indicator groups havechanged significantly this year in order todevelop an even more accurate image ofcity success. Indeed, only two indicators—technology readiness and health, safetyand security—remain unchanged fromthe previous year.The most extensive revisions are in transpor-tation and infrastructure, which has seen itsfocus sharpened from nine to six variables(of which only three remain the same);demographics and livability, which has beenrealigned around four variables with theemphasis on livability; and cost, which hasfour new variables. But there are substantivechanges among other indicators as well,including sustainability and the naturalenvironment, economic clout, and ease ofdoing business.Because Cities of Opportunity is based onpublicly available information supportedby extensive research, three main sourcesare used to collect the relevant data:Global multilateral developmentorganizations such as the World Bank andInternational Monetary Fund, nationalstatistics organizations, such as UK NationalStatistics and the US Census Bureau, andcommercial data providers. The data werecollected during the latter half of 2011 andfirst quarter of 2012. In the majority of cases,the figures used in the study refer to 2010and 2011 data.In some cases, national data are used as aproxy for city data. Use of national data tendsto disadvantage the 27 cities in our study,all of which are either national or regionalcapitals of finance and business that tend tooutperform national averages in measuresof socioeconomic advancement. This effectmight be even more pronounced in developingeconomies and economies with larger ruralpopulations. Nonetheless, because consistentcomparisons across all cities are critical toassure objectivity, country-level data wereused when consistent, highly reliable sourcesof publicly available municipal data could notbe used for all 27 cities.The scoring methodology was developed toensure transparency and simplicity for read-ers, as well as comparability across cities. Theoutput makes for a robust set of results and astrong foundation for analysis and discussion.In attempting to score cities based on rela-tive performance, we decided at the outsetof our process that maximum transparencyand simplicity required that we avoid overlycomplicated weightings of our 60 variables.Consequently, each one is treated with equalimportance and, thus, weighted equally. Thisapproach makes the study easy to understandand use by business leaders, academics,policymakers, and laypersons alike.Taking the data for each individual variable,the 27 cities are sorted from the best perform-ing to the worst. The cities are then assigneda score from 27 (best performing) to 1 (worstperforming). In the case of a tie, the cities areassigned the same score.Once all 60 variables are ranked and scored,they are placed into their 10 indicators(for example, ease of doing business or citygateway). Within each group, the variablescores are then summed to produce an overallscore for that indicator. This produces 10indicator league tables that display the relativeperformance of our 27 cities.
    • 16 | Cities of Opportunity | PwCThe maps below show city rankings in each of the study’s 10 overallindicators. A brief key to the 60 variables is available on pages 92-95.Interactive tools and detailed listings of definitions and sourcedocuments used to develop Cities of Opportunity are offered atwww.pwc.com/cities.Indicator rankings at a glanceEase of doing businesspage 74BeijingSeoulTokyoShanghaiHong KongKuala LumpurSingaporeSydneyMumbaiAbu DhabiIstanbulJohannesburgLondonBerlinMoscowParisMilanMadridSão PauloNew YorkTorontoChicagoLos AngelesSan FranciscoMexico CityStockholmBuenos Aires161311 86 1514121097543212324252627BeijingSeoulTokyoShanghaiHong KongKuala LumpurSingaporeSydneyMumbaiAbu DhabiIstanbulJohannesburgLondonBerlinMoscowParisMilanMadridSão PauloNew YorkTorontoChicagoLos AngelesSan FranciscoMexico CityStockholmBuenos AiresIntellectual capital and innovationpage 4216131186212019181715141210954321222324 2526278Transportation and infrastructurepage 56BeijingSeoulTokyoShanghaiHong KongKuala LumpurSingaporeSydneyMumbaiAbu DhabiIstanbulJohannesburgLondonBerlinMoscowParisMilanMadridSão PauloNew YorkTorontoChicagoLos AngelesSan FranciscoMexico CityStockholmBuenos Aires 1611862120171412107543212324262714261623202010Health, safety and securitypage 51BeijingSeoulTokyoShanghaiHong KongKuala LumpurSingaporeSydneyMumbaiAbu DhabiIstanbulJohannesburgLondonBerlinMoscowParisMilanMadridSão PauloNew YorkTorontoChicagoLos AngelesSan FranciscoMexico CityStockholmBuenos Aires13 118621201918171514121097543212223 2425262717Economic cloutpage 72BeijingSeoulTokyoShanghaiHong KongKuala LumpurSingaporeSydneyMumbaiAbu DhabiIstanbulJohannesburgLondonBerlinMoscowParisMilanMadridSão PauloNew YorkTorontoChicagoLos AngelesSan FranciscoMexico CityStockholmBuenos Aires1382120 191817151412105432122252627258812102221201918182317Ease of doing businesspage 74BeijingSeoulTokyoShanghaiHong KongKuala LumpurSingaporeSydneyMumbaiAbu DhabiIstanbulJohannesburgLondonBerlinMoscowParisMilanMadridSão PauloNew YorkTorontoChicagoLos AngelesSan FranciscoMexico CityStockholmBuenos Aires161311 86 1514121097543212324252627BeijingSeoulTokyoShanghaiHong KongKuala LumpurSingaporeSydneyMumbaiAbu DhabiIstanbulJohannesburgLondonBerlinMoscowParisMilanMadridSão PauloNew YorkTorontoChicagoLos AngelesSan FranciscoMexico CityStockholmBuenos AiresIntellectual capital and innovationpage 4216131186212019181715141210954321222324 2526278Transportation and infrastructurepage 56BeijingSeoulTokyoShanghaiHong KongKuala LumpurSingaporeSydneyMumbaiAbu DhabiIstanbulJohannesburgLondonBerlinMoscowParisMilanMadridSão PauloNew YorkTorontoChicagoLos AngelesSan FranciscoMexico CityStockholmBuenos Aires 1611862120171412107543212324262714261623202010Health, safety and securitypage 51BeijingSeoulTokyoShanghaiHong KongKuala LumpurSingaporeSydneyMumbaiAbu DhabiIstanbulJohannesburgLondonBerlinMoscowParisMilanMadridSão PauloNew YorkTorontoChicagoLos AngelesSan FranciscoMexico CityStockholmBuenos Aires13 118621201918171514121097543212223 2425262717Economic cloutpage 72BeijingSeoulTokyoShanghaiHong KongKuala LumpurSingaporeSydneyMumbaiAbu DhabiIstanbulJohannesburgLondonBerlinMoscowParisMilanMadridSão PauloNew YorkTorontoChicagoLos AngelesSan FranciscoMexico CityStockholmBuenos Aires1382120 191817151412105432122252627258812102221201918182317
    • Partnership for New York City  |  Cities of Opportunity | 17Technology readinesspage 50BeijingSeoulTokyoShanghaiHong KongKuala LumpurSingaporeSydneyMumbaiAbu DhabiIstanbulJohannesburgLondonBerlinMoscowParisMilanMadridSão PauloNew YorkTorontoChicagoLos AngelesSan FranciscoMexico CityStockholmBuenos Aires1613862018171514121097432122232425262720612 22Sustainability and the natural environmentpage 62BeijingSeoulTokyoShanghaiHong KongKuala LumpurSingaporeSydneyMumbaiAbu DhabiIstanbulJohannesburgLondonBerlinMoscowParisMilanMadridSão PauloNew YorkTorontoChicagoLos AngelesSan FranciscoMexico CityStockholmBuenos Aires 16131162119 1817151410943212223242627132662199Costpage 76BeijingSeoulTokyoShanghaiHong KongKuala LumpurSingaporeSydneyMumbaiAbu DhabiIstanbulJohannesburgLondonBerlinMoscowParisMilanMadridSão PauloNew YorkTorontoChicagoLos AngelesSan FranciscoMexico CityStockholmBuenos AiresDemographics and livabilitypage 67BeijingSeoulTokyoShanghaiHong KongKuala LumpurSingaporeSydneyMumbaiAbu DhabiIstanbulJohannesburgLondonBerlinMoscowParisMilanMadridSão PauloNew YorkTorontoChicagoLos AngelesSan FranciscoMexico CityStockholmBuenos Aires16 13 11 862120191817141210954321232426272316826City gatewaypage 44BeijingSeoulTokyoShanghaiHong KongKuala LumpurSingaporeSydneyMumbaiAbu DhabiIstanbulJohannesburgLondonBerlinMoscowParisMilanMadridSão PauloNew YorkTorontoChicagoLos AngelesSan FranciscoMexico CityStockholmBuenos Aires161162120191817 14 12109754321222324252627149 1627262524242221 2019191716151513121110988854321Map keyThe 27 cities are sorted from the best to the worstperforming, with each receiving a score rangingfrom 27 for best to 1 for worst. In ties, cities areassigned the same score.HighLowMedium
    • 18 | Cities of Opportunity | PwCThe city tomorrow
    • Partnership for New York City  |  Cities of Opportunity | 19Our cities in 2025From butcher to baker to memory-stick maker;From blue skies to thunderstorms …Our approach to projecting the future liessomewhere between Mark Twain, the Americansatirist, and Charles Goodhart, the emeritusprofessor of banking and finance at the LondonSchool of Economics. Twain famously said, “It’sdifficult to make predictions, especially aboutthe future.”1More recently, Goodhart said ofcentral bank forecasting in today’s uncertainenvironment: “We need to refocus attentionaway from point forecasts to the range ofpossible outcomes, on potentially varyingscenarios and on the need for flexibility (notpre-commitment) to respond to an unknowablefuture.”2We agree with them both.Cities of Opportunity projects the future ofeconomic growth, population, and employ-ment in our 27 cities in a pragmatic spirit.We establish a baseline projection to 2025that assumes a continuation of urban growthbut at a more modest pace than the boombefore the Great Recession. In that environ-ment, emerging cities skyrocket in populationand employment, but mature cities retainmuch higher productivity. With average percapita wealth converging slowly over theforecast period, each will still need the other tobuy and sell products and services—suggestinga continuing, mutual self-interest among ourcities. (See chart on page 22, “The shape of cityeconomies to come.”)Our look at the future also suggests“what ifs” that push the probable envelopetoward the possible. Scenarios investigatechanges in the size of our urban pie throughfaster or slower macroeconomic growth aswell as the same-sized urban pie beingresliced with different winners and losersbased on the relative importance of varyingcity qualities. (See next page for backgroundon the methodology used.)“What ifs” are constructed not as predictorsbut as parameters or signposts for governmentand business decision-makers to consider inthinking and planning. They include scenariosin which:• Knowledge, technology, and travelconnections increasingly drive globalinvestment decisions.• Urban quality of life attracts businesses andpeople and, in turn, fuels progress.• A restructuring alters the long-term employ-ment picture through some combination oftechnological jobs displacement, governmentconstraint, austerity, and a waning ofconsumer spending, with market forcesadding to the downdraft.• Protectionism spreads as a tactic to counterdifficult times.This seems the right time to take a lookat the future of our cities for a number ofreasons. The world has been moving on afairly steady course in economics and financefor some years, often with expectations ofcontinuity or even predictability. But social,political, scientific, and economic forces,all played out against the background ofglobalization and urbanization, suggest thispresumed order may be changing. Standardexplanations do not quite unravel the persis-tence of high unemployment, for instance,or capture the underlying technological trans-formation that shows signs of taking place(see page 34, “What if” technological unem-ployment finally dawns?”). These forcescould play out in many ways that naturallyconcentrate their toll in cities.On the positive end of the spectrum,constructive forces come together in citiesalso, as demonstrated in different ways by allthe cities in our study. The upside potential is1 Baseball player Yogi Berra, physicist Neils Bohr, and movie mogulSam Goldwyn are also widely credited with a version of the adage.2 Charles Goodhart, Financial Times, February 2, 2012, “Longer-termcentral bank forecasts are a step backwards.”New York harbor at dawn.
    • were adjusted for the particular urban geogra-phies used throughout Cities of Opportunity.To assess the impact that different Cities ofOpportunity indicators might have on futureeconomic outcomes, we analyzed each sectorto determine “mobile” employment shares orthose jobs or economic activity not serving thelocal market that could most readily be locatedanywhere in the world. That share of mobileemployment is higher in sectors such as hedgefunds, legal services, or manufacturing butlower in areas like healthcare, retailing, andtransport. A locally dependent share wasdetermined in all sectors according to threetranches of high, medium, or low employmentmobility, with adjustments within each tocreate a dynamic scale. (For instance, wecreated a sectoral sensitivity matrix for theCities of Opportunity indicators based onempirical evidence and qualitative input fromOxford’s sectoral economists. This was used toadjust future sectoral growth across the citieswhen scenarios are run in the model.)We considered performance on Cities of Oppor-tunity indicators as signposts of cities’ growthtrajectories, and weighed in relative rankscores into the model. The model also linksindividual sectors to global trade performanceHow it worksThe economic underpinnings of the “what if” scenario toolOur “what if?” scenario tool is designed byPwC and the Partnership for New York Cityworking in conjunction with Oxford Econom-ics to create a forward-looking framework forurban thinking and to challenge preconcep-tions, not to predict what will occur. It wasdeveloped to measure what might happenif Cities of Opportunity indicators were moreor less important in future business invest-ment decisions or if macroeconomic patternschanged to influence the overall urbanenvironment. This, like all scenario tools,depends on input assumptions and underlyingrelationships.The baseline economic forecasts for eachof the 27 cities build from a foundation ofOxford Economics’s global cities, regional,and world models, all updated quarterly.Forecasts are customized to match thespecific urban geographies used in Citiesof Opportunity.enormous and extends over a wide range ofopportunities coming from both the matureand emerging worlds: students, travelers,and tourists increasingly drawn to cities;professional service sectors connecting andtrading across an ever more intertwined envi-ronment; engineers, designers, and buildersgetting infrastructure up to speed with needs;and, of course, the potential that innovationrepresents in urban clusters. Some of human-ity’s greatest triumphs have been achieved byforward-looking cities that align governments,businesses, and citizens for the common good.This will be no less so in future.“If we can make what we have a lot morelivable, we really can develop somethingclose to a paradise ... through rationalityand an understanding of what we really are,”renowned biologist E.O. Wilson tells Cities ofOpportunity. Wilson suggests that anintelligent way to think about the evolvingurban world and the natural one coexistingsustainably is to set aside half the planet forcities and the other half for the rest of life. Atthe same time, we can use the technologieswe possess to build cities and communities insynch with human needs (see condensedinterview on the next page, as well aswww.pwc.com/cities for the full-lengthdiscussion and podcast).In the end, issues of growth, place, people,resources, ambition, governance, collaborationand competition, vision and leadership feedinto any city’s vision of its own future. But nomatter what that vision is, from cultural capitalto manufacturing hub to biotech or informa-tion/communications technology cluster, itwill be challenging to move the needle aheadat a time of straitened financing.To do so, we once more turn to E.O. Wilson—who himself often quotes the Israeli diplomatAbba Eban—“when all else fails, men turn toreason.” This year, Cities of Opportunity turnsto reason early in trying to frame evolvingurban thought and action in the contextof known challenges and probable andpossible directions.Learn moreSee www.pwc.com/cities for videocasts andpodcasts of interviews in addition to the full-length discussions. Detailed background onsources and definitions are also available.1 The sectoral definitions used in this study are consistent with the UK’s 2003 Standard Industrial Classifications (SIC 03), the StatisticalClassification of Economic Activities in the European Community (NACE), and the 2002 North American IndustryClassification System (NAICS).The “what if” scenario tool covers 22 broadsectors1for both gross domestic productand employment. The financial and businessservices sector is split into 10 job subsectors tocapture the nuances of urban labor markets.Published sectoral GDP data are used withestimation techniques selectively filling gapsto complete the dataset. In the absence ofemployment data at a sectoral level, countsof business units are used to make effectivesubsector estimates. The employment data inthe model refer to total employment, that is,self-employed plus employees.GDP data are sometimes unavailable at acity level. Where estimation was needed, citysectoral employment data and metropolitan,regional, or national productivity estimates20 | Cities of Opportunity | PwC
    • Induced impactsarising fromdirect and indirectjobs change andtheir associatedconsumer spendingIndirect orsupply-chainimpacts in theform of jobsand GDPDirect change in jobsand GDP compared withthe baseline outlookThree rounds of impacts determine a “what if”scenario’s results:Three rounds of impacts combine to developthe results of an overall scenario. Directjobs change is determined by the sectoralsensitivity matrix and Cities of Opportunityscores in each indicator category. Sectoralproductivity provides an estimate of sectoralGDP change (with the model keeping theoverall level of economic activity static orallowing it to rise or fall depending on themacroeconomic scenario). Supply-chainor indirect effects are calculated usingcity specific input-output tables (derivedfrom national input-output tables and cityemployment structures). Induced effectsare estimated using the direct and indirectimpacts and consumer-spending data.We factored in different urban productivitylevels in determining overall and local cityjob tallies. That is, the total value of eco-nomic activity might remain the same, butjob numbers are adjusted to rise or fall basedon a city’s productivity. The model alsomoves jobs within the Cities of Opportunityuniverse and does not account for competi-tion from cities outside our 27: Shenzhen,say, which is not in our study, taking jobsaway from nearby Hong Kong, which isincluded. We also recognize that a city mayappear to have the right stuff in our model togrow, but if underlying skills or infrastructureare lacking growth may be hampered.HIGH mobilityManufacturingMiningFinancial services• Banking and finance• Insurance and pension funding• Activities auxiliary to financial intermediationBusiness services• Real estate and renting activities• IT and computer related• Research and development• Architecture and engineering• Legal, accounting, bookkeeping• Advertising• Professional, scientific, and technical servicesMEDIUM mobilityLeisure, culture, and otherTransport and communicationsNO mobilityPublic administrationSource: Oxford Economics, Cities of OpportunityLOW mobilityAgriculture, forestry, and fishingConstructionEducationHealthHotels and restaurantsUtilitiesWholesale and retailContinued from previous page:(based on analysis of the historicallyobserved relationships). This allows differ-ent global trade outcomes to be exploredat a city level. In addition, the scenario tooladjusts productivity assumptions across sec-tors and locations and individually assessesdifferent sectoral performance globally orwithin cities. All this allows explorationof alternative economic trajectories andconditions for the 27 cities.The “what if” scenario tool enables Citiesof Opportunity indicators to be flexedindividually or together with other indica-tors in terms of their future importance toinvestment decisions.Partnership for New York City  |  Cities of Opportunity | 21Will the jobs relocate?Ranking mobility among 22 job sectors from globally fluid to locally rooted
    • $222* $51 $47$48$230 $163 $141 $153 $161 $151 $94 $78 $184 $160 $132 $98 $1145 10 15306912ShanghaiIstanbulTorontoChicagoStockholmMilanKuala LumpurAbu DhabiSanFranciscoSydneyParisSingaporeTokyoMoscowSeoulNew YorkMexico CityHong KongMadridLos AngelesBuenos AiresBerlinJohannesburgLondon São PauloMumbaiPopulation in millionsValue of outputEmploymentinmillions$1bMature Emerging 2012 20252012–2025 GDP projection2003–2011 historical GDP dataAbuDhabi*SanFranciscoStockholm Milan KualaLumpurParis Chicago Toronto Buenos Aires Madrid Berlin LosAngelesJohan-nesburgSydney Singapore HongKongLondo*GDP driven by the oil economySource: Oxford Economics, Cities of OpportunityThe shape of city economies to come… While the West gets richerEconomic output measured by gross domestic product (GDP), 2003–2025Growth should continue in the emerging world despite today’s risks …Population vs. employment, 2012-2025Productivity (GDP per worker per year) in thousands $US, 2025
    • Mutual self-interestunites developed anddeveloping citiesA number of themes emerge charting thelikely economic evolution of our 27 citiestoward 2025. Foremost, the cities share asmuch interdependence as they do individual-ity—making as strong a case for cooperation toshare in a richer pie as there is for competitionto grab a bigger piece of a poorer one. Our 27cities represent disproportionate economicmuscle today, generating nearly 8 percent ofworld 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 onour current course of modest growth andavert serious economic crises.But the big picture of divided East/Westwealth and quality of life is unlikely to changeunless transformations occur in the way wework and spend globally. Affluence is likelyto remain in developed cities—whose longestablishment, high productivity, and richerincomes tower over developing cities. Thelatter have a mountain to climb to catch up inproductivity (and underlying areas like opengovernance, lack of corruption, and strongerphysical and social infrastructure), evenwhile growing spectacularly in populationand employment.If those improvements occur, employmentpatterns could change dramatically indeveloping cities, cutting labor dependencyand jobs. But that issue may be upon usalready as employment struggles to regainpre-recession levels and as a new phase maybe dawning in the information revolutionwhere less work is required and wealth mustbe shared in a more rational manner amongthe soon-to-be 9 billion of us. Meantime, ourcities are intertwined. As long as the West pos-sesses the time and money to buy goods andthe rest of the world has the labor to create theproducts, symbiosis will continue, each sideneeding the other to prosper and making thecase at least as strong for intelligent urbancollaboration as it is for competition.$73$77 $58 $54 $16 $108$58 $424 $244 $10420 2536912Beijingon New York MexicoCitySeoul Moscow SãoPauloMumbai Tokyo Istanbul Shanghai Beijing0Partnership for New York City  |  Cities of Opportunity | 23
    • 24 | Cities of Opportunity | PwCEdward O. Wilson, emeritus professor of entomology at Harvard, hasspent 60 years at the university as a pioneering scientist, thinker, andauthor. Wilson has written 27 books, including the groundbreakingSociobiology that in 1975 placed the social behavior of all animals,including humans, in the context of evolution. He has been awardedthe Pulitzer Prize twice, for On Human Nature and The Ants, a monu-mental study of his first scholarly love. His most recent book, The SocialConquest of Earth, examines the fundamental questions of human lifethrough the lens of man’s basic tension between individual and groupselection. Here, Wilson extends thoughts from a lifetime of work as ascientist to cities and the planet as a whole.E.O. Wilson takes the very longview of cities… and the human potential to “develop something close to a paradise…through rationality and understanding of what we really are”Asked for seven words to describeyourself in a talk at the New YorkPublic Library, you said, “The antscame, spoke, taught, and judged.”What would they say, whatwould they teach, and whatwould be their verdict if theywalked through New York orJohannesburg or Shanghai?I think that if you could get reasonout of what they were doing andhow they were organized, youwould say for them that theycame about through their higherlevel of social organization, whichis one of the very few that everevolved on earth, by altruisticcooperation. They would have toreveal that we evolved in much thesame way and through the samepathway of evolution. We followedthe same rules and we have someof the same basic principles oforganization. Then things beginto differ a great deal. But we reallycannot understand our ownorigins without examiningprehuman origins.Do you think urbanization isprogrammed into our geneticleash and perhaps we’re a millionyears away from being as evolvedin our cities as we might be?I do not. Cities just happen to bethe aggregate of convenience.They’re becoming more and more
    • Partnership for New York City  |  Cities of Opportunity | 25What we have to do is make cities a lot morelivable. By that I mean, more consistent with thefundamental emotional needs, the instinctiveneeds of human beings.necessary for high productivity intechnologically advanced societ-ies, and also becoming a necessityas natural resources, or transpor-tation back and forth betweendwellings and city centers, becomescarcer. All those things conspireto move us into cities. What wehave to do is make cities a lot morelivable, and, by that, I mean moreconsistent with the fundamentalemotional needs, the instinctiveneeds of human beings.What do you think are the ecologi-cal or sociobiological pluses andminuses of an urbanizing world?It all depends on technology. Weneed to arrange cities so they’relivable, and that means adequatetransport in and out and foodchanneled in and waste channeledout, and then within the city,development of living quarterswith sufficient privacy. And afurtherance of a tendency—we’rebeginning to see nicely in NewYork City—of greening the dwell-ings themselves with balconygardens, rooftop gardens, withcreative landscaping everywhere.Then you can have a very livablecity, and I believe then you havethe great advantage, obviously, ofwhat New York has. New York isthe greatest city in the world. It’sthat way partly because of largenumbers of people and a longhistory of wealth, with a class ofthe wealthiest people willing to orwishing to build up the institu-tions that have led to the best ofthe core of New York City today.So there are a lot of advantagesto having a large city if you canorganize it properly.But another great advantage, onethe Germans have already putinto law, is they prevent suburbangrowth out from city and smalltown centers, and the result is thatthey have lots and lots of opencountryside not far from wheremost of the people live. And thatwill become more and morethe case.You have said, “We really don’tknow what on earth we’re doingbeyond our short-term goals.We’re destroying the rest of life.It’s important we keep a separatepart, half of the earth, for the restof life.” Do you think cities shouldbe reserved for us humans, and weset aside the rest of the planet forthe rest of life?I envision a human population,which the United Nations esti-mates if the current estimates arecorrect, stabilizing, we hope,somewhere around nine or 10billion. That being the case, alongwith the increasing urbanizationand, we hope, quality of life foralmost everybody, that then wereally could do what you just sug-gested—have a part for humansand a part for the rest of life.And why is this valuable? It justmakes good sense to leave therest of life alone; that is, protectit enough so that it keeps onevolving the way it has, reachingits own sustainability, its ownbalances for 3 1/2 billion years.And then we can go on with allour own craziness. Urban, sub-urban, in the sky planting spacevehicles to ruin some other planet,whatever things we do—we couldgo on without destroying so muchof life that we eventually destroyourselves or make the planet sounpleasant that we really willwant to go out to another location.Do you say that altruisticallyor functionally, that it’s bettermutually for us and the rest ofthe planet?Both. I think that we owe some-thing to the rest of life. After all,it gave rise to us. We were bornin a biosphere. We arose fromanimals, and we owe the restof life something. And that’s acompletely human instinct or, Ishould say, moral attribute. It’svery much in our self-interest tohave a planet—to continue livingon a planet— that’s balanced,that has obtained sustainabilitythrough, literally, billions of yearsof evolution. … Leave it alone. …Give half of the world to the restof life. Half should be more thanenough when we’ve developedsufficient technology and sustain-ability techniques to give us a verygood quality of life.In Africa, you’re working to savean endangered ecosystem at thesame time Africa is the world’sfastest urbanizing continent.What can be done to manage theinterplay of advancing urbanismand nature?It’s pretty clear what needs to bedone. First, various countries,“There are areas of Central Park thatare pretty close to resembling a naturalenvironment.”
    • 26 | Cities of Opportunity | PwCsovereign states, have to evolveaway from dictatorships and highlevels of corruption. They oughtto be encouraged or helped tocontinue improving educationand economic growth—althoughAfrica is now also the fastestgrowing in percentage increaseof GDP of any of the continents.How would you relate the urgencyof biodiversity loss to a NewYorker who rides the subway andrarely experiences nature?We’re talking about the need fortechnology and the humanities tobe more democratized and spreadmore evenly, and conservationto be spread more evenly. We’retalking about a city like New Yorkthat could, in due course, clean upa lot of the more obvious defects:the unlovely traffic, the conditionof the poorest parts of it, and soon. And I would remind anyonenot to look down too much onNew York City. There are areas ofCentral Park that are pretty closeto resembling a natural environ-ment. So, with parks in cities,combined with the improvementof the purely urban aspects of citylife, I think you could get a prettylovely city.I know that Chicago is anothergood example of this. Chicagohas what is called its WildernessProgram that 10 or 15 years agostarted to map out all of the emptyspaces—the road edges, the river-banks, the vacant lots, the old andmostly neglected city local neigh-borhood parks. Chicago madecomplete maps of them. And thenit set out to let them come back tothe wild as much as possible, cleanthem up, make biological surveysof them, and start getting kidsand people in to enjoy them, allover Chicago. I think that’s a neatprogram, and every city wouldbenefit by having somethinglike that.You’ve said, “The human conditionis being hung in betweenindividual selection and its con-sequent sin and group selectionand its resulting virtue.” Can wehave a nondestructive relationshipwith the natural world when weourselves seem to be at war withourselves, ranging from mundanedaily greed and shortsightednessto actual wars?That’s a painfully accurate ques-tion. It certainly looks, from all ofthe evidence, that we are eternallyand naturally conflicted. Anyspecies that reaches the humanlevel may—I don’t want to get intoscience fiction but it may—be apeople, but to realize that groupdistinctions, and group competi-tion and individual competitionwithin groups, is just the way weare. That’s what made our species.And we really should try to findthe solutions to our problems thatdo not entail pushing and coursingtoward what one group or othersees as the perfect harmony—a harmonious solution—but,rather, just to abate and dampthe differences between us in amanner that’s based upon humanself-understanding. And that’s notso hard to achieve. It just takes arethinking of the foundations ofhuman science—the science abouthumans. But we don’t really wantto go to one extreme or the other,do we? We stay somewhere in thecenter because it’s that fermentof the center, between the twoopposing impulses, our conflictednature, which makes us creative.It’s in the conflict that we tryto move ahead?I agree. If we can make what wehave a lot more livable, we reallycan develop something close to aparadise. By developing throughrationality and an understandingof what we really are, we can geta very livable planet to stay on.Can there be enlightened citypolicies to address the great fearthat people have in a time ofglobal migration towardnew immigrants?Yes. Look at it the way a geneticistwould. We’re evolving in a way tohomogenize the human genome.Up until quite recently, a very largepart of the genetic differences orvariation in humans were thedifferences from place to place:shall we say, from Stockholm toBeijing. There are a lot of geneticdifferences between thosepeople—and they’re extraordi-narily similar, incidentally—butthey are what differences occurin the human species. That’s thedifference between localities. Butone result of globalization is thatwe’re homogenizing. And nowthe differences between localitiesWe should give half of the world to the rest of life [and half tocities]. Half should be more than enough for us when we’vedeveloped sufficient technology and sustainability techniquesto give us a very good quality of life.conflicted species in that manner.And that conflicted conditionmeans that we are always tornbetween the two impulses of indi-vidual survival and developmentat the expense sometimes ofothers and the nobler, the betterangels of our nature—the productsof group selection—on the otherhand: the group selection thatmade us what we are.So the solution to our problemsis not to define the best religionand try to get everybody into it;it’s not to define the best ideologycertainly, as though there werea perfect ideology that we areevolving; it’s not to expect completeharmony among cooperating
    • have to improve educationsystems. We need far bettermethods of teaching. We needbetter incentives for teachers, andespecially to include educationin science and technologybecause we are now enteringa techno-scientific world. Thetechno-scientific revolution is hereand it’s pervading every minuteof our lives. People are not goingto be able to understand the mostfundamental questions about ourspecies—things we used to callphilosophical questions, urgentquestions of reality—we’re notgoing to be able to handle thesethings, particularly dealing withgroup conflicts. That’s the partI like to think of as somethingeverybody could agree on.I myself right now have afoundation that is setting upin partnership with Apple anonline course in biology, whichI hope, and I know this was thegoal of Steve Jobs, will give theopportunity for an education, anare diminishing, and the amountof variation within each localityis increasing. And I’m optimisticto think that the result will be agreater flourishing of genius, ofspecial talents, and it’ll be a muchmore interesting species thefarther along that line we go.Do you think evolution at allpushes us toward the virtuous,toward logic?I don’t think a genetic evolutiondoes. What’ll happen is that it willbe a cultural evolution in whichwe have the same ferment, wehave the same conflicted nature.I think that probably now, insteadof little wars, and battles againstdictators and clashes of differentreligions, we will work out ourenergies in the area where we’vealways dearly loved and exercisedour hottest instincts and greatpassions—team sports. People ina more civilized society will stillbe having all those emotions butit’ll be in a tamer arena. I don’tperceive 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 Ageemotions, 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 reallyinteractive education that can beadapted to classroom techniques,the same education to a kid inParaguay, Angola, Mozambique,or outer Mongolia that you canget in a prep school in Connecticut.We could do that kind of thingwith technology. I like to thinkthat we can make big leaps ineducation, and it’s absolutelynecessary for the future of thiscountry and the world at large.Our hypothesis in Cities ofOpportunity is that strongquality of life forms a virtuouscircle with a strong economy. Ifyou have jobs, you’ll have moreschools; if you have parks, you’llhave more happy people whowant to go to the schools and beproductive. It forms a sort of virtu-ous circle. Does that make sense?It makes complete sense. You’retalking about positive reinforce-ment in the network of activitiesin cause and effect. Another thingthat makes things hopeful is whatthe chemists called autocatalyticreactions. That is to say, when youget a product created by puttingcertain ingredients together—thisis in chemistry—the product itselfbecomes a catalyst. So the reactionspeeds things up, and you getmore and more products like that,and it just takes off exponentially.Final question. How did you feelwhen you learned that Björk,the Icelandic singer, named theworld’s first app album “Biophilia”after your book?I could not be more pleased to beconnected with a rap operation.That’s funny.This conversation has been sopleasant for me, I hate stopping.Learn moreA podcast of this condensed conver-sation is available at www.pwc.com/cities, as is a full-length print versionof the entire discussion.E.O. Wilson in Gorongosa National Park, Mozambique.
    • 28 | Cities of Opportunity | PwCThe 2025 baseline scenarioOur cities weave a surprising tapestry of jobsOur 27 cities currently produce 8 percent ofthe world’s wealth despite housing only 2.5percent of its population. In looking towardthe future, Cities of Opportunity assumed acontinuation of growth to quarter-century butat 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 afew years ago for a number of reasons, notablyincluding the large overhang of debt in thedeveloped world.Building from this outlook, we developed our2025 baseline scenario as the foundation forall “what if” projections. The baseline showsthat by 2025, 19 million more people will beliving and 13.6 million more working in ourcities. The 27 cities will generate an additional$3.3 trillion in gross domestic product.Even with growth projected to be strong inemerging cities, Western customers are notforeseen borrowing and spending as in thepast, depriving the emerging world of keycustomers who could supply the wealth tobuild their own cities—currently gaining40,000 people a day in China and 20,000 inIndia, to cite only two in the staggering arrayof 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 capitaproductivity will still be needed by emergingcities to buy their goods and services. In short,both families of cities, mature and emerging,remain in it together.Broad brushes of this general picture areknown. However, when we look closely atindividual cities and consider the differentgears in the engine needed to continuesocial and economic prosperity, shadings ofmeaning come into play that are relevantto government, business, and communitydecision-makers.What exactly do all those people in Shanghaior New York or Milan or any of our citiesactually do to support themselves, to drivethe economy from day to day, and to continueboth the upkeep and innovation that assuresfuture well-being?The evolving percentage of employment by sector—emerging and mature cities2012 and 2025*Business services include:Real estate and renting activitiesIT and computer-relatedResearch and developmentArchitectural and engineeringLegal, accounting, bookkeepingAdvertisingProfessional, scientific, andtechnical services**Financial services include:Banking and financeInsurance and pension fundingActivities auxiliary to financialintermediation0% 10% 20%MiningAgriculture,forestry, and fishingUtilitiesHotels and restaurantsFinancial services**HealthConstructionEducationPublic administrationLeisure, culture,and otherTransport andcommunicationsManufacturingWholesale and retailBusiness services*Source: Oxford Economics, Cities of OpportunityEmerging20122025 Mature20122025
    • Partnership for New York City  |  Cities of Opportunity | 29Each city in its own right is a highlycomplex ecosystem. The jobs at the heartof a functioning city typically turn out to bein retail, healthcare, public administration(or government), and business services—a diverse and fundamental cross-sectionneeded to make a city run. At the same time,the bills are paid by exportable manufacturedgoods in emerging cities and globallytradable professional and financial servicesin mature ones.Our top two employment sectors, businessservices and wholesale and retail, account fora third of all jobs in 2012. This rises to 36.3percent in 2025. Business services—includingreal estate, IT, and computer-related work,architecture and engineering, advertising,legal and accounting, and other professional-40 -20 20 40 60 80 100-40-35-30-25-20-15-10-505101520253035%Changeinmanufacturingemployment% Change in manufacturing GDPSource: Oxford Economics, Cities of OpportunityMatureEmergingSize of bubble = Manufacturing GDP 2012 (US$, 2012 prices)Abu DhabiSão PauloKuala LumpurBeijingMoscowShanghaiSingaporeMumbaiStockholmIstanbulSan FranciscoLos AngelesTokyoMilanBerlinMexico CityHong KongMadridLondonNew YorkParisSydneyTorontoChicago SeoulJohannesburgBuenos AiresManufacturing employment has been shifting from West to EastChange in manufacturing employment vs. Change in manufacturing GDP (2004-2012)Some emerging cities are beginning to diversify from reliance on manufacturingChange in manufacturing employment vs. Change in manufacturing GDP (2012-2025)20 40 60 80 100 120 140 160-30-20-100102030405060 Abu DhabiBeijingLos AngelesSão PauloSingaporeJohannesburgIstanbulMoscowMexico CityMumbaiKuala LumpurToronto%Changeinmanufacturingemployment% Change in manufacturing GDPSource: Oxford Economics, Cities of OpportunityMatureEmergingSize of bubble = Manufacturing GDP 2025 (US$, 2012 prices)LondonShanghaiMilanChicagoMadridParisSan FranciscoSydney Hong KongBerlinSeoulStockholmTokyoBuenos AiresNew Yorkor technical services—tend to be moredominant in developed cities with sophisti-cated needs. Wholesale and retail accountfor more jobs in emerging cities with a higherconcentration of small stores and loweroverall productivity.Manufacturing plays strongly in the mix aswell, employing the third most people, againdisproportionately stacked toward emergingcities. However, as emerging cities grow inaffluence and sophistication, they are diver-sifying away from manufacturing (see chartsbelow). Mature cities, meantime, engagedin trying to build balanced economies andtaking advantage of idled factories andderelict waterfronts, are often encouragingentrepreneurial manufacturing.Those working in the very guts of the citycome in fourth and sixth overall in terms ofgenerating jobs. This includes the transportand communications workers, at 9.2 percentof jobs, who are behind the scenes as therest of the city moves about, and the publicadministrators in city halls and city parks,whose 6.8 percent of overall jobs are often nowthreatened by austerity budgets. Workers inthe leisure and culture segment account for 6.9percent of jobs, fifth overall in 2012, with allour cities being major business travel and touristdestinations as well as entertainment hubs.All in all, well-functioning city economiesdepend on job sectors fitting together handin glove. Supporting services that keep citieschurning from day to day, from the glamorousContinued on page 39The role of manufacturing continues to evolve
    • 30 | Cities of Opportunity | PwCAn 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.Where the jobs areCity employment today in six sectorsManufacturing2012Wholesale and retail2012Financial and business services*2012% of total employmentShanghaiIstanbulSão PauloSingaporeBeijingJohannesburgMexico CityTokyoMoscowSeoulBuenos AiresAbu DhabiMilanMumbaiLos AngelesKuala LumpurSydneyBerlinTorontoMadridChicagoStockholmParisLondonHong KongNew YorkSan Francisco33.928.016.514.712.712. Oxford Economics, Cities of OpportunityMatureEmerging% of total employmentHong KongKuala LumpurMoscowMumbaiMexico CityIstanbulJohannesburgSeoulTokyoMilanSão PauloTorontoSydneyAbu DhabiBuenos AiresLos AngelesSingaporeBeijingMadridStockholmLondonNew YorkBerlinShanghaiChicagoSan FranciscoParis23.822.922.421.921.219.419.118.817.817.722.415.314.814.214.212.812.412.012.011.911.711.410.710.39.68.614.3Source: Oxford Economics, Cities of OpportunityMatureEmerging% of total employmentMilanParisLondonBeijingSan FranciscoStockholmChicagoTorontoNew YorkBuenos AiresBerlinSeoulSydneyShanghaiJohannesburgKuala LumpurSingaporeMoscowLos AngelesTokyoHong KongMadridSão PauloMumbaiMexico CityIstanbulAbu Dhabi39.936.334.233.433.330.027.826.925.524.135.724.122.621.320.820.519.919.619.418.918.817.316.512.48.68.321.6*Combines financial services and business services sectors,which include the 10 subsectors listed on page 28.Source: Oxford Economics, Cities of OpportunityMatureEmerging
    • Partnership for New York City  |  Cities of Opportunity | 31Health2012Construction2012Hospitality and tourism*2012% of total employmentNew YorkLos AngelesChicagoBerlinSydneyLondonTorontoParisStockholmMadridSan FranciscoJohannesburgMoscowTokyoMumbaiSeoulMexico CityAbu DhabiHong KongShanghaiBuenos AiresIstanbulSingaporeBeijingSão PauloKuala LumpurMilan15.812.912.311.410.910. Oxford Economics, Cities of OpportunityMatureEmerging% of total employmentSingaporeAbu DhabiMoscowIstanbulKuala LumpurSydneyHong KongSeoulSão PauloTorontoJohannesburgMadridBeijingMilanMexico CityBuenos AiresTokyoLondonBerlinLos AngelesStockholmMumbaiShanghaiNew YorkSan FranciscoChicagoParis13.112.310. Oxford Economics, Cities of OpportunityMatureEmerging% of total employmentAbu DhabiMexico CityHong KongSan FranciscoParisMadridLos AngelesSingaporeBerlinChicagoLondonKuala LumpurSeoulNew YorkBuenos AiresTorontoJohannesburgSydneySão PauloStockholmBeijingMumbaiMilanTokyoIstanbulMoscowShanghai27.220.319.318.318.317.817.217.014.814.620.014.414.012.612.412.112.111.511.411.*Combines two sectors: leisure, culture, and other; and hotelsand restaurants.Source: Oxford Economics, Cities of OpportunityMatureEmerging
    • 32 | Cities of Opportunity | PwC“What if”… Cities prosper based on knowledge, technological, and travel connections?In the context of rapid globalization andincreasingly pervasive interconnection, it’seasy to picture a world where the cities thatprosper are those with the deepest, broadest,and highest-quality education, those that are“wired” most thoroughly and effectively, andthose with easiest access to, from, and for therest of the world.If businesses, along with workers of all levelsmost likely to follow demand, make theirlocation decisions seeking those cities with theright stuff for an urbanizing, globalizing, andexpanding world, cities that perform well inall three will gain a larger share of internation-ally mobile jobs. This is represented by threeof our indicator categories, intellectual capitaland innovation, technology readiness, andcity gateway.The cities that lead in those qualities now aremature global and regional centers, and theywould build on their strength going forward.Projected to 2025, London, Tokyo, New York,Seoul, Paris, Singapore, Chicago, Stockholm,and San Francisco lead the way in termsof capturing more jobs. London takes a-1,500-1,200-900-600-3000300600900-2.5-2.0-1.5-1.0- intotal jobs,2012 to2025 (bar)Change in% GDP perannum, 2012to 2025 (line)AbuDhabiBeijingTokyoSeoulMilanKualaLumpurTorontoSanFranciscoSãoPauloMadridBuenosAiresChicagoLosAngelesShanghaiMexicoCityIstanbulNewYorkSingaporeStockholmSydneyMumbaiHongKongJohannesburgLondonMoscowBerlinParisSource: Oxford Economics, Cities of OpportunityMatureEmerging Additional GDP per annum(in000s)London leaps ahead in a world where educated, connected cities count, but growth falls in emerging citiesChange in jobs and GDPcommanding lead in terms of 829,000 addi-tional jobs gained versus the 2025 baselineprojection. Mature city economies also growfaster in this picture, with London, Paris, andNew York gaining nearly a point or more eachin GDP growth by quarter-century. Among thecities most hurt, São Paulo, Mumbai, Beijing,Shanghai, Buenos Aires, and Mexico Citywould experience the greatest “brain drain”versus the 2025 baseline projection.On the other hand, higher relative productivityin this scenario also depresses the overall num-ber of jobs among our 27 cities by 4 million lessthan the 2025 baseline projection because theincreasingly efficient urban economies antici-pated in this world would employ fewer peoplein the supply chain (even more so in maturecities where more workers reside outside thecity jurisdiction).Continuing in this line of reasoning, we alsotested a likely outgrowth of the scenario:What might occur if additional economicbuoyancy tracks with an urban world in whichknowledge and greater connectivity driveprogress? We projected international tradegrowing an additional 3 percent per year,translating into a total city GDP increase ofan additional 1 percentage point annually and8.2 million more jobs than the 2025 baselineprojection. In this case, London and Tokyo stilllead, but emerging cities that tend to be moresensitive to international trade gain a majorboost. Beijing and Shanghai, for instance,jump from the bottom to near the top of therankings with accelerated trade. Moscowand Istanbul move up the rankings also,but less dramatically.
    • Partnership for New York City  |  Cities of Opportunity | 33Combined city forecastsSource: Oxford Economics, Cities of Opportunity70,00080,00090,000100,000110,000120,0002025’24’23’22’21’20’19’18’17’16’15’14’13’12’11’10’09’08’07’06’05’042003Baseline Educated, connected citiesplus 3% trade increaseEducated, connected citiesTotalemployment(000s)Comparing patterns: productivity pares jobs, trade multiplies them-1,000-50005001,0001,5002,000-1.0- intotal jobs,2012 to2025 (bar)Change in% GDP perannum, 2012to 2025 (line)Abu DhabiBeijingTokyoSeoulMilanKualaLumpurTorontoSanFranciscoSãoPauloMadridBuenosAiresChicagoLosAngelesShanghaiMexico CityIstanbulNewYorkSingaporeStockholmSydneyMumbaiHongKongJohannesburgLondonMoscowBerlinParisSource: Oxford Economics, Cities of OpportunityMatureEmerging Additional GDP per annum(in000s)The employment picture improves if trade rises in an educated, connected worldChange in jobs and GDPLondon takes a commandinglead in terms of 829,000additional jobs gained versusthe 2025 baseline. Maturecity economies also growfaster in this picture, withLondon, Paris, and New Yorkgaining nearly a point ormore each in GDP growthin the time frame.
    • 34 | Cities of Opportunity | PwC“What if”… Technological unemployment finally dawns in a slow-growth,urbanized world of 9 billion?Employment and GDP growth fall across thespectrum. On the jobs front, Beijing, Shanghai,and São Paulo lose the most jobs because ofthe size and structure of their economies, withLondon and Tokyo following. Wholesale andretail, the second largest employment sectoramong our 14 categories at 16.5 percent,might prove especially vulnerable. Despitethe buffeting, however, Mumbai, Beijing, andShanghai are still estimated to grow signifi-cantly in GDP through 2025 supported bygeneral growth in population (although arisk remains that less favorable labor marketsin these cities could slow down populationexpansion with implications for overall GDPgrowth). Paris, Tokyo, Sydney, and Chicagowould contract in GDP terms.A few trends suggest transformative restruc-turing could reasonably be on the horizon.As Lawrence Summers, former US TreasurySecretary, notes, “the agricultural economygave way to the industrial one because prog-ress enabled demands for food to be met by asmall fraction of the population, freeing largenumbers of people to work elsewhere. Thesame process is now under way with respectto manufacturing and a range of services,reducing employment prospects for mostcitizens.”1Nobel economist Joseph Stiglitzadds separately, “the Great Recession is partof the transition from manufacturing to aservice sector economy. … Markets on theirown do not manage such dramatic economictransformations well.”2History has its ups and downs, from extinc-tions to Great Depressions and wars, to Agesof Enlightenment and Discovery. In econom-ics, Joseph Schumpeter referred to cycles incapitalism as “creative destruction.” But endof day, history is written by the winners, asGeorge Orwell, Winston Churchill, and Napo-leon said in one form or another—better toend up a flexible survivor than a magnificentdinosaur. The same aphorism goes for citiescaught amid transformation. Today, enoughhandwriting is on the wall to question whethera presumed return to an economic equilibriumof steady, strong growth is around the corner.In this “what if” scenario, a combination oftechnological, economic, and sociopoliticalforces create something bordering on aperfect storm in terms of job loss. Technologyplays a greater role in low value-added servicesectors as companies replace labor withrelatively less expensive technology (strikingmost visibly in retail through self-servicecashiers, online shopping, and the threat thatcity stores may morph into showrooms);constrained governments pare jobs in publicadministration, health, and education toreduce spending and borrowing (depressingconstruction as well as public infrastructureinvestments); consumers cut their spending inthe face of high personal debt, more restrictedaccess to credit than before the recession, andsustained high levels of unemployment, withthe downdraft cutting demand in retail,hotels and restaurants, leisure, culture, andother services.Science appears to be playing a role inthe change also. While Keynes discussed“technological unemployment” 80 years ago,humans have so far held their own againstmachines as technology has created as manyjobs as it has destroyed. There are signs,however, that this could be changing and thatrobotized, computerized competitors are clos-ing in a little too fast for human comfort.“The pace [of technological innovation] hassped up so much that it’s left a lot of peoplebehind. Many workers ... are losing the raceagainst the machine,” contend MIT professorsErik Brynjolfsson and Andrew McAfee inRace Against the Machine.3“And it’s not justworkers. Technological progress—in particular,improvements in computer hardware,software, and networks—has been so rapidand surprising that many present dayorganizations, institutions, policies andmindsets are not keeping up.”Brynjolfsson and McAfee are optimistic thathumans will not invent themselves out of aday job because some of our “skills are morevaluable than ever, even in an age of incrediblypowerful and capable digital technologies.”1 Lawrence Summers, Financial Times, January 9, 2012,“Current woes call for smart reinvention not destruction.”2 Joseph Stiglitz, Financial Times, March 13, 2012, “The Americanlabour market remains a shambles.”3 Erik Brynjolfsson and Andrew McAfee, Race Against theMachine: How the Digital Revolution is Accelerating Innovation,Driving Productivity, and Irreversibly Transforming Employment andthe Economy, 2011, Digital Frontier Press.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.
    • Partnership for New York City  |  Cities of Opportunity | 35However, of importance to short- andmedium-term planning in city governmentsand businesses, not to mention citizens, “otherskills have become worthless, and peoplewho hold the wrong ones find they have littleto offer employers. They’re losing the raceagainst the machine, a fact reflected in today’semployment statistics.”The potential toll of technological unem-ployment jumps out in the second largest jobsector among our 27 cities—wholesale andretail, where the possibilities of job displace-ment could be immense through changes suchas in-store mechanization and online shop-ping. Wholesale and retail now employ onein six persons in our cities overall, and in a citysuch as Hong Kong that share rises to nearlyone in four, or roughly one in five in MexicoCity, Kuala Lumpur, Istanbul, Mumbai,Tokyo, and others.Financial uncertainity adds to the picture.“The economy has clouds hovering over it,”says John C. Bogle, founder of VanguardFunds. “And the financial system has beendamaged. The risk of a black swan event—of something unlikely but apocalyptic—is small but real.”4Sociopolitical forces come powerfully intothe equation against the backdrop of risinglevels of unemployment (often dispropor-tionately high among the young), increasingincome inequality in some places,5austerityin others, and growing popular resistancebubbling up to a consumer-goods-driveneconomy.6Add to that the tension that urbanimmigration, whether domestic or inter-national, often stirs, and the mix offers awake-up call to leaders and policymakersin government and business.“When distrust in a system becomes wide-spread among small players, it throws upsomething like Occupy Wall Street, or like theTea Party. Or like, for instance, the Frenchrevolution,”7writes Margaret Atwood, Cana-dian author of, among many other works,Payback: Debt and the Shadow Side of Wealth.The think tank Demos notes populist partiesthat “do not fit easily into the traditional politi-cal divides” have been growing for the pastdecade across Western Europe. Demos addsthat “the growth of these movements is mir-rored online. … This nascent, messy and moreephemeral form of politics is becoming thenorm for a younger, digital generation.”84 Jeff Sommer, The New York Times, August 12, 2012, “A mutualfund master, too worried to rest.”5“Growing income inequality in OECD countries: What drives it andhow can policy tackle it?” OECD, May 2, 2011, www.oecd.org/els/social/inequality.6 In addition to movements such as Occupy Wall Street, otherexamples include the Five Star Movement in Italy, whose “envi-ronmentally friendly, anti-consumerist, pro-education platform”is “committed to changing Italy’s entrenched political system byoffering an Internet-based alternative.” From The New York Times,May 24, 2012, Elisabetta Povoledo, “Caustic comedian in Italyfosters a movement against traditional politics.” Or, according toEnrico Rossi, president of Tuscany, “consumerism is not the rightresponse to the crisis. It is an insult to our cultural identity, ourtraditions and our history.” From The New York Times, January 7,2012, Elisabetta Povoledo, “In Italy, mom-and-pop stores worrythat longer hours may hurt business.”7 Margaret Atwood, Financial Times, April 14, 2012, “Our faith isfraying in the faceless god of money.”8 “The new face of digital populism,” Jamie Bartlett, JonathanBirdwell, Mark Littler, 2011, Demos, www.demos.co.uk.-2,500-2,000-1,500-1,000-5000-2.0-1.5-1.0-0.50.0AbuDhabiBeijingTokyoSeoul MilanKualaLumpurTorontoSanFranciscoSãoPauloMadridBuenosAiresChicagoLosAngelesShanghaiMexicoCityIstanbulNewYork SingaporeStockholmSydneyMumbaiHongKongJohannesburgLondonMoscow BerlinParisSource: Oxford Economics, Cities of OpportunityChange intotal jobs,2012 to2025 (bar)Change in% GDP perannum, 2012to 2025 (line)MatureEmerging Additional GDP per annum(in000s)An employment restructuring cuts deeply as the industrial/information revolution takes a new turnChange in jobs and GDPEven with less than a perfect storm, creativedestruction sounds better on paper than itlooks in real life. Cities may be in for a bumpyride if some of these economic, scientific, andsociopolitical forces that naturally concentratein cities move in the wrong direction simul-taneously. Understanding the possible futurecourse can help stakeholders in government,business, academia, and the community thinkthrough policies and actions today.
    • 36 | Cities of Opportunity | PwC“What if”… Protectionism spreads as a way to counter lingering slow growth?Protectionism sits on the other side of the coinfrom the faster trade that might occur in aworld powered by urban know-how and con-nections. And it is reasonable to consider thatnations struggling to energize their economieswill turn to trade restrictions in a world ofslow or no growth and rising political pressureto improve conditions. In fact, reports fromthe World Trade Organization,1EuropeanCommission,2and Global Trade Alert3all pointto a notable uptick in protectionist measuresthrough the end of May 2012.We took a step back and tested what mightoccur if, in our 2025 baseline, protectionismwidens globally, the recessionary slide contin-ues, and, ultimately, trade shrinks 2 percentper year, translating into a 1 percent drop inGDP across our cities.Here, trade-dependent emerging cities tendto suffer the greatest job losses, though notin a lockstep pattern. For instance, Beijing,Shanghai, and São Paulo lose the most jobs,but London and Tokyo follow closely in lossesbecause of those cities’ structure of employ-ment and therefore exposure to drops in trade.In terms of dampening GDP growth, Shanghaileads the losers, followed closely by maturecities like Milan, Paris, Chicago, London, andStockholm, with large shares of employmentin internationally tradable activities. Mumbaiemerges partially insulated because of lowtradable-sector employment and highdomestic growth.In the end, this scenario takes away10.4 million jobs and destroys $1.1 trillionin potential GDP by 2025 relative to the 2025baseline projection—far worse a toll thanthe educated and connected “what if” inwhich productivity pares jobs.-2,000-1,500-1,000-5000-1.5-1.0-0.50.0AbuDhabiBeijingTokyo SeoulMilanKualaLumpurTorontoSanFranciscoSãoPauloMadridBuenosAiresChicagoLosAngelesShanghaiMexicoCityIstanbul NewYorkSingaporeStockholmSydneyMumbaiHongKongJohannesburgLondonMoscowBerlinParisSource: Oxford Economics, Cities of OpportunityChange intotal jobs,2012 to2025 (bar)Change in% GDP perannum, 2012to 2025 (line)MatureEmerging Additional GDP per annum(in000s)A rising tide of trade restrictions broadly lowers jobs and outputChange in jobs and GDP1 “The more recent wave of trade restrictions seems no longer tobe aimed at the temporary effects of the global crisis, but ratherat trying to stimulate recovery through national industrialplanning,” according to Report on G20 Trade and InvestmentMeasures (mid-October 2011 to mid-May 2012), World TradeOrganization, OECD and UN UNCTAD, May 31, 2012.2 “A staggering increase in protectionism around the world” isnoted in the Ninth Report on Potentially Restrictive Measures,European Commission, June 6, 2012.3 Débâcle: The 11th GTA Report on Protectionism, Global TradeAlert and Centre for Economic Policy Research, June 2012.A highly productive urbanworld might destroy4 million jobs in our 27cities. But trade shrinkagekills 10.4 million jobs and$1.1 trillion in gross valueadded by 2025.
    • Partnership for New York City  |  Cities of Opportunity | 37“What if”… Quality of urban life attracts people and businesses?The businesses and professionals that buildcities often have choices: They can vote withtheir feet, domestically and often internation-ally, following their urban bliss to whatevercity attracts them with the best quality of lifein which to work, start families, put downroots, or locate businesses. It makes intuitivesense that the three telltales of quality of lifeamong the 10 Cities of Opportunity indicators—health, safety and security, demographics andlivability, and sustainability and the naturalenvironment—could drive business andpersonal decisions that directly affect thegrowth of cities.An interesting cross-section of those we spoketo this year agree. Bill Bratton, former NewYork and Los Angeles head of police; DavidMiller, former Toronto mayor; and AndrewChan, deputy chairman of Arup engineers anddesigners based in Hong Kong, mirrored eachother in stressing the preeminence of health,safety and security as a foundation for strongcities in the mature and emerging world alike(see pages 52, 64, and 68 for excerpted inter-views or www.pwc.com/cities for full-lengthdiscussions and video). This priority appliesbeyond the privileged. A cab driver echoed thepolice chief, engineer, and mayor on why heIn this quality-driven world, most wealth isgained by mature cities that perennially leadour health, safety and security, demographicsand livability, and sustainability indicators.Stockholm, the top performer overall in thesethree categories this year as well as last,enjoys the greatest boost in annual GDP at1.6 percent—little surprise in the context ofStockholm’s natural beauty, outstanding socialbenefits, and the success of the Nordic modelin today’s challenging times. Sydney, Paris,San Francisco, Toronto, and Berlin follow.Developing cities sacrifice the most wealth.London again gains the most jobs at 520,000,given strong performance in the three indica-tors and its relatively high proportion ofjobs in sectors of the economy that are mostinfluenced by quality of life (such as healthand high value-added service sectors). Sydney,Singapore, Paris, Berlin, Toronto, New York,Stockholm, and Chicago round out the topthird. Most jobs are lost by emerging giantsShanghai, Beijing, Mumbai, Istanbul, and SãoPaulo, all still engaged in strengthening theirown quality of life and infrastructure aspopulations and needs burgeon.had come to New York 25 years ago fromBangladesh: “There is terrible corruption andlittle public security in my city.... But whatcan we do? We are not politicians or powerfulpeople. We just want to survive....That’swhy people come here from all over theworld. There is law and order.” Thinkers fromAristotle to John Stuart Mill agree, placingjustice, law, and order at the cornerstone ofa healthy community. On the empirical level,Cities of Opportunity correlations show thathealthy housing tracks very positively withelements of a strong economy.Robust demographics and livability addadditional appeal. Cultural vibrancy, qualityof living, well-managed traffic, a healthyworking-age mix all have natural appeal tobusinesses and people. Paris, for instance,leads Cities of Opportunity in demographicsand livability and comes in second only toBeijing in global economic clout—a testamentto the balanced power that the “City of Light”retains even today in a world tilting evereastward. When a sustainable and pleasantnatural environment, with plenty of parks, isadded into the mix, the makings of a magneticcity are understandable.-1,500-1,200-900-600-3000300600-3.00-2.25-1.50-0.750.000.751.50AbuDhabiBeijingTokyoSeoulMilanKualaLumpurTorontoSanFranciscoSãoPauloMadridBuenosAiresChicagoLosAngelesShanghaiMexicoCityIstanbulNewYorkSingaporeStockholmSydneyMumbaiHongKongJohannesburgLondonMoscowBerlinParisSource: Oxford Economics, Cities of OpportunityMatureEmerging Additional GDP per annumChange intotal jobs,2012 to2025 (bar)Change in% GDP perannum, 2012to 2025 (line)(in000s)If we follow urban bliss, London and Sydney get a bounceChange in jobs and GDP
    • 38 | Cities of Opportunity | PwCTop 3 scores Bottom 3 scoresAn educated,connected worldpage 32Trade booms in aneducated, connectedworld page 33Technological job lossand slow growthpage 34Protectionism spreadsto counter hard timespage 36Quality of lifespurs city growthpage 37Abu Dhabi -70 -9 -100 -50 -30Beijing -800 1,110 -2,400 -1,620 -1,250Berlin -30 160 -340 -160 180Buenos Aires -590 -220 -480 -310 -50Chicago 80 230 -250 -120 80Hong Kong 8 300 -660 -250 60Istanbul -450 160 -990 -570 -660Johannesburg -390 -150 -420 -200 -140Kuala Lumpur -90 20 -190 -90 -60London 830 1,640 -1,130 -690 520Los Angeles 30 170 -320 -120 40Madrid -30 110 -270 -120 30Mexico City -500 -150 -700 -300 -320Milan -100 40 -160 -120 30Moscow -410 210 -1,030 -530 -270Mumbai -1,300 -640 -940 -560 -1,120New York 380 790 -830 -340 150Paris 210 470 -360 -220 250San Francisco 30 95 -110 -50 70São Paulo -1,300 -460 -1,340 -730 -630Seoul 330 840 -920 -430 -140Shanghai -620 1,080 -1,860 -1,430 -1,330Singapore 100 590 -640 -420 270Stockholm 50 140 -110 -70 120Sydney 30 330 -510 -260 390Tokyo 530 1,200 -1,110 -570 -70Toronto 7 190 -230 -150 170Source: Oxford Economics, Cities of OpportunityComparing the “what if” scenarios: In good times, London makes Olympian strides, but the emerging megacities slow their paceDifference from 2025 baseline employment projection (000s)Expect the unexpectedPreparing for a range of possibilitiesThe “what if” scenarios offer no Ouija boardto foretell the urban future. Quite the opposite:They show the wide range of reasonableoutcomes that may await cities over theshort-term planning horizon.The different pathways make an importantpoint: Flexible thinking is needed. Continuedcity growth and expansion are anything buta given in a world facing big question marksin technology, economics, employment,politics, climate, population, demographics,and social cohesion.Mature cities like New York and Londonthat have been so successful in recentyears (in fact, poster towns for the urbanrenaissance) could contract painfully. Bigemerging cities could see their growthsidetracked. But innovation, education,connectivity, trade, and travel also openthe door for healthy expansion.Optimism tempered with pragmatismis a good outlook today for all the plannersand stakeholders in urban transportation,energy, water and waste, education,healthcare, and security systems worldwide.
    • Continued from page 29to the grimy, represent the fabric of our citiesand the biggest employment generators. Theexport sectors that they nurture drive theeconomy outwardly and bring in money.Interesting trends and anomalies surfacelooking at individual cities. For instance,retail plays a very large role in certaincities—Hong Kong, Kuala Lumpur, Moscow,Mumbai, and Mexico City, among them—perhaps because of productivity improvementopportunities. Healthcare employs 16 percentof New Yorkers, possibly because of similarchallenges in productivity, as well as the highrelative wealth that can be invested in healthservices. (If New York’s healthcare employ-ment rate were projected onto the six citieswith the least healthcare employment in Citiesof Opportunity, 3.2 million jobs would begenerated in Beijing, Istanbul, Singapore,Kuala Lumpur, São Paulo, and Milan.)Viewed together, financial and businessservices form the backbone of many city labormarkets. That tandem employs over one inthree workers in Milan, Paris, London, Beijing,San Francisco, and Stockholm, and at leastone in four in Chicago, Toronto, New York, andBuenos Aires. (These two categories broadlyinclude financial intermediation and auxil-iary activities as well as insurance in financialservices. Business services embrace real estate,research and development, architecture andengineering, legal, accounting and tax con-sultancies, advertising, and other professionalservices such as scientific and technical,as well as IT and computer services.)Vulnerabilities and opportunities jump out incertain sectors. Public administration jobs arethreatened as city and national governmentsconsider austerity measures. Retail workersin mature cities have to wonder when a robotmight stock the shelves or make fashionrecommendations, or when online buying willsimply shutter storefronts. Healthcare jobscould suffer much the same way if majorproductivity improvements like virtual caretake hold.Even more sobering are the challenges offunding the basics of good housing, health-care, infrastructure, and education to keep upwith the expanding urban world. Investmentoutlays required from 2012 through 2025to support our baseline projections of futuregrowth reach about $2.5 trillion in New York,about $2 trillion for Beijing and Shanghai, andaround $1 trillion in Tokyo, London, Sydney,and São Paulo. (See chart, “Forecast of invest-ment spending relative to growth,” page 81.)The importance of all these employmentsectors, the potential for disproportionate joblosses, and the uphill climb to fund city growthall bear consideration by the stakeholders inthe future of urban well-being. At the sametime, growth brings opportunities andthe rapidly urbanizing world holds outenormous potential.The cities weave a surprising tapestry of jobsInvestment 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.
    • 40 | Cities of Opportunity | PwCThe city today
    • Partnership for New York City  |  Cities of Opportunity | 41Chuo Avenue in Tokyo’s Ginza section.Our 10 indicators have undergone substantialrevision this year and are now composed of60 variables. As we do every year, however,we have “fleshed out” our quantitative researchwith several interviews with leading specialistsand recognized authorities from all overthe world.Intellectual capital and innovation saw onlya single change in its variables this year, andStockholm and Toronto once again toppedthe rankings.Technology readiness proved to be a verycompetitive indicator, with cities from threecontinents in the top 4 and Seoul rankingfirst overall.Transportation and infrastructureunderwent a fundamental reorganization thisyear. The focus is now sharply on the role oftransportation and infrastructure in integrat-ing a city, and in bringing people togetherefficiently but also in a manner that deepensthe urban experience. Because of the extensiverevision to the indicator that notably placedairport traffic and connectivity into the citygateway category, the rankings have alsochanged dramatically this year. Four of thetop 5 cities are Asian. Last year, the top 5 wereAmerican and European.Health, safety and security remains preciselyas it was last year and, consequently, producesthe same results: Stockholm and Torontoremain on top.Sustainability and the natural environment,as its new name indicates, has also changedsubstantially. It keeps only two variables fromlast year, as it now includes elements of thenatural environment in its overall measure-ment of urban sustainability. Sydney does evenbetter this year than it did in 2011, topping theranks, while Berlin remains in the top 4.Economic clout has also undergone majorrevision. Only four variables remain fromlast year and several are gone. And yet, Paris,London, and New York are still in the top 5,as they were last year—except that Beijingnow tops the ranks and is joined in the fivebest-performing cities by Shanghai.Ease of doing business has seen some modifi-cation in its variables this year, but very littlechange in the final results, with the top 5remaining virtually the same: Singapore andHong Kong swapping the top spot, followedby New York, London, and Toronto.Cost also saw a significant renovation, addingfour new variables, with the result beingBerlin ranking first and the next five cities—Seoul, Kuala Lumpur, Istanbul, Mexico City,and Johannesburg—all coming from thedeveloping world.Demographics and livability’s focus thisyear is very much on livability, as measuredby three of its four variables. Paris takes topspot this year replacing Stockholm, withSydney, Toronto, and San Franciscoremaining high performers.City gateway is the one completely newindicator in this year’s study. It seeks tomeasure a city’s global attraction. Interestingly,as with economic clout, Beijing and Shanghaionce again join London, Paris, and New Yorkin the top 5.Learn moreSee www.pwc.com/cities for interactive modelers;videos, podcasts, and full-length versions of theinterviews; detailed data definitions and sources.Shanghai and Beijing are pushing ahead,while Western cities continue to compete
    • 42 | Cities of Opportunity | PwCOf the 10 indicators in our study, intellectualcapital and innovation consistently attracts theattention of a wide range of readers. And thatis precisely because, in a modern and globaleconomy, it is almost axiomatic that intellec-tual capital, and the innovation it generates,is the engine of both social development andeconomic growth.As it is so critical, Cities of Opportunitycontinually strives to ensure as accurate anassessment of this indicator as possible. Lastyear, we made a number of changes; this year,we made only one—but it was significant.Percent of gross domestic expenditure on R&Dhas been replaced with the Innovation CitiesIndex. This provides a more accurate pictureof each city’s actual “innovativeness” than theprevious country-level measure (which gaveall five US cities an equal rank in last year’sresults, for example). In addition, the rankingsin the current variable are based on an indexof 162 different statistical components, so theensuing results are both broader and deeper.Still, there is little difference in this year’soverall rankings, as Stockholm and Torontoonce again finish first and second, respectively.Although there seems to be a marginaldegree of slippage for Stockholm from lastyear—when it ranked first in three variables(including the now superseded R&D category),as opposed to finishing first this year in onlytwo—what is more worrisome for theSwedish capital is, again, its result in math/science 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 impressivethis year at number two than it was in 2011,finishing in the top 10 in all nine variables inthis indicator. Paris also finished very wellthis year, replacing New York in third place.All four US cities finished in the top 10 again,as did Tokyo, although the Japanese cityfell three places from last year.Tokyo was again the only Asian city to breakinto the 10 best in this indicator. The Asiancities’ remarkable results in math and scienceskills, however, might be a sign of substantialadvances to come, as they swept the top sixplaces in this variable. Moreover, three AsianIntellectual capitaland innovationGenerating the skills thatgenerate growthcities ranked in the top 10 in research perfor-mance of their leading universities, making itclear that Asia knows what it needs to do toachieve competitive ranking in this area.Finally, in a near reprise of our previous study,the 10 cities at the bottom of the rankings arehome to some of the most potent economiesin the world, with annual growth that, in mostcases, has left the cities in developed econo-mies trailing behind year after year. Theirresults here confirm, however, that if they areto really become competitive with the histori-cally (and still) dominant cities of Europe,North America, and Asia, they have no choicebut to build, or enhance, the intellectualinfrastructure that will make that possible.It is admittedly a difficult task, but certainlydoable, as many of these cities have long anddistinguished histories of their own. It might,however, require the assistance of nationalgovernments, as with Brazil’s Science WithoutBorders scholarship program, which hopesto train 100,000 additional engineers andscientists by 2015 at many of the finestuniversities around the world.11 See “Education in Brazil: Studying the world,” The Economist,March 17th-23rd, 2012.15211515182015152226192310269827624472311617Math/scienceskills attainment*27222118242615192011412145102387225913616317Libraries withpublic access212520151317221698197265242731432461211141018Classroom size11 516131186StockholmTorontoParisSan FranciscoNew YorkLondonSydneyLos AngelesChicagoTokyoHong KongBerlinSeoulMilanSingaporeMadridMoscowShanghaiAbu DhabiBeijingMexico CityKuala LumpurBuenos AiresSão PauloJohannesburgMumbaiIstanbul2120171815141210985432122242325262719
    • Partnership for New York City  |  Cities of Opportunity | 43HighLowMediumHighest rank in each variableEach city’s score (here 205 to 45) is the sum of its rankings across variables. The city order from27 to 1 is based on these scores. See maps on pages 16–17 for an overall indicator comparison.1 Where average class size data were unavailable, pupil-teacherratios, or the number of students divided by the number ofteachers in primary education, were used as substitutes.2 Measurement of a country’s ability to generate, adopt, and diffuseknowledge using data from the World Bank’s Knowledge Indexcategory, education and human resources. The variables thatcompose education and human resources are adult literacy rate,secondary education enrollment, and tertiary education enrollment.*Country-level data.19181526271723212520162413119710212826144522Researchperformance oftop universities26202724191117212213151612618231491058731425Percent ofpopulation withhigher educationLiteracy andenrollment2*26252323182723231910171514916133837412116124InnovationCities Index18242725231913121721221420151141691028461526Intellectualproperty protection*26211717242017171922231072711291894121513625Entrepreneurialenvironment*272226261822262614191216151811291493106164205 2 3 7 3 9Score20519819419118918417917117016715014713713112211910999878282666360494845
    • 44 | Cities of Opportunity | PwCCity gatewayA new indicator measures a city’s global connectionCity gateway is the only indicator in the studythat is altogether new. It also serves a controlfunction for the results in the demographicsand livability indicator. In fact, it is best toread the rankings here in conjunction withthe rankings in demographics and livability(see page 67)—and vice versa.Above all, this indicator attempts to quantify acity’s global connections and attraction beyondits local borders. By measuring a city’s globaldraw, city gateway reflects the actual realityof today’s networked world and takes thepulse of a city’s social, economic, and culturalmagnetism internationally.In that light, the rankings are revealing. Thereis no surprise in London clinching first place,given the city’s function as a hub of Europeantravel (sustained by its four airports). Whatis surprising is how, in coming a very closesecond, Paris not only does very well acrossthe board in this indicator, but also beats outEnglish-speaking London and New York, aswell as famously business-friendly Singapore,for the top rank in international associationmeetings. What is equally surprising is thatLondon, Paris, Beijing, and Shanghai beatNew York in this indicator.When it comes to the world’s most attractivecities for tourists, the popular Western con-sensus has long accepted the trinity of London,Paris, and New York. But despite placing firstin aircraft movements and second in passengerflows, New York is hampered by poor airportto central business district access (especiallyfor a city that likes to consider itself thecenter of the contemporary world) andunexpectedly weak appeal to organizersof international meetings.While city gateway measures attractiveness tothe outside world, demographics and livabilityrepresents the other side of the coin, judging acity’s quality of life through the experience ofits own citizens. The cities that do well in bothindicators combine global and local vitalityand attractiveness; appealing globally butstill acting locally. London, Paris, Hong Kong,and Singapore are the only cities that scorein the top third in both measures. Paris doesparticularly well, narrowly finishing second toLondon in city gateway and finishing first indemographics and livability.It is also possible to consider that citygateway may function as a leading indicator.For instance, Beijing and Shanghai havequickly attained significant global presence,but achieving balanced and long-lastingvitality will also mean addressing the needsand desires of their own residents.242227251923211320109187125111715144316812626Hotel rooms16141196LondonParisBeijingShanghaiNew YorkMadridTokyoHong KongSingaporeLos AngelesChicagoKuala LumpurMoscowIstanbulSan FranciscoSeoulSydneyBerlinMilanTorontoMexico CityStockholmSão PauloBuenos AiresJohannesburgMumbaiAbu Dhabi2120191817161412109754321222423252627
    • Partnership for New York City  |  Cities of Opportunity | 451 A cumulative count of international association meetings per cityper year that take place on a regular basis and rotate between aminimum of three countries from 2005 to 2010. Figures are pro-vided by members of the International Congress and ConventionAssociation.2 A measure of the ease of using public transit to travel between acity’s central business district and the international terminal of itsbusiest airport in terms of international passenger traffic. Citieswith direct rail links are preferred to those with express busservices. Cities with rail links with the fewest transfers are rankedhigher than those with more.Each city’s score (here 145 to 16) is the sum of its rankings across variables. The city order from 27 to 1is based on these scores. See maps on pages 16–17 for an overall indicator comparison.HighLowMediumHighest rank in each variable23271392115172648165196221425710112012182324Number ofinternationalassociation meetings127231924161521262012518221496135121011483717International tourists251922102613221241919108161423722712153325327Airport to CBD access227232126162517132024111814151912581063724922Incoming/Outgoingpassenger flowsAircraft movements252321271720109242671815221311512161438246192 1 1 1 5Score14514313512312111511110899928887878585827772696957555041393016
    • 46 | Cities of Opportunity | PwCIn 2006, Wim Elfrink was named the first Chief Globalisation Officerat Cisco Systems, the networking equipment giant. Instead of basinghimself in the company’s California headquarters, Elfrink made aradical decision: He moved to Bangalore and established a secondCisco headquarters in one of the world’s fastest-growing metropolises.Now back in Silicon Valley, Elfrink continues to lead Cisco’s globalizationstrategy, its entry into new emerging markets, and its Smart +Connected Communities initiative. Here, he discusses the challengesof urbanization and the power of technology to transform cities inways we can barely imagine.Why did you decide to create asecond headquarters in Indiaafter taking charge of Cisco’sglobalization strategy?A lot of companies look at Indiabecause of its low labor costs. Welooked at India for business oppor-tunities, access to new talent, newmarkets, new partners. India isEnglish-speaking, democratic, hasa good legal system, IP protection,a collaborative government, andbig internal markets. In a decade,one in three workers in the worldwill be Indian. Its populationis also getting younger, and 20million people are joining India’smiddle class every year, whichmeans you add an Australia tothe market each year. If you drawa circle of countries within afive-hour flight from India, youcan reach 70 percent of theworld’s population.How did living in Bangalorechange your perspective on thechallenges facing cities?We had a unique opportunitybecause we were building a newcampus there for 10,000 people.In India, you have to providehealthcare, transport, and educa-tion to your employees. So wedeveloped a whole vision of thiscampus as a city of the future.Bangalore became the center forwhat we initially called “intelligenturbanization,” which morphedinto our concept of “Smart +Connected Communities.” It wasalso in India that I really started tounderstand what urbanization isall about. In the next decade, morethan 100 million people will movefrom rural areas to urban areas inIndia alone. In total, 700 millionpeople globally will urbanize inthe next decade. That’s 190,000 aday. If you’re in the middle of that,you start to understand what thechallenges are. In India, whereyou’re dealing with a lot of povertyand illiteracy, how do you givepeople access to education andhealthcare, create jobs, and givepeople decent lives? Perhaps thebiggest lesson was that you haveto think out of the box. You can’tthink about all these challenges ina traditional pattern. We can’tbuild cities like we did in thepast. A transformational shifthas to happen.What innovative projects is Ciscoinvolved with in India?There’s a master plan with abudget of around $90 billion tocreate a transport line betweenDelhi and Mumbai, then to create24 new cities around it. Cisco hasbeen awarded with the masterICT [information and communica-tions technology] plan for two ofthese cities. And that’s new: ICTin city planning has always beenan afterthought. But now you seeconglomerates starting to worktogether, with technology centralin their awareness. Elsewhere inIndia, we’re working with a devel-oper that’s building 25 millionsquare meters of apartments andshopping malls. In the first phase,we’re establishing real connectiv-ity from the home. It’s a tripleplay: home automation, energymanagement, and entertainment.Many Indian families have parentsliving with them, so you also needto consider assisted living andaccess to healthcare. We’ve identi-fied a portfolio of services you canbuy for so many dollars per squaremeter. We’re used to the idea ofgetting gas, water, and electricityin our homes. In future, weenvision that technology willbe built in, so you won’t buy it,but will have more and more ser-vices available to consume.You could even think of ICTas the fourth utility.Cisco’s vision of cities transformedby technology spreads… from Wim Elfrink’s passage to India into a surrounding world ofurban possibilities
    • Partnership for New York City  |  Cities of Opportunity | 47The first phase of Songdo InternationalCity Development, with Cisco Smart +Connected Communities’ home network-ing systems and TelePresence, openedin Incheon, South Korea, in 2009.You have to think out of the box. We can’t build cities like we didin the past. A transformational shift has to happen.
    • 48 | Cities of Opportunity | PwCUrban 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.You define urban sustainabilityin a holistic way, including eco-nomic, social, and environmentalfactors. What’s the priority in acity like Mumbai?There has to be a balance overtime between economic, social,and environmental sustainability.Depending on the most urgentneeds, where do you start? Forpeople in Mumbai, giving themsecurity, safety, a place to live,a good sewer system, access toutilities, is the priority. In moredeveloped cities, you’re at a differ-ent phase. Take Detroit, where thepopulation has gone down from2 million people to 700,000. Thequestion there might be: How doyou attract new investors and startnew industry? The starting pointsare different. But, in the end, youwant to look holistically at all threeof those elements of sustainability.What role will technology playin transforming urban life?From a technology point of view,we see two megatrends on topof broadband. One is what wecall the “Internet of Things.”Everything will be connected. Weforecast that there will be50 billion devices in the nextdecade; and we’ll have threebillion people connected to theInternet. The other trend is thateverything will be cloud-based.This will create new opportunitiesand business models that we’ve sofar only dreamed of. Technologycan be a key enabler to transformsocieties by giving people afford-able access to cloud-based services.How is technology changing theway people work in cities?In the past, cities were built forwork—you’d go to a city to work.But work is now being virtual-ized. I can work anyplace. Youdon’t commute to compute. Yougo to meet people and collaborate.So the whole nature of work ischanging, and you’re seeing newconcepts coming up in terms oftechnology-enabled work method-ologies. Amsterdam is a fantasticshowcase for what we call “SmartWork Centers,” which provide awork environment that bridges thegap between a central office anda home office. By locating thesecenters close to urban areas, we’restarting to decentralize work. Soyou reduce transport, improveutilization, and share infrastruc-ture. This is happening in Koreaand France, too. Best practices arespreading around the world.Will technology change the waywe collaborate?Urban planners often say youneed an environment in citieswhere people come together,eat together, where a cluster ofactivities comes together—theninnovation will happen. You hadthis in Paris, with art; in NewOrleans, with music; in SiliconValley, with technology. But nowyou can also create clusters virtu-ally. I can set up a community ofexperts in five minutes. It’s notjust that I go to a pub or restau-rant to meet people. This willmean you can start innovation indifferent types of environments,which will become more andmore virtualized.Is technology dehumanizing ourlives by eliminating the nuances offace-to-face or even voice-to-voicecommunications?Technology is a great enabler. Itdoesn’t replace. It replaces partly,and it adds. It gives us a biggertoolkit. I love to meet people andhave brainstorming sessions. I lovelistening to voicemails because,in voicemails, you hear emo-tion. These things serve differentpurposes. But the world willincreasingly move to connectivity;social networking is happening.We have to embrace it, make it atool, and use technology to enablenew opportunities.Should there be more emphasison the public good in urbanplanning?In future, there will be more com-petition between cities. Cities willcompete for work, investors, andtalent. So, urban planners haveto ask questions like: How can weattract more young people andmake people feel safe? You’ll alsosee more cities with integratedoperations centers. With every-thing becoming connected and allthat “Big Data” available, you’ll getmore real-time scenario planning:If you have a thunderstorm andneed to close an airport, you cansay, “Perhaps we should also letthe children go home now, informschools, reroute traffic.” Theseoperations centers will cut costsand make cities more produc-tive. You can also monetize thesedata via mobile applications. TheBy 2017, over 300,000 will either liveor work in Songdo International CityDevelopment in Incheon, South Korea.
    • average Parisian spends four yearsof his life finding parking spaces;would he pay 10 euros a monthfor a service that made this easier?This type of intelligent infra-structure will be the new norm.Greenfield cities will be builtthat way. So, cities that want tocompete will have to arrive at thatnew norm.How will these technologicalinnovations help cities cut costs?Just look at what new technologycan enable in city governance.About 70 percent of the energyin the world is used in cities, 40percent of that in buildings. Butbuildings have only 40 percentutilization. So, if you can improveutilization, a 30 percent energysaving is simple. Or look at thereduction of traffic you canachieve through different waysof working, Smart Work Centers,better planning. With cloud-based computing, you can givepeople access to education for $3 amonth. If you think about health-care, 80 percent of doctors’ callsdon’t need physical interaction.In future, more diagnostics willbe done remotely, so you’ll onlysee your doctor for an interven-tion. Politicians buy in becausethey see the benefits—and need toprovide thought leadership to getreelected.Tell us about your work in London.I love cities with deadlines. Ifyou’re hosting the Olympics, youknow you have to make progress.For us, in the neighborhoodswhere you have the Olympics, thereal work starts after the games.How will the Olympic Village besustainable? How will we makethat a Smart Work Center? Howcan you transform stadiums sothey serve multiple functions?If you add technology, can youmake them profitable for the nextdecade, not just for one event? It’sa different way of thinking.Where is globalization heading?We’re in the fourth phase of glo-balization. Columbus discoveredthe New World; Vasco da Gamadiscovered the way to the East.Then we started trading for centu-ries. Then, at the end of the 20thcentury, we started to outsourcework, manufacturing, R&D.Now, in the fourth phase, we’relooking at the globalization of thecorporate brain. Where’s the mostexpertise for supply-and-demandvalue chains? Probably Asia. So,you see many companies havinga head of supply-chain manage-ment there. I’m always lookingat clusters because innovationcomes in clusters. And I look athow we can participate in theseinnovation centers.In envisioning the future, you’vesaid that it helps to think morelike children. Why?If I look at how my childrenlearn, work, and communicate,it’s dramatically different fromthe way that Generation 50-plusthinks. So I think urban plannershave to look more through theeyes of children. I was 14 when wegot a black-and-white televisionat home. So, if I’m not careful,I become a prisoner of my ownexperiences. Then I won’t thinkout of the box.How has living in India changedyou and your family?It was humbling to see theextreme poverty, the malnutrition,the people living on the streets,and to see them still valuinglife and being happy. That hasdramatically changed our lives.It’s made us more humble. It alsofurther develops your communityfeeling and deepens your sensethat your company has a corporatesocial responsibility. As a technol-ogy company, you’re giving peopleaccess to healthcare and educa-tion, and helping to create jobs;you’re not just selling what youhave, but creating what peopleneed. For my kids, it’s been life-changing, too—to understand thatthe world is big and complex, thatthere are a lot of unmet needs, andthat, as a human being, you have asocial responsibility to contribute.Learn moreVideo clips from this condensedconversation are available atwww.pwc.com/cities, as is afull-length print version of theentire, much longer discussion.
    • 50 | Cities of Opportunity | PwCTechnology readinessThe competition for digitaladvantage continues to intensifyThis indicator has seen an interestingreordering of positions in the top 10 this year.While this fact might just be the result ofshort-term developments, it might alsopresage longer-term trends.Seoul, which came in second last year, hasovertaken New York at the very top of therankings. But instead of simply switchingplaces with the Korean city, New York hasdropped to third place, behind San Francisco—which climbed two places from fourth lastyear. In so doing, the northern California cityhas also passed ahead of Stockholm, whichdrops to fourth this year from third in 2011.Moreover, while Hong Kong has dropped threeplaces to tenth this year, Tokyo has risen threeplaces, jumping from ninth last year to sixththis year. London, too, which just missedthe top 10 in 2011, tied Los Angeles this yearfor eighth place, safely inside the group of10 best.Basic, but intriguing, consistencies with lastyear’s data remain, however. Stockholm isstill the only non-Asian city to reach the topranking in any variable in this indicator, rank-ing first, as it did last year, in both InternetDigital economyscore*Software developmentand multi-media design1Broadbandquality scoreInternet accessin schools*252027202612242023229218161116101357141642203272226231525141718122013249199113101625561227182627262116172622191420141541310126115289267262591218272416813222212031910157411714611235161386SeoulSan FranciscoNew YorkStockholmChicagoSingaporeTokyoLondonLos AngelesHong KongTorontoParisSydneyMoscowBeijingBerlinShanghaiMadridKuala LumpurMilanIstanbulAbu DhabiBuenos AiresMumbaiMexico CityJohannesburgSão Paulo2020181514121297643212222232425261017Score969391898180807979716665565449484844413433282827242322271 The combined indices gauge a city’s performance using quality(weighted 70%) and cost (weighted 30%) assessments of thelocation, as well as 120 qualitative competitiveness measures. Forsoftware development, these measures include availability andtrack record in ICT; availability of specialized-skills professionalssuch as scientists and engineers; access to venture capital; R&Dcapabilities; software exports; quality of ICT infrastructure; andspecialization in software development. For multi-media design,measures include the size of the location’s leisure and entertain-ment sector; its specialization and track record; informationtechnology infrastructure; quality of life; and skills availability.Each city’s score (here 96 to 22) is the sum of its rankings across variables. The city order from 27 to 1is based on these scores. See maps on pages 16–17 for an overall indicator comparison.HighLowMediumHighest rank in each variableaccess in schools and digital economy score.Meanwhile, Seoul continues to outrank everyother city in broadband quality, as does Tokyoin software and multi-media development anddesign. This year’s results continue to raisethe question that was obvious last year: Whydoes Stockholm score so low in developmentand design, the only variable in which it doesnot rank first or second? A possible answer isits relative lack of success in attracting foreigntechnology firms, which is also reflected in itslow Foreign Direct Investment (FDI) figures inthe economic clout indicator. Everything elsebeing equal, Sweden’s capital would easilyrise to number one in this indicator if it weresimply competitive in this variable.*Country-level data.
    • Partnership for New York City  |  Cities of Opportunity | 51Health, safety and securityFrom Aristotle to Bratton to Chan,securing citizens’ well-being is key“Man when perfected is the best of animals,”Aristotle wrote in Politics, “but when he isisolated from law and justice he is the worst ofall. …” In the words of Kroll chairman and theonly man to have led both the New York andLos Angeles police departments, Bill Bratton,“If you don’t have security, and you don’t havehealth and safety, all the other pillars thatsupport democracy will weaken, includingeducation and the economy. If you have ashaky platform, they are all going to be shaky.”Dr. Andrew Chan, deputy chairman of theArup Group of global engineers and designers,agrees: “For the average person in a develop-ing city, the most important factor is safety,health, and security.”From ancient Athens to modern New Yorkand Hong Kong, there appears to be univer-sal agreement on a city’s responsibility toits citizens’ well-being. As such, this sectionessentially tests civic viability, cohesion, andadvanced socioeconomic achievement. Amongall indicators in Cities of Opportunity, thisone comes closest to actually quantifying thequalities that constitute urban “civilization”—the word whose very meaning is embeddedin the notion of a city.That is why this indicator also rewards long-term stability and relative affluence. After all,health, safety, and security were the reasonsmen and women originally gathered together18242424172524271316142419121510911365518726End of life care2*252215152621151924162715202311175167111128318Health systemperformance1*252126241711201619274229125714181513861013223Hospitals27252020162620162172420231613991112114352123Political environmentCrime24242424271818181827241018182718185751010755244 3 1 6718192317131186StockholmTorontoSydneyChicagoSan FranciscoSingaporeBerlinNew YorkLondonMilanAbu DhabiTokyoLos AngelesParisMadridHong KongSeoulKuala LumpurJohannesburgBuenos AiresMexico CityShanghaiBeijingMumbaiIstanbulMoscowSão Paulo212017151412109543212224252627Score1191161141091071031019796959393918981716155464342383525241916Each city’s score (here 119 to 16) is the sum of its rankings across variables. The city order from 27 to 1is based on these scores. See maps on pages 16–17 for an overall indicator comparison.HighLowMediumHighest rank in each variable1 Measurement of a country’s health system performance madeby comparing healthy life expectancy with healthcare expendituresper capita in that country, adjusted for average years of education.(Years of education are strongly associated with the health ofpopulations in both mature and emerging countries.)2 Measurement of countries according to their provision of care fortheir citizens at the end of their lives taking into account the basichealthcare environment, availability, cost, and quality of care.Continues on page 77*Country-level data.
    • 52 | Cities of Opportunity | PwCWhat’s the role of the police intoday’s society?We make neighborhoods peace-ful. We help control behavior. Wemake things safe. Other societalproblems can be dealt with moreeffectively when you don’t havefear, disorder, and crime. As apolice chief, I think of myself asvery much like a surgeon in atrauma center. A person is broughtin from a horrific accident. Youfind out what’s going to kill thispatient and what you must do tosave that life. In the late 1980s,As Commissioner of the New York Police Department from 1994 to1996, William J. Bratton fought crime with legendary success, spear-heading a national revolution in attitudes toward policing. Brattonadopted a “broken windows” community policing strategy of zero toler-ance for minor offenses and championed statistical analysis to preventcrimes before they occurred. His seven years as Chief of Police in LosAngeles saw an equally impressive drop in crime rates. Now back inNew York, Bratton is chairman of Kroll, the private security company.He recently co-authored a leadership book, Collaborate or Perish!many American cities were effec-tively dying, principally because ofcrime, which was causing peopleto flee, leaving behind the poorand dispossessed. Cities werebeing written off. But just as thepatient seemed about to expire,it all began to change.How did you save the patient?A new philosophy of policing wasembraced by many police chiefs,myself included. The medicinewe used was community policing,with its emphasis on partnership.We also returned policing to itsBill Bratton transformed lawand order… in New York and Los Angeles. Today, he says public safety is themost critical priority for any city—and explains how to achieve it.
    • Partnership for New York City  |  Cities of Opportunity | 53founding roots—the idea thatpolice exist primarily to preventcrime by our presence, activities,and visibility. In the ’70s and ’80s,police were told to focus not onpreventing crime but on respond-ing to it. We corrected that.What’s the secret of transformingcrime-ridden neighborhoods?Community policing and a focuson broken windows are essential.The concept of broken windows—taking care of the little things—was our lynchpin strategy inNew York and L.A. We will arrestpeople drinking in public whoget drunk and then go after eachother with guns and knives. Wewill not allow people to litter.We will have zero tolerance forquality-of-life crimes. At the sametime, we will focus police resourceson more serious crimes—themurders, muggings, rapes, androbberies—because, otherwise, itseems like a no-man’s land. In the’90s, we got it right by having zerotolerance not only for major crime.However, if the government cleansthe area up but the communitydoesn’t help preserve it, you’re notgoing to be successful.How can the police encourage thecommunity to help in high-crimeneighborhoods?Police have to go into these verydangerous neighborhoods andcalm things down, handling thetough job of taking on the badguys. You can’t break the law toget them. You have to deal withthem humanely. You can’t beatthem or wrongfully arrest them.That’s critically important becauseeven the good people in thoseneighborhoods aren’t going tosupport you if they feel thatthese kids—who are their sons,nephews, and brothers—areunfairly treated. You also haveto act consistently: You can’tpolice differently in rich and poorneighborhoods, white and blackneighborhoods. The mantra I’mknown for is that you put copson the dots: You identify whereproblems occur that create fear,disorder, and crime, and that’swhere you put your police. Unfor-tunately, that often happens inpoor and minority neighborhoods.So it’s critical that people therefeel they’re treated fairly and gettheir share of resources.How beneficial was CompStat, asystem that uses statistical analy-sis to allocate police resources?Think of this from a medicalperspective. You go to the doctor,and he runs a CAT scan over youto identify your illness. CompStatidentifies the crime hot spots ina particular location, and that’swhere you want to put your cops.A doctor does a physical exami-nation to identify a basal cellmelanoma because he under-stands that you’ll die if he doesn’tstart treating your illness rightaway. In the same way, CompStatidentifies these crime problems asthey’re emerging—when there aretwo or three incidents, not whenthere are 20 or 30 incidents andyou’re already dead. Fortunately,we had a lot of medicine to workwith: In New York, we had 38,000cops, and it took us one to twoyears to completely tip the cityand turn it around. We had a lotless medicine in L.A.—9,000cops—so it took me seven yearsto tip the city.Given the huge problems con-fronting you in L.A., did youever have second thoughts abouttaking on that managementchallenge?On my first weekend there asChief of Police, we had about 17murders, and I was questioningwhat the hell did I get myself into.The police department was muchmore demoralized than in NewYork. It was incredibly small andhad been literally at war with theAfrican-American community for50 years. There also was a horrificgang problem. In my first yearin L.A., I think there were 676murders. This year, there may befewer than 300. So we took thatterrible situation and turned itaround. I believe in a leadershipmanagement system that I callthe Christmas tree. You start withPolicing is not a cost. It’s an investment. If youdon’t have public safety, the money you’reapportioning to libraries and parks is wasted:If people don’t feel safe, they’re not going to usethem. If you make it safe, businesses will comeand invest; jobs will be created.Today, as chairman of Kroll.
    • 54 | Cities of Opportunity | PwCa vision and surround yourselfwith people who believe it canbe achieved; then spread it downthe tree. Your team attracts othersuntil, eventually, you find there’s atipping-point level where the rub-ber hits the road. In cities, that’susually the police captain, who’sclosest to the community andthe cops and who’s under a lot ofpressure from the police structureabove him or her. You give thatperson power and authority buthold them accountable. This sys-tem is teachable and will work injust about any city in America.How do you develop a sense ofinclusion and shared investmentin a city as diverse as L.A.?Cities are where people of all dif-ferent types come together fromdifferent backgrounds, ethnicities,and countries to trade, to learn, todevelop art. Tom Wolfe once wrotea wonderful piece explaining howartists are the first to recreatecities that are dying: Artists gointo deserted neighborhoods, intolofts, then attract patrons; thenlittle coffeehouses and restau-rants are established. The point isthat cities are intended to allowfor that socialization. But if thatsocialization is threatened, therevitalization of cities isn’t goingto happen. And how is it threat-ened? Crime and disorder. That’swhere the police come in. In ademocracy, the first obligation ofgovernment has to be the rule oflaw, to ensure your physical safetyand that contracts are enforced.These two things that holdhumanity together—the abilityto coexist in peace and engage inrelationships based on contractsthat can be legally enforced—are the foundations of democracy.And cities are the catalysts forthese things.How should today’s cash-strappedcities view the vast cost of effec-tive police work?Public safety is the first obligationof government in a democracy.Policing isn’t a cost. It’s an invest-ment. If you don’t have publicsafety, the money you’re appor-tioning to libraries and parks iswasted: If people don’t feel safe,they’re not going to use them. Ifyou make it safe, they will come.Businesses will come and invest,jobs will be created, more taxeswill be paid, more schools willbe built, more policemen willbe hired.Do megacities present particularpolicing challenges?Everything is scalable. But theproblem is that the megacitieshave tended to grow up in some ofour most impoverished countrieswhere the rule of law is not asfirmly established as in, say, theWestern democracies. Also, a lotof the basic services that help todeal with human needs are notavailable there. So if you lookat those cities with enormouspopulations, all of them are strug-gling to deliver basic quality-of-lifeservices, and none of them aredelivering a satisfactory police ser-Cybercrime is the crime of themoment and the crime of thefuture. The capability to causephenomenal havoc—financial,personal, economic, or amongnations—is very real.vice or public safety. Sometimesthe issues are too big. New Yorkwas tough enough in the 1990swith 8 million people. Imaginehow challenging Mexico City iswith 20 million.Are gangs the same in differenttypes of cities, whether it’s MexicoCity, New York, L.A., or London?There are some commonalities inthat gangs always exist because ofa need. And that need is social-ization, the desire to belong, thedesire to be part of a family.What did you make of the policeresponse to the London riots?Britain’s government recentlycame out with a report that waspretty strong in its criticisms of theMetropolitan Police for its failureto respond quickly enough andforcefully enough. The good newsis that the police will learn fromthat. Months after the riots, theywere still arresting people andmaking every effort to identifyeverybody they could, which sendsBack 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.
    • Partnership for New York City  |  Cities of Opportunity | 55phenomenal havoc—financial,personal, economic, or amongnations—is very real. It is agrowing problem, and a lot ofresources are being put into playto address it.Looking at the 10 indicator catego-ries we survey in this report, whichones seem most important for thelong-term future of cities?Health, safety, and security is thenumber-one requirement. If youdon’t have security, you don’t havehealth and safety, and all the otherpillars that support democracywill weaken, including educationand the economy. Transportationinfrastructure also is important:People in huge, emerging citiesoften travel incredible distances towork with incredibly poor trans-portation systems. Also, ease ofdoing business is critical. In L.A.,they’re so anti-business: The regu-lations smother you to death. I hadlots of friends who were trying tocreate businesses there, and theregulations were such a disincen-tive. But for me, public safety stillis the most critical issue. We’re inthe midst of the greatest recessionsince the Great Depression, andhow do you describe Americanpolitics at the moment? It’s a totaldisaster area. But crime has beendown in the US for four and a halfyears in a row. So at this time ofgreat despair, the one positivething we have going for us is thatfoundation of safety.Did you want to become apoliceman when you were a boy?My earliest memories weregrowing up with TV shows like“Dragnet” and “Adam-12” andwanting to be a policeman. Fortu-nately, life was very kind becauseI was able to get into it and go ina lot of interesting directions. It’s avery rewarding profession becauseevery day you can have a life ofsignificance. Every day, if you getit right, you can have an impacton so many people.Learn moreVideo excerpts of this condensedconversation are available atwww.pwc.com/cities, as is afull-length version of the entire,much longer discussion.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 youengage in this behavior in thefuture, you’ll be punished severely.That’s very important: In a democ-racy, you must have punishmentfor offenses.How significant is the impact ofsocial media on urban violenceand protest?Social media played a significantpart in the London riots. The ArabSpring is a clear example of thepotential impact. Identity theftalso is an impact of social media.The loss of privacy is another. Inaddition, see these pop-up mobsin different American cities. Onthe plus side, it’s very helpful to usin solving crimes. Oftentimes, thecriminal provides all the evidencewe need through use of the socialmedia. I don’t think we fullyunderstand yet the scope or thepotential of it, both good or bad.But we are learning very quickly.New technology poses anenormous challenge in terms ofcyber-spying. How significantare the threats?We’re at tremendous risk. At mycompany, Kroll, we are rapidlyexpanding our cyber-securityactivities and our data-breachprotection. It’s the crime of themoment and the crime of thefuture. The capability to cause
    • 56 | Cities of Opportunity | PwCAfter a fundamental reorganization andrestructuring to better reflect a city’s trans-portation and infrastructure experience forresidents and visitors, the rankings in thisindicator have changed dramatically. None ofthe top five this year was in the top five lastyear. For instance, Singapore, which ranksfirst this year, ranked 17th last year. Seoul andToronto, tied for second place this year, rankedninth and 15th, respectively, last year. Tokyohas also moved up, albeit only two places, tonumber four, while number-five Hong Konghas also moved up two places. In the end,Toronto is the only non-Asian city in the topfive—as opposed to last year, when the top fivecities were exclusively European or American.Regarding US cities, in fact, only New York isin the top 10 this year, along with four Euro-pean cities. Chicago has fallen 12 slots fromsecond last year to 14th this year, tied withSan Francisco, which has fallen 10 slots fromfourth last year. And Los Angeles does evenworse this year than in 2011, falling from21st to 25th.This indicator now reflects a rethinking, notsimply of the category, but of the actual roletransport and infrastructure play in a city’sdevelopment and cohesion. It now seeks tomeasure and assess the actual networks ofinternal mobility and physical connection thatbind a city together and maximize both itseconomic efficiency and social integration.As a result, three variables (aircraft move-ments, incoming/outgoing passenger flows,and airport to CBD access) have been movedto the city gateway indicator, as they measuremovements in and out of, not within, a city. Ofcourse, traffic congestion is certainly an issueof 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.Transportation and infrastructureA major revision focuses on internal mobilityand the city dweller’s experienceWhile several variables have been removedfrom this indicator, some have been addedor altered. The altogether new one is publictransport systems. This variable assesses thevarious systemic elements of a fully modernand efficient public transport network, whichare manifestly more than the sum of metrotracks or tram rails. By gauging systemiccoverage and connectivity (bus rapid transit,trolleys, or bike share, for example, as well asconventional modes), this variable measuresthe broadest possible coverage—or the extentto which the largest possible percentage ofa city’s population has access to the widestpossible means of public conveyance.In addition, major construction activitynow replaces skyscraper construction activ-ity. While vertical density is a distinguishing(and often necessary) feature of urban life,skyscrapers are only one aspect of symbolicurbanism (the café and the cabaret are oth-ers). And while it is mostly European citiesthat are identified with a less vertical defini-tion of urbanism, the “Old World” actuallycontains more than one continent. In fact, inmany Asian cities that are now emblems ofskyscraping ambition, it is often the resident ofa Beijing hutong (an alley of traditional court-yard residences) or a Shanghai lilong (again,a lane of traditional low-rise settlement) whois the descendant of generations of urbanites.By contrast, many of the dwellers of muchtaller, “modern” structures are recent migrantsfrom the countryside. It is precisely to stressthis human dimension of infrastructure thatwe also moved the housing variable—whichcorrelates very strongly with high quality oflife—from demographics and livability tothis indicator.Public transportsystems202022222515271725251332012512714126291794272161686SingaporeSeoulTorontoTokyoHong KongStockholmNew YorkLondonMadridParisBerlinBuenos AiresMexico CityChicagoSan FranciscoAbu DhabiMilanKuala LumpurShanghaiMoscowBeijingMumbaiIstanbulSydneyLos AngelesSão PauloJohannesburg2020201414127432123232426101017262111527
    • Partnership for New York City  |  Cities of Opportunity | 57Each city’s score (here 114 to 32) is the sum of its rankings across variables. The city order from 27 to 1is based on these scores. See maps on pages 16–17 for an overall indicator comparison.HighLowMediumHighest rank in each variable1 The kilometers of mass transit track for every 100 squarekilometers of developed and developable land area.2 Cost of the longest mass transit rail trip within a city’s boundaries.Bus trips are used in the cities where there are no rail systems.Cost of publictransport2Licensed taxisMass transitcoverage1122291726231520272414101325221116198163745182172214243112137523271116261341820259211191568202118112271319239262510824142715317165421261Major constructionactivityHousing1813211442219727924158211123161772625102132742711231523232323152584232311158112814272352515Score1141091091071031031019999999593939292898680807371706766595432
    • 58 | Cities of Opportunity | PwCPeter Chamley, head of infrastructure at Arup, the global design andengineering firm, joined Richard Abadie, his counterpart in PwC’sinfrastructure practice, for a conversation on the challenges oftransportation and infrastructure in the world’s great cities. The twodiscuss commuter and high-speed rail, air access, developed versusdeveloping city needs, as well as the seemingly universal struggle togo from planning to completion on time, on budget, and at top quality.The British government hasrecently announced plans for anew high-speed rail line linkingLondon with major cities tothe north.What would HS21do for London?We should not be thinking aboutHS2 as a London project becauseit’s about the rest of the country.But for London, it will have amassive impact in that the com-muting reach increases, thebusiness reach increases, and theability of the rest of the countryto get to London and then on toEurope is significantly improved.HS2 is primarily about capacityrather than speed, and adding tothe capacity of HS2 is absolutelyessential for the economy.Is the challenging process in theUK of dealing with planningand costs unique, or is it acommon issue?It’s a fairly common problem,and it depends on the legislativeframework that you’re working in.Here, we have a well-developedlegislative framework and a veryrigorous planning process. Placeslike the States get embroiled inpolitics. Here, there’s a fairly largedegree of politics, but the planningprocess grinds on. You end up witha very good result, but it just takestime to get there. In Singapore,which is much smaller, you’ve gotone level of government, decisionsare made, stuff happens quickly.The ins and outs, overs andunders, of a great city… keep economies and commuters on the right track, accordingto Peter Chamley of Arup engineers
    • Partnership for New York City  |  Cities of Opportunity | 59What are lessons from other citiesin terms of centralized planning?My experience includes manyyears in New York working on theSecond Avenue Subway. There’sthis slow decision-making processand politics gets involved. If simpledecisions had been made earlyand at the right level, you couldhave saved a huge amount of timeand money.What lessons can we learn fromthe Big Dig3in Boston, a greatcase study on cost overruns.The big lesson learned in the UKwas from CTRL/HS1,4which wasdelivered on time and on budget.I think it is about being realisticat the outset and not lettingwishful-thinking numbers be usedin the planning process. Thereare quite a number of people whoknew what the cost of the Big Digwas going to be right from theearly days, but nobody allowedthose numbers to be spokenbecause the project would neverhave gone ahead. On CTRL, therewere realistic timeframes andrealistic estimates, so there wasn’ta constant battle of costs seen tobe rising.How can we reduce delays inflying into London? Is it a newairport, a new runway at Gatwick,a new runway at Heathrow?There are several answers. Theplan for the Thames Estuaryairport is great, but that will takelong to come to fruition and we’vegot a problem right now. Youwon’t get a new airport out in theEstuary completed for 15 years.In the meantime, we’ve got toimprove Heathrow.What impact do airport delayshave on London?I think people find it difficult butit doesn’t deter them from comingto London. Heathrow ExpressUsing Old Oak Common2as anexample, how can the cost ofdelays be reduced?At Old Oak Common, you’ve gota large area of land and you needan integrated view of the whole.How does the land that is availableintegrate with Crossrail? Integratewith the Great Western route?Integrate with links to Heathrow?Integrate with High Speed 2?If you want to put an HS2 stationin the way, you are going tocause a lot of trouble. But it needssomebody to take a step back anddecide what, overall, is the rightthing to do.1 HS2 is a £33 billion ($52 billion) high-speedrail line approved for construction to connectLondon to Birmingham, Manchester, and Leedsto the north.2 Old Oak Common is a section of London withkey rail connections.3 A major highway tunnel project in Bostonplagued by cost overruns and delays.4 HS1 is the high-speed rail line from London tothe Channel Tunnel. It is also known as CTRL,for Channel Tunnel Rail Link.Digging into Manhattan’s bedrock for the new Second Avenue Subway, on whichPeter Chamley served as chief engineer.
    • 60 | Cities of Opportunity | PwCHave the Olympics5been good forLondon in terms of constructionand tourism?The construction industry canlook at the Olympics with pride.Wonderful facilities have beendelivered very quickly and onbudget, and that puts the nailin the coffin of the story thatBritish construction is always lateand costs too much. It has beena great success in regeneratingthat part of London.How can commuting intoLondon be improved?London has made some bigstrides. Everybody complains,has made a fantastic change tothe traveling experience to andfrom Heathrow. I live in centralLondon, and I can be from myflat, checked in from door to door,through security, in less thanan hour. What I see as the issuewith Heathrow is the reducednumber of connections. Going tocertain countries is much easiervia Frankfurt or Schiphol ratherthan by Heathrow, and Heathrowis possibly losing its position. Mindyou, the flying experience into JFKis similar, but the experience ofgetting from JFK into Manhattanis just a nightmare.talking about at Old Oak Com-mon, which would allow Londonto grow. London has to provideadditional quality office space inthe right locations, and Crossrailwill be part of that. We have tomake sure that inter-connectivitybetween HS1, HS2, and theContinent really works for therest of the country. We have tosort out the capacity problemat the airports.Compare infrastructure in devel-oped cities versus developing cities.It’s a different set of challenges.In a place like London, the ques-tion is how to tweak infrastructureYork, you have straight wideavenues, with plenty of space togo underneath the avenue. Youdon’t have that in London, butwe’ve found a way to thread theneedle. So we go up and over, overand under, in varying degrees andwith varying amounts of clear-ances. The approach taken onCrossrail is to do everything offthe street, so we don’t have bigexcavations in the street whereyou would have a nightmare ofdealing with the utilities.Contrast that with the Second Ave-nue Subway project in New York,where there isn’t space to put stuffoff line because it’s all multi-story high-rise buildings, andyou are confined to the avenue’salignment. A large section of theSecond Avenue Subway develop-ment has to be cut-and-covered[a temporary excavation from thestreet cover decking]. And it hasbeen a nightmare just to deal withall of the utilities in the ground.Is there a fundamental differencebetween the cost-benefitanalysis for Crossrail and, say,the Delhi Metro?There’s always a problemestimating ridership with newtransportation infrastructuregoing into a city that doesn’t haveit. In mature markets like Londonor New York, estimating ridershipis well-proven, and we generallyexceed the ridership that weanticipate. There is a long andsad history of new transportationinfrastructure going into cities thathave not had it before and theridership projections are com-pletely over-estimated.Compare privately financedand publicly financed projectsas they relate to quality, timetable,and cost overruns.In the past, there has been plentyof experience of cost and scheduleover-runs on public infrastructureprojects. But this is a hugegeneralization and the picture ischanging. With privately financedPlaces like the States get embroiled in politics. In the UK, there’s a fairlylarge degree of politics, but the planning process grinds on. You end upwith a very good result, but it takes time. In Singapore, with one levelof government, decisions are made, stuff happens quickly.to keep ahead of the game. Inplaces like Mumbai and São Paulo,it’s how to get some infrastructurein just to meet basic needs. Do wespend our dollars on sanitation,or on making sure we have ametro system that serves thecity center and creates a vibranteconomic hub?London is so developed, there’shardly any space for anyone, letalone construction activity andTBMs [tunnel boring machines]navigating underground. Can youtake us through that challenge?The alignment of Crossrail, whereit goes and how it gets there, is toa large degree driven by what isalready in the ground, and a bigchallenge is avoiding buildingfoundations. In places like Newbut commuting now is dramati-cally different than it was 20years ago. There has been a fairamount of investment in newrolling stock and capacity, butprobably not enough. That’swhere we’ve got to go—electrifica-tion, upgrading of existing lines,upgrading of signaling, improvingstations to allow longer trains.It’s in getting more out of theexisting infrastructure.What infrastructure shouldLondon invest in to be morecompetitive globally?Crossrail6will make a big dif-ference and will allow CanaryWharf7to grow. It is constrainedat the moment by transport.Crossrail could be the catalystfor something like we were
    • Partnership for New York City  |  Cities of Opportunity | 61projects, there has been a bettertrack record of rigor being appliedto making sure that we are oncost and on schedule and that therisk profile is managed correctly.These same levels of rigor are nowbeing applied across the board.During the Great Depression,America had the New Dealprogram and later the interstatehighway system, spent a fortuneon infrastructure and probablymade a step change in its infra-structure. Some today wouldargue that we may have pro-gressed in technology but notvision. What do you think?We often forget the lessons ofhistory. One of the most fantasticbits of private entrepreneur-ship was Penn Station8in NewYork. Look at the challenges thatthe promoters of that projecttook on: Putting new tunnelsusing completely new technol-ogy underneath the Hudsonand East Rivers; building thismassive station in the middle ofan already well-developed city;5 This interview was conducted in February2012, before the Olympics in July-August.6 Crossrail is a 118-kilometer (73-mile) rail lineunder construction linking London to the eastand west. It involves 44 kilometers (24 miles) oftunneling under the city and is described as thelargest civil engineering project in Europe, witha projected £16 billion ($25 billion) cost. It isscheduled to begin service in 2018.7 Canary Wharf is a major business and retailcenter built on former London docklands.8 Pennsylvania Station is a key rail hub in NewYork City and the largest in North America. Theoriginal structure (demolished in 1963 and sincereplaced above ground) was considered anarchitectural showcase when it was completedin 1910, and a technological marvel because ofthe tunneling required under the Hudson andEast Rivers.9 Isambard Kingdom Brunel was a renownedBritish engineer and railroad pioneer who,starting in 1883, became the driving forcebehind construction of the Great WesternRailway initially connecting Bristol and London.St. Paul’s Cathedral as viewed from London’s Millennium Bridge, another Arup project.dealing with the politics of NewYork at the time, Tammany Halland all that. It’s an object lesson inwhat people with vision and thedrive to deliver can do. What weoften lack now are projects havinga champion who will get hold ofthem and make it their sole aim todeliver them. You might criticizeRobert Moses, lots of people do,but he certainly delivered stuff.You might argue about whether itwas the right stuff, but he certainlygot it delivered. And those privatebackers and their railway compa-nies in the UK and America thatbuilt these big iconic projects didit because they had a champion,a vision, and a drive to get thingsdone. I don’t often see that happen-ing in public infrastructure projectsthat get mired in politics. You needa leader at the top of his game whois the Brunel9saying, “I’m going tobuild the Great Western.” Whereare those people? If we’ve learnedanything, it’s that big projects needa champion to drive them.Learn moreVideo excerpts of this condensedconversation are available atwww.pwc.com/cities, as is afull-length version of the entire,much longer discussion.
    • 62 | Cities of Opportunity | PwCSustainability and thenatural environmentWeighing the effectivenessof public policyWe have added “natural environment”to this indicator’s name in 2012 to reflectspecific variables, usually of climate (Toronto’swinters) or geology (San Francisco’s seismicactivity), over which municipalities have littlecontrol but which affect the daily lives of theircitizens. The ongoing repercussions from lastyear’s Tōhoku earthquake and subsequenttsunami illustrate that, while nature maynot be amenable to human control, its mosttragic consequences can be mitigated bypublic policy.Two variables remain from last year: recycledwaste and air pollution. The last variable,public park space, was originally green spaceas a percent of city area in last year’s lifestyleassets indicator. It has been renamed toreflect the true scope of the measure: accessto public parks.The decidedly different profile at the top ofthis year’s rankings, therefore, correspondsto the many changes in the variables. Almostevery city in the top 10, with the exception ofMoscow, is a mature economy, in contrast tolast year, when four cities from the emergingworld made the top 10. This was primarilybecause of renewable energy use, a variablethat has been removed from this year’s evalu-ation because the available data are national,not municipal, and are accordingly non-comparable and may be misrepresentative.17261924121881351511716201422521271096432223Recycled waste25209175117101826217133112717228142313241947Thermal comfort11272518262721122221221171917173125181741762525Natural disaster risk22231819272526241715161472164521211109133820Public park spaceAir pollution272520111815142420211423162171491622510874263 1 3 116131196SydneySan FranciscoTorontoBerlinMilanStockholmMoscowParisNew YorkMadridLos AngelesBuenos AiresChicagoSingaporeBeijingLondonSão PauloHong KongMumbaiSeoulTokyoJohannesburgKuala LumpurMexico CityIstanbulShanghaiAbu Dhabi2121191817151413109964321222423262627Score103101101918988868683827974726965656459585858555553494433Each city’s score (here 103 to 33) is the sum of its rankings across variables. The city order from 27 to 1is based on these scores. See maps on pages 16–17 for an overall indicator comparison.HighLowMediumHighest rank in each variable1 Measure of the average deviation from optimal room temperature(72 degrees Fahrenheit) in a city. January and July heat indices werecalculated for each city using an online tool that integrates averagetemperature and average morning relative humidity during eachmonth. A final thermal comfort score was derived by first takingthe difference between a city’s heat index for each month andoptimal room temperature and then averaging the absolute valuesof these differences.
    • Measuring sustainabilityThe variables making up this indicator havechanged continually during the last severalyears for the simple reason that “sustainability”is both difficult to define in itself and toimplement as a coherent public policy—especially as cities vary widely in terms ofclimate, geology, demographics, and economicdevelopment. Making comparative analysiseven more complicated is the fact that thecriteria for data collection for this indicatorvary from one city to the next. Three examplesindicate the “degree of difficulty” in actuallydetermining, and measuring, sustainability.Greenhouse gas (GHG) data are now availablefor many cities, but the method of collection,degrees of verification, and types of emissionsincluded diverge considerably. Paris’s datacomprise sources of both food and waste, forexample, while those of many cities do not(and American cities tend to exclude emissionsfrom agriculture, fossil fuel extraction, andrefinement and other industrial sources).1New York meanwhile measures GHG annuallywhile other cities may do so every five or 10years, or not at all.Another case in point is a city’s recycling rate,which is not always an automatic indicatorof commitment to sustainability. In manyEuropean countries, including Germany andSweden, a greater emphasis on reducingIn 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.consumption and unnecessary packaging notonly results in less waste, but in less recyclablematerials as a percentage of waste. Moreover,although Sweden uses waste-to-energytechnology to further manage waste—andreduce landfill—this advanced approachto waste management is not represented inour recycling variable. On the other hand, indeveloping cities such as Mumbai, community-driven and informal collection of recyclables,which also adds income in the poorest areas,makes the actual rate of recycling far surpassthe official rate.Finally, in the case of renewable energy, whichwas included in the indicator last year, therewas little available and non-comparable dataat the municipal level, so we had to construct ameasure using country-level data. Subsequentresearch confirmed that the cities in our reportwere, in most cases, correctly represented bythe resulting data. Nevertheless, after discus-sions with specialists in the field, it becameclear that a few cities would have fared evenbetter than their respective countries as awhole (which, of course, validates the generalassessment that cities have become the world’slaboratories in sustainable living). In thisinstance, therefore, we decided to removethe variable.Partnership for New York City  |  Cities of Opportunity | 631 Inventory of New York City Greenhouse Gas Emissions,September 2011, http://www.nyc.gov/html/om/pdf/2011/pr331-11_report.pdf.Prussian blue skies boost sustainability in Berlin.
    • 64 | Cities of Opportunity | PwCToronto’s former MayorDavid Miller… discusses the civility of his city, economic development, and thevalue of immigration.Toronto comes across as acity of unsurpassed civility.Do you agree?It’s true. We are a city ofnewcomers; inclusion, socialjustice, and equity are coreCanadian values. That createsa city where people value eachother. It has implications forwhom we elect, how we govern,how the city looks and feels.By many measures, Toronto is a beacon of urban success, and from2003 to 2010, David Miller was mayor. Here, Miller talks about whatmakes a city prosper and the interplay among the needs of business,the cultural vitality of a city, and the balance of infrastructure and theenvironment. He sees jobs, opportunity, and technology as keys to acity’s prosperity. Miller now serves as the World Bank’s special advisoron urban issues as well as Future of Global Cities Fellow at New YorkUniversity’s Polytechnic Institute.Does that civility translate intoeconomic benefits?Yes. The fact that we are a civilcity, that we have strong envi-ronmental values, has a positiveimpact on the economy. Moderncompanies, which can move tomany cities, like to locate whereit is profitable, where you’ve got agreat labor force. Toronto has that.And the fact that we are relativelyprosperous has helped fund thosevery good public services that,in turn, reinforce the civility ofthe city.
    • Partnership for New York City  |  Cities of Opportunity | 65Great architecture, great urban design, justdoesn’t cost that much. The arts lift your spiritand your soul, and you need that even morewhen times are tough.regional governments haven’tcaught up to that yet. They arejust starting to wake up to theimportance of cities.Could you imagine redrawnjurisdictions—say, here’s Toronto,including a whole region beyondjust today’s city limits?Yes. A great city like New York isthe heart of an urban region thatarguably extends down the wholeof the eastern seaboard almostas far as Washington. Torontois the heart of an urban regionthat includes Hamilton, probablyalmost all the way to NiagaraFalls and east a third of the wayto Montreal.How do you promote strongerpublic-private collaborationsto do more with less?Collaboration between the publicand private sectors is essential tothe health of cities. We conveneda group of senior business leadersto write our strategy. We also hadlabor, non-profit, academic, andcultural organizations at the table.We asked the group, “How can weensure prosperity in this city?”Their report, Agenda for Prosperity,ultimately was adopted by theCity Council unanimously. Andit’s real recommendations—principles and then actions.How can a city balance the needsof communities, developers,architects, and preservationists?Development is crucial for cities,but growth at any cost doesn’twork. First, you don’t want sprawlbecause sprawl is environmentallyand fiscally unsustainable. Second,you need a coherent plan. Ourplan set out where the growthcorridors were, and they corre-sponded with higher-order rapidtransit. Third, the developmentmust be very green.What is the importanceof infrastructure?Infrastructure is hugely important,and now is the time to invest. Butit’s hard politically because youhave some constituencies saying,“No, no, no, you can’t—spendingdoesn’t work. You’ve got to cutback.” That’s totally wrong eco-nomically, and it’s wrong from acity building perspective becausewe need this infrastructure. What are the most importantareas for the long-term well-beingof a city?Intellectual capital and innovationmatter a lot because businesseswill come where there is theintellectual capital. Demographicsand lifestyle assets matter a lot.If you’ve got the intellectualcapital and innovation, you’ve gota livable city, and if you’ve goteconomic clout, that’s a verystrong combination.What does urban quality oflife mean to you?Can you walk around your city atany time of the day or night? Is itinteresting and exciting? If you goto a new city, you walk it and learnit through your feet.Can we afford aesthetics duringhard economic times?Great architecture, great urbandesign, just doesn’t cost thatmuch. The arts lift your spirit andyour soul, and you need that evenmore when times are tough.Are environmental targetsand economic developmentmutually exclusive?No. If you do the right thing forthe environment, it’s always theright thing for the economy.How can cities exploit theadvantage of density?You need rapid transit so peoplecan get out of cars. And you needgreat green spaces. You also needCities are growing rapidly inpopulation and economic power.But they seem to be shortchangedoften by national or regionalgovernments on funding, politi-cal influence, and the power toself-govern.Yes, there is a trend worldwide ofmass migrations to cities, and asa result, cities are acting on theirown. Mayors are very practical.Mayor LaGuardia [of New York]quite famously said there is noRepublican or Democrat way topick up the garbage. Cities arebecoming more powerful eco-nomically, but our national andCold comfort for a Torontonianin New York.
    • 66 | Cities of Opportunity | PwCto deal with the generation ofelectricity, and you need a smartgrid so you can sell power backto the plant.How does the city promotetechnology and innovation?Toronto is a hotbed of IT. In oneof our initiatives, pushed by theprivate sector, the city was a part-ner, and national and provincialgovernments very strong partners,in an organization called MARS,Medical and Related Sciences. It’sa biotechnology incubator, rightbeside some of the greatest teach-ing hospitals in the world, rightbeside a fantastic research univer-sity, the University of Toronto.And it is right near our bankingdistrict. It has venture capital rightin it, patent offices right in it, andcompletely fitted-out labs so thatsmall incubator companies canhave the same state-of-the-art labsthat a large multinational does.How important are art andculture to a city?The creativity that’s inherent inthe city not only relates to the arts.You need that creativity in indus-tries like biotechnology, research,and IT. Cities that have greatarts and cultural life have greatresearch and innovation becausethey are creative cities.Toronto is a huge magnet forimmigrants. What are thebenefits and the costs?It’s all benefits. We get the bestand the brightest young peoplefrom around the world. We havean incredible opportunity forinnovation, for entrepreneurialactivities, for learning from eachother, for having a diverse laborforce. And we’ve made it mucheasier for students to stay oncethey’ve studied, so we have thisincredible pool of talent.You said Canadians tend to favorimmigration. Why?Eighty percent of Canadians livein cities, and that’s where theimmigrants go, so people knownewcomers. If you’re not a new-comer, your neighbor is or yourneighbor’s parents are, and that’svery important. Our immigrationpolicies tend to recruit skilledpeople so Canadians see peoplecome and work hard and succeed.[Toronto] gets the best and the brightest young people from aroundthe world. We have an incredible opportunity for innovation,for entrepreneurial activities, for learning from each other, for havinga diverse labor force. And we’ve made it much easier for students tostay once they’ve studied.What are the challenges andbenefits brought by less-skilledimmigrants?It has to do with the characterof the people who come. It’s anunbelievable thing to uproot yourfamily and move halfway aroundthe world. And the people who arebrave enough to emigrate are thekind of people who are going towork incredibly hard. And that’strue whether it’s somebodywho is working at a blue collarjob or somebody who is acomputer engineer.Toronto is rich in ethnic com-munities. Does Toronto work tosupport that?Yes, we are culturally sensitive.We have swimming hours in ourpublic pools that are for womenonly. So if you’re from a Muslimcountry where it would be veryuncomfortable for you to be seenby a man in your bathing suit, youhave a place you can go. That’sa simple example, but there arehundreds of examples like that.We have a history of great publicservices, and it matters to integra-tion and it matters to business.Judged by the number of branchesper person, or by the number ofbooks circulated per person, wehave the best public library inthe world. If you go to the mainreference library in Toronto andyou get there when the doors openin the morning, people actuallyrun in to use the computers. Andthose people are newcomersseeking their first job or seekingto upgrade their English skills orother skills, or wanting to get theircredentials recognized in Canada.You recently told a group ofstudents that technology wouldplay an increasing role in solvingurban problems. How so?People are moving to cities, andcities are going to help us meet theworld’s challenges of opportunity,of equality, and of the environ-ment. Technology has a part toplay in meeting those challenges.How are we going to meet airquality, water quality, and climatechange goals? We are going tomeet them through things like asmart grid, things like buildinglight and heavy rail transport, andthose rely on technology.Toronto came in a close secondin Cities of Opportunity rankingslast year. Did that surprise you?No. Toronto is a really livable citythat’s successful economicallyand that welcomes and integratesnewcomers. One day, Toronto willbe number one.Learn moreVideo excerpts of this condensedconversation are available atwww.pwc.com/cities, as is afull-length version of the entire,much longer discussion.
    • Partnership for New York City  |  Cities of Opportunity | 67Each city’s score (here 82 to 23) is the sum of its rankings across variables. The city order from 27 to 1is based on these scores. See maps on pages 16–17 for an overall indicator comparison.HighLowMedium1 Weighted combination of city rankings based on: the quality andvariety of restaurants, theatrical and musical performances, andcinemas within each city; which cities recently have defined the“zeitgeist,” or the spirit of the times; and the number of museumswith online presence within each city. The “zeitgeist” rankings takeinto account cultural, social, and economic considerations.2 The traffic congestion measure is taken from the 2011 MercerQuality of Living Survey and adjusted using two additional sources.This measure reflects not only traffic congestion but also themodernity, reliability, and efficiency of public transport, whichreflect a city’s active management of the issue.Demographics and livability We know it when we see it, despite a certain je ne sais quoiThis indicator has been substantially revisedthis year into four variables, as opposed toseven in 2011, with the focus clearly on“livability,” a difficult term to define butone that most people instinctively feel theycan interpret for themselves. In that sense,the data in this indicator as a whole seek toapproximate, and reflect, what most peoplemean when they speak of livability. Continues on page 77In a fundamental way, this indicator isvery much like sustainability. Just as thereseems to be a global consensus on the citiesthat are most environmentally conscious,there is the same kind of relatively universalagreement on what makes a “livable” city—or, at least, on which cities are more livablethan others.Working agepopulationTraffic congestion2Quality of livingCultural vibrancy1251820121625142618252722285161219310713569211242116162722251420181323819717105911536122261162223201527912138324518119212741126251014617171717271725272317911112323231794923231499254166ParisHong KongSydneySan FranciscoSingaporeTorontoBerlinStockholmLondonChicagoLos AngelesNew YorkTokyoAbu DhabiMadridKuala LumpurMilanMoscowSão PauloBeijingBuenos AiresJohannesburgMexico CityShanghaiSeoulIstanbulMumbai201918161412119885432123212324262610172713Score827878767575747372676559595755535150494848464340373423It is no surprise, therefore, that seven citiesin the top 10 this year were also in the top10 last year, despite the considerable changein the respective variables. It is also hardly ashock that the top-ranked city in this indica-tor is Paris; even the most dyed-in-the-woolNew Yorkers have a soft spot in their heartsfor the City of Light, as the most recent filmsof Woody Allen and Martin Scorsese bothconfirm. (Many Parisians, it should be added,reciprocate this regard with their ownfondness for New York.)The cities in the top ranks of this year’s indi-cator are either all almost mythical in theirappeal—not simply Paris, but Hong Kong,Highest rank in each variable
    • 68 | Cities of Opportunity | PwCAs an engineer, what’s distinctiveabout your approach to urbanproblems?We engineers are used to mission-based tasks. We look at the risksa city faces, and say, “What’sneeded?” We set priorities, findthe solution, implement the solu-tion. In a developed city, we mighttalk about retrofitting buildings; ina city pursuing low-carbon strate-gies, we’d emphasize looking firstat existing technologies. This isa logical sequence. It’s commonsense. Money is a problem, butvery often it’s not just aboutAs deputy chairman of Arup Group, the global engineering company,Andrew Chan has played a key role in many of Asia’s largest infrastruc-ture projects. Overseeing Arup’s East Asia region between 1996 and2007, the Hong Kong-based engineer has helped build iconic skyscrap-ers, airports, highways, bridges, railways, subways, and even the BeijingNational Stadium for the 2008 Olympics. An expert on sustainability,Chan was until recently chairman of the Hong Kong Green BuildingCouncil. He also sat on the corruption prevention committee of thecity’s Independent Commission against Corruption. Here, he explainshow farsighted planning and “integrated infrastructure” can makecities more efficient and resilient.Andrew Chan of Arup engineerssees emerging cities… through the logical lens of resilience and sustainabilitymoney: It’s about creating agovernance system to makethings happen.Hong Kong’s infrastructure isfamously efficient. But are thereareas of vulnerability?We pride ourselves on everythingbeing efficient here, but onemajor issue is that we don’t talkin terms of “just in case.” We relyheavily on everything working inthe whole supply chain. But whatif one element fails or becomesless efficient and then a wholechain reaction occurs? It’s wiseto consider these “just-in-case”scenarios. Unforeseen problemsmight be caused by climate changeor issues over energy resources.For example, many Chinese citiesupstream—from which we pumpour water—will need more waterthemselves as they develop. Chinahas a water problem and is look-ing to secure an alternate watersupply system for its major urbancenters. So I ask, “What alterna-tive will Hong Kong have?” Wehave to become more resilient.We need a holistic approach, andwhat I call “integrated infrastruc-ture.” That can’t just happen on itsown. It must be by design.Is this need for greater resiliencedifferent in other cities worldwide?No. When you look at climatechange as a driver, for example,you see that flooding risks, energyrisks, and natural hazards apply tomany places, including developingcities built beside riverbanks orcoasts around Asia. They’re verysusceptible to rising sea levels,extreme weather patterns, andnatural disasters resulting fromclimate change.Why is retrofitting old buildingsso beneficial in saving energy andreducing carbon emissions?Buildings use 90 percent of theelectricity in Hong Kong andaccount for two-thirds of itsgreenhouse gas emissions. Soretrofitting existing buildings is avery big opportunity. Hong Konghas an existing stock of 50,000buildings, whereas new buildingsare a very small percentage of thetotal. You can easily cut 30 percentof a building’s energy use by retro-fitting, so this is low-hanging fruit.That’s why our firm is also pushinghard for retrofitting in cities likeLondon and New York.Cities across Asia are growingexplosively. How do you balancethe economic benefits with thethreat posed to environmentalsustainability?The economies driving this urbangrowth can’t afford to stop becausethen you have social problems iffactories close or even slow down.When your GDP growth targetsare so high, you do things that areenvironmentally unsatisfactory,so sustainability is under threat.But cities around Asia often have acertain life cycle: In Taiwan, citieswould develop industry, pollutethe environment—then they’dspend billions fixing it. Unfortu-nately, that’s being repeated inChina. When you look at the
    • Partnership for New York City  |  Cities of Opportunity | 69I 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.
    • 70 | Cities of Opportunity | PwCmillions of cars being producedthere, clogging up roads andproducing pollution, you mightsay, “Surely, you should ban thecars.” But you can’t because theindustry would collapse; thenyou’d have a labor problem anda social problem.What do you think of the West-ern perception that China has anincredible ability to get infrastruc-ture projects done, while citieslike London, Paris, and New Yorkmove slowly?It’s correct that China can getthese vast, ambitious infrastruc-ture projects done. The policycomes down from the centralgovernment: “We need this high-speed rail network.” And ithappens. When the governmentwants a piece of infrastructurecompleted by whatever date, thoushalt do it. By hook or by crook,you get there. That’s the waythings get done in China, and it’svery good because much of theinfrastructure is being built incities that are in a “need” stagerather than a “want” stage. Theyneed more sustainability, so theyhave to cut down on aviation andembrace high-speed rail.How does the West differ?In the West, people typicallylook at the viability of a singlepiece of infrastructure in isola-tion. They analyze its financialviability, calculate its internalrate of return, but don’t look at itwithin the context of the wholeeconomy. In China, high-speed railis one element in an overall grandplan. Projects are looked at in thisbroader context from a very highlevel. That’s something the Westis missing.Did last year’s disastrous high-speed rail crash in China raisequestions about its ability tohandle such technologicallycomplex projects?They have the best technology, so Idon’t think it’s really a technologyproblem. It’s a management prob-lem. It’s an operating problem. It’sa people problem.Does China still struggle toinnovate when it comes toinfrastructure?Yes and no. Innovative solutionsaren’t appreciated in the same wayas in the West: In China, there hasto be a reason to innovate, whetherit’s doing a project at a lower costor very quickly. But some of thebig, tricky projects being built inwestern China now are exception-ally innovative: They’re doingmajor civil works like construct-ing a big bridge across a deepvalley, and difficulties in accessand machinery are forcing themto innovate. China is still goingthrough a learning process whenit comes to very high-tech controlsystems, and some would say theydid steal or copy from the West.But I wouldn’t discount themon innovation. China is goingthrough pretty much what Japanwent through in the ’60s and ’70s:They’re learning and modifying.The NGO TransparencyInternational has said corruptionis a bigger problem in infrastruc-ture than any other industry.How challenging is this indeveloping countries?In some developing countries,corruption is so rampant that it’salmost written down: “To do this,it’s this price; to do that, it’s thatprice. And if you don’t deliver ontime, it’ll be refunded.” It’s part ofthe system. Arup tries to stay awayfrom places where corruption isrampant, so our involvement incertain countries is very limited.But Hong Kong’s anti-corruptionsystem is so good that almost allgovernments in Asia come hereto learn about it. I’ve also beeninvolved in conferences in Chinaon preventing corruption: One pre-sentation said their system is evenbetter than ours, since they havehuge books laying out even morestringent rules than in Hong Kong.But it’s not just about the systemyou set up. You also need to createtotal transparency and a level play-ing field in the marketplace. Theydon’t have that yet. Asia still needsto work very hard at that.How does urban developmentcompare in China and India?I see a great parallel betweenMumbai and Shanghai in theirstages of development. But Chinahas an advantage in that it buildsinfrastructure with state money,whereas it’s often done withthe help of private investmentin cities like Mumbai and NewDelhi. When China decides itneeds a ring road, it gets built in10 months, no questions asked.It might be that India would begrowing even faster than Chinaif not for the corruption.In this report, we look at 10factors that make cities great.Which are the most important?For the average person in adeveloping city, the most impor-tant factor is safety, health, andsecurity. Efficiency is also impor-tant—and that relates to transportor connectivity and how you laythings out through good urbanplanning. This ability to get aroundefficiently is probably second inimportance only to safety. In devel-oped cities, you need economicactivity that creates jobs: So thingslike ease of doing business andsmart technology are very impor-tant. For some developed cities,efficiency is a big issue because ofinadequate transport infrastruc-ture. In London, the transportinfrastructure is badly in needof 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.
    • Partnership for New York City  |  Cities of Opportunity | 71Can urban densityenhance sustainability?You can certainly achieve greaterefficiency through density. InHong Kong, we’re so close to oneanother—in terms of time ratherthan distance—that we can getto whatever we need to do withinhalf an hour or an hour. Thatfacilitates many activities—eco-nomic and cultural—easily andcheaply. The energy used percapita for transport is exception-ally low here, but this density canonly work if the transport systemis convenient, reliable, and com-fortable, as in Hong Kong. In thatcase, density helps, enhancingenergy efficiency and improvingconnectivity among people.But density can also causequality of life to suffer if a cityfeels overcrowded.Of the 27 cities spotlightedhere, which benefit most fromgood planning?I can’t help but be impressed bySingapore. Things there are doneas part of a grand plan. When thepopulation was 3.5 million, thegovernment talked about a futurewith 5 million or 7 million people.They set a high-level target, thenplanned the social and physicalinfrastructure accordingly forthat population. They also havea transportation network systemwhere they say, “Every citizen willbe within 400 meters of a metroentrance.” That’s very farsighted,and this rail-based approach isvery sustainable. When it comesto water, they’ve also plannedahead. Hong Kong plans in a morepiecemeal way, solving problemsas they pop up rather than havinga longer-term vision and beingmore methodical.What urban project do youstill dream of doing?I’d like to create a true eco city.You need infrastructure thatworks together in a holistic way,so that energy, water, transport,and waste are all integrated.We’ve planned these projects andprovided thought leadership, butit’s very difficult to make themhappen. People say: “The IRR[internal rate of return] is this, sowhy should I pay more for a dis-trict cooling system that requireslonger to pay back our invest-ment?” If one element hits thatproblem, the rest fall apart, andyou don’t make the integrationhappen. I’d be ambitious enoughto aim for a new city with 50,000-60,000 people. At that scale, youcan make the sums work. That’smy dream project.Learn moreFor the full-length version of theentire, much longer discussion, go towww.pwc.com/cities.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.
    • 72 | Cities of Opportunity | PwCEconomic cloutAsia rises, but we’ll always have ParisThe name of this indicator says it all, andconcisely. What is critical in the term, how-ever, is not the adjective but the noun. What iscentral to the rankings here is the actual clouta city’s economy gives it, not merely the cumu-lative potency of the economy itself. In thatsense, this category assesses what has alwaysbeen the historical understanding of urbanstrength: a city’s dominion beyond its borders.What was once called a “hinterland” is nowcalled a region or metropolitan area. Thelabel refers to the wider geography of whicha dominant city is the economic core. Theintegration of the global economy, however,now allows cities to return to prospects oftransnational influence and power thatpredate the 20th century.And while no one may think that any contem-porary city can (or seek to) wield the imperialhegemony of Periclean Athens, 16th-centuryAmsterdam, or Victorian London, the currentnotion of economic clout transcends nationalboundaries, if only because cities perceivethemselves as competing with other citiesbeyond their traditional frontiers, not onlyeconomically but in terms of global recogni-tion and prestige. It is a sign of the times (andhardly coincidental) that New York’s mayor,Michael Bloomberg, wrote in the FinancialTimes earlier this year that “cities cannotafford to cede their futures to national gov-ernments,” while, just a couple of days later,Mayor Rahm Emanuel of Chicago, in announc-ing a multibillion-dollar infrastructure plan tobuild “a new Chicago,” said that he refused to“tie” his city’s future to the “dysfunction”of state or even national politics.It is this ability to translate urban strength intoa global economic presence that this indicatortries to measure. And, again, in order to do soas well as possible, we have engaged in a majorrevision for the 2012 edition, removing fourvariables and adding two others. By eliminat-ing domestic market capitalization, inflation,and strength of currency (and moving levelof shareholder protection to ease of doingbusiness), while adding productivity and rateof real GDP growth, this indicator now hasa trimmer, and decidedly more recognizable,profile. Now a city’s appeal beyond its naturaleconomic region pops out of the data in thevariables measuring Global 500 headquartersand, especially, foreign direct investment (FDI).But despite the substantial reorganizationof this indicator, certain trends observed lastyear are already coming to pass. In summingup our discussion in 2011, we concludedthat, “Three factors are unusually sugges-tive of future developments.” First of all, wenoted that, although the top three cities wereEuropean or North American, Hong Kong hadcome in fourth and five Asian cities were in thetop 10; clearly, we thought that Asia was thecontinent to watch. It is certainly turningout that way.Beijing has rocketed to the very top of therankings this year, from ninth in 2011. What isimpressive about the Chinese capital’s perfor-mance is that it ranks second in one variableand in the top five in four others. Even in theone area in which Beijing performs poorly—ranking second to last in productivity—it hasnowhere to go but up, especially giventhat China has been focused on increasingproductivity for many years.Meanwhile, the other city that has leaped upthe table is also Chinese. Shanghai moves upthree places from last year, coming in just onepoint behind London and New York, whichare tied for third. It also scores at the very topin two out of six variables—the only city todo so in this indicator. Asia’s cities performimpressively this year. And while they onlymake up five out of the top 10, as in 2011, theirpresence as a whole this year is much moredynamic. Mumbai, for example, has movedup four places since last year to finish in themiddle of the rankings.Paris’s continued strength is the only findingthat is as impressive as Asia’s dominance.It was number two last year; it is numbertwo this year. It was number two the yearbefore last.But this consistency is hardly an accident:As the capital of the country with the world’sfifth largest economy (ahead of both Braziland the UK), it naturally hosts a large num-ber of Global 500 headquarters and just asnaturally is the object of significant foreigninvestment. Moreover, an inordinately largesegment of its (highly productive) populationworks in financial and business services:36.3 percent, as opposed to London’s 35.7percent, let alone New York’s 26.9 percent.The second factor we warned readers aboutin 2011 was the possibility that the eurozonecrisis might negatively affect European cities,particularly Madrid, in the following year.That is exactly what happened, with Madridfalling in the rankings from fifth last yearto 16th this year.262524171216212027151212202220123631215661512324Number of Global500 headquarters131288BeijingParisLondonNew YorkShanghaiSingaporeHong KongTorontoMoscowTokyoMilanSydneyStockholmMumbaiSeoulMadridSan FranciscoAbu DhabiBerlinBuenos AiresChicagoSão PauloKuala LumpurIstanbulMexico CityLos AngelesJohannesburg2120191817151412101085432125252627222317
    • Partnership for New York City  |  Cities of Opportunity | 7323222027252410211914167181117113852151296326Attracting FDI: Numberof greenfield projects2426191411720108271522416623117182151223925Financial and businessservices employment221269151218517192220110142527 313723846112416Productivity1Attracting FDI:Capital investment2520172726229231910165131118121147212815632413 4 4 325613242118201625917261111410277122223198415Rate of realGDP growth2Score125120119119118110999895929090838281767668686767676461605942Each city’s score (here 125 to 42) is the sum of its rankings across variables. The city order from 27 to 1is based on these scores. See maps on pages 16–17 for an overall indicator comparison.HighLowMediumHighest rank in each variable1 Productivity is calculated by dividing the gross domestic product(GDP) in 2012 US dollars by employment in the city.2 GDP percentage growth rate from 2010-2011 in real termsexpressed 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.
    • 74 | Cities of Opportunity | PwCEase of doing businessCompetitive cities knowhow to stay competitiveThis indicator shares with intellectual capitaland innovation the most number of variables,a total of nine. The reason for this substantialdataset is obvious: The combination of innova-tion and human capital with a hospitable andresponsive business environment is the classicrecipe for economic success. As opposed tothe intellectual capital indicator, however,this one has been significantly enhancedand redesigned.It now includes two new variables: resolvinginsolvency and level of shareholder protection(the latter moved from the economic cloutindicator). Another new variable, employeeregulations, encapsulates the data thatwere previously contained in three variablesthat assessed ease of hiring and firing andrigidity of hours. Still, what is most tellingabout the results this year is that, despitethe section’s considerable reevaluation andreorganization, leading performers remainlargely the same, and the changes at the verytop of the rankings concern only two citiesand involve minor adjustments.Singapore ranks first this year, up fromsecond in 2011. Hong Kong is now second,2623210826241319221611617521412187154912027Employeeregulations1**26182425162222271022172311151214136128495322Resolvinginsolvency**252419261420228132227181759111015166312741323Ease of startinga business**Ease of entry:Number of countrieswith visa waiver2*272523121788142689241721191320221019315411388 15 31916131186SingaporeHong KongNew YorkLondonTorontoStockholmLos AngelesChicagoTokyoKuala LumpurSan FranciscoSydneySeoulParisMadridBerlinMexico CityMilanJohannesburgAbu DhabiSão PauloBeijingIstanbulMoscowBuenos AiresMumbaiShanghai21201514121095432122242526271818723Each city’s score (here 202 to 56) is the sum of its rankings across variables.The city order from 27 to 1 is based on these scores. See maps on pages16–17 for an overall indicator comparison.HighLowMediumHighest rank in each variable*Country-level data.**Data based on countries’ most populous cityexcept in the case of employee regulationsand ease of starting a business, which havebeen differentiated for US cities.
    • Partnership for New York City  |  Cities of Opportunity | 751 Sum of three rank scores from the World Bank’s Doing Businessstudy, including: ratio of minimum wage to average value addedper worker; notice period for redundancy dismissal (for a workerwith 20 years of tenure, in salary weeks); and paid annual leave fora worker with 20 years of tenure (in working days).2 Count of visa exemptions includes tourist and business travel.3 Count of countries allowed a stay of 90 days or more for touristand business travel.4 The level of shareholder protection index is the average of indicesthat measure “transparency of transactions,” “liability for self-dealing,” and “shareholders’ ability to sue officers and directors formisconduct.”although it was first last year. As for numbersthree, four, and five, they are the same cities inthe same order as in 2011: New York, London,and Toronto. If there is a lesson here, it is thatthose cities that have created globally competi-tive business cultures understand what it takesto maintain their advantage—and that, ofcourse, city policies and regulations, and theireffects, do not change overnight.Nowhere is this more apparent than in theresults scored by top-ranking Singapore. Itstally across the board is truly impressive: Itfinishes first in three variables, second in one,and third in two others. There is one variablein which it scores in a middling rank (foreignembassies or consulates) and only one in whichit truly finishes badly. Interestingly enough,this one variable, flexibility of visa travel,would intuitively seem to be the logical exten-sion of ease of entry, in which Singapore topsthe chart. (See “Key to the variables,” page 93,for the precise definition of flexibility of visatravel, as opposed to ease of entry.)There are some additional points worth not-ing about the top 10 cities. First of all, whileUS cities once again continue to rank first inemployee regulations, or the ease of hiring andfiring and setting work hours, they also consis-tently do well in several other variables. In fact,the only areas in which American cities fall intothe bottom half (or even third) of the rankingsare ease of entry and flexibility of visa travel(as well as, with the exception of New York,number of embassies or consulates)—clearly anegative signal to send in a global economy.Continues on page 7715122611208724177111827192314511352592117322Foreign embassiesor consulates42627162110101821101119122523182414423415614510Flexibility ofvisa travel3*Level of shareholderprotection4**2726192416242417252413101077151319110713331524Operationalrisk climate*27251624262020151320241121142281171296421320Workforcemanagement risk251925272322212010191912161315311614792146264 2 7 6 8Score2021981821811751611601581561541541471461371361351171111028988807862605956
    • 76 | Cities of Opportunity | PwCCostComparative advantage is the bottom line for every city,developing or developed, as the 2012 order tilts eastwardThe most difficult—and continuallychallenging—aspect of preparing Cities ofOpportunity every year is ensuring that itsanalysis is not only based on reliable andcredible data, but on a critical evaluation ofthose data. In today’s world of internationalorganizations of the highest integrity offeringeasy access to their databanks (from the IMFand World Bank to the OECD and World142318922161915327241787162612203251454111021Total tax rate161311BerlinSeoulKuala LumpurIstanbulMexico CityJohannesburgLos AngelesMadridChicagoMumbaiAbu DhabiTorontoSan FranciscoStockholmShanghaiBuenos AiresBeijingHong KongMoscowLondonMilanSingaporeNew YorkParisSão PauloSydneyTokyo2120191915151210521222424252627262417221911151081361618232039514211221425Cost of rent726131420272521231122181716819415315101276924Cost of businessoccupancy21812639261620113232622524141022151127178267iPod index2192426201728910251512192115222327181416713634Cost of Internet112717988843Score124108106102102100999693939089868683807978777171717058575451Consumerprice index1181722262113161527196852420231114310794121252Each city’s score (here 124 to 51) is the sum of its rankings across variables. The city order from 27 to 1is based on these scores. See maps on pages 16–17 for an overall indicator comparison.HighLowMediumHighest rank in each variable1 A relative measure of consumer goods prices, includinggroceries, restaurants, transportation, and utilities. The CPI doesn’tinclude housing expenses such as rent or mortgage. The index isrelative 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).2 Working hours required to buy an 8 GB iPod nano. The indexdivides the price of the product by the weighted net hourlywage in 14 professions.Economic Forum), gathering information is, infact, the easiest part of our job. The hard partis assessing that information. The questionalways remains: Does the analysis make sense.Upon examining last year’s results in thisindicator in preparation for this year’s report,we felt that they had inadvertently tiltedtoward the West. The issue wasn’t that theyshowed the five lowest-cost cities in our rank-ings coming from North America (followedby Berlin and Sydney), while seven out of the10 highest-cost cities were in the developingworld. What seems counterintuitive isn’t neces-sarily so. Our cost indicator, after all, measurescosts for a businessperson living in our cities—which is to say, the cost of a transnational,middle-class way of life.The point was to capture the actual costs ofa middle-class lifestyle in each of our citiesas accurately—or, at least, as effectively—aspossible. In the event, we’ve restructured thisindicator again. We’ve kept only two variablesfrom last year (total tax rate and cost of
    • Partnership for New York City  |  Cities of Opportunity | 77Health, safety and securityContinued from page 51Demographics and livability,Continued from page 67Ease of doing businessContinued from page 75Continued storiesThe other notable results in this year’srankings come from Stockholm and Tokyo.The Swedish city has climbed the chart threeslots to eighth this year, from 11th last year,while Japan’s capital has also moved up,from 12th last year to number 10 this year.On the negative side, there is one surpriseregarding Sydney. There is also one resultinvolving Europe that is, unfortunately, any-thing but surprising. The unexpected outcomewas Sydney’s fall out of the top 10 citiesto 12th this year, from sixth last year. Thepredictable development was the continuingdifficulty of European cities to compete in thisindicator. Stockholm is the only continentalEuropean city in the top rankings this year—and there were none last year. Paris, Madrid,Berlin, and Milan finish 14th, 15th, 16th,and 18th, respectively (while Istanbul andMoscow find themselves in the bottom five ofthe list). The data thus echo what so manypolicymakers in Europe itself have been sayingfor the last couple of years: that a significantfactor in resolving the eurozone crisis isindeed making it easier to do businessin Europe.San Francisco, and Singapore, as well as Berlinand London—or have been the beneficiariesof a global “buzz” for several years, as in thecase of Sydney, Toronto, and Stockholm.Still, a concept such as livability is infinitelymalleable, unusually provisional, and ulti-mately subjective, with each person judgingit individually. Moreover, great cities such asNew York or Tokyo become great over a verylong period and because of immense effort,mostly for the sake of their own citizens.Their standing in a ranking such as this,consequently, is simply a snapshot of amoment in time. What is indisputable is thatthey, as well as most of the other cities thatfall in the middle or even at the bottom of therankings here, can easily climb much higher—and probably will, sooner rather than later.A passing glance at some of the cities at theend of the list—Moscow, São Paulo, Beijing,Buenos Aires, Mexico City, Istanbul—makethat a relatively safe prediction. So, whileShanghai scores near the bottom of therankings, it is easy to envision a time, in thevery near future, when that placement willseem inconceivable.to form the first human communities, theearliest cities. It stands to reason, then, thatthe most developed cities are those thatcontinually top the rankings in this indicator.Stockholm and Toronto repeat their respec-tive performances at first and second placethis year. After coming in fourth in 2011,Sydney finished third this year. Chicago,which was third last year, dropped to fourthin this newest edition of Cities. San Franciscoalso dropped one place, ranking fifth this yearafter tying with Sydney for fourth last year.These are all marginal movements. In anycase, there is not one developing city in thetop 10 this year—just as there wasn’t last year.But there is a reason Rome wasn’t built in aday. The only thing that takes longer to createthan urban infrastructure is the intangiblesense of well-being and trust that is the mostdirect result of the very tangible systems ofsocial protection and communal order putin place by developed societies.business occupancy), while adding four newones—cost of rent, consumer price index,iPod index, and cost of Internet—which alsoincreases the variables from five to six, thusimproving the total dataset.With the exception of the iPod index, the otherthree variables all measure actual living costs(while only one variable did last year). Somecosts—that of rent, most obviously—havebecome critical issues for business in recruit-ing talent, from New York and Singapore toMoscow and Chicago. The iPod index itself isnot only a sure gauge (and therefore efficientsurrogate) of purchasing power, but it alsoallows for straightforward comparisons of thatpurchasing power between cities (Sydney andBuenos Aires, for example).Interestingly, the ensuing rankings now reflectthe 2010 results, before last year’s changes,when five developing cities and five developedones were in the top 10, and Johannesburgranked first. This year, Berlin ranks first, butthe next five cities—Seoul, Kuala Lumpur,Istanbul, Mexico City, and Johannesburg—are all from the developing world. Los Angeles,Madrid, Chicago, and Mumbai complete thetop 10, giving developing cities six out of the10 spots—as opposed to last year, when theyonly had two.The bottom 10 in this indicator now includethe mature global centers that common sensetells us instinctively, and experience confirmsempirically, are costly cities in which to live andwork. But the presence of Berlin at the top—and cities such as Los Angeles, Madrid, andChicago also ranking very well—in this indica-tor continues to prove that mature economiesare not preordained to suffer, let alone decline,even in head-on competition on costs alone.Every city can compete in cost containmentas long as it maximizes its own competitiveadvantages. In the end, as with most of ourindicators, each city’s final ranking is, to somedegree at least, up to the city itself.
    • 78 | Cities of Opportunity | PwCCities at the edge
    • Partnership for New York City  |  Cities of Opportunity | 79Megacities, megachallengesEmerging cities will need to grow, and invest, even moreto enhance their citizens’ quality of lifeThe metropolitan areas of the world’s citiescurrently contain 3.6 billion people,1morethan half of the planet’s population.2In thecoming years, cities will constitute an ever-increasing percentage of human communities,rising both in number and size. Just to giveone example, the number of cities with morethan 750,000 residents has grown thirteenfoldin China since 1950, multiplying from 10 to132, with a combined population of 290 mil-lion—or the equivalent of 360 San Franciscos.3China is currently adding 40,000 peopledaily to its urban population. It is not alone.India is adding 20,000, while Indonesia,Nigeria, and Pakistan are projected to addover 350 million urban residents during thenext four decades. Since the end of the SecondWorld War, urbanization has been the overrid-ing demographic trend in every continent butespecially in the developing world. In 1950,both Africa and Asia were almost completelyrural, with only 14 percent of Africa’s peopleand 16 percent of Asia’s residing in cities. By2010, the number of people living in Afri-can cities had almost tripled, making up 40percent of the continental population, whileurban dwellers had increased over two andhalf times in Asia, to 42 percent of the total.In another 13 years, Africa will be 47 percenturban and Asia will have reached the 50percent threshold of an urban majority. Mean-while, Latin America and the Caribbean arealready 80 percent urban.This tremendous—and tremendously rapid—urbanization has led inexorably to anotherfact: Today, Asia alone encompasses 50percent of the world’s urbanites. While thisreality does not, of course, redefine the natureor functions of a city, it certainly refocuses theworld’s attention on urban centers that weremostly invisible just two generations ago. Alook at the world’s largest cities since mid-20thcentury presents a vivid illustration of howmuch the urban world has changed. (See chartnext page.) Of the top 10 metropolitan regionsin 1950, three are European, two are NorthAmerican, and one is Latin American—for atotal of six in the West—while two are Japa-nese, one is Chinese, and one is Indian. Move,however, to the year 2010, and the generallandscape is utterly transformed.Europe has disappeared. And of the threeWestern cities, only one—New York—is inNorth America, with São Paulo and MexicoCity making up the other two (and replac-ing the ostensibly more “European” BuenosAires). There are now not only a total of sevenAsian cities on the list, but five are from theIndian subcontinent. Most telling of all, six ofthe 10 cities here were not on the list of the top10 cities by population in 1950.Of course, it is naïve to believe that, as withnations, the number of people in a city—or more accurately, the weight of its demo-graphic presence—does not affect others’perceptions of it, and of its standing in theworld. This is not to argue simplistically thatquantity equals quality. Cities of Opportunityhas proven year after year that small cities—San Francisco, Stockholm, Toronto—can castenormous shadows on the world stage. And, ofcourse, the obverse is equally true: that manyextremely populous cities, mostly in the devel-oping world, are now being severely testedA street market in Lagos, Nigeria1 This section measures metropolitan areas as opposed to thesmaller city jurisdictional or administrative boundaries that are usedfor the 27 cities in the main report. Except as indicated, all data in theCities at the edge section are from research undertaken by PwC andOxford Economics for Cities of Opportunity 2012.2 According to the US Census Bureau, the world’s population wasapproximately 7 billion as of June 1, 2012; see the monthly figuresat http://www.census.gov/population/popclockworld.html.3 According to the US Census Bureau, the city’s population lastyear was 805,235; see “U.S. Census Bureau Delivers California’s2010 Census Population Totals, Including First Look at Race andHispanic Origin Data for Legislative Redistricting,” March 8, 2011, athttp://2010.census.gov/news/releases/operations/cb11-cn68.html.
    • 80 | Cities of Opportunity | PwCby the massive repercussions of their largelyunplanned expansion and have become, notmodels for others, but examples to be avoided.Still, a large population can be a major stepto development if it is seen not as a burdenbut as an enormous resource that can providecontinual generational streams of human andintellectual capital. It’s not coincidental thatthree cities with the largest populations in2010—São Paulo, Mexico City, and Mumbai—are part of Cities of Opportunity. What is evenmore striking, however, is that eight of the 10most populous cities in 1950 are in Cities ofOpportunity today, although most of them arenow comparatively much smaller.Clearly, these cities have remained preeminentglobal centers because they built upon theirstrengths when they had the opportunity todo so. The most enduring power of developedcities is precisely the generations of planning,investment, and building that have gone intothem—which, of course, are very difficult toemulate, let alone match. Indeed, the world’shistorically established cities suffer from anaming problem. The very phrase “historicallyestablished”—or “mature” or “developed”or even “advanced” city—implies comfort orrepose, if not complacency or even decline.But the truth is that what makes New York,Paris, and Tokyo continue to thrive throughthe decades is that they are consolidated cit-ies. That is, having gathered in their migrantpopulations (both domestic and foreign) andbuilt their infrastructure—not just sewers andmass transit, but hospitals and schools anduniversities—as they rose in the world, theyconsolidated this immense, and very complex,sociopolitical and economic structure to createthe singularly vital and universally admiredcommunities they are today. (Because theywere major urban centers in previous ages,cities such as Istanbul or Mexico City are alsomuch more consolidated as urban communi-ties than other cities in the developing world.)Again, we should pause for a moment on thefive largest cities by population in 1950: NewYork, Tokyo, London, Paris, and Moscow. Withthe exception of New York, the other four wereall part of theaters of operations, to a lesseror greater degree, of the Second World War.London, of course, was the target of the Blitzand of the V-1 and V-2 attacks; the Battle ofMoscow saw one of the bloodiest encountersof the war, with hundreds of thousands ofcasualties; and Tokyo was completely leveledby the bombing raids at the conflict’s end. OnlyParis was spared extensive physical damagebecause of the famous refusal of the occupa-tion authorities to follow Hitler’s orders totorch the city (the subject of the book andfilm Is Paris Burning?)—in itself a profoundreflection of the enormous esteem in whichcertain cities are held by most of us.Cities, in other words, that are fully developed,not only in terms of physical infrastructurebut, even more important, because they’vecreated a rich and resilient social networkof citizens and institutions, have built in tothemselves a natural capacity to survive andregenerate. As the cities of Europe and Asiaproved after the Second World War, infrastruc-ture can be rebuilt with the necessary fundingand will. But it’s the social glue that mattersabove all—the feeling of common purposeamong the many human beings who call thesame place home: what former New York andLos Angeles police chief Bill Bratton calls the“socialization” that is a city’s key function andvirtue (see interview, page 52).Reaching that level of “socialization” requiresextraordinary investment, however, botheconomic and intellectual. Leaving aside theintellectual investments, which naturally resultfrom prior expenditure on education andculture, the capital investment is substantial,as a look at the overview of city investmentspending on the next page shows.Two figures stand out under the last column,“Average annual investment”: Beijing andShanghai will have to devote 42 percentof annual GDP until 2025 to accommodate thecities’ necessary growth, a sum just under twoand a half times the 17 percent of annual GDPLondon will need to meet its infrastructureTop 10 metropolitan areas by population size1950, 1980, 2010Population (millions)1950New YorkTokyoLondonParisMoscowBuenos AiresChicagoKolkataShanghaiOsaka12.3411.276.525.365.105.004.514.304.158.36The 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 NationsPopulation (millions)1980TokyoNew YorkMexico CitySão PauloOsakaLos AngelesBuenos AiresKolkataParisMumbai28.5515.6012.099.999.519.429.038.678.6613.01Population (millions)2010TokyoDelhiSão PauloMumbaiMexico CityNew YorkShanghaiKolkataDhakaKarachi36.6722.1620.0419.4619.4316.5815.5514.6513.1220.26
    • Partnership for New York City  |  Cities of Opportunity | 81Capital investment is substantial to accommodate someemerging cities’ growth. Beijing and Shanghai, forinstance, will have to devote 42 percent of annual GDP,just under two and a half times the 17 percent Londonwill need to meet its infrastructure requirements.Population2012 / 2025(000s)Abu DhabiBeijingBerlinBuenos AiresChicagoHong KongIstanbulJohannesburgKuala LumpurLondonLos AngelesMadridMexico CityMilanMoscowMumbaiNew YorkParisSan FranciscoSão PauloSeoulShanghaiSingaporeStockholmSydneyTokyoTorontoEmployment2012 / 2025(000s)7,970 3,650 / 3,640790 / 96026,06016,8103,000 / 3,1502,650 / 2,4207,20013,220 14,2803,470 / 3,580Averageannualinvestment(% of GDP2012-2025)Investment required2012-2025($ millions)366,6902,111,380205,960311,750478,820814,200205,54076,3201,244,400438,780375,390983,740284,290348,600581,860459,250722,790184,620919,380653,5701,830,600760,410146,780944,8001,064,650703,0302,583,560The 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 Opportunity4,400 / 5,1601,700 / 1,8507,970 9,0203,820 / 3,9703,300 / 3,4808,900 9,0801,330 / 1,42010,92010,71013,21012,5302,270 / 2,390810 / 88012,75011,3509,900 9,67015,76014,3305,230 / 5,660870 / 9804,480 / 4,86013,020 12,9602,830 / 3,2608,8108,410380 / 52013,1209,9102,000 / 2,4101,190 / 1,2704,260 5,2601,730 / 1,7901,560 / 2,000780 / 1,0504,7101,500 / 1,7701,350 / 1,5704,110750 / 8405,8306,1809,5106,4901,800 / 1,810530 / 5907,1305,5705,050 5,0608,1407,3503,150 / 3,560590 / 6502,350 / 2,3406,220 6,2501,450 / 1,5903,820 / 4,4802012 202527%42%20%26%20%20%26%20%25%17%20%20%25%20%26%35%20%20%20%22%24%42%26%19%32%20%25%5,4504,470Forecast of investment spending relative to growth2012-2025
    • 82 | Cities of Opportunity | PwCrequirements. Of course, not all developingcities require equal investment. Only Beijing,Shanghai, and Mumbai need to spend sumsconsiderably higher than the 20-26 percentof GDP needed by most developed cities.Istanbul, Johannesburg, Mexico City, and SãoPaulo, on the other hand, all fall within thatrange—and Abu Dhabi just goes over it. Butthis is probably for several reasons. There arevery few cities in the world with the financialresources of Abu Dhabi, which has alreadybeen able to bring its infrastructure up todeveloped-city levels; Istanbul and MexicoCity have been major urban (not to say impe-rial) centers for hundreds of years, with basicinfrastructure built long ago; Johannesburgis the largest city of the country with the larg-est GDP, by far, of any other African nation(including the oil producers);4and São Paulois the economic center of one of the mostdynamic economies of the last decade.Most emerging cities, and those cities of thedeveloping world that will grow the fastestduring the next decade, do not have theseadvantages, however.The five African cities forecast by the UnitedNations to have the largest increases inpopulation—Kinshasa, Lagos, Luanda,Dar es Salaam, and Khartoum—do not haveJohannesburg’s preexisting infrastructure,although robust growth throughout Africaover the next few years might provide theeconomic resources needed for investment.5In Asia, all five of the fastest-growing citiesin population are on the subcontinent. It isreasonable to assume, therefore, that Delhi,Dhaka, Karachi, and Kolkata will probablyneed annual investment closer to Mumbai’s35 percent of GDP than to that, say, of SãoPaulo or Abu Dhabi. In any case, given thatat least two-thirds of the world’s megacities(cities with populations of over 10 million) in2025 will be in the developing world (see mapon the next page), it is clear that the invest-ments required to provide for their futurejob and economic growth will not only beenormous but, in many cases, of adaunting magnitude.The good news is that technology can andwill help emerging cities bypass the needfor much traditional infrastructure. Indeed,the most critical infrastructural issue in themature cities of the West is the obsolescenceof and urgent need to upgrade much of theirbasic infrastructure, which was built in manycases in the 19th and early 20th centuries.Emerging cities at least have the advantage inmany areas of a blank slate: Mobile telephonyin lieu of landlines is an obvious example.New technology and continual innovation—in everything from construction materialsto urban transport to environmental reme-diation—will increasingly allow emergingcities to catch up with developed ones. Moreimportant, it will make it possible for them to4 The International Monetary Fund’s World Economic OutlookDatabase 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/weodata/index.aspx.5 Again, IMF GDP data and projections for Africa are available athttp://www.imf.org/external/pubs/ft/weo/2012/01/weodata/index.aspx.6 Edward Glaeser, Triumph of the City, New York, 2011, p. 1.bring their citizens closer to the quality of lifeenjoyed by those in mature cities. In the wordsof Cisco’s chief globalization officer, WimElfrink, “Technology can be a key enabler totransform societies.” (See the interview onpage 46; see also the interviews with ArupGroup deputy chairman Andrew Chan, page68, and Infosys founder N.R. NarayanaMurthy, page 84.)But it will be a long and difficult process.Just how difficult can be seen by the charton page 23, “Productivity (GDP per workerper year) in thousands $US, 2025.” Accord-ing to that chart, Mumbai’s per worker GDPwill be about 6.5 percent of New York’s figurein 2025. It will be about 31 percent of thatof Buenos Aires. Beijing’s per worker GDP,meanwhile, will be slightly less than that ofJohannesburg, and the figure for both citieswill be less than a fifth of that of New York.For Beijing to catch up with New York’sprojected GDP per worker in the next13 years, in other words, it will need essen-tially to more than quintuple its currentlyprojected growth. That is not likely to happen.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.
    • Partnership for New York City  |  Cities of Opportunity | 832000 2025The 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 NationsCairoShanghaiKarachiDelhiKolkataDhakaSão PauloMumbaiMexico CityBuenos AiresLos AngelesNew YorkRio de JaneiroMoscowTokyoOsakaKinshasaLimaBogotáLagosJakartaShenzhenGuangzhouManilaIstanbulParisLahoreChongqingBeijingWorld megacities are multiplyingCities with a population of 10 million or more in 2000 and 2025But it doesn’t have to. What needs to be doneis for emerging cities simply to understandthe dynamics of urbanization—the extentto which urbanization increases wealth andenhances social well-being—in order to mapout a strategy of viable urbanization, to thebenefit of the men and women who live inthose cities now and will do so in increasingnumbers in the future. It is telling that even inan enormous, continental nation such as theUS, cities not only contain over 80 percent ofthe population but account for three-quartersof GDP and two-thirds of all jobs.That is exactly what Harvard economistEdward Glaeser means by the “triumph of thecity.” To wander through any successful city,he writes, “is to study nothing less than humanprogress.”6Because of the often seeminglyimpossible challenges to emerging cities, thereality of their extraordinary economic advan-tages is often buried in a blizzard of mediaimages about slums, crime, and massive socialinsecurity. At best, however, these imagesreflect a half-truth—or, more accurately,the facts of cities that are only half-formed.Because it is only when cities reach their maxi-mum efficiency that their economic and socialpayback to their societies—in economies ofscale for service provision and infrastructurecosts, reduced energy use, and labor agglom-eration—are at their peak.Seventy-eight percent of the developedworld’s population is urban today—almosttwice the percentage in Africa or Asia. Thatfigure will rise to 84 percent in Europe and 90percent in the US by 2050. By contrast, Africawill still be only 62 percent urban and Asia 65percent in 2050. Nonetheless, it will only beas they approach developed-city levels thatdeveloping cities will begin to see the eco-nomic and social benefits of urbanization. Itis by increasing density and, therefore, thoseeconomies of scale mentioned above thatcities become efficient, and extremelyproductive, centers of “human progress.”It is, finally, precisely at the level of humanprogress—whether the term is defined asquality of life, standard of living, or both—that developed cities can be models fordeveloping ones. While many of the developedworld’s urban centers have been rudelyshaken by the global financial crisis, withunusually harsh ramifications for their socialinfrastructure in many instances (see “A Taleof Three Cities,” page 88), all of them havethe advantage of fully formed public sectors.While it is true that many municipalities inthe eurozone (and the US) need to reorga-nize and retrench their public services—and,especially, to cut excessive and insupport-able public spending—it is always easier tocut, or rearrange, than to start from scratch.Despite (and because of) their rapid growth,living standards remain very low in develop-ing cities. But all cities go through this. Theword “Dickensian” was born from the greatEnglish writer’s descriptions of 19th-centuryLondon. Conditions in 18th-century Paris ledto Europe’s most famous revolution. For thefirst few decades of the 20th century, it wasself-evident why the west side of midtownManhattan was called Hell’s Kitchen. In thatsense, developed cities are no different fromdeveloping ones. A developing city is trans-formed into a “developed” one, in fact, themoment it decides, to echo Bill Bratton again,to ensure public safety, and then health andsecurity. Once those fundamental tasks areaccomplished, “the triumph of the city” isvirtually preordained.
    • 84 | Cities of Opportunity | PwCNarayana Murthy of Infosys links… India’s urban future to the power of private enterprise, leadership,governance, and transparencyIndia’s economy is growing rap-idly, its population is expanding atan extraordinary rate, and there’smassive migration from the coun-tryside to cities that are alreadyovercrowded. How concernedare you about the stress all of thisplaces on urban infrastructuresuch as roads, the water supply,and the electricity system?It’s a big challenge, there’s nodoubt at all. The country isprogressing very fast. We grew at8.5 percent on average over thelast five years. When the economygrows at this rate, it’s only naturalthat there’s huge pressure oninfrastructure. Even though we’veN.R. Narayana Murthy founded Infosys in 1981 and built it over threedecades into a global software giant with 145,000 employees. Murthy,now chairman emeritus of Infosys, also serves on the boards of HSBCand the Ford Foundation. In praising his book, A Better India, A BetterWorld, Bill Gates said Murthy “demonstrated that it’s possible to createa world-class, values-driven company in India,” while India’s PrimeMinister Manmohan Singh hailed Murthy as “a role model for millionsof Indians.” Here, Murthy discusses India’s urban challenges—andhow to tackle them with the help of government reform, “huge foreigninvestment,” and entrepreneurial dynamism.been building infrastructure,we’re not able to keep pace withdemand. That results in huge pro-ductivity losses and delays, mainlyin urban areas.Where do you see the mostacute strains?Transportation takes an enormousamount of time. Our roads haven’tbeen developed as quickly as ourlogistical demands require. Also,the average speed of our freighttrains today must be about 40mph, which is no speed in 2012.We’re not adding a lot more rail-way lines. We’re not expandingroads or improving their quality.
    • Partnership for New York City  |  Cities of Opportunity | 85When the economy grows at this rate, it’sonly natural that there’s huge pressure oninfrastructure. Even though we’ve been buildinginfrastructure, we’re not able to keep pace withdemand. That results in huge productivitylosses and delays, mainly in urban areas.11 million two-wheelers, but theroads are not expanding. WhenI leave my home in south Banga-lore at 7 a.m., it takes me only 20minutes to drive to Electronics City[the industrial park in Bangalorewhere Infosys is headquartered].But if I leave at 8.30 a.m., ittakes an hour—and this is one ofBangalore’s better roads. Before itwas built, I’d spend two and a halfhours waiting in traffic to cometo the office or get home, and thisis still the norm in many parts ofthis city and other Indian cities.These traffic conditions reduceyour productivity and waste yourtime, and you’re not in a very goodmood when you’ve just spent twoand a half hours in traffic.In Aravind Adiga’s recent novelLast Man in Tower, an exasperatedresident of Mumbai complains:“Look at the trains in this city.Look at the roads. The law courts.Nothing works, nothing moves; ittakes ten years to build a bridge.”Why do such things function soinefficiently in India’s cities? Isthere a cultural reason why Indi-ans accept these frustrations?Yes. Somehow, the staple diet ofIndians is apathy. We see a prob-lem and don’t do much about it.The government doesn’t act witha sense of alacrity; there’s somuch legislation still pendingwith the parliament. What manycountries take six months tocomplete, we most often takeseveral years to do. Our nature,our natural pastime, is apathy. Myinterpretation is that it’s becausewe were under foreign rule forthe last millennium, until we gotindependence from the British in1947. We weren’t in control of ourdestiny, so we weren’t responsiblefor designing a better strategy forour society. It’s natural for a nationlike that to take a little time tobring back a sense of urgency,self-created destiny, and alacrity.Is that what entrepreneurslike you have injected intoIndian society?I think so. I have a fetish for quickaction because of the apathy I seearound me. My children makefun of me: They say, “We shouldn’tdiscuss anything with dad becausehe’ll go ahead and do it immedi-ately!” But there are many peoplein the country, particularly in theprivate sector, who have nowrealized the importance of speed.Over the last 20 years, muchof India’s progress has beendriven by the dynamism of theprivate sector—not least in thetechnology industry, which hastransformed Bangalore into theso-called “Silicon Valley of India.”What should the government doto foster more entrepreneurship?First, we have to enhance thequality of our higher educationsystem by creating greater interac-tion with well-known universitiesin developed countries. Second,we need regulations that attractthe best venture-capital firms toIndia in even greater numbers.Third, we have to create a businessenvironment for entrepreneurswhere there’s very little frictioncreated by bureaucrats. Today, ittakes several days to even registera firm. And smaller entrepreneurssuffer under the tyranny of pettybureaucracy in terms of factoryinspectors, tax inspectors, and soon. We need to shield them fromthis bureaucratic tyranny. Fourth,we need to create an environ-ment in which failure is not seenas highly negative. If you fail asan entrepreneur in the US, it is inmany ways a badge of honor; wein India need to have the samemindset as in America.So the movement of goods takesa long time. Similarly, our portinfrastructure is not as developedas we’d like. The average time forclearance at our ports is severaldays, whereas it’s several hoursin many countries. For India’seconomy to make sustained prog-ress, we have to build good roads,build ports, bring efficiency tothese systems, and also enhanceour power capacity.How economically disruptive is thelogjam on roads in Indian citieslike Mumbai, Delhi, and Bangalore?We’re adding about 4 millionvehicles every year and about
    • 86 | Cities of Opportunity | PwCHow well has privatizationworked in addressing economicbottlenecks such as India’s inad-equate supply of electricity?Power production is open to theprivate sector, but power distribu-tion is still in the government’shands in most states, so it’s notworking that well. There are hugelosses in transmission, and there’sa lot of theft of electricity. Severalstate governments give free powerto farmers, which is causing somestrain, and the state governmentsaren’t able to pay power manu-facturers on time. So, it’s a mixedbag. Unfortunately, we’ve lookedat this situation piecemeal, notholistically. The solution is to lookat the entire supply chain andbring in the participation of theprivate sector.Does the success of technologycompanies like Infosys suggestthat private enterprise is the mosteffective driver of economic prog-ress in India, not the government?The software industry is a goodexample of how the private sectorcan add tremendous value to theeconomy if the government takesa back seat and acts as a catalyst.In our area, the governmentdid a good job of promoting theIndian software industry abroad.The moral of the story is that thegovernment should become acatalyst, listening to the people inthe trenches who are producinggoods and services, then creat-ing laws and rules that will makethem more competitive.Thomas Friedman, author of TheWorld is Flat, has written thatIndia’s government is failing toconfront urgent issues like urbanpollution and poor infrastruc-ture. He warns: “As much as I’mimpressed by the innovative prow-ess of India’s young technologists,without a government to enablethem with the roads, ports,bandwidth, electricity, airports,and smart regulations they needto thrive, they will never realizetheir full potential.” Is he right?Absolutely. India has done wellto get to the current orbit. Butto move to the next orbit, weneed good leadership. To bringprosperity to the vast majority ofIndians, we need to enhance ourgovernance system, enhance ourtransparency and accountability,combat corruption, and enhanceour infrastructure.The government has called for$1 trillion in infrastructurespending. How can this befunded when India’s financesare already stretched?Developing nations like India needto seek huge foreign investmentand huge debt from abroad tobuild our infrastructure, thenmake ourselves more productiveand competitive on a global scale,sell more, then pay back theseloans. There’s no other model inthe world. It’s happening in someareas already: India’s IT industryis very competitive. But it has tohappen in many other industries.What advice would you giveto foreigners looking to investin India?One of the drawbacks of oursystem is that the rules andregulations are not very transpar-ent. They’re not very explicitlywritten in simple English that canbe understood by you and me inthe same way. Therefore, there’san opportunity for misinterpreta-tion by the bureaucracy—and,when there’s an opportunity formisinterpretation, there’s a pos-sibility for rent-seeking. That’ssomething that foreign investorsdon’t like because they’re used toopen, clear rules. So, I’d adviseforeign investors to use well-known Indian lawyers and makesure these lawyers look very care-fully at whatever contracts they’rewriting, and also look at all theprevious case studies.Some foreign investors are alsoscared that corruption may stillbe too pervasive in India. Howhard is it to avoid corruption?In fairness, at Infosys, we’ve notpaid a single cent in bribes in thelast 30-odd years of our existence.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.
    • Therefore, I do believe it’s possibleto do business with the govern-ment without any bribery aslong as you’re willing to accept acertain delay in the processing ofapplications and approvals. Andif you demonstrate that you’re notgoing to give any bribes the firsttime, the second time they won’task you. So my advice to any for-eign investors is to be firm in beinghonest and not succumbing to anysuch bribery situations the firsttime; the second time, you won’thave to worry about it.One growing challenge is urbanpollution, not only in megacitieslike Mumbai, but in lesser-knowncities like Kanpur and Ludhiana,which both rank very high inlists of the world’s most pol-luted places. Is the governmentaddressing these environmen-tal concerns—for example, byembracing alternative energy?The government has createdincentives in wind power, solarpower, and biomass, but themajority of our power comesfrom coal, and that’s not goodfor the environment. We’ve beentrying to install nuclear power,but there’s been a lot of oppositionbecause of what happened inJapan. I wouldn’t fault our govern-ment on its enthusiasm for makingalternative energy more popular.But the reality is that we’ll con-tinue to use more and more coalfor quite a few years—and we’realso adding automobiles likethere’s no tomorrow, whichcauses tremendous damage tothe environment.India has made spectacular prog-ress over the last 20 years. Whenyou look at the next 20 years,what makes you hopeful?I’ve seen a new sense of confi-dence and hope amongst Indiansin the last 12 years as they’vewatched our country movingforward, our GDP growth ratesincreasing, our softwarecompanies succeeding, our banksbecoming smarter and smarter.Therefore, even though we haveproblems, there’s confidence todaythat we’ll be able to solve them—if not tomorrow, then at leastthe day after. That’s the biggesttransformation I’ve seen in thepsyche of India. This confidenceis extremely important for a nationon the go.Infosys Electronics City, Bangalore.
    • 88 | Cities of Opportunity | PwCA tale of three citiesDubai recovers strongly, Dublin tries to turn the corner,and Athens slogs on wearilyTo paraphrase Tolstoy’s famous opening toAnna Karenina, while most happy cities arealike, every unhappy city is unhappy in its ownway. Although the pain and suffering (and, insome cases, tragedy) provoked by the globalfinancial crisis during the last few years havehad common causes, and certainly been mani-fested in much the same way (unemployment,foreclosures, bankruptcies), each city that hasundergone these wrenching events has hada very different history.Diagnostically, that means that each cityarrived at its crisis through a different set offactors and causes, which is also why eachone’s revival and future well-being will followa different path. While it is true that cities inthe eurozone—from Lisbon and Madrid toParis and Rome—share fundamental problemsarising from the single currency, each has adifferent past (and future) that makes its spe-cific prognosis for potential economic healthdistinctive and not comparable. Focusing onAthens, Dublin, and Dubai, three of the mostconspicuous examples of urban crisis duringthe last several years, will illustrate the extentto which it is more the differences rather thanthe commonalities that distinguish economicbreakdown and recovery in a city.Dubai had a prominent collapse of its realestate market in the late fall of 2009.1Veryquickly, Abu Dhabi came to the rescue of itssister emirate with a $10 billion bailout.2To a very real extent, Dubai was a victim ofthe worldwide financial crisis following thecollapse of Lehman Brothers in September2008. Although Dubai’s accumulated debtof about $120 billion was mostly from realestate it had built and reasonably expectedto lease, these investments immediatelybecame identified with the global real estatebubble that burst simultaneously in so manycountries at the time.But some bubbles are less frothy than others.As far back as December 1, 2009—two weeksbefore Abu Dhabi came to the rescue of its sis-ter city—Harvard economist Edward Glaeserwas presciently warning people against a rushto judgment. In his New York Times blog, hepointed out that while Dubai had “massivelyoverbuilt relative to … current demand” andthat “extreme height” in skyscraper construc-tion is “a bellwether of irrational exuberance,”it was also true that “it took more than adecade for the Empire State to stop beingthe ‘Empty State Building.’” In fact, Glaeserreminded us, five of the 10 tallest buildings inNew York were planned during the Roaring(and very bubbly) ’20s but were actually builtduring the Depression. “Great cities,” Glae-ser remarked, “have long been built by greatgamblers,” and concluded: “Even if Dubai’sreal estate prices continue to drop, which iscertainly quite possible, there will remaina strong incentive to fill its buildings. If thestructures remain occupied, then Dubai… will survive.”3As it turned out, while Dubai experienced an18 percent drop in GDP between 2008 and2009, it actually grew 3.4 percent in 2011 andis expected to grow 3.7 percent this year, 3.9percent in 2013, and to return to its pre-reces-sion peak by 2014.4Even more important, atleast as far as the actual repercussions on thecity’s population, Dubai has never sufferedthe debilitating unemployment that has beenthe most devastating consequence of finan-cial disaster in every other city. Thus, whilethe economy lost almost a fifth of its value injust one year, it only shed 3,000 jobs. By thefollowing year, in fact, total employment hadincreased by 30,000. The city is now projectedto gain an average of 45,000 jobs annuallythrough 2025.The reasons for this relatively benign employ-ment environment are unique to Dubai. Firstof all, despite (or perhaps because of) AbuDhabi’s financial intervention, whatevermarginal job loss occurred during the city’scrisis was made up by increased hiring in thepublic sector, which added more than 61,000jobs between 2008 and 2010. Moreover, andas counterintuitive as it may appear, althoughthe city’s troubles originated in the real estatesector, employment in construction has actu-ally grown, by roughly 37,000 jobs during thesame period. If nothing else, this confirmsthe wisdom of Edward Glaeser’s predictionthat Dubai would indeed survive this tempo-rary financial hiccup in its development as“a great metropolis.”5Moving to Dublin, the second of our threecities under examination, we come across adecidedly grimmer landscape. Gone are thedays when Dublin was toasted in think tanksand investment conferences around the worldas the capital of the “Celtic Tiger” and heartof the “Irish Miracle,” as Ireland averagedannual GDP growth of over 7 percent from1995-2007, and even hit stratospheric heightsof 10-11 percent several years during thatperiod, while the European Union was averag-ing 2.2 percent.6By 2008, and the onset ofthe global financial crisis, Ireland’s real estatebubble had burst and GDP had fallen by3 percent.7The consequences for Dublin have beenharrowing. In 2007, with employmentexpanding at an annual rate of 3.5 percentduring the previous decade, the city’s unem-ployment rate stood at 4.5 percent; by 2011, ithad more than tripled to 14.2 percent. Youthunemployment has increased 150 percent,shooting up from 8,000 to almost 20,000.1 Unless otherwise stated, all data in this article are from researchundertaken for the Cities of Opportunity 2012 report.2 See Landon Thomas Jr., “Abu Dhabi Tightens Its Grip as It OffersHelp to Dubai,” The New York Times, December 14, 2009.3 See Edward L. Glaeser, “The Ascent, and Fall, of Dubai,” Econo-mix, The New York Times, December 1, 2009, at http://economix.blogs.nytimes.com/2009/12/01/the-ascent-and-fall-of-dubai.4 For 2011, see “Dubai economy grows by 3.4 pct. in 2011,”Reuters, May 29, 2012, at http://www.reuters.com/arti-cle/2012/05/29/dubai-gdp-idUSL5E8GT1LH20120529; for 2012and 2013 projections, see the chart “Dubai Government DebtSustainability, 2007–17,” International Monetary Fund, IMF CountryReport No. 12/116, United Arab Emirates: 2012 Article IV Consulta-tion, May 2012, page 12.5 Glaeser, “Ascent and Fall.”6 See the chart, “Real GDP Growth 1993-2009,” in NationalTreasury Management Agency, Ireland: Information MemorandumMarch 2008, page 16. The growth rate of 10-11% was achieved in1995, 1997, and 1999.7 For 2008 GDP, see Table 1, “Ireland: Selected Economic Indica-tors, 2008–13,” International Monetary Fund, IMF Country ReportNo. 12/48, Ireland: Fifth Review Under the Extended Arrangement—Staff Report; Staff Supplement; Press Release on the ExecutiveBoard Discussion, March 2012, page 25.
    • Partnership for New York City  |  Cities of Opportunity | 89Riot 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.Athens, Dublin, andDubai illustrate theextent to which it ismore the differencesrather than thecommonalities thatdistinguish economicbreakdown andrecovery in a city.
    • 90 | Cities of Opportunity | PwCForecastSource: Oxford Economics, Cities of Opportunity1002003004005002025’24’23’22’21’20’19’18’17’16’15’14’13’12’11’10’09’08’07’06’05’04’03’022001Athens DublinDubaiGDP(2001=100)Mature citycompositeEmerging citycompositeHow economic growth compares among the three cities and Cities of Opportunity averages2001-2025Meanwhile, since the housing bubbleexploded, everyone for whom their home wastheir major asset has been impoverished, ascurrent housing prices have plummeted tohalf their 2007 value. Of course, the cost ofhousing had almost quadrupled in the priordecade, rising from an average of €108,000to €415,000, but all those who bought housesas the real estate bubble inflated (as so manydid) are now underwater on their mortgages,saddled with homes they can no longer afford.In a story published last year, New YorkTimes correspondent Liz Alderman quoted ademoralized father of three saying, “It’s likewe drew the lottery ticket made in hell.”8The figures point to the Dantesque terrain.Dublin’s economy has lost 11 percent of itsvalue in the period from 2007 to 2012, orapproximately $6.5 billion. Employment hasplunged 15 percent, and unemployment isprojected to remain above 10 percent until2018. At the same time, the job losses over thelast five years have been spread across a widespectrum of sectors. Joblessness as a wholeis not expected to recede to pre-crisis levelsuntil after 2025, at the earliest.But it is surely Athens that has become theemblem of the global financial crisis. Theimages on television screens throughout theworld of the fires periodically raging inConstitution Square in the heart of the Greekcapital are the obvious illustration of an econ-omy that has crashed and continues to burn.While neither Dublin nor Athens is projectedto return to its pre-collapse levels of unem-ployment until after 2025, joblessness inAthens started at both a higher level than inDublin—6.5 percent as opposed to 4.5 percentin 2007—and is currently much worse: at theend of 2011, it stood at 20 percent, as againstDublin’s 14.2 percent mentioned above.Moreover, youth unemployment is over50 percent in Athens, while it stands at29 percent in Dublin.9It is precisely this dynamic of continuallyincreasing unemployment that seems to bespiraling out of control in Greece, having shotup from 15.7 percent to 21.7 percent in justthe last 10 months of 2011 (as opposed to thecorresponding Irish increase of 14.1 percentto 14.7 percent during the same period).10Furthermore, while Dublin has managed toeke out some job gains in the last few yearsin transport and communications, Athens’sjob losses have not spared any sector of theeconomy and have devastated two criticalareas of previous job growth, construction andmanufacturing, which have both shed at least50 percent of their respective workforces.GDP as a whole has also dropped much moreprecipitously in Athens than in Dublin, losing18 percent of its value from 2008 to 2012.More ominously, while Dublin is expected toreturn to its pre-crisis peak in four years,Athens is not forecast to get back to its peakfor at least another decade. There is, however,one positive area of comparison: Housingprices have fallen only 20 percent in Athensin the past four years while halving in Dublin,and most banks are restructuring loans ratherthan foreclosing. In the words of one banker,“Taking away the home of a particularfamily tears apart the social fabric of analready stressed society.”11In the end, the future for each of these threecities appears as different as their respectivepasts—although two of them, Dublin and8 Liz Alderman, “After Bust in Ireland, Ordinary People Make DoWith Less,” The New York Times, May 6, 2011.9 See David McWilliams, “This is a fiscal straightjacket for Ireland,not a union,” Financial Times, May 28, 2012, for the 29% rate ofyouth unemployment.10 For unemployment rates from March 2011 to January 2012, seeEurostat’s news release, “Euro area unemployment rate at 10.9%,”STAT/12/67, May 2, 2012, at http://europa.eu/rapid/pressReleases-Action.do?reference=STAT/12/67&type=HTML. Although the figuresare national, they are representative of trends in the two capitals. Itis noteworthy that Ireland shows a drop in unemployment in March2012 of 0.2% to 14.5%.11 See Rob Urban and Sharon Smyth, “Greek Banks FollowEuripides To Help Borrowers: Mortgages,” Bloomberg, July 27,2012, at http://www.bloomberg.com/news/2012-07-26/greek-banks-follow-euripides-to-help-borrowers-mortgages.html.
    • Partnership for New York City  |  Cities of Opportunity | 91Athens, are linked in a common, supranationalinstitutional framework (and, for the timebeing at least, a common currency) that willseriously affect the extent to which they do, ordo not, recover in the coming years. As men-tioned, Dubai has already left its past behindit and is moving ahead robustly and confi-dently.12With the assistance of Abu Dhabi, itensured that its crash was of short duration,without longer lasting consequences, and,above all, as painless as possible.The two European cities have a much moredifficult future ahead of them and, in thecase of Athens, a truly daunting one. Theoutlook for Dublin is definitely brighter thanfor the Greek city, even if only comparatively,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.In the ensuing disorder following the variouseconomic meltdowns in the EU, it has beenforgotten (or ignored) that, from 2000 to2007, Dublin was capital of a nation whosegovernment finances were in surplus to thetune of an average of 1.4 percent of GDP,whereas Athens was capital of a nation whosebudget deficits during that time averaged 5.4percent.13In addition, during the same time,Ireland’s general debt averaged an astound-ingly low 29.8 percent of GDP, just under halfthe relevant EU limit, while Greece’s camein at a whopping 102.6 percent, 70 percentabove EU rules.Thus, what happened in Ireland had abso-lutely nothing to do with profligate publicspending. The exact opposite, in fact. Thesovereign sacrificed its fiscal integrity, andfuture, when it decided to cover the debts thatresulted from the truly profligate expansionof the private sector, in this case the banks. Ifnothing else, these facts illustrate that fiscalresponsibility would be a reversion to thenorm for the Irish. Dublin’s key weakness,which led to its crisis, was its asset bubble.Consequently, as it stabilizes and then slowlyreturns to growth, Dublin, and Ireland as awhole, faces the same structural challenge asDubai: to diversify its economy and ensurethat it will never again be held hostage to thiskind of bubble (or to one particular economicsector). It must also be said, in all justice, thatthe “Celtic Tiger” was not all myth. The “IrishMiracle” might have turned out to be consider-ably less miraculous than touted to be at thetime, but there can be no doubt that a robusteconomic structure was put in place—andthat this structure is far from ruined and willultimately prove a haven for Dublin.Athens has, by far, the most uncertain future,or at least the one that is most difficult topredict with any reasonable assurance otherthan to repeat the obvious: the city’s deadlylink to a Greek state that was, and remains(as opposed to the Irish state), inefficient,over-indebted, and underfunded (primarilybecause of tax evasion). Athens is also thenucleus of an economy that is uncompetitive,risk-averse, and inward-looking (again,the very opposite of Dublin). Athens is themetropolitan center, in other words, ofa multiple dysfunctionality—political,economic, and now social—that will takemany years to set right.Having arrived at its crisis through adifferent set of factors and causes, each city’srevival and future well-being will thereforefollow a different path.*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 OpportunityAthens(2008-2012)**Dublin(2007-2012)**Dubai(2008-2010)**ManufacturingConstructionPublic sectorDistribution& retailOtherservicesBusinessservicesTransport &communicationsFinancial servicesAgriculture,forestry & fishingHotels & catering-50-51-18-34-20-22-2612-4-213-18-1221-50-2-31-0.3-2-2-8-5037-32-37*61-1-50-51-5012 The IMF warns, however, that the “large property overhangcontinues to be a drag on the economy” and that credit to theprivate sector has essentially remained flat for the last three years.See IMF Country Report No. 12/116, especially pages 4-7.13 The averages above were calculated on the basis of Eurostat’sdata; see the table, “General government deficit/surplus: Percent-age of GDP,” at http://epp.eurostat.ec.europa.eu/portal/page/portal/product_details/dataset?p_product_code=TSIEB080.Interestingly, Ireland was a much more stringent observer of theeurozone’s fiscal stability criteria than Germany, whose own deficitsduring the same period averaged 2.3%, or over 150% more thanIreland’s surpluses.Sectoral employment change for Athens, Dubai, and DublinEmployment change in thousands
    • 92 | Cities of Opportunity | PwCKey to the VariablesAir pollutionMeasure of outdoor air pollution levels basedon annual mean concentrations of particulatematter 10 micrometers (PM10) in diametersor less, which reflect the degree to whichurban populations are exposed to this finematter. Figures are based on daily measure-ments or data that could be aggregated intoannual means. In the absence of annualmeans, measurements covering a more limitedperiod of the year were exceptionally used.Figures were sourced from the World HealthOrganization’s Public Health and Environmentdatabase, which is of global scope aiming toprovide data at both national and city levels.Aircraft movementsCount of air traffic movements at each of themajor airports servicing a city, including civilinternational and domestic passenger, cargo,and non-revenue flights but excludingmilitary flights.Airport to CBD accessA measure of the ease of using public transit totravel between a city’s central business districtand the international terminal of its busiestairport in terms of international passengertraffic. Cities are separated into categoriesaccording to whether a direct rail link exists;if so, the number of transfers required; andif not, whether there is a public express busroute to the airport. Cities with direct raillinks are preferred to those with express busservices. Cities with rail links with the fewesttransfers are ranked higher than those withmore. Within categories, cities are rankedagainst one another according to the cost ofa single one-way, adult weekday trip andthe length of the trip, with each factorweighted equally.Attracting FDI: Capital investmentTotal value of greenfield (new job-creating)capital investment activities in USD in a citythat are funded by foreign direct investment.Data cover the period from January 2003through July 2011. Figures provided byfDi Intelligence.Attracting FDI: Number ofgreenfield projectsNumber of greenfield (new job-creating)projects in a city that are funded by foreigndirect investment. Data cover the periodfrom January 2003 through July 2011.Figures provided by fDi Intelligence.Broadband quality scoreMeasurement of the quality of a broadbandconnection in a given country using theBroadband Quality Study. This index iscalculated based on the normalized values ofthree key performance parameter categories:download throughput, upload throughput,and latency. A formula weights each categoryaccording to the quality requirements of aset of popular current and probable futurebroadband applications. The BroadbandQuality Study is an index produced by SAIDBusiness School University of Oxford andUniversidad de Oviedo, sponsored by Cisco.Classroom sizeNumber of students enrolled in public primaryeducation programs divided by the number ofclasses in these programs. Primary educationprograms usually begin at ages five to sevenand last four to six years.Consumer price indexA relative measure of the price of consumergoods by location, including groceries,restaurants, transportation, and utilities.The CPI measure does not include housingexpenses such as rent or mortgage. Figuresprovided by Numbeo, a worldwide cost-of-living database.Cost of business occupancyAnnual gross rent divided by square feetof Class A office space. Gross rent includeslease rates, property taxes, maintenance, andmanagement costs. Data produced by CBREGlobal Office Rents.Cost of InternetThe current monthly price for Internet service(6 mbps) with unlimited data using cable orADSL (in USD). Figures provided by Numbeo,a worldwide cost-of-living database.Cost of public transportCost of the longest mass transit rail tripwithin a city’s boundaries. The cost of a bustrip is used in the cities where there are norail systems.Cost of rentMonthly rent for a one-bedroom apartment inthe city center (in USD). Figures provided byNumbeo, a worldwide cost-of-living database.CrimeAmount of reported crimes in a city suchas petty and property crimes, violent crimes,and street crimes. Data are from the MercerQuality of Living reports.Cultural vibrancyWeighted combination of city rankings basedon: the quality and variety of restaurants,theatrical and musical performances, andcinemas within each city; which cities recentlyhave defined the “zeitgeist,” or the spirit ofthe times; and the number of museumswith online presence within each city. The“zeitgeist” rankings take into account cultural,social, and economic considerations.Digital economy score*Assessment of the quality of a country’s infor-mation and communications technology (ICT)infrastructure and the ability of its consumers,businesses, and governments to use ICT totheir benefit. Data were sourced from thedigital economy rankings, “Digital EconomyRankings 2010—Beyond E-readiness,” by theEconomist Intelligence Unit.Ease of entry: Number of countries withvisa waiver*Number of nationalities able to enter thecountry for a tourist or business visit withouta visa. Excludes those nationalities for whomonly those with biometric, diplomatic, orofficial passports may enter without a visa.Ease of starting a business**Assessment of the bureaucratic and legalhurdles an entrepreneur must overcome toincorporate and register a new firm. Accountsfor the number of procedures required toregister a firm; the amount of time in days
    • Partnership for New York City  |  Cities of Opportunity | 93required to register a firm; the cost (as apercentage of per capita income) of officialfees and fees for legally mandated legal orprofessional services; and the minimumamount of capital (as a percentage of per cap-ita income) that an entrepreneur must depositin a bank or with a notary before registrationand up to three months following incorpora-tion. Assessment scores gathered from DoingBusiness 2012, The World Bank Group.Employee regulations**Sum of three rank scores from the WorldBank’s Doing Business study including: ratioof minimum wage to average value addedper worker; notice period for redundancydismissal (for a worker with 20 years oftenure, in salary weeks); and paid annualleave for a worker with 20 years of tenure(in working days).End of life care*Ranking of countries according to theirprovision of care for their citizens at the endof their lives taking into account the basichealthcare environment, availability, cost, andquality of care. The Quality of Death Indexscores countries across four categories:Basic End-of-Life Healthcare Environment;Availability of End-of-Life Care; Cost of End-of-Life Care; and Quality of End-of-Life Care.These indicator categories are composed of27 variables, including quantitative, quali-tative, and “status” (i.e.,whether or notsomething is the case) data. The indicator dataare aggregated, normalized, and weighted tocreate the total index score. Quality of Deathis an Economist Intelligence Unit index reportcommissioned by the Lien Foundation.Entrepreneurial environment*Measurement of the entrepreneurial attitudes,entrepreneurial activity, and entrepreneurialaspirations in a country using the GlobalEntrepreneurship Index (GEINDEX). TheGEINDEX integrates 31 variables, includingquantitative and qualitative measures andindividual-level data and is produced by theCenter for Entrepreneurship and PublicPolicy, George Mason University.Financial and businessservices employmentNumber of jobs in financial and businessservices activity as a share of total employ-ment in the city. Financial services includes“banking and finance,” “insurance and pensionfunding,” and “activities auxiliary to financialintermediation.” Business services includesa mix of activities across the following subsec-tors: “real estate and renting activities”; “ITand computer related”; “R&D”; “architectural,engineering, and other technical activities”;“legal, accounting, bookkeeping, and auditingactivities, tax, and consultancy”; “Advertising”;and “Professional, scientific, and technicalservices and business services where notelsewhere classified.” Data sourced byOxford Economics.Flexibility of visa travel*Ranking based on the number of visa waiv-ers available for tourist or business visits andthe length of time for which the visa waiver isgranted. Ranking is based on the number ofthose countries that grant a waiver for at least90 days, excluding those countries whose resi-dents can enter without a visa only if they havea biometric, diplomatic, or official passport.Foreign embassies or consulatesNumber of countries that are represented bya consulate or embassy in each city. Figuressourced from Go Abroad.com.Health system performance*Measurement of a country’s health systemperformance made by comparing healthy lifeexpectancy with healthcare expenditures percapita in that country, adjusted for averageyears of education (as years of education arestrongly associated with the health of popula-tions in both mature and emerging countries).Methodology adapted from the 2001 report,“Comparative efficiency of national healthsystems: Cross-national econometric analysis.”HospitalsRatio of all hospitals within each city accessibleto international visitors for every 100,000individuals of the total population.Hotel roomsCount of all hotel rooms within each city.HousingMeasure of availability, diversity, cost, andquality of housing, household appliances, andfurniture, as well as household maintenanceand repair. This measure is produced by theMercer Quality of Living reports.Incoming/Outgoing passenger flowsTotal number of incoming and outgoing pas-sengers, including originating, terminating,transfer, and transit passengers in each of themajor airports servicing a city. Transfer andtransit passengers are counted twice. Transitpassengers are defined as air travelers comingfrom different ports of departure who stayat the airport for brief periods, usually onehour, with the intention of proceeding to theirfirst port of destination (includes sea, air, andother transport hubs).Innovation Cities IndexThe index comprises 331 cities selected from1,540 cities based on basic factors of health,wealth, population, geography. The selectedcities had data extracted from a city bench-marking data program on 162 indicators.Each of the benchmarking data was scored byanalysts using best available qualitative analy-sis and quantitative statistics. (Where datawere unavailable, national or state estimateswere used.) Data were then trend-balancedagainst 21 global trends. The final index hada zeitgeist (analyst confidence) factor addedand the score reduced to a three-factor scorefor cultural assets, human infrastructure, andnetworked markets. For city classification,these scores were competitively graded into5 bands (Nexus, Hub, Node, Influencer,Upstart). The top 33 percent of Nexus andHub (and selected Node cities of futureinterest) final graded scores were ranked byanalysts based on trends over two to fiveyears. A Node ranking is considered globallycompetitive. The index is produced by2Thinknow Innovation CitiesTMprogram.
    • 94 | Cities of Opportunity | PwCIntellectual property protection*Leading business executives’ responses tothe question in the World Economic Forum’sExecutive Opinion Survey 2010 that asks,“How would you rate intellectual propertyprotection, including anti-counterfeiting mea-sures, in your country? (1=very weak; 7=verystrong).” The survey covers a random sampleof large and small companies in the agricul-tural, manufacturing, non-manufacturing,and service sectors.International touristsAnnual international tourist arrivals for 100cities collected by Euromonitor International.Euromonitor’s figures include travelers whopass through a city, as well as actual visitorsto the city.Internet access in schools*Leading business executives’ responses tothe question in the World Economic Forum’sExecutive Opinion Survey 2010 that asks,“How would you rate the level of access to theInternet in schools in your country? (1=verylimited; 7=extensive).” The survey coversa random sample of large and small companiesin the agriculture, manufacturing, non-manufacturing, and service sectors.iPod indexWorking hours required to buy an iPod nano(8 GB). Data sourced from UBS Prices andEarnings report.Level of shareholder protection**Measurement of the strength of minorityshareholder protection against misuse ofcorporate assets by directors for their personalgain. The Strength of the Investor ProtectionIndex is the average of indices that measure“transparency of transactions,” “liability forself-dealing,” and “shareholders’ ability tosue officers and directors for misconduct.”Assessment scores gathered from DoingBusiness 2012, The World Bank Group.Libraries with public accessNumber of libraries within each city that areopen to the public divided by the total popula-tion and then multiplied by 100,000.Licensed taxisNumber of officially licensed taxis in eachcity divided by the total population and thenmultiplied by 1,000.Literacy and enrollment*Measurement of a country’s ability to gener-ate, adopt, and diffuse knowledge using datafrom the World Bank’s Knowledge Indexcategory, education and human resources.The variables that compose education andhuman resources are adult literacy rate,secondary education enrollment, and tertiaryeducation enrollment.Major construction activityCount of “under construction” buildings inthe SkyscraperPage database for each cityunder way as of December 19, 2011. Thisincludes structures such as highrises,stadiums, towers, and lowrises.Mass transit coverageRatio of kilometers of mass transit track toevery 100 square kilometers of the developedand developable portions of a city’s land area.A city’s developable land area is derived bysubtracting green space and governmentallyprotected natural areas from total land area.Math/Science skills attainment*Top performers’ combined mean scores on themath and science components of the Programfor International Student Assessment (PISA),an Organization for Economic Co-operationand Development (OECD) assessment of15-year-olds’ academic preparedness. Topperformers are defined as those studentswho scored in the top two proficiency levels(Level 5 and Level 6) on the math and scienceportions of the test. Comparable examinationsare used wherever possible to place citiesnot included in the OECD assessment.Natural disaster riskRisk of natural disasters occurring in or neara city. Counted hazards include hurricanes,droughts, earthquakes, floods, landslides, andvolcanic eruptions.Number of Global 500 headquartersNumber of Global 500 headquarters locatedin each city, as per the CNN Money FortuneGlobal 500 list.Number of internationalassociation meetingsNumber of international association meetingsper city per year that take place on a regularbasis and rotate among a minimum of threecountries. Figures provided by members ofthe International Congress and ConventionAssociation.Operational risk climate*Quantitative assessment of the risks to busi-ness profitability in each of the countries.Assessment accounts for present conditionsand expectations for the coming two years.The operational risk model considers 10 sepa-rate risk criteria: security, political stability,government effectiveness, legal and regulatoryenvironment, macroeconomic risks, foreigntrade and payment issues, labor markets,financial risks, tax policy, and standard of localinfrastructure. The model uses 66 variables,of which about one-third are quantitative.Data produced by Economist IntelligenceUnit’s Risk Briefing.Percent of population withhigher educationNumber of people who have completed at leasta university-level education divided by thetotal population. A university-level educationis set equivalent to a bachelor’s degree orhigher from a US undergraduate institution.Political environmentMeasure of a nation’s relationship with foreigncountries, internal stability, law enforcement,limitations on personal freedom, and mediacensorship. Data are from the Mercer Qualityof Living reports.ProductivityProductivity is calculated by dividing the grossdomestic product (GDP) in 2012 US dollarsby employment in the city. Data provided byOxford Economics.
    • Partnership for New York City  |  Cities of Opportunity | 95Public park spaceProportion of a city’s land area designated aspublic recreational and green spaces to thetotal land area. Excludes undeveloped ruggedterrain or wilderness that is either not easilyaccessible or not conducive to use as publicopen space.Public transport systemsMeasure of the efficiency, reliability, andsafety of public transport networks to residentsand visitors in each city. The extensivenessand integration of the systems are also factors.Cities are further differentiated by the extentof multi-modal transport systems, includingsubway, bus/bus rapid transit, taxi, light rail,tram/trolley/streetcar, commuter rail, andbike share systems.Quality of livingScore based on more than 30 factors acrossfive categories: sociopolitical stability,healthcare, culture and natural environment,education, and infrastructure. Each cityreceives a rating of either acceptable, tolera-ble, uncomfortable, undesirable, or intolerablefor each variable. For qualitative indicators,ratings are awarded based on the EconomistIntelligence Unit analysts’ and in-city contribu-tors’ judgments. For quantitative indicators,ratings are calculated based on cities’ relativeperformances on a number of external data-points. Data produced by the EconomistIntelligence Unit Liveability ranking.Rate of real GDP growth2010-2011 gross domestic product (GDP)percentage growth rate in real termsexpressed in 2012 US dollars. Dataprovided by Oxford Economics.Recycled wastePercentage of municipal solid waste divertedfrom the waste stream to be recycled.Research performance of topuniversitiesSum of the scores of each city’s universitiesincluded in the world ranking of top-perform-ing research universities. Scaled scores arebased on the number of articles published,number of citations to published work, and thequantity of highly cited papers. The scoringaccounts for social sciences papers but nothumanities papers. The rankings favor largeuniversities, universities with medical schools,and universities that focus predominantly onthe “hard sciences” rather than social sciencesand humanities. The performance rankingis carried out by the Higher EducationEvaluation & Accreditation Council of Taiwan.Resolving insolvency**Gauges the weaknesses in existing bankruptcylaw and the main procedural and administra-tive bottlenecks in the bankruptcy processby looking at three category areas: time andcost required to resolve bankruptcies and therecovery rate of the claim from the insolventfirm. Assessment scores sourced from DoingBusiness 2012, The World Bank Group.Software development andmulti-media designCombined score for each city from fDiBenchmark’s “Software Development Centre”and “Multi-Media Design Centres” profiles.Both indices gauge a city’s performance basedon the quality (weighted 70 percent) and thecost (weighted 30 percent) of the location aswell as 120 quality competitiveness measures.For software development, these measuresinclude availability and track record in ICT,availability of specialized-skills profession-als such as scientists and engineers, access toventure capital, R&D capabilities, softwareexports, quality of ICT infrastructure, andspecialization in software development. Formulti-media design, measures include the sizeof the location’s leisure and entertainmentsector, its specialization and track record,information technology infrastructure,quality of life, and skills availability.Thermal comfortMeasure of the average deviation from optimalroom temperature (72 degrees Fahrenheit)in a city. January and July heat indices werecalculated for each city using an online toolthat integrates average temperature and aver-age morning relative humidity during eachmonth. A final thermal comfort score wasderived by first taking the difference betweena city’s heat index for each month and optimalroom temperature and then averaging theabsolute values of these differences.Total tax rateMeasure of the total taxes and mandatory con-tributions payable by the business in the secondyear of operation, expressed as a share of com-mercial profits. The total tax rate is designed toprovide a comprehensive measure of the costof all taxes a business bears. The World BankGroup, Doing Business 2012 reports the totaltax rate for calendar year 2010.Traffic congestionMeasure of traffic congestion and congestionpolicies for each city scored on the level ofcongestion, as well as the modernity, reliability,and efficiency of public transport.Workforce management riskRanking based on staffing risk in each cityassociated with recruitment, employment,restructuring, retirement, and retrenchment.Risk was assessed based on 25 factors groupedinto five indicator areas: demographic risksassociated with labor supply, the economy,and the society; risks related to governmentalpolicies that help or hinder the managementof people; education risk factors associatedwith finding qualified professionals in a givencity; talent development risk factors related tothe quality and availability of recruiting andtraining resources; and risks associated withemployment practices. A lower score indicatesa lower degree of overall staffing risk. Rankscores sourced from the 2011 People RiskIndex produced by Aon Consulting.Working age populationRatio of a city’s population aged 15-64 to thetotal population of the city.*Country-level data.**Data based on countries’ most populous city.
    • 96 | Cities of Opportunity | PwCFor more informationOn research …Partnership for New York CityBrook Jacksonbjackson@pfnyc.org+1 212.493.7580PwCSabrina McColgansabrina.y.c.mccolgan@us.pwc.com+1 646.471.8180On media inquiries …Partnership for New York CityFarrell SklerovRubenstein Public Relationsfsklerov@rubenstein.com+1 212.843.8289PwCTanja Sullivantanja.sullivan@us.pwc.com+1 646.471.6959On business implications …PwCHazem GalalGlobal Leader, Cities Networkhazem.galal@br.pwc.com+55 21 3232 6168Jan SturessonGlobal Leader, Government & Public Servicesjan.sturesson@se.pwc.com+46 (0)46 286 93 39Egon de HaasGlobal Director, Government & Public Servicesegon.de.haas@nl.pwc.com+31 (0) 20 5686162ContributorsPhotography:Bill Bratton, David Miller, and Times Square: Kate ÖrneEdward O. Wilson: Richard Perry, The New YorkTimes, ReduxAerial View of NYC: Todd Heisler, The New York Times,ReduxElectronics City, Bangalore: Dirk Kruell, Laif, ReduxSt. Paul’s Cathedral: James Veysey, Camera Press, ReduxLagos Island: Benedicte Kurzen, The New YorkTimes, ReduxPaul Langrock/Zenit/Laif/ReduxDr. Andrew Chan, courtesy of ArupWim Elfrink, courtesy of CiscoSongdo photos, courtesy of Gale International and CiscoEdward O. Wilson in Gorongosa National Park, copyrightHoward W. FrenchN.R. Narayana Murthy, REUTERS/Jagadeesh NvMadrid, REUTERS/Andrea ComasXiaojiahe in Beijing’s university district, REUTERS/StringerShanghaiGetty ImagesAP ImagesCorbis ImagesMasterfileStrategic directionPwCTom CrarenBrendan DougherCore teamPartnership for New York CityKaty BelotBrook JacksonMerrill PondPwCDorothy JonesLou GabrielAdiba KhanCiara McAlisterSabrina McColganColin McIlheneyCliona O’BeirneTatiana PechenikWilliam SandOxford EconomicsNeil GibsonGraeme HarrisonMark MagillNeil McCulloughProject directionPwCWilliam Sand, communicationswilliam.k.sand@us.pwc.com+1 646.471.4470Partnership for New York CityKathryn WyldeDesignOdgis + CompanyJanet OdgisRhian SwieratPartnership for New York CityMerrill Pond, researchmpond@pfnyc.org+1 212.493.7515
    • www.pwc.comwww.pfnyc.org13 trees were preserved for the future39 lbs of waterborne waste were not created5,687 gallons of wastewater flow were saved629 lbs of solid waste were not generated1,239 lbs net of greenhouse gases were prevented9,482,515 BTUs of energy were not consumedThe 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: