Competitive Futures STEEP Report: The Urban Future

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    Competitive Futures STEEP Report: The Urban Future - Presentation Transcript

    1. A monthly report to keep you thinking about the strategic impact of society, technology, economics, ecology and politics. THE URBAN FUTURE
    2. THIS MONTH’S ISSUE Why we chose… THE FUTURE OF CITIES For the first time ever man is becoming a majority urban creature. It’s hard to overestimate this change. Since the Fertile Crescent in 10,000 B.C., cities were only a fraction of human population, even if they were the centers of technology and culture. Humans throughout history have been mostly villagers, mountain people, hunter/gatherers. As of 2007, more than half of humanity lives in cities. Upward of 88% of all economic activity happens in cities – and this is increasing. The destiny of cities is not yet certain. Not all urban growth is created equal. The future of cities will have major impact on business and governments around the world. Let’s have a look…
    3. THE URBAN FUTURE Cities are the future. Due to growth of population and share of GDP in urban areas, non-urban areas will pale in comparison to the social, cultural, economic, and industrial power of cities. There will be significant market opportunities in new infrastructure, goods, and services that this transition will require.
    4. The Trends
    5. Trends for the New Urban Future: 2007-2027 Growing Urbanization Rise of the Global Urban Citizen The 21st Century City-State Slum Cities
    6. Trend #1: Growing urbanization Simply put, the world is becoming urbanized. Yes, we’ve been living in cities for 10,000 years, but for the first time, the majority of us live in cities. As a result cities are growing in influence, changing market behaviors as well as geopolitical relationships. This is from two simple root trends: 1. People are immigrating from the country into the city. 2. Cities are making up a greater proportion of GDP. Moving from the city to the country is not new, but the forecast for global urbanization are without precedent. The resulting developments have significant implications for business and government.
    7. Populations are growing in cities around the world Mexico New York: Seoul: Cairo: Paris: Moscow: Osaka: City: 15 million 11 million 13 million 11 million 10 million 12 million 17 million Urban growing is still new. For historical reference, in 1800, only 3% of the world lived in cities. Most people lived their entire life without seeing one. In 1900, 9% of people lived in cities. This year 3.3 billion people--more than 50% of humanity--lives in cities. By 2030, the number of urban dwellers will double to five billion. By 2030, the rural population will decrease by 28 million. According to the Population Institute, an estimated two-thirds of humanity will live in cities by 2050. By 2030, Latin America and the Caribbean will be 84 percent urban. By 2010, seven out of ten Moroccans will live in cities. In 2005, China had 139 cities with more than 750,000 people, and nine with more than 5 million. It will become majority urban by 2010.
    8. Citires are increasingly the centers of economic activity Worldwide, the proportion of GDP is shifting toward cities. o In 2005, 65 percent of American metropolitan hubs grew faster than the nation at large. o In China, cities were responsible for 63.2 percent of GDP in 2006; up from 53.4 percent in 2002. o Six percent of China’s population is concentrated in Just three urban hubs (metropolitan Shanghai, Beijing-Tianjin and the Pearl River Delta). However, they account for a full 37 percent of China’s GDP. o In Japan, China and the Republic of Korea, just six urban regions generate 45 percent of total GDP. America’s metropolitan areas are responsible for 86 percent of US GDP. By 2015, this is predicted to be 90%.
    9. Cities are the new economic drivers – this time without help from the countryside Globalization IS cities. Businesses aren’t located in countries; they are located in Bangalore, New York, Paris, or Hong Kong. With this economic power. cities are coming to a new heyday. For most all of history, cities were crossroads where agricultural and industrial goods were bought and sold. Still, the real power was in the amount of land and natural resources you possessed. This is no more. In the knowledge economy, people living in the cities are the inputs. They aren’t just traders of other people’s inputs – it’s their brainpower that IS economic growth. Agricultural bazaar, Call center, India India: Creating the Selling the outputs of economic inputs the rural economy
    10. Trend #2: RISE OF THE GLOBAL URBAN CITIZEN Living in a city creates different values, requires different goods and services than life in the countryside. A secondary trend to urban growth is the increasing importance of the global urban consumer. For the first time in history, “city slickers” are becoming the majority of the market. What they eat, where they live, how they get to work, and other needs will drive the marketplace of the 21th century- even more than today. Where was this picture taken? Amsterdam? California? Toronto? It’s not clear. What is clear is that this guy is a little too excited about the iPhone.
    11. To live and buy in the city There’s a symbiotic relationship between urban development and increased consumption. You buy differently, and in the developing economies, you buy more. For example, in China, the urban average income in 2001 was $6,860, but only $2,360 in rural areas, according to the China Statistics Bureau. Urban consumption is four times greater than rural consumption. In 2004, average household incomes in Shenzhen, Zhejiang, Shanghai and Beijing were 60- 90% higher than the national average.
    12. To live and buy in the city: different needs, different products Living in a city creates different values, requires different goods and services than life in the countryside. There are some goods and services that are distinct to urban areas. New types of housing, luxury shops, cars, transport – when people move to urban areas, the goods they buy change distinctly. Experimental urban housing, London Louis Vuitton Shop, Hong Kong The Smart Car, popular in European and Asian cities. (A car that will get you beaten up in Middle America.)
    13. One of the most interesting elements about global culture is that as brands are shared across borders, it’s getting hard to tell where you are. Quiz: In which global city was the photo below taken? Los Angeles? New York? London? Paris? Answer: Club Peppermint in the Fairmont Dubai, United Arab Emirates.
    14. Subtrend: Rising tension between urban and rural peoples Just as global cities are now peers, so too are the urban global consumers. They often have more in common with their global urban peer 3000 miles away than with a rural countryman 30 miles out. As a result, there are more sharp – and increasing - divides between urbanites and the rural people with whom they still share political borders. "...the most important conflict in the poor countries of the world today is not between labor and capital. Nor is it between foreign and national interests. It is between rural classes and urban classes.“ -Michael Lipton, international development economist,World Bank
    15. These people live in the same country: Kurdish man, rural Turkey Casual diners, Istanbul, Turkey
    16. These people live in the same country: Rural poor, anxious that the Wal-Mart won’t East Coast Yuppies, anxious over grad provide a 30 cent wage increase this year, school loans, drinking $13 Cosmotinis, Arkansas, USA Washington DC, USA
    17. These people live in the same country: “Janjaweed” fighters in Darfur. Sudan Al Souq Arabi, the commercial district in downtown Khartoum, Sudan. (We wouldn’t exactly start looking for condos there, but it is much more stable than Darfur)
    18. Trend #2: The 21st Century City-State Remember your Greek history? Ever read The Prince? The polis, or city-state is BACK! In the old days, cities, not countries, were main actors in international politics. As cities rise in economic, industrial, and cultural power, this dynamics is returning. King Leonidas, Arnold Scwarzenegger, Rudy Giuliani, Warrior-King of the Lorenzo de Medici, “Governator” of the Former CEO of the Spartan city-state Devious Prince of the Confederated City-States New York City-state Florentine city-state of Coastal California
    19. Cities make their own rules Cities are increasingly staking it out on their own, be it legalizing medical marijuana in flagrant opposition to federal laws or gay marriage in contravention to state law. For example, Hong Kong and the other Chinese coastal cities hosting the fiercest and most successful free-market experiment in the world, strangely dissonant from the official ideology of the Communist Party government. € $ $ Hong Kong, left to its capitalistic ways even after being absorbed into China
    20. The city-states are consolidating their political power The emerging power and influence of cities is squarely reflected in American politics of 2008. In the 2008 presidential election, the front-runners of both parties are representatives of New York: Hillary Clinton, New York Senator and Rudy Guiliani, former mayor of New York City. Mitt Romney was governor of Massachusetts, where he resided in Boston. Barack Obama was a Illinois State Senator representing the south-side of Chicago. Even the current Speaker of the House, Nanci Pelosi, represents California's 8th District--which is San Francisco. Each of these candidates are from major U.S. cities. What happened to the “Southern Strategy” in terms of politics? What about rural values voters?
    21. THE OLD NATIONAL MAP The old map, cut conveniently into nation-states, for easy analysis
    22. THE NEW URBAN MAP Paris Москва London Nowhere Nowhere Toronto Seoul New Istanbul Nowhere York Chicago 京東 Nowhere Nowhere L.A. Caracas 海上 Nowhere ‫ا ه ة‬ Mexico D.F. Rio Singapore Bangalore Lagos Nowhere Lima Sao Paolo Sydney Buenos Johannesburg Aires Today’s map. Connected global cities, and the hinterlands
    23. Trend #4: Further expansion of slum cities Not all urbanization results in fine dining and opera tickets There’s another kind of city on the rise: According to a 2007 World Bank All of the problems, few of the benefits study, 94 percent of the urban population growth through 2020 will occur in developing countries. Whereas the traditional urbanization path followed on the heals of increased agricultural productivity and higher wages in the cities, much of the new urban world does not follow this historical pattern. These are the slum cities, where the poor have fled from the desperate hinterlands to settle amongst urban squalor.
    24. The Way the Other Urban Half Lives Sub-Saharan Africa has the world's highest rate of rural-urban migration. While 36 percent of its population is now urban, and a majority of Africans will live in cities by 2030. A full 70% of Africa's urban population lives in slums. 150 million people who live in in cities worldwide are without municipal services, and this number is projected to double by 2020. Jakarta, Indonesia - Lagos, Nigeria - Favela slums in São Paulo, Brazil - A Will host over 16 million Largest city in Africa sixth of the world live like this people by 2015
    25. What To Do Today
    26. Strategic implications – why you should care Cities everywhere Do you make steel, glass, REBAR, concrete, water systems, manhole covers, or even stop will be building signs? The most basic industries in the world will continue to grow to meet the new new infrastructure demands for urban development. Markets for these products and services will be global. in the coming The developing economies will be particularly large market – but then again, running decades million dollar construction projects in Zimbabwe is not without its risk. Cleantech and Will all the new development that will be required in urban areas, this is an unparalleled opportunity to deploy new clean technologies. Moreover, much of this development green business will will be re-development, not greenfield development – another great advantage to the have ample clean and green movements. There will be trillions of dollars of business in fixing the opportunities to urban systems of the 19th and 20th centuries – and this will provide fertile ground for shine innovation in cleantech movement. In the past decade, the Chinese have built their cities so fast that the market for scrap metal As result of the went through the roof just to keep up with global demand. There is even a rise in above, recycling will “criminal recycling” where people steal copper electrical wire and other metal from be BIG business construction sites to profit from these shortages. The moral of the story? Recycling will be even more profitable – and world spot markets on basic materials may still be artificially high due to demand.
    27. Strategic implications – why you should care Smaller towns and cities could be facing hard times. The trend in urban development is Cities may have rising just as we head for the greatest shortage of skilled labor since the Black Plague of the upper hand the 14th Century. Cities have what it takes to attract and keep the “creative class” over rural areas in described by Richard Florida. Cities will compete with each other to attract brainpower the talent crisis – and rural areas may be left out of the equation entirely if they don’t make plans now to retain young minds. When it comes to Urban areas will produce increasing amounts of GDP around the world. Still, there will manufacturing, be activities that industry will want to do away from centers of population: smelting some things should copper, nuclear waste storage, testing munitions. So distant second and thirds tier be away from urban cities will have a future, however limited. areas. The more people congregate in the cities, the less cost-effective it will be to drag goods into The future is about the middle of the continent. If this sounds a lot like the 19th century – it is. And as such, rail and sea rail and sea transport may find a resurgence. They are considerably more energy efficient than cars and trucks, and given the forecasts for petroleum (see CF STEEP Report #2) that’s probably a good thing.
    28. Strategic implications – why you should care How interesting that cities are able to make their own rules. Information technology makes Federal regulation it possible for China, India and America to assert centralized control over hundreds of could be harder in millions of people, but Hong Kong and San Francisco serve as interesting the future counterexamples. Cities could take the lead in making policy – for example, if L.A., San Francisco, and New York outlaw diesel engines, how could diesel manufacturers and transportation companies deal with the blow? Moreover, it wouldn’t matter what federal regulation was like. Huge implications here for lobbying and government relations. The tension between global, connected urbanites and their more regional, traditional Rural people may countrymen is already high in some countries – and this trend shows that there is no feel increasingly sign of this tension abating. What’s more – it could get worse. In America this means alienated even further divisive politics, but in places like Turkey you could be talking about increased violence and trends toward regionalism and secession. Slum cities still Just because millions of new urban residents will be poor doesn’t mean that they won’t be mean a growing consumers. If anything, the move to the city will only show them the range of goods market for luxury available to other classes of people. If they stayed in the rural areas they may have been goods content with rustic goods, but in the city, it’s clear that Crate & Barrel, IKEA, Gap, Cartier and Apple products remain goods to aspire to. But this aspiration will also lead to social tension and possible instability.
    29. Recommended options: What can you do today? Hunt for talent today As we have said in past STEEP Reports, the talent crunch will an undeniable in the cities, or struggle constraint on your future strategies. You’ll be competing on a global scale for in the future intellectual capital – talented people. That hunt will almost always start in a city. Which cities do you plan on being hubs for the intellectual capital of your business? Look into otherwise Helping South Africa and Burma and Bangladesh transition to a better urban future unstable developing might give your company’s risk analysts palpitations – but still, analyze where markets your potential might be in terms of products and services you could offer. There is trillions of dollars in unmet need. Plan to lobby city Landmark cases, such as California’s recent decision to regulate CO2 emissions governments in without approval from the US Federal Government, show that cities may decide addition to federal regulation more than national governments. Make sure your government regulators relations policy is diverse, creating relationships with federal, regional AND city governments. This will be a significant shift for many businesses, and could equal competitive advantage.
    30. Addendum: Future of Cities- By the Numbers Figure Source Two-thirds of humanity to live in cities by 2030 United Nations Population Fund, “State of the World’s Cities,” 2003 One-sixth of the world lives in slums, one billion people - This "The Challenge of Slums," UN Human Settlements Program, number is projected to double to two billion by 2030. 90% of 2003 slums are in developing nations By 2015, American metro-areas will account for 88.5% of GDP, The Urban Future, report by Global Insight, 2005 and by 2030, they will produce over 91% of GDP "Farmers and ranchers" and "Farmworkers and laborers, crop, U.S. Bureau of Labor Statistics, 2007 nursery, and greenhouse" are among the 30 occupations with the largest employment declines from 2006-2016 36% of Africa's population is urban today, and the continent “State of the World’s Cities: 2006-2007” UN Habitat will be majority urban by 2030 Programs Japan, China, and South Korea accounted for 84% of East "About Urban Mega Regions: Knowns and Unknowns," Asia's GDP in 2005, and within the three countries, just six World Bank, 2007 urban regions generated 45% of regional GDP 65% of American metro regions grew faster than the nation as US Conference of Mayors, 2006 a whole in 2003
    31. Find out more: Books Sassen, Saskia. The Global City: New York, London, Tokyo (2nd Edition, 2001) http://press.princeton.edu/titles/6943.html Sassen, Saskia. Global Networks, Linked Cities. (2002) . http://www.amazon.com/Global-Networks-Linked-Cities- Saskia/dp/0415931630/ref=pd_sim_b_img_7 Tayler, Peter James. World City Network: A Global Urban Analysis (2004) http://www.amazon.com/World-City-Network-Global- Analysis/dp/0415302498/ref=pd_bxgy_b_text_b
    32. Find out more: Articles • The 19.20.21 Project – 19 cities of 20 million in the 21st century- http://www.192021.org/ • “The challenges facing an urban world,” BBC News, http://news.bbc.co.uk/2/hi/science/nature/5054052.stm • “American metro areas remain nation’s economic engine but new jobs pay less: A report by Global Insight for the US Conference of Mayors,” City Mayors, http://www.citymayors.com/economics/metro_economies_us.html • “Confessions on a Dubai Dance Floor,” New York Times, http://travel.nytimes.com/2007/03/25/travel/tmagazine/03talk.dubai.t.html • “A Roster of World Cities,” Globalization and World Cities Study Group and Network, http://www.lboro.ac.uk/gawc/rb/rb5.html • “Inventory of World Cities,” Globalization and World Cities Study Group and Network, http://www.lboro.ac.uk/gawc/citylist.html • “The World According to GaWC,” Globalization and World Cities Study Group and Network, http://www.lboro.ac.uk/gawc/citymap.html • “World City Networks ‘From Below’: International Mobility and Inter-City Relations in the Global Investment Banking Industry,” Globalization and World Cities Study Group and Network, http://www.lboro.ac.uk/gawc/rb/rb179.html • “The World’s Urban Systems: A European Perspective,” Global Urban Development Magazine, http://www.globalurban.org/Issue1PIMag05/Hall%20article.htm
    33. Find out more: Articles • “The Seattle Region’s Study Mission to Dublin: Learning From Ireland’s Success in Competing for Employment and Income Growth in the Global Economy,” Global Urban Development Magazine http://www.globalurban.org/GUDMag06Vol2Iss1/Stafford%20&%20Kaplan.htm • “Encouraging Sustainable Urban Development in the United Arab Emirates,” Global Urban Development Magazine, http://www.globalurban.org/GUDMag06Vol2Iss1/Al%20Marashi.htm • “A New Economy and its New Clusters,” Udgivet af Erhvervsfremme Styrelsen, http://www.ebst.dk/publikationer/rapporter/gb_klynge/efspup0202/ren.htm • “Growing Out of Poverty: Urban Job Creation and the Millennium Development Goals, “ Global Urban Development Magazine” http://www.globalurban.org/GUDMag06Vol2Iss1/Kuiper%20&%20van%20der%20Ree.htm • “About Urban Mega Regions: Knowns and Unknowns” (World Bank) http://www- wds.worldbank.org/external/default/WDSContentServer/IW3P/IB/2007/06/13/000016406_20070613094736/Rendered/INDEX /wps4252.txt • “Globalization, Urban Heritage, and the 21st century Economy,” Global Urban Development Magazine, http://www.globalurban.org/Issue1PIMag05/Rypkema%20article.htm
    34. Contact For more information or to discuss what this means for you, contact: steepreport@competitivefutures.com (202) 508-1496

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