Hotspots 2025


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The costs of living and doing business in New York City are high, but not as high as in some others, including London and Tokyo, Mr. Abruzzese said. New York’s most glaring weakness has been in the management of the environment and preparation to cope with storms and other natural disasters, he said. (The New York Times)

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Hotspots 2025

  1. 1. A report from the Economist Intelligence UnitCommissionedbyHot spots2025Benchmarkingthefuturecompetitivenessofcities
  2. 2. © The Economist Intelligence Unit Limited 20131Hot Spots 2025 Benchmarking the future competitiveness of citiesExecutive summary 2Methodology overview 5Key findings and selected cities 6The United States 8Asia 9Europe, The Middle East and Africa (EMEA) 11Latin America 13Overall 2025 City Competitiveness rankings table 15Regional findings 19Appendix: methodology 21Overview 21Category and indicator selection 22Data sources and indicator normalisation 28Weighting 29Data modelling 29City selection 30Contents
  3. 3. © The Economist Intelligence Unit Limited 20132Hot Spots 2025 Benchmarking the future competitiveness of citiesOne hundred years ago only two out of ten of theworld’s population were living in urban areas. Bythe middle of the 21st century, seven out of tenpeople will be living in cities. Already globalbusiness is beginning to plan strategy from a city,rather than a country, perspective. Understandablyso: well over half of the world’s population lives incities, generating more than 80% of global GDP.Standard population projections show that virtuallyall global growth over the next 30 years will be inurban areas. The number of people living in theworld’s cities is growing by nearly 60m every year.The key findings of the research are as follows.l North American and European cities areamong the world’s most competitive todayand are likely to retain their advantage until2025, despite concerns over ageingpopulations and infrastructure, indebtednessand slow growth. While there is much concernin the West about the lingering impacts of thefinancial crises that have slowed plans for urbanrenewal, this has not reduced the ability of US,Canadian and European cities to attract capital,businesses and people, which is ultimately whatthis Index seeks to measure. New York (1st) andLondon (2nd) are rated as the world’s two mostcompetitive cities in 2025, while cities in theUS, Canada and Western Europe account for 21of the top 30 cities. Singapore (3rd), Hong Kong(4th) and Tokyo (5th) retain their position asglobally competitive centres.l The combined GDP of China and India isprojected to exceed that of the major seven(G7) OECD economies in 2025.1Despite this,leading cities in Western countries will continuesuccessfully to compete against fast-growingemerging-market cities.l Asia’s economic rise is reflected in thecompetitiveness of its cities in 2025. Asiancities dominate the economic strength categoryof the City Competitiveness Index. This category,which accounts for 30% of the overall Index—more than any other category—measures howfast a city grows, how rich or poor its citizens areand how well a city is integrated into the globaleconomy. Delhi and Tianjin top the list. All butthree of the top 20 cities in this category can befound in the Asia-Pacific region. New York (3rd),Doha (16th) and London (19th) are the onlynon-Asian cities to make the cut. There are nineChinese and seven Indian cities in the top 20.The dominance of Chinese and Indian citiesreflects rising incomes and urbanisation. Indiancities do particularly well on the measure ofeconomic strength. This is in part because, muchlike in China’s cities, average incomes will havedoubled by 2025. But more significantly, Indiais less urbanised than China and will thereforesee many more tens of millions of people withmiddle-class aspirations move from the rural1 Looking to 2060: Long-term growth prospects for the world, OECD,2012.Executivesummary
  4. 4. © The Economist Intelligence Unit Limited 20133Hot Spots 2025 Benchmarking the future competitiveness of citiesareas to its cities. Apart from Delhi (1st) andMumbai (7th), Chennai (10th), Bangalore andPune (joint 11th), Hyderabad (13th) andAhmedabad (14th) make the top 20 on themeasure of sheer economic might.l The quality of institutions matters greatly forcities’ economic competitiveness. There is astrong correlation between the quality of a city’sinstitutions and its overall competitiveness. Thismakes sense: a city’s ability to tax, plan,legislate and enforce laws and its willingness tobe held accountable by its citizens requirestrong institutions. Five American cities top thelist in this category: Seattle, New York, SanFrancisco, Dallas and Washington DC. In all, 11out of the top 20 cities rated best in theinstitutional character category join the top 20in the overall Index. Among the top 20 forinstitutional character are five developed citiesin Asia-Pacific: Hong Kong, Taipei, Incheon,Sydney and Auckland. Not a single city indeveloping Asia makes the top 20. At the otherend of the spectrum, cities rated poorly oninstitutional character in 2025 are also the leastcompetitive overall.l Cities of all sizes can be competitive. The topten most competitive cities in 2025 range fromthe world’s biggest (Tokyo, with an estimatedpopulation of 37m) to some of the smallest(Zurich, estimated population 1.4m). Indeed,there is no major correlation between a city’ssize and its competitiveness ranking in theIndex. Densely populated small city states suchas Singapore (3rd) and Hong Kong (4th) will beamong the most competitive places in 2025,along with Sydney (6th) and Stockholm (8th),which are spread out over a large geographicalarea.l African cities lag most on competitiveness,while major cities in Latin America improvetheirs. All regions have leaders and laggards interms of competitive cities. Africa performsparticularly poorly, with South Africa providingthe only decent contenders, such asJohannesburg (66th), Cape Town (77th) andDurban (95th). In northern Africa, Cairo (106th)benefits from the economic power derived fromits sheer size in 2025. In Latin America, majorBrazilian cities—São Paulo (36th), Rio deJaneiro (76th) and Porto Alegre (97th)—willhave improved their competitivenesssignificantly in 2025. All three cities are amongthe top 15 risers in the overall Index rankings.Their rise, combined with the relative stagnationof African cities’ competitiveness, will be seen asvindication by those who argue that Brazilrightly belongs to the select club of BRICcountries (Brazil, Russia, India and China)—famously predicted by Jim O’Neill, a formereconomist at Goldman Sachs, to be among thedominant economies by 2050—which have cometo symbolise the shift in global economic poweraway from the developed G7 economies.l Easy maritime access helps cities rapidly toascend in the overall rankings. Nine out of tenof the fastest risers (led by São Paolo) in termsof improvement on the overall competitivenessmeasure are seaports or have easy maritimeaccess. (Incidentally, only three of the top risersare capital cities.) The reverse is true for citiesthat have seen the steepest fall in theircompetitiveness ranking. The vast majority ofthem are either landlocked or face substantialchallenges in their access to major seaports.These findings support a broad trend: a secondtier of cities, often propelled by demographicsand favourable geography, is becoming morecompetitive and closing the gap with its well-established rivals. The port city and Omanicapital Muscat (ranked 64th) rises faster thanany other city in the Middle East. SaintPetersburg (92nd), Russia’s trade gateway tothe West, improves its overall ranking, whilePanama City (65th) owes its very existence tomaritime trade through the Panama Canal.
  5. 5. © The Economist Intelligence Unit Limited 20134Hot Spots 2025 Benchmarking the future competitiveness of citiesl The quality of a city’s physical capital ishighly correlated with its overallcompetitiveness. Statistically, the correlationbetween a city’s competitiveness and thequality of its physical capital—defined in theIndex as the quality of physical infrastructure,public transport and telecommunicationsinfrastructure—is the strongest among theeight sub-categories that make up the Index.Two Chinese cities, Shanghai and Beijing,ascend to the top 20 in terms of their physicalcapital in 2025 and are among a group that isotherwise dominated by a mix of rich, well-established global cities. Eleven of them arealso among the 20 most competitive overall.
  6. 6. © The Economist Intelligence Unit Limited 20135Hot Spots 2025 Benchmarking the future competitiveness of citiesCompetitiveness is a holistic concept. Whileeconomic size and growth matter, several otherfactors determine a city’s competitiveness,including its business and regulatory environment,its institutions, the quality of human capital,cultural aspects and the quality of environmentalgovernance. These factors not only help a city tosustain high economic growth, but also secure itsfuture competitiveness.Against this backdrop, the EconomistIntelligence Unit defines a city’s competitivenessas its ability to attract capital, businesses, talentand visitors. The 2025 City Competitiveness Indexbenchmarks the competitiveness of 120 citiesacross the world at two distinct points in time:today and in 2025. We do so by examining 32indicators for each city. Indicators are groupedinto eight distinct, thematic categories andassigned weights: economic strength 30%,physical capital and financial maturity 10% each,institutional character and human capital 15%each, global appeal 10%, social and culturalcharacter 5%, and environment and naturalhazards 5%.The Index includes a total of 27 qualitative andfive quantitative indicators.A city’s overall ranking in the benchmark Indexis a weighted score of the individual categories. Fora full breakdown of the categories, individualindicators and sub-indicators, weightings and datasources, see the Appendix.Methodologyoverview
  7. 7. © The Economist Intelligence Unit Limited 20136Hot Spots 2025 Benchmarking the future competitiveness of citiesKey findings and selected citiesMajor cities in India, Brazil and Russia are expected to improve their competitivenessand catch up to many cities in the developed world. Six of the top 25 most improvedcities in terms of their overall competitiveness ranking are located in BRIC countries (barChina). Of these, three—São Paulo, Mumbai and Saint Petersburg—are in the top five.Delhi, Rio de Janeiro and Porto Alegre complete the list of major cities from the BRICeconomies. There is no Chinese city among the top 25 most improved cities. This reflectsthe progress that Chinese cities have already made and the fact that many cities in Indiaand Brazil still have a bit of catching up to do before they can match the competitivenessof their Chinese rivals.São Paulo (36th), the Index’s most improved, is also the most competitive city amongthe BRIC countries. Shanghai (38th) comes in second, Beijing ranks 49th, while Mumbai,India’s commercial capital, ranks 51st. Delhi, India’s capital city, ranks 56th. SouthAfrica and Indonesia, countries with the ambition of becoming the new “S” and “I” in anenlarged BRIICS, do not have a city in the top half of the Index in terms of overallcompetitiveness in 2025. Their leading contenders, Johannesburg (66th) and Jakarta(74th), just fall short.The top movers or most improved cities in terms of their competitiveness are São Paulo,Incheon and Mumbai.São Paulo, Brazil’s commercial and financial capital, is the most improved city in the Index.The city leapfrogs from the bottom half of the table today to 36th place in 2025. A youngand rapidly growing workforce, a good telecommunications infrastructure, and the city’sopenness are behind the surge in its competitiveness. Well-established democratictransitions and stable democratic institutions underpin its attractiveness for firms andpeople. Easy port access and financial maturity, the completion of a high-speed rail link to
  8. 8. © The Economist Intelligence Unit Limited 20137Hot Spots 2025 Benchmarking the future competitiveness of citiesRio de Janeiro, a low risk of natural disasters, and its overall openness account for SãoPaulo’s competitive edge in 2025.Incheon ranks 43rd and is the second biggest mover in the 2025 City CompetitivenessIndex. South Korea’s third largest city has been one of the main engines behind thecountry’s rapid economic development. Investments in a world class port, transportinfrastructure and the development of the Incheon Free Economic Zone have all resulted inthe city becoming a commercial, business, logistics and leisure hub for all of northeastAsia. It scores particularly well in quality of its physical capital (physical infrastructure,public transport and telecommunications), institutional character (particularly localgovernment fiscal autonomy, electoral process and government effectiveness), low risk ofnatural disasters, human capital (quality of education and healthcare) and global appeal(frequency of international flights).Mumbai, India’s commercial capital, comes third in terms of improved competitiveness.The city improved its rank to 51st in the overall Index. This surge in competitiveness isdriven by Mumbai’s sheer economic strength and its improved financial maturity andcultural vibrancy. Unlike São Paulo, which improves in all categories, Mumbai is losing outto other cities in an astonishingly large number of categories: physical capital (88th),institutional character (joint 76th), environment and natural hazards (joint 102nd), globalappeal (73rd) and human capital (84th).Jakarta edges up two ranks to 74th position on the overall Index. Its competitivenessimproves significantly owing to its rising economic strength, its unrivalled position as afinancial centre of a vast archipelago, and better connectivity with the region and theworld. It is held back by its geography, its liability to flooding and the vast gap it will haveto close to counter decades of chronic underinvestment in its defences. Although itsimportance as Indonesia’s capital and largest city will only rise, Jakarta fares relativelypoorly in higher education development and regional market integration.
  9. 9. © The Economist Intelligence Unit Limited 20138Hot Spots 2025 Benchmarking the future competitiveness of citiesTHE UNITED STATESl New York is the most competitive city today andwill remain so in 2025. The city makes gains inalmost all major categories. It tops the ranking interms of financial maturity and is among the mostcompetitive on institutional character (2nd) andeconomic strength (3rd). While building on itsstrength as the world’s financial capital and amagnet of opportunity for people from America andbeyond, the city owes its competitive edge in 2025to improvements in other areas. New York’senvironmental governance still lags behind othercities, but its NYC 2030 plan sets out a credibleblueprint for improvement. The quality ofhealthcare, although not among the best globally,improves in 2025, pushing up the city’s ranking inthe human capital category by 20 places to 27th.l Chicago ranks ninth in the overall Index and isAmerica’s second most competitive city after NewYork. As America’s second most important financialhub after the Big Apple, Chicago ranks 20th in thecategory of financial maturity. It ranks above anyother US city on its environmental governance andability of dealing with environmental challenges(joint 4th). Its public transport plan runs until2040, and its water management plan controlswater quality, supply and demand through to 2050.The city’s economy is projected to grow by anaverage of 3% per year, roughly on par with SanFrancisco and Washington DC. The city has a longhistory of attracting immigrants and ranks 15thglobally on social and cultural character. Othercomponents that underpin its competitiveness areprojected improvements in governmenteffectiveness, the quality of healthcare and flightconnectivity.l Washington DC is America’s third mostcompetitive city and ranks 14th in the overallIndex. America’s capital is a good all-roundperformer. It scores particularly well in thecategories institutional character (joint 4th),social and cultural character (joint 6th) andfinancial maturity (joint 32nd). The city is seen asone of the worst US cities in terms of trafficcongestion and waiting times, and investment inphysical capital (joint 31st) is currently not apriority. There has been a dramatic improvement inthe telecommunications infrastructure, with a risein broadband adoption and Wi-Fi spots, makingWashington a “wired city to watch”. Education is apriority, but healthcare much less so, and relativeto other cities Washington descends in therankings on both counts. The capital, one of thewealthiest US cities, is still seen by Americans asone of the best places to live.l Los Angeles ranks 17th on the overall Index,ascending by seven places between 2012 and2025. The city is the second most competitive UScity in terms of economic strength (ranked 27thglobally). It is one of the largest and most diversejurisdictions in the US and ranks third in NorthAmerica on global appeal (21st overall). The cityscores particularly well in the category social andcultural character (joint 6th), a reflection of itscultural diversity, openness and tolerance. Likemany of its peers the city struggles with fiscalconstraints, but is projected to improve in terms ofits government effectiveness. Continuous upgradesto the infrastructure of its port help to protect thecity’s position as a trade gateway to the PacificRim. By far the biggest improvement, moving up 43ranks in 2025, is seen in the category environmentand natural hazards (52nd). The City of Los Angeleshas credible and long-term water and air qualityimprovement strategies in place and is committedto improving environmental governance and aperformance-based budgeting system, which itintroduced in 2012.
  10. 10. © The Economist Intelligence Unit Limited 20139Hot Spots 2025 Benchmarking the future competitiveness of citiesl San Francisco is ranked 18th in the overallIndex and the fifth most competitive city in theUS. It is the second best performer on NorthAmerica’s West Coast, behind Los Angeles (17th),but ahead of Vancouver (28th) and Seattle (35th).The city performs particularly well in the categoryinstitutional character (joint 2nd). As a specialisedglobal hub for IT venture capital and private equity,it ranks joint 32nd in terms of its financialmaturity. San Francisco gains strongly as a result ofimprovements in the categories quality ofhealthcare and government effectiveness. It isproactive in attracting businesses and providesboth quality education and healthcare services tocitizens, with a “Healthy SF Initiative” aiming toimprove access to healthcare. The city benefitsfrom its reputation as one of the most liberal andmost accepting cities.ASIAl Singapore ranks third overall in the Index andis the highest-placed Asian city. The city statescores particularly well in terms of its physicalcapital (ranked joint first overall), financialmaturity (joint first), and environment and naturalhazards (joint first) and global appeal (3rd). Noneof this is surprising given the city’s efficienttransport system, lean bureaucracy, safe and cleanenvironment, and its increasingly highinternational reputation. The city’s focus onimproving the quality of education allowed it tojump 27 places to 10th in the human capitalcategory in 2025. Singapore drops 24 places to39th in the economic strength category, displacedby the 20-plus cities from developing Asia thatdominate the top 30 positions. Singapore’sdemographics weigh on its competitiveness: itsworking-age population is projected to be stagnantat 3.6m between 2012 and 2025, highlighting theneed to ensure that the city remains a hub open tothe flow of people, ideas, capital and goods andservices.l Hong Kong ranks fourth overall in the Index. Itshares with Singapore many of the features thatunderpin its competitiveness. Hong Kong is rankedparticularly highly in terms of its physicalinfrastructure (joint first overall), financialmaturity (joint first) and global appeal (5th). LikeSingapore, however, it is moving down the ranks inthe category economic strength in 2025 (ranked60th, down 39 places). Hong Kong’s income level isbelow Singapore’s; it is growing more slowly andlags its rival in terms of managing the
  11. 11. © The Economist Intelligence Unit Limited 201310Hot Spots 2025 Benchmarking the future competitiveness of citiesenvironment. But Hong Kong is able to fend offSingapore in the category social and culturalcharacter and benefits from the efficiency gains ofa well-run, densely populated area located on thesouthern coast of China, the world’s largesteconomy in 2025.l Delhi, India’s capital, is ranked 69th overall in2012 and rises to 56th place in 2025, by whichtime it will top the global ranking in the economicstrength category. Delhi’s rise mirrors that of manylarge urban areas in India. The city is a magnet ofopportunity for companies and people alike. Itsshared border with Uttar Pradesh, a state with apopulation larger than Brazil’s, is a locationaladvantage few companies can afford to ignore.Delhi’s competitiveness will improve in areas suchas financial maturity and social and culturalcharacter. But rapid, often poorly managedurbanisation and breakneck economic growth willtake their toll. Delhi performs poorly in theenvironment and natural hazard category, as itspolicymakers struggle to put in placeenvironmental policies that limit pollution andensure a sustainable supply of water.l Mumbai, India’s financial capital, ranks 51st inthe overall Index. The city’s surging economicstrength (ranked 7th), improved financial maturity(9th) and a better score in the category social andcultural character (60th) account for theimprovement in competitiveness. Unlike itsBrazilian counterpart, the financial and commercialcapital São Paulo, which recorded improvements inall categories, Mumbai is losing out to competitorsin three categories: institutional character (76th),environment and natural hazards (102nd) andglobal appeal (73th).l Tokyo is ranked 5th in the overall Index andremains Asia’s most competitive city that is not acity state (Singapore third, Hong Kong fourth).Tokyo’s primary strengths are the maturity of itsfinancial system (joint first) and impeccablephysical infrastructure (joint first). Tokyo loses outin terms of economic strength (17th) as it isovertaken by cities in emerging Asia. Its ageingworkforce and limited government effectivenessare also a drag on its competitiveness. Tokyo wouldhave struggled to retain its competitive edge in ourbenchmark assessment without an impressiveimprovement in its projected ability to cope withnatural disasters and environmental governance.(In this category, Tokyo ascends from the bottomhalf of the rankings to joint 36th.)l Jakarta edges up to 74th place in the overallIndex. Jakarta scores well in the categorieseconomic strength (24th)—a big chunk ofeconomic activity of Indonesia’s 272m-strongpopulation in 2025 is concentrated in Jakarta—andfinancial maturity (32nd). Improving theconnectivity of the capital with the vastarchipelago that is Indonesia and the world is apriority of the federal government’s 2025 EconomicMasterplan. Jakarta is held back by its topography(as a low-lying city it is prone to flooding) and thechronic underinvestment in its defences. It ranksamong the worst in the world (114th) in thecategory of environment and natural hazards.Although its economic importance as Indonesia’sprimary city will only rise, it scores relatively poorlyin the categories global appeal (73rd), social andcultural character (86th) and human capital(97th).
  12. 12. © The Economist Intelligence Unit Limited 201311Hot Spots 2025 Benchmarking the future competitiveness of citiesEUROPE, THE MIDDLE EAST AND AFRICA (EMEA)l London ranks second overall in the Index. It isthe only European city—apart from Paris (7th) andStockholm (8th)—in the top 10. London ranksparticularly well in terms of its financial maturity(joint first overall), physical capital (joint first) andglobal appeal (joint first). The city retains its roleas the UK’s and Europe’s leading financial centre.Notably, London is the only city in the developedworld that rises significantly in terms of itseconomic strength between 2012 and 2025(ranked 19th, up 18 places). The South-East ofEngland is among Europe’s most densely populatedareas, and London’s population is projected to risefrom 8.6m currently to 14.4m in 2025. The city thusremains a magnet of opportunity for businessesand people, although a tightening of immigrationrules has made hiring foreign nationals moredifficult. The quality of its physical capital,compromised by decades of underinvestment, hasbeen given a boost by multi-billion investments inthe city’s public transport infrastructure as part ofits bid for the London Olympics in 2012. Publictransport is a key priority, and the city has beensuccessful in implementing innovative ways ofmanaging road traffic. London moves up theoverall ranking in the categories of institutionalcharacter (12th) and its ability to implementenvironmentally sustainable policies and mitigatethe impact of natural hazards (joint 15th). Theprovision of quality primary and secondaryeducation and access to affordable healthcare are,as any Londoner will tell you, a matter of concern.The only category in which London struggles tokeep up with the world’s most competitive cities ishuman capital, in which it is ranked 44th in 2025.l Dubai moves up to 23rd place overall in theIndex. Dubai is one of several cities in the MiddleEast that are among the top climbers in the overallIndex—the others are Doha (24th), Abu Dhabi(39th), Muscat (64th), Kuwait City (63rd) andRiyadh (87th). Dubai is a good all-round performerand improves its ranking in seven out of eightcategories. Its competitiveness is in part owing tothe fact that the city has been planning actively fora future without petrochemicals for some time.Dubai ranks 44th overall on economic strength,reflecting the rapid growth of its tourism, realestate and financial services sectors. Its low-taxand pro-business economic philosophy continuesto attract businesses and people as Dubai attemptsto expand its status as a global city and financialand cultural hub of the Middle East and the PersianGulf region. The city, one of seven emirates in theUnited Arab Emirates, is making major strides interms of competitiveness in the categories ofhuman capital (5th), financial maturity (9th),global appeal (31st) and physical capital (37th).Its opaque political system and lack of pluralismand diversity limit progress until 2025 in thecategories institutional character (joint 43rd) andsocial and cultural character (joint 78th).l Saint Petersburg, Russia’s second city, ranks92nd on the overall Index. Its capital city Moscowranks 59th. Russia’s gateway to the West isamong the least competitive in Europe—onlyAnkara (103rd) has a lower ranking. However,Saint Petersburg ascends by 15 places, driven byimprovements in the categories of economicstrength (74th), human capital (73rd) andenvironment and natural hazards (joint 69th).Russia’s only major port on the Baltic Sea isexpanding, with its population projected to crossthe 5.1m threshold in 2025 (from 4.6m currently).The city also improves in the categories physical
  13. 13. © The Economist Intelligence Unit Limited 201312Hot Spots 2025 Benchmarking the future competitiveness of citiescapital (joint 56th) and financial maturity (joint77th). Saint Petersburg improves but still performspoorly in the category institutional character(102nd). The city has very limited fiscal autonomy,struggles with endemic corruption and lackspolitical autonomy, with the mayor and many cityofficials appointed by or under significant influenceof politicians in the capital Moscow.l Tel Aviv ranks 41st in the overall Index. Itsposition improves by 16 places as the city becomesmore competitive in the categories human capital(35th), institutional character (40th) andeconomic strength (81st). It performs best in thecategory financial maturity (joint 20th) and humancapital (35th). A firm and long-standingcommitment to first-class education and universalquality healthcare underpins Tel Aviv’sattractiveness. Despite ongoing political andsecurity concerns the city remains open andtolerant, and its pro-business policies make itattractive to both businesses and people. Thisattractiveness is reflected in Tel Aviv’s size (itspopulation is projected to rise by 1m to 4.3m in2025), and the pace at which its economy isgrowing (at an annual average of 3.8%, itseconomy is growing faster than that of many citieswith a comparable level of income).l Cape Town’s rank moves to 77th in the overallIndex. Cape Town is South Africa’s second mostcompetitive city after Johannesburg (66th), butnotably outranks Johannesburg and all otherAfrican cities in the Index on five out of eightcategories. In terms of overall competitiveness, theeconomic strength (98th) of South Africa’s thirdmost populous city is lower than some otherregional cities, owing to its slower growth rate. Itshigh score in the institutional character category(28th) reflects Cape Town’s high degree of fiscalautonomy, simple tax code, transparent electoralprocess and improved government effectiveness.The city’s development strategy includesinvestment in port infrastructure and publictransport and telecommunications, allowing it toimprove in the category physical capital (69th).The strategy also focuses on measures to improvethe city’s financial maturity (joint 77th) and isgenerally pro-business and pro-investment. Thecity has a vibrant cultural and sporting scene, butcompared with better-connected globalcompetitors it scores poorly on the quality ofeducation and healthcare. The city has acomprehensive disaster management plan in place.As a major tourist destination it performs betterthan its African competitors in the categoryenvironment and natural hazards, but globally itonly ranks joint 81st.
  14. 14. © The Economist Intelligence Unit Limited 201313Hot Spots 2025 Benchmarking the future competitiveness of citiesLATIN AMERICAl São Paulo is the most improved city in theoverall ranking. Brazil’s commercial and financialcapital ascends from the bottom half of theoverall rankings table today to 36th place in2025. The city’s rank improves in seven out of eightcategories. Its ascent is fuelled by improvements inthe categories financial maturity (ranked joint 9thoverall), institutional character (54th), physicalcapital (60th) and human capital (77th). A youngand rapidly growing workforce, goodtelecommunications infrastructure and improvedgovernment effectiveness drive the surge incompetitiveness. Other factors underpinning SãoPaulo’s competitive edge in 2025 are its massiveand growing port and rising financial might, thecompletion of a high-speed rail link to Rio deJaneiro, a low risk of risk of natural disasters, andthe city’s overall openness and diversity. SãoPaulo’s growing economic strength (50th) mattersas well. However, in contrast to Mumbai, the thirdmost improved city in the Index, sheer economicsize and growth is not the primary driver behindthis improvement in competitiveness.l Mexico City ranks 72nd in the overall Index.Despite having higher income levels than most ofits regional competitors, the city is only the fifthmost competitive in South and Central America.Mexico City’s performance is mixed. It makes upground in four categories: financial maturity (joint20th), economic strength (59th), social andcultural character (joint 67th) and environmentand natural hazards (joint 81st). Mexico’s politicaland commercial capital is projected to struggle intackling environmental challenges that will onlyworsen as the city’s economy grows (annual GDPgrowth is expected to accelerate from an averageof 2.7% to 3.5% during 2012-25). The challengesinclude poor air quality and chronic watershortages. The city’s global rank deteriorates infour categories: drags on its competitiveness areworsening scores in the categories global appeal(54th) and human capital (65th), an uneveninstitutional character (89th), and the relativelypoor quality of its physical capital (joint 95th).Individual factors that limit the city’scompetitiveness are a quota system for foreignworkers, a decline in its working-age population,corruption and relatively poor governance, and loweducational attainment.l Santiago ranks 60th in the overall Index. TheChilean capital is the second most competitivecity in Latin America after São Paulo (36th).Santiago’s competitiveness improves on the backof its growing economic strength (56th)—the city’spopulation is expected to grow by more than 1m to7.1m in 2025. The city scores better than in anyother category on the quality of its physical capital(24th). It benefits from a well-developedtelecommunications infrastructure and thegovernment’s continued focus on investment in theareas that shaped the city: maritime transport andcommerce. The government plans to double thecity’s airport capacity by 2030, a step that willmitigate the city’s relative isolation, which iscurrently reflected in its limited global appeal(65th). Santiago’s rank improves in the categoriesfinancial maturity (joint 32nd) and environmentand natural hazards (joint 85th).l Panama City ranks 65th in the overall Index. Itranks third in terms of competitiveness in Southand Central America after São Paolo (36th) andSantiago (60th). Panama City does particularly wellin the category economic strength (48th), onwhich it beats all of its peers in Latin America. Thisis because, despite its tiny population of 1.4m, it is
  15. 15. © The Economist Intelligence Unit Limited 201314Hot Spots 2025 Benchmarking the future competitiveness of citiesgrowing at rates only seen in developing Asia (thepopulation is projected to rise to 2m in 2025). Thefuture of the Panama Canal, on which the city’sfuture depends, is secure. Under the 2005-25Logistics and Transport Masterplan, post-Panamax-size ships will traverse the canal starting in 2015,in effect doubling its capacity. A trade agreementwith the US, its biggest trading partner, will furtherimprove the trade integration of Panama City’sdollarised economy with that of the US. The citygovernment has ambitious plans to create a first-class public transport system by 2030, but limitedgovernment effectiveness and high levels ofcorruption will make implementation tricky.Already a leader in the field of telecommunicationsin Latin America, improvements in the quality ofthe telecoms infrastructure help the city to improveits ranking in the category physical capital (joint56th). Panama City’s financial maturity (joint 56th)remains mixed, despite government efforts to getthe OECD to remove Panama City from its grey listof tax havens.
  16. 16. © The Economist Intelligence Unit Limited 201315Hot Spots 2025 Benchmarking the future competitiveness of citiesRank Change Change2025 from 2012 City Score/100 from 20121 +1 New York 75.7 +7.12 +4 London 73.1 +5.33 -2 Singapore 71.2 +0.64 -1 Hong Kong 68.1 +0.15 -2 Tokyo 68.0 -0.16 +2 Sydney 67.3 +4.57 -2 Paris 67.0 -0.98 +5 Stockholm 65.7 +5.79 +3 Chicago 65.6 +4.610 - Toronto 64.7 +2.6=11 +14 Taipei 64.1 +6.5=11 -4 Zurich 64.1 -13 -2 Amsterdam 63.8 +2.014 +3 Washington 63.2 +4.0=15 +6 Copenhagen 63.0 +4.9=15 +7 Seoul 63.0 +5.017 +7 Los Angeles 62.7 +5.018 +1 San Francisco 62.5 +4.019 -3 Boston 62.3 +2.7=20 -11 Frankfurt 62.0 -0.3=20 -6 Melbourne 62.0 +2.222 +5 Dublin 61.4 +4.323 +6 Dubai 61.3 +5.224 +14 Doha 61.1 +6.325 +1 Brussels 61.0 +3.626 +8 Oslo 60.8 +5.427 +2 Houston 60.7 +4.728 -5 Vancouver 60.6 +2.8Overall 2025 City Competitiveness rankings tableWeighted total of all category scores (0-100 where 100=most favourable)
  17. 17. © The Economist Intelligence Unit Limited 201316Hot Spots 2025 Benchmarking the future competitiveness of cities29 -15 Vienna 60.4 +0.630 -10 Geneva 59.4 +1.031 +8 Kuala Lumpur 58.9 +4.332 +1 Dallas 58.6 +2.933 +9 Atlanta 58.1 +4.234 +2 Berlin 57.7 +2.835 -1 Seattle 57.6 +2.2=36 -8 Montréal 57.5 +0.7=36 +25 São Paulo 57.5 +9.638 -6 Shanghai 57.3 +1.339 +2 Abu Dhabi 57.2 +3.140 +10 Miami 56.5 +5.941 +16 Tel Aviv 56.1 +6.742 -11 Auckland 56.0 +0.1=43 +3 Birmingham 55.8 +3.5=43 +17 Incheon 55.8 +7.6=43 +6 Warsaw 55.8 +5.0=46 -2 Hamburg 55.7 +2.2=46 -28 Madrid 55.7 -3.048 -8 Philadelphia 55.0 +0.549 -13 Beijing 54.9 +0.150 - Osaka 54.5 +4.0=51 +12 Busan 54.3 +6.9=51 +16 Mumbai 54.3 +7.853 -5 Budapest 54.0 +2.154 -7 Prague 53.9 +1.855 -13 Barcelona 53.6 -0.156 +13 Delhi 53.3 +7.857 +1 Lisbon 53.1 +3.858 -13 Milan 53.0 -0.359 - Moscow 52.5 +3.9=60 +2 Monaco 52.1 +4.4=60 +8 Santiago 52.1 +5.962 -9 Bangkok 52.0 +2.163 +12 Kuwait City 51.7 +6.764 +14 Muscat 51.4 +7.265 -2 Panama City 50.8 +3.466 -1 Johannesburg 50.5 +3.567 -11 Buenos Aires 49.9 +0.4Rank Change Change2025 from 2012 City Score/100 from 2012
  18. 18. © The Economist Intelligence Unit Limited 201317Hot Spots 2025 Benchmarking the future competitiveness of cities68 -16 Rome 49.8 -0.569 -16 Shenzhen 49.4 -0.570 +1 Istanbul 49.3 +3.971 - Fukuoka 49.2 +3.972 +1 Mexico City 49.0 +4.073 -18 Nagoya 48.6 -1.274 +2 Jakarta 48.1 +3.175 +8 Lima 48.0 +4.676 +13 Rio de Janeiro 47.6 +5.877 +10 Cape Town 47.4 +4.878 +2 Athens 47.3 +3.379 +12 Manila 47.1 +5.780 -3 Bucharest 46.9 +2.581 -12 Tianjin 46.7 +1.282 +6 Qingdao 46.4 +4.3=83 -2 Dalian 46.1 +2.5=83 -1 Suzhou (Jiangsu) 46.1 +2.685 - Bogotá 45.8 +2.686 -8 Chengdu 45.4 +1.2=87 -14 Kraków 45.3 +0.3=87 +11 Riyadh 45.3 +6.389 -23 Guangzhou 45.2 -1.490 +13 Kiev 44.9 +7.291 +7 Medellín 44.4 +5.492 +15 Saint Petersburg 44.1 +7.193 -3 Hangzhou 44.0 +2.494 -8 Bangalore 43.6 +1.095 -2 Durban 42.9 +2.996 - Ho Chi Minh City 42.3 +2.997 +12 Porto Alegre 41.7 +4.898 -15 Chongqing 41.0 -2.499 +2 Pune 40.9 +2.7100 -2 Hyderabad 40.6 +1.6=101 +4 Chennai 39.7 +2.3=101 -6 Monterrey 39.7 +0.1103 - Ankara 39.6 +2.0104 -12 Ahmedabad 39.2 -1.0105 +3 Belo Horizonte 38.8 +1.9106 +8 Cairo 38.5 +3.5Rank Change Change2025 from 2012 City Score/100 from 2012
  19. 19. © The Economist Intelligence Unit Limited 201318Hot Spots 2025 Benchmarking the future competitiveness of cities107 -11 Almaty 38.3 -1.0108 -6 Colombo 38.2 +0.2109 -4 Kolkata 38.1 +0.5110 +5 Bandung 37.4 +3.3111 -1 Karachi 37.0 +0.8=112 -19 Hanoi 36.9 -3.1=112 -1 Nairobi 36.9 +1.0114 -1 Surabaya 35.8 +0.1115 -3 Guadalajara 35.0 -0.8116 - Dhaka 34.9 +3.5117 - Alexandria 34.6 +4.6118 -1 Beirut 32.4 +2.4119 - Lagos 29.0 +0.1120 - Tehran 25.0 -1.6Rank Change Change2025 from 2012 City Score/100 from 2012
  20. 20. © The Economist Intelligence Unit Limited 201319Hot Spots 2025 Benchmarking the future competitiveness of citiesOne of the findings revealed by the 2025 CityCompetitiveness Index is the fact that very few ofthe most competitive cities can do without threethings: a high level of income, favourabledemographics and access to quality seaports.l A city’s access to and quality of seaports areparticularly good predictors of itscompetitiveness. Almost every single city in thetop 50 of the Index is rated “excellent” or “verygood” in the category access to and quality ofseaport(s). The three notable exceptions areDelhi, India’s landlocked and hugely populouscapital city, Atlanta and Philadelphia.l Money matters. Only two cities among the top40 in the overall ranking—Dubai (23rd) andKuala Lumpur (31st)—fail to make the top 40 interms of income per head, a category in whichDubai ranks 56th and Kuala Lumpur joint 77th.l Demography matters. The faster a city grows,the more likely it is to ascend in the overallranking.Mapping city competitivenessThe hotspots of competitiveness in 2025 areconcentrated in North America, Europe and ahandful of advanced economies in Asia and thePacific region. Despite rapid growth in Africa andLatin America, there is a vast competitiveness gapbetween their best-performing cities (São Paulo:36th, Johannesburg: 66th) and those in thedeveloped world.North American cities dominate the list of themost competitive cities in the 2025 Index. Six ofthe top 20 are US cities: New York (1st), Chicago(9th), Washington DC (14th), Los Angeles (17th),San Francisco (18th) and Boston (19th). OneCanadian city, Toronto, falls into the top 20,ranked at 10th.Europe, with seven of the 20 best-performing cities,is another hotspot of competitiveness. However, acloser look reveals a “competitiveness divide”between northern and western Europe on the onehand, and southern and eastern Europe on theother. The top 15 cities in Europe are those that arelocated in the core of the eurozone (Paris,Amsterdam), plus Copenhagen, London, Stockholmand Zurich. The bottom half are located in eurozonecountries that have been hit particularly hard by theeuro crisis (Madrid, Rome, Lisbon and Athens amongthem) or in new EU member states (or countries thataspire to join the EU) such as Bucharest or Ankara.Regional findings
  21. 21. © The Economist Intelligence Unit Limited 201320Hot Spots 2025 Benchmarking the future competitiveness of citiesAfrican cities continue to face the biggestcompetitiveness challenges of all regions. They arespread across the bottom half of the overall Index.The three top performers are Johannesburg(ranked 66th), Cape Town (77th) and Durban(95th). And there is a concentration at the verybottom: Cairo (106th), Nairobi (112th), Alexandria(117th) and Lagos (119th).Asia’s cities are a source of growth and a magnet ofopportunity for businesses and people alike, buthere, too, there is a competitiveness divide. Themost competitive Asian cities in 2025 are spreadacross the four “Asian Tigers” (Seoul and Incheonin South Korea, Taipei in Taiwan, Hong Kong andSingapore) and the advanced economies of theregion (Tokyo, Sydney and Melbourne). The best-performing Chinese city is Shanghai (38th). TheSouth-East Asia region is led by Kuala Lumpur(31st). Other rapidly growing cities in the region,such as Bangkok (62nd), Jakarta (74th) and Hanoi(112th), are struggling to keep pace. In SouthAsia, the Indian cities of Delhi (56th) and Mumbai(51st) show significantly increasedcompetitiveness. The low ranking of Dhaka(116th), one of the world’s fastest-growing cities,is a reminder (although the ascent of thebourgeoning cities of Delhi and Mumbai mayappear to suggest otherwise) that there is noautomatic correlation between rapid urbanisationand population growth and competitiveness asdefined in the 2025 City Competitiveness Index.In the Middle East, cities in the member states ofthe Gulf Co-operation Council perform well: thetop performers are Dubai (23rd), Doha (24th) andAbu Dhabi (39th)—all of them are among themost improved cities in the overall index. Tel Aviv,too, improves between 2012 and 2025 and isranked 41st.Finally, a number of cities in the BRIC countriesare on the verge of becoming hotspots ofcompetitiveness. Six of the top 25 most improvedcities—São Paulo, Delhi, Mumbai, SaintPetersburg, Rio de Janeiro and Porto Alegre, arelocated in Brazil, Russia and India. There is noChinese city among the top 25 most improvedcities, which reflects the fact that despite theprogress that many cities in India and Brazil havealready made, they will still have some catchingup to do before they can match thecompetitiveness of their Chinese rivals.
  22. 22. © The Economist Intelligence Unit Limited 201321Hot Spots 2025 Benchmarking the future competitiveness of citiesOverviewThe 2025 Global City Competitiveness Indexmeasures the competitiveness of 120 cities. In itsbroadest form, competitiveness is defined as acity’s ability to attract capital, businesses, talentand people. The Index benchmarks thecompetitiveness of cities at two points in time:today and in 2025.The Index scores each city across eightcategories: economic strength, physical capital,financial maturity, institutional character, socialand cultural character, human capital,environmental and natural hazards and globalappeal. These eight categories are composed of atotal of 32 indicators (as well as 17 sub-indicators).A city’s overall ranking in the Index is a weightedscore of the underlying categories.The eight category scores are calculated fromthe weighted mean of underlying indicators andscaled from 0-100, where 100=most favourable.The overall score for the 2025 Index (from 0-100)is calculated from a simple weighted average of thecategory and indicator scores.DefinitionToday cities are no longer limited to their politicalboundaries. They are rapidly metamorphosing intobigger urban agglomerations or metropolitanareas, with the city proper at the core. New YorkCity, for example, has a population of only 8.2m,compared with 18.9m people living in the NewYork-Northern New Jersey-Long Islandmetropolitan area. Typically, an urbanagglomeration or metropolitan area is defined asthe continuous area encompassing the city properand smaller cities or towns close to the city’sboundaries at comparable urban density levels(World Urbanisation Prospects, United Nations,2009). In the context of this benchmark, “city” isdefined as the urban agglomeration ormetropolitan area it holds together.The 120 cities included in the EconomistIntelligence Unit’s assessment were the same asthose analysed in the previous Index. For thatstudy, we selected cities on the basis of their sizeand regional economic importance. Dataavailability was a consideration too. To build arelevant set of global cities, we first considered allcities with populations estimated at over 1m in2010. From this selection, we excluded cities withan estimated nominal GDP of less than US$20bn in2008 (the most recent year for which comparabledata were available). To ensure a balancedregional representation, we established an upperlimit on the number of cities for several largeeconomies: China (12 cities), India (8 cities), andthe US (12 cities). Finally, the EIU analyst teamreviewed the list and included establishedfinancial and commercial centres (for example,Geneva), as well as important emerging cities(such as Ahmedabad, Ho Chi Minh City, Nairobi,AppendixMethodology
  23. 23. © The Economist Intelligence Unit Limited 201322Hot Spots 2025 Benchmarking the future competitiveness of citiesPanama City), which did not meet our initialcriteria of population and GDP size. To preserveanalytical rigour, we limited our selection forbenchmark assessment to 120 cities.Categories and indicator selectionWe assessed 32 indicators across eight thematiccategories: economic strength, physical capital,financial maturity, institutional character, socialand cultural character, human capital,environment and natural hazards and globalappeal. The benchmark includes 27 qualitative andfive quantitative indicators.The EIU research team assigned category andindicator weights after consultations with internaland external experts. The economic strength of acity (GDP size, pace of growth, income levels) isundisputedly a key driver of attractiveness.Investors follow sizeable and growing markets.Therefore, we have given a relatively higher weight(30%) to the economic strength category, with acity’s real GDP growth rate as the dominantindicator.Both demographic and institutionalunderpinnings are important determinants ofcompetitiveness. While emerging economies boastof their demographic dividend, developed marketshave to resort to allowing increased levels ofmigration to deal with a shrinking workforce. Astable institutional environment is often cited asdeveloped markets’ key advantage. Both areimportant and, therefore, human capital andinstitutional effectiveness categories carrysubstantial weights (15% each) in our benchmarkassessment. A city’s physical infrastructure,financial maturity and global appeal helpbusinesses to operate efficiently. While concernsaround accessibility and connectivity are becomingless urgent with the growing use of technology,these factors remain important in driving a city’scompetitiveness. The categories physical capital,financial maturity and global appeal have eachbeen assigned a 10% weight.Although not a necessary condition forcompetitiveness, the social and cultural characterof a city plays an important role in shaping itsattractiveness for talent and visitors. This categoryhas been weighted at 5%. With the growingincidence of natural disasters, investors areincreasingly building locational risks into theiroperational strategies. Equally, the environmentalquality of cities is increasingly being compared andbenchmarked as cities lead their countries’ chargeagainst climate change. Taking note of this trend,our benchmark framework includes environmentand natural hazards as a category with a 5% weight.The following table provides a brief descriptionof indicators, data sources and weights.CATEGORY WEIGHTS 2025 2012ECONOMIC STRENGTH 30 30.0% 30.0%PHYSICAL CAPITAL 10 10.0% 10.0%FINANCIAL MATURITY 10 10.0% 10.0%INSTITUTIONAL CHARACTER 15 15.0% 15.0%SOCIAL AND CULTURAL CHARACTER 5 5.0% 5.0%HUMAN CAPITAL 15 15.0% 15.0%ENVIRONMENT AND NATURAL HAZARDS 5 5.0% 5.0%GLOBAL APPEAL 10 10.0% 10.0%
  24. 24. © The Economist Intelligence Unit Limited 201323Hot Spots 2025 Benchmarking the future competitiveness of citiesINDICATOR WEIGHTS 2025 2012ECONOMIC STRENGTHReal GDP (US$, 2005 prices) 5 27.8% 27.8%Real GDP per capita (US$, 2005 prices) 2 11.1% 11.1%HHs with annual consumption >US$14,000 (PPP) 0 n.a. 0.0%City real GDP growth rate 9 50.0% 50.0%Regional market integration 2 11.1% 11.1%PHYSICAL CAPITALQuality of physical infrastructure 6 42.9% 42.9%Quality of public transport 2 14.3% 14.3%Quality of telecommunications infrastructure 6 42.9% 42.9%FINANCIAL MATURITYBreadth/depth of the financial cluster 9 75.0% 75.0%Location of the Central Bank 0 0.0% 0.0%Location of EXIM bank/agency 0 0.0% 0.0%Location of the country’s main stock exchange 3 25.0% 25.0%INSTITUTIONAL CHARACTERElectoral process and pluralism 5 14.3% 14.3%Local government fiscal autonomy 10 28.6% 28.6%Taxation 5 14.3% 14.3%Rule of law 5 14.3% 14.3%Government effectiveness 10 28.6% 28.6%SOCIAL AND CULTURAL CHARACTERFreedom of expression and human rights 1 20.0% 20.0%Openness and diversity 1 20.0% 20.0%Presence of crime in the society 1 20.0% 20.0%Cultural vibrancy 2 40.0% 40.0%HUMAN CAPITALPopulation growth 3 15.0% 16.7%Working-age population (% of total population) 2 10.0% 11.1%Entrepreneurship and risk-taking mindset 0 n.a. 0.0%Quality of education 8 40.0% 44.4%Quality of healthcare 2 10.0% 11.1%Hiring of foreign nationals 3 15.0% 16.7%Women’s Economic Opportunity 2 10.0% n.a.ENVIRONMENT AND NATURAL HAZARDSRisk of natural disasters 2 33.3% 33.3%Environmental governance 4 66.7% 66.7%GLOBAL APPEALGlobal business attractiveness 1 25.0% 25.0%International flight ranking 1 25.0% 25.0%Conference/convention development 1 25.0% 25.0%Higher education leadership 1 25.0% 25.0%Globally-renowned think-tanks 0 n.a. 0.0%
  25. 25. © The Economist Intelligence Unit Limited 201324Hot Spots 2025 Benchmarking the future competitiveness of citiesSUB-INDICATOR WEIGHTS 2025 2012Quality of physical infrastructureQuality of road network in the city 5 41.7% 41.7%Quality of regional or international links 5 41.7% 41.7%Access to and quality of seaport(s) 2 16.7% 16.7%TaxationTax complexity 1 50.0% 50.0%Standard VAT rate 1 50.0% 50.0%Government effectivenessCorruption 1 25.0% 50.0%Effectiveness in policy formulation 1 25.0% 50.0%Quality of bureaucracy 0 n.a. 0.0%Orderly transfers 1 25.0% n.a.Transparent performance indicators 1 25.0% n.a.Presence of crime in the societyPrevalence of petty crime 1 50.0% 50.0%Prevalence of violent crime 1 50.0% 50.0%Risk of natural disastersDisaster management/business continuity plan 1 33.3% n.a.Physical exposure to natural hazards 1 33.3% n.a.Susceptibility to climate change 1 33.3% n.a.Environmental governanceWater quality monitoring 1 33.3% 33.3%Waste strategy 1 33.3% 33.3%Air quality code 1 33.3% 33.3%Quality of air in the city/pollution 0 n.a. 0.0%Note on comparability with the 2012 CityCompetitiveness IndexAlthough the vast majority of categories andindicators are the same as in the previous year’sCity Competitiveness Index, the actual scores arenot the same, as the specific indicator weightingswere shifted following the removal of certainindicators (such as globally renowned think-tanks,entrepreneurship and risk-taking mind-set, etc).Such indicators were removed owing to thedifficulty in forecasting them to 2025. As a result,the remaining indicators were reweighted; theupdated weightings are described below. Thus, the2012 rankings given in this Index will differ slightlyfrom the rankings given in last year’s version.Economic strength (30%)This category captures the speed at which a city’sGDP is growing, the size of the national economyand the level of development measured byincome per head. Large and fast-growingmarkets tend to be more successful in thecompetition to attract capital, firms and people.The economic strength category comprises foursub-categories with different weights. A city’s realGDP growth carries a weight of 50%. This isfollowed by the speed at which the nationaleconomy is growing (real GDP growth, 27.8%), theaverage income level at country level (measured byreal income per head, 11.1%) and the extent towhich the city is economically integrated withregional economies through trade or otheragreements (regional market integration, 11.1%).
  26. 26. © The Economist Intelligence Unit Limited 201325Hot Spots 2025 Benchmarking the future competitiveness of citiesAll income-related data have a base year of 2005and originated from city-level GDP figures from thelast study. The relationship between historical GDPgrowth rates of each city and the wider country wasestablished using regression analysis. The resultsof this analysis enabled us to forecast city-levelGDP using the EIU’s country-level GDP growthforecasts, which were then adjusted on a city-by-city basis by our analyst team.Regional market integration was based on acareful review of the current regional marketstatus, as well as any potential trade agreements.The city was then rated on a scale of 1-5, where1=Lowest, 5=Highest (1=The country is not likely tobe a member of any regional trade agreement orgrouping, 5=The country will belong to an economicunion, e.g. the European Union. There will befreedom of movement for goods, people andcapital).Physical capital (10%)A city’s infrastructure—ranging from airports,trains and ports to roads, bridges andtelecommunications networks—is at the heart ofits ability to function and attract businesses andpeople.This category comprises the qualitativeassessment of a city’s physical infrastructure,public transport network and telecommunicationsinfrastructure. The indicator scores are presentedon a scale of 1-5 (1=Intolerable, 5=Acceptable). Thedata are based on the EIU’s Global City LiveabilityIndex and EIU expert assessments, which includedreview of current and potential plans forinfrastructure investment at the national andmetropolitan level.Financial maturity (10%)Financial maturity determines the ease of accessfor firms and a city’s ability to finance (throughthe local banking system) productive investmentand allocate capital efficiently.The qualitative assessment of financial marketmaturity is based on a review of a number ofsecondary reports on financial depth, including Z/Yen Group’s 2012 Global Financial Centres Index 12(GFCI). GFCI is a barometer that seeks to trackmovements in the competitiveness of financialcentres around the world. It uses assessments byfinancial service professionals to rank financialclusters based on their breadth, depth and outlook.The results of this review were also augmented withexpert opinion on the likely trajectory of financialmarket development. The indicator scores arepresented on a scale of 1-7 (1=Basic financialinfrastructure is missing, 7=Established globalclusters, broad and deep).Institutional character (15%)A city’s ability to tax, plan, legislate and enforcerules as well as the degree to which citizens canhold a city’s politicians accountable requirestrong institutions.We identified five factors that play an importantrole in shaping a city’s institutional character andeffectiveness. They are local government fiscalautonomy, government effectiveness, electoralprocess and pluralism, taxation, and rule of law.The sub-indicator local government fiscalautonomy is a proxy for the degree ofdecentralisation and fiscal autonomy andultimately the extent to which a city is in control ofits own finances. To assess this, our research teamdrew on country profiles published by the GlobalObservatory on Local Democracy andDecentralisation to assign scores of 1-4, whichwere then augmented by further primary andsecondary research on local autonomy issues (1=Nofiscal autonomy, 4=Extensive fiscal autonomy exists,majority of policy and budgetary decisions are madeby the city government).The government effectiveness sub-categorylooks at four sub-indicators. First, the researchteam assessed the likely level of corruption amongpublic officials in 2025 (10=Very low, 0=Very high)by drawing on the EIU’s long-term economicforecasts. Second, we assessed the ability ofprospective governments to effectively formulatepolicy (0=Strongly no, 5=Strongly yes). Third, citieswere rated on how clear, established and accepted
  27. 27. © The Economist Intelligence Unit Limited 201326Hot Spots 2025 Benchmarking the future competitiveness of citiesmechanisms for the orderly transfer from onegovernment to another are. Fourth, to gauge acity’s ability to plan and officials’ preparedness tobe held accountable, we established whether ornot a city has clear and transparent performanceindicators.Local government fiscal autonomy andgovernment effectiveness are weighted equally andaccount for more than one-half of a city’sinstitutional character.Three additional sub-indicators—electoralprocess and pluralism, taxation and rule of law—complete the category.The research team assessed the nature of a city’selectoral processes and degree of pluralism on a 0-10 scale (0=Electoral process and pluralism issuppressed by ruling party, 10=Electoral process andpluralism is transparent, fair and open to allqualified citizens). The sub-category taxationconsiders two factors: first, the level of value-added tax observed today and projected in 2025,and second, tax complexity derived from the WorldBank’s Doing Business Survey and scored on a scaleof 1-5 (1=Very complicated, 5=Very simple).Social and cultural character (5%)A diverse and open city with a thriving social andcultural scene attracts investors and visitors,making a city more dynamic and thuscompetitive.Although perhaps the least tangible category,this is nevertheless an important feature of a city’scompetitiveness. It comprises four aspects ofliveability. First, freedom of expression and humanrights, as measured by Freedom House on a scale of1-7, which was forecasted by country experts basedon the trajectory of such issues (1=Most free,7=Least free). Second, prevalence of crime in thesociety, based on relevant categories in the EIU’smost recent City Liveability Index and a qualitativeassessment of EIU researchers of the prevalence ofpetty and violent crimes as well as external factorsaffecting future crime. Third, we consider opennessand diversity in each city based on five attributes:(1) the degree of global/regional ethnic/racialdiversity; (2) the number of different languagesspoken or heard; (3) whether English or anothermajor language is widely spoken; (4) whetherforeigners feel comfortable; and (5) whether thereis an acceptance of different lifestyles and beliefs.The scores are presented on a scale of 1-5 (1=Veryclosed and homogenous, 5=Very open and diverse).Last, we assess each city’s cultural vibrancy. Thecurrent score for cultural vibrancy is based on thecategories culture, sport, and food and drink in thelatest EIU City Liveability Index. The score for 2025is based on a qualitative assessment by EIUexperts, based on city investment plans in culturalissues, and presented on a scale of 1-3 (1=Culturalvibrancy is expected to decrease, 3=Cultural vibrancyis expected to increase).Human capital (15%)A growing skilled labour force with easy accessto quality education and healthcare makes a cityattractive for businesses. The quality ofeducation and healthcare feeds into firmproductivity and growth, and ultimately citycompetitiveness.The human capital category considers six factorsthat shape the attractiveness of a city in terms ofits ability to create a pool of labour that firms valuewhen they choose a location or decide to expandtheir operations in a city.We scored cities’ quality of education on a scale1-5 (1=Very Poor, 5=Very good) by looking at thequality and quantity of private and publiceducation. The scores are based on the EIU’s GlobalCity Liveability Index. The future score assessedcities’ plans or initiatives to improve the educationsystem, such as planned investments in new schoolconstruction (including plans to hire new teachersor provide additional training to existing ones),investment in public/private partnerships,investment in vocational/technical education. Asimilar assessment, based on the EIU’s Global CityLiveability Index, was made for the quality ofhealthcare in each city.One of the key factors that makes a labourmarket attractive is a sizeable working-age
  28. 28. © The Economist Intelligence Unit Limited 201327Hot Spots 2025 Benchmarking the future competitiveness of citiespopulation. There are two indicators that look athow demographic trends impact on a city’scompetitiveness in this regard. The first is theworking-age population, defined as people agedbetween 15 and 64. These data were collected fromnational statistical agencies and the UN WorldUrbanisation Prospects and Demographia for thelatest available year. We used population growthrates as measured by the UN to project the size ofthe working-age population in 2025, which wasadjusted by country analysts to account for city-specific demographic factors. These adjustedpopulation growth rates were used as anotherindicator.Finally, we believe that the quality of a city’sworkforce depends on its ability to attract peoplefrom outside the country and to provide equaleconomic opportunities to women. This isparticularly relevant for, but not confined to,countries with ageing populations, which dependon the migration of foreign skilled workers tomaintain their competitive edge. To reflect theimportance, we scored cities on the ease of hiringforeign nationals (1=Very difficult, 5=Very easy),based on a qualitative assessment of immigrationbarriers, rules of employment of local nationals(such as quotas) and unofficial barriers to hiringforeign workers. The Women’s EconomicOpportunity score was taken from the EIU’sWomen’s Economic Opportunity Index, which is adynamic quantitative and qualitative scoring modelconstructed from 26 indicators that measurespecific attributes of the environment for womenemployees and entrepreneurs.Environment and natural hazards (5%)High standards of environmental governancemake a city attractive for both businesses andpeople. In the long term, sustainableenvironment policies are key to preserving acity’s competitiveness.We assess each city’s quality of environmentalgovernance by considering city authorities’ likelyperformance in three areas: (1) Water quality(0=City does not have a long-term water qualitystrategy; water quality is likely to remain the same orworsen. 10=The city has an in-depth and long-termwater quality improvement strategy that is credibleand includes performance metrics/monitoringpolicies; the city’s water quality is likely to improve,or if it is already at a high level, will stay the same).(2) Air quality (0=City lacks a comprehensive long-term strategy for dealing with air quality issues. Airquality is likely to be a major problem owing to lackof investment and focus on this issue. 10=City has acredible long-term air quality monitoring andimprovement strategy. The city has a rigorousmonitoring and evaluation policy in place whichensures that any issues will be dealt with. There isvery little chance that air quality will be an issue forthe city). (3) Waste management strategy (0=Citylacks a comprehensive long-term strategy for dealingwith waste. Waste management is likely to be amajor problem given lack of investment and focus onthis issue, 10=City has a credible long-term wastemanagement strategy, including a comprehensiverecycling programme. There is very little chance thatwaste management will be an issue for the city). Thescoring is based on the EIU’s 2010 Green CitiesIndex, adjusted based on each city’s relativepriority in this area, as well as the likelihood ofachieving set environmental goals based oncurrent trends.The risk of natural disasters indicator iscomposed of three sub-indicators. First, weincluded a qualitative assessment of each city’sdisaster management/business continuity plans.The score is presented on a scale of 1-5 (1=Strongadaptive capacities, 5=Highly unadaptive). Second
  29. 29. © The Economist Intelligence Unit Limited 201328Hot Spots 2025 Benchmarking the future competitiveness of citiesand third, an assessment of each city’s physicalexposure to natural hazards and susceptibility toclimate change, based on the forward-lookingscores in the 2012 World Risk Report of the UNUniversity Institute for Environment and HumanSecurity (UNU_EHS), the Alliance DevelopmentWorks/Bündnis Entwicklung Hilft and The NatureConservancy (TNC). The scores are presented on ascale of 1-5 (1=Very low, 5=Very high). Country-level scores were reviewed by EIU analysts andadjusted based on city-specific factors.Global appeal (10%)This category seeks to gauge a city’sinternational orientation measured by its abilityto attract people and businesses from aroundthe globe.We believe that a city’s international orientationhas a bearing on its competitiveness. To assess acity’s global appeal, we consider four factors.First, global business attractiveness is scored bya qualitative assessment of a city’s policies towardsattracting investment and supporting localbusinesses (such as tax breaks, public-privatepartnerships or the presence of technology parks,Special Economic Zones, free-trade zones). Theindicator scores were ranked on a 1-3 scale (1=Cityhas none of these policies in places, 3=City has manyof these policies in place and has allocatedsubstantial funding to improving businessenvironment issues). The 1-3 ranking was thenapplied to the city’s score from the last Index,which was based on the number of Fortune 500companies as well as EIU’s Business OperatingEnvironment rankings.Second, we determine an international flightranking based on the frequency of internationalflights from and to a city. The indicator score ispresented on a 1-4 scale (1=Very low, 4=Very high).Historical flight data were taken from the laststudy, then forecast using estimates of regionaland country flight trends from the UN’sInternational Civil Aviation Organization (ICAO).These forecasts to 2025 were then put intoquartiles and scored on a 1-4 scale.The third indicator looks at each city’s level ofconference/convention development. The 2012scores were derived from the actual number ofconferences and conventions held in the city in themost recent year. The 2025 scores are informed bythe city’s current state of conference andconvention development and the city government’spolicies and priorities in this area, if any. The 2025scores were ranked on a 0-3 scale (0=No realpolicies or investment focused on establishing/promoting the city as a tourism and conferencedestination; 3=The city government has long-termplans that are focused on strengthening its appealas a conference centre; the city is likely to be a majorinternational destination for conferences). This 1-3scale was then used to increase the city scoresappropriately.Finally, the global leadership in highereducation category scores cities based on ourassessment of the number of globally competitivehigher education institutions and the citygovernment’s policies to invest and promoteuniversity education. The scores were ranked on ascale of 1-4 (1=City has no globally competitivehigher education institutions and has shown nofocus on this issue in its policies; 4=City has a largenumber of globally competitive higher educationinstitutions and has shown its focus on maintainingsuch an environment through already establishedlong-term plans, investment, and partnerships withother globally recognised institutions). Similar tothe other indicators in this category, the 2012Index figures were then modified by this scoringsystem to increase the appropriate cities’ highereducation scores.Data sources and indicatornormalisationThe EIU collected data for the Index fromNovember 2012 to March 2013. Wherever possible,publicly available data from official sources areused for the latest available year. The qualitativeindicator scores were informed by publicly
  30. 30. © The Economist Intelligence Unit Limited 201329Hot Spots 2025 Benchmarking the future competitiveness of citiesavailable information and assigned by the EIU’sresearch team. Qualitative indicators scored by theEIU are often presented on an integer scale of 1-5(where 1=worst, 5=best). This scale varies forratings from third-party sources.Indicator scores are normalised and thenaggregated across categories to enable an overallcomparison. To make data comparable, wenormalised the data on the basis of:Normalised x = (x - Min(x)) / (Max(x) - Min(x))where Min(x) and Max(x) are, respectively, thelowest and highest values in the 120 cities for anygiven indicator. The normalised value is thentransformed into a positive number on a scale of 0-100. This was similarly done for quantitativeindicators, where a high value indicates greatercompetitiveness.WeightingThe weighting assigned to each category andindicator can be changed to reflect differentassumptions about their relative importance. Threesets of weights are provided in the Index. The firstoption, called “EIU default”, attaches theweighting described above. The second, called“neutral weighting”, assumes equal importance ofall indicators and evenly distributes weights. Thethird option, called “2011 weighting”, uses thecategory weightings as provided in last year’sIndex, that is, categories that were not measuredin this version of the Index will still impact the2012 scores.Data modellingIndicator scores are normalised and thenaggregated across categories to enable acomparison of broader concepts across countries.Normalisation rebases the raw indicator data to acommon unit so that they can be aggregated. Theindicators where a higher value indicates a morefavourable environment for city competitivenesshave been normalised on the basis of:x = (x - Min(x)) / (Max(x) - Min(x))where Min(x) and Max(x) are, respectively, thelowest and highest values in the 120 cities for anygiven indicator. The normalised value is thentransformed from a 0-1 value to a 0-100 score tomake it directly comparable with other indicators.This in effect means that the city with the highestraw data value will score 100, while the city withthe lowest will score 0.For the indicators where a high value indicatesan unfavourable environment for citycompetitiveness, the normalisation function takesthe form of:x = (x - Max(x)) / (Max(x) - Min(x))where Min(x) and Max(x) are, respectively, thelowest and highest values in the 120 cities for anygiven indicator. The normalised value is thentransformed into a positive number on a scale of 0-100 to make it directly comparable with otherindicators.
  31. 31. © The Economist Intelligence Unit Limited 201330Hot Spots 2025 Benchmarking the future competitiveness of citiesCity selectionThe 120 cities in the Index were selected based on regional diversity, economic importance and size of population, as described previously.They are:North America South and CentralAmericaAsia Pacific Europe Middle East AfricaAtlanta Belo Horizonte Ahmedabad Amsterdam Abu Dhabi AlexandriaBoston Bogotá Almaty Ankara Beirut CairoChicago Buenos Aires Auckland Athens Doha Cape TownDallas Guadalajara Bandung Barcelona Dubai DurbanHouston Lima Bangalore Berlin Kuwait City JohannesburgLos Angeles Medellín Bangkok Birmingham Muscat LagosMiami Mexico City Beijing Brussels Riyadh NairobiMontréal Monterrey Busan Bucharest TehranNew York Panama City Chengdu Budapest Tel AvivPhiladelphia Porto Alegre Chennai CopenhagenSan Francisco Rio de Janeiro Chongqing DublinSeattle Santiago Colombo FrankfurtToronto São Paulo Dalian GenevaVancouver Delhi HamburgWashington Dhaka IstanbulFukuoka KievGuangzhou KrakówHangzhou LisbonHanoi LondonHo Chi Minh City MadridHong Kong MilanHyderabad MonacoIncheon MoscowJakarta OsloKarachi ParisKolkata PragueKuala Lumpur RomeManila Saint PetersburgMelbourne StockholmMumbai ViennaNagoya WarsawOsaka ZurichPuneQingdaoSeoulShanghaiShenzhenSingaporeSurabayaSuzhou (Jiangsu)SydneyTaipeiTianjinTokyo
  32. 32. © The Economist Intelligence Unit Limited 201331Hot Spots 2025 Benchmarking the future competitiveness of citiesWhilst every effort has been taken to verify the accuracy of thisinformation, neither The Economist Intelligence Unit Ltd. nor thesponsor of this report can accept any responsibility or liabilityfor reliance by any person on this white paper or any of theinformation, opinions or conclusions set out in the white paper.Coverimages:Shutterstock
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