A monthly report to keep you thinking about
the strategic impact of
society, technology, economics,
ecology and politics.
THE URBAN FUTURE

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…

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.

The Trends

Trends for the New Urban Future: 2007-2027
Growing Urbanization
Rise of the Global Urban Citizen
The 21st Century City-State
Slum Cities

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.

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 For historical reference, in 1800, only 3% of the world lived in cities.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.

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%.

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

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.

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.

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.)

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.

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

These people live in the same country:
Kurdish man, rural Turkey Casual diners, Istanbul, Turkey

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

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)

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

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

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?

THE OLD NATIONAL MAP
The old map, cut conveniently into
nation-states, for easy analysis

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

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.

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

What To Do Today

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.

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.

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.

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.

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

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

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

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

Contact
For more information or to discuss what
this means for you, contact:
steepreport@competitivefutures.com
(202) 508-1496