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PriceWaterhouseCoopers Cities of Opportunity 2012


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PriceWaterhouseCoopers Cities of Opportunity 2012

  1. 1. Abu Dhabi Hong Kong Madrid New York Singapore Beijing Istanbul Mexico City Paris Stockholm Berlin Johannesburg Milan San Francisco Sydney Buenos Aires Kuala Lumpur Moscow São Paulo Tokyo Chicago London Mumbai Seoul Toronto Los Angeles Cities of Opportunity 2012 Cities of OpportunityThe papers and printer used in the production of this study are certified to Forest Stewardship Council (FSC) standards,which promote environmentally appropriate, socially beneficial, and economically viable management of the world’sforests. The cover and text for this publication were printed on paper containing 10% postconsumer waste material.By printing at a facility utilizing 100% wind energy and using postconsumer recycled fiber in lieu of virgin fiber: 13 trees were preserved for the future 629 lbs of solid waste were not generated 39 lbs of waterborne waste were not created 1,239 lbs net of greenhouse gases were prevented 5,687 gallons of wastewater flow were saved 9,482,515 BTUs of energy were not consumed
  2. 2. Cities of Opportunity 2012 analyzes thetrajectory of 27 cities, all capitals of finance,commerce, and culture—and through theircurrent performance seeks to open a windowon what makes cities function best. This year,we also look ahead to 2025 to projectemployment, production, and populationpatterns, as well as “what if” scenarios thatprepare for turns in the urban road.Cover image: Brooklyn Bridge and Lower Manhattan,Guillaume Gaudet©2012 PwC. All rights reserved. “PwC” and “PwC US” refer to PricewaterhouseCoopers LLP, a Delaware limited liability partnership,which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. Thisdocument is for general information purposes only, and should not be used as a substitute for consultation with professional©2012 The Partnership for New York City, Inc. All rights reserved.
  3. 3. Looking to the future of 27 cities at the centerof the world economyIn this fifth edition of Cities of Opportunity, 2.5 percent of the population. By the quarter- with some of this uncertainty, “what if”PwC and the Partnership for New York City century, they will house 19 million more scenarios test the future of our cities underagain examine the current social and economic residents, produce 13.7 million additional different conditions. The clouds hold silverperformance of the world’s leading cities. We jobs, and generate $3.3 trillion more in GDP linings for some cities in terms of greateralso add a future dimension that probes the if population follows UN projections and employment and wealth. But storms roll in forshape of city economies to come. Together, economic progress remains modest. As growth others. The differing “what if” scenarios stresslooking at 2012 results and ahead toward occurs, the symbiotic relationship between the need for flexible thinking simply to dealthe possibilities in 2025, we seek to provide East and West is likely to continue: Emerging with foreseeable changes, not to mentiona realistic framework for thought and action cities will skyrocket in jobs and population, the unexpected turns.beginning with 27 of the world’s most signifi- but developed cities will retain the spendingcant cities—on one hand, the engine of the power, as well as the consumer and corporate To flesh out the empirical picture, we spokemodern global economy and on the other, demand, to drive growth. One side will still to a broad scope of leaders on issues from thethe heart of much of our shared culture. need the other to move ahead. long range and philosophical to the practical and immediate. This includes E.O. Wilson, theIt is precisely because of the importance of Meantime, our analysis shows that each naturalist; Bill Bratton, former New York andcities and the need to deepen knowledge of city represents an economic ecosystem in its Los Angeles head of police; Narayana Murthy,urban issues that we undertake the study. The own right, built around mutually supportive founder of Infosys; Andrew Chan and Petereffort to question and understand where cities economic and social strengths as well as an Chamley, two leaders of the global engineeringare and where they are headed benefits all intertwined fabric of jobs—not just the profes- firm Arup, based in Hong Kong and London,of us in a world urbanizing like never before. sionals in bright skyscrapers but all those who respectively; Wim Elfrink, Cisco’s head ofThis includes the officials and policymakers turn the lights on every morning from retailers Smart + Connected Communities; and Davidsetting the course, businesses invested in city and teachers to nurses and cooks, from crime Miller, former Toronto mayor and Worldwell-being, and the citizens who build their fighters to street cleaners. Maintaining healthy Bank special advisor on urban issues.lives in thousands of city neighborhoods world- balance is a cornerstone of urban resilience.wide, rich or poor, picturesque or prosaic. All in all, we hope to provide insight into Our jobs analysis also reveals surprising an urban world in which all of us are “in itStatistics tell some of the story: Today, our patterns, vulnerabilities, and dependencies, together,” making as strong a case for joint27 cities account for nearly 8 percent of world as cities journey toward 2025 with more than thought and action among cities as there isgross domestic product (GDP) but only a few clouds on the horizon. To come to grips for self-interest and competition.Yours sincerely,Robert Moritz Kenneth I. Chenault Terry J. LundgrenChairman and Senior Partner Chairman and CEO Chairman, President andPricewaterhouseCoopers LLP American Express Co. Chief Executive Officer Macy’s Inc. Co-chairman Partnership for New York City Co-chairman Partnership for New York City
  4. 4. What makes a city tick? “Justice remains the appropriate name for certain social utilities which are vastly more important, and therefore more absolute and imperative, than any others,” John Stuart Mill wrote in Utilitarianism in 1861. He added, “education and opinion, which have so vast a power over human character, should so use that power to establish in the mind of every individual an indissoluble association between his own happiness and the good of the whole.” Many of those we spoke with this year in developing Cities of Opportunity agree. The foundations of healthy cities remain rule of law and safety and security today, as well as strong education to foster those qualities for future generations. Overview The city tomorrow Projecting urban possibilities to 2025 10 19 24 Population in millions 30 How the cities rank From butcher to baker to The ants, the man, and Where the jobs are London moves up, memory-stick maker the city A detailed look at six big ormerging 2012 2025 Asian cities improve Projecting urban trends to E.O. Wilson views city life telling employment sectors 2025 in jobs, production, through the lenses of nature and population and reason 14 22 28 34 The study’s methodology The shape of city The 2025 baseline scenario “What if” technological economies to come unemployment dawns Refinements continue on Jobs in business services, a solid foundation Mutual self-interest unites wholesale and retail, and … in a slow growth, Mumbai developed and developing cities manufacturing anchor the cities urbanized world? And four other scenarios that explore unexpected directions Shanghai Moscow Tokyo 24 Berlin Beijing Paris 21 Seoulw York 23 3 Istanbul 13 9 London Seoul São Paulo Milan Abu Dhabi Shanghai 2 9 Tokyo 1 10 Hong Kong 9 Istanbul Mumbai 6 Kuala Lumpur Mexico City Singapore 14o Paulo 11 Johannesburg Singapore New York 6 Sydney6 27 Hong Kong 24 16 Buenos Aires Sydney 23 W e’re quickly coming to an agreement as a nation and as Berlin a world—that we really have to improve education systems.aris Toronto We need far better methods of teaching. We need better incentives Johannesburg for teachers, and especially to include education in science and Los Angeles Madrid technology because we are now entering a techno-scientific world. Chicagouala Lumpur 5 10 15 2 | Cities of Opportunity | PwC Value of output
  5. 5. The city todayResults for 201242 46 51 56Intellectual capital Booting up holistic Health, safety and security Transportationand innovation sustainability From Aristotle to Bratton and infrastructureGenerating the skills that Wim Elfrink discusses to Chan, securing citizens’ A major revision focusesgenerate growth Cisco’s and his own passage well-being is key on internal mobility to urban India44 50 52 58City gateway Technology readiness Bill Bratton transformed The ins and outs, overs and urban law and order unders, of a great cityA new indicator measures The competition for digitala city’s global connections advantage continues to intensify … in New York and Los Angeles … can be engineered for efficiency, and explains how to achieve Peter Chamley of Arup explains that fundamental priority on the toughest city streets 46 52 58 T he biggest lesson is that you H ealth, safety, and security is the number one requirement for a W hat we often lack now are have to think out of the box. city. If you don’t have security, you don’t have health and safety, projects having a champion You can’t think about all and all the other pillars that support democracy will weaken, who will get hold of them these [urban] challenges in a including education and the economy. If you have a shaky and make it their sole aim traditional pattern. We can’t platform, they are all going to be shaky. to deliver them. build cities like we did in the past. A transformational shift has to happen. Partnership for New York City  |  Cities of Opportunity | 3
  6. 6. The city todayResults for 201262 67 72 76Sustainability and the Demographics and livability Economic clout Costnatural environment W e know it when we see A sia rises, but we’ll always Comparative advantagesW eighing the effectiveness it, despite a certain je ne have Paris can keep advancedof public policy sais quoi economies competitive64 68 74Cold comfort comes Andrew Chan of Ease of doing businessin Toronto Arup engineers sees C ompetitive cities know emerging cities how to stay competitive… from civility and economicbalance, former mayor David … through the prism ofMiller explains resilience and sustainability 64 68 T o understand a city’s quality of life, see if you can walk around F or the average person in a developing city, the most important at any time of day or night. You don’t want to be walking around factor is safety, health, and security. Efficiency is also important— a city at 11 at night if it’s not interesting and exciting, and that’s and that relates to transport or connectivity and how you lay a test of a neighborhood and a city as a whole. things out through good urban planning. This ability to get around efficiently is probably second in importance only to safety.4 | Cities of Opportunity | PwC
  7. 7. Cities at the edge Reference Megacities, megachallenges 79 84 92 Smaller world, bigger cities Narayana Murthy Key to the variables E merging cities will need to of Infosys links Understanding the datapoints grow, and invest, even more … India’s urban future to the that underpin the study to enhance their citizens’ power of private enterprise, quality of life leadership, governance, and transparency 83 88 On the web Forecast of investment A tale of three cities See for spending Athens, Dublin, and Dubai interactive modelers; videos, … shows tremendous need weather the Great Recession podcasts, and full-length in emerging megacities in different ways versions of the interviews; detailed data definitions and sourcescow Beijingl Shanghai Dhaka Tokyo Chongqing Delhi Osakaarachi Guangzhou Shenzhen Manila Kolkata 84 83 T o bring prosperity to the T here is terrible corruption and little public security in my city Jakarta vast majority of Indians, in Bangladesh. ... But what can we do? We are not politicians we need to enhance our or powerful people. We just want to survive. ... That’s why governance system, enhance people come to New York from all over the world. There is law our transparency and and order. —New York cab driver accountability, combat corruption, and enhance our infrastructure.unicipal population data used in the main Cities of Opportunity comparison. Partnership for New York City  |  Cities of Opportunity | 5
  8. 8. HighlightsCities of Opportunity 2012 covers a broad range of findingsand ideas. Here is a selection of notable ones.London moves up markedly broad technological transformation replacing workers without the right skills. Not unexpect-but New York shows continued strength edly in this “what if” scenario, employmentLondon advances four spots from last year to a virtual lock with New York at the top and finishes and GDP growth fall across our spectrum offirst in city gateway, a new category that measures international connectivity. New York performs 27 cities. Beijing, Shanghai, and São Paulowell across the board but wins no individual category, showing diverse strengths. Paris rises four lose the most jobs, but London and Tokyospots to number four this year, coming in first in demographics and livability and narrowly second follow close behind, showing that neitherto London in city gateway, showing that despite the eurozone’s continuing economic instability, developed nor developing cities escapethe long-term investment that builds a great urban center also lends resilience to weather the sweeping transformation. London and Sydneystorms. Overall, relative bands of performance remain similar to 2011. sacrifice more annual GDP than any city except Johannesburg—all suggesting the old adage, plan for the best but prepare forBeijing and Shanghai advance the worst.The two Chinese cities move to the top 5 in economic clout and city gateway along withLondon, Paris, and New York. Balanced progress across a range of social and economic “What if” smart cities prevail?indicators represents the next step for Shanghai and Beijing in transforming exceptional The answer is anything but a no-brainer.growth into sustainable performance at the top tier of world capitals. London, Tokyo, New York, Seoul, and Paris fare best in employment growth if cities prosper based on knowledge as well as technological and travel connections—A virtuous circle of social Size does matter. But is a big city light seemingly the right stuff for the modernand economic strengths enough on its feet to dance? world. Overall, our 27 cities lose 4 millionOur thesis remains that a city’s healthy growth Continuation of the “urban renaissance” jobs compared to the 2025 baseline projection.and long-term resilience depends on “positive is no guarantee in difficult economic times. Perhaps counter-intuitively, this occursreinforcement in the network of economic and Uncertainty seems to have replaced the expec- because greater productivity will cut the needsocial development,” to borrow from scientist tation of return to a steady state of economic for workers. However, higher trade mightE.O. Wilson. When great quality-of-life factors growth, and signs of potential transformation reasonably accompany such a scenario andlike schools, healthcare, housing, and safety can be seen in everything from jobs to the generate even more jobs than productivityare balanced with strong businesses and solid weather that greets us every morning. shaves away.infrastructure, the formula is right to pave city No matter the size, wealth, or advancementstreets with optimism if not yet gold. of modern cities, flexibility will be the If we follow our urban bliss, London keyword for planners and policymakers and Sydney lie on the yellow brick road“Another factor that makes things hopeful is considering the future. In Cities of Opportunity, our measures ofwhat chemists call autocatalytic reactions,” health, safety and security, demographicsWilson adds. “That is, when you get a product It doesn’t take a perfect storm to scuttle and livability, and sustainability representcreated by putting certain ingredients city futures a good proxy for quality of life—the urbantogether, the product itself becomes a catalyst. Looking at a range of uncertainties, we tested characteristic for which many professionalsThe reaction speeds up and you get more and what it would mean for cities if technological, and businesses appear to be searching. If thatmore products like that, and it just takes off economic, and sociopolitical forces go in the proves correct and more of us follow our urbanexponentially. You won’t get it quite in a social wrong direction and hamper economic health bliss, London, Sydney, Singapore, Paris, andsystem, but you could get something like it.” and employment growth between now and Berlin benefit the most in terms of jobs gained 2025—a realistic enough scenario given the by 2025; Stockholm the most in terms ofIf there’s bad news for cities it’s the same stubborn failure of jobs to return and hints of additional GDP. Today’s developing citiesas in science: “One of the hardest things to lose the most jobs and sometimes is to get a reaction started.”6 | Cities of Opportunity | PwC
  9. 9. When it comes to the share of city makes us creative.” Cities like San Francisco, housing correlates in a highly positive wayemployment, the biggest gorillas in with its mutually supportive ties to Silicon with the attributes of an economically strongthe room throw their weight around Valley, show the dividends of collaboration. city. They may be cold, dark, or far from thedisproportionately (for better or worse) madding crowd, but Stockholm, Toronto, and Cities of invention ... or reinvention Sydney again demonstrate balanced success inFinancial and business services, manufactur- History shows the capacity of cities to build education and health, safety and, wholesale, and retail sectors anchor manycity economies in 2012. The first two account from the ground up, as many emerging cities Can the champions rest their feats?for as much as a third of jobs. That includes are doing now, and to rebuild from rubble,Shanghai, where one in three workers is in as many developed cities have done after war. The Olympic effort may be ended in London,manufacturing, and Milan, Paris, London, Success comes from collective will and the but cities worldwide require leaders with theBeijing, San Francisco, and Stockholm, where ability to align economic, governmental, and vision and drive to realize transformative proj-financial and business services predominate. social forces. Where there’s a common will, ects like Baron Haussmann in 19th-century there’s a way forward. Paris, Daniel Burnham of Chicago at the turnWholesale and retail accounts for more than of the 20th century, and Robert Moses in mid-one in five jobs in Hong Kong, Kuala Lumpur, Growing cities with growling appetites for 20th century New York. While their programsMoscow, Mumbai, Mexico City, and Istanbul. capital investment were sometimes criticized, they “certainly To keep up with the great gains in population delivered,” to paraphrase Peter Chamley,While these profiles may be changing—for head of infrastructure at Arup. Many credit and employment by quarter-century, someinstance, as emerging cities begin to diversify Singapore’s modern planners with that vision emerging cities will have to invest significantly.away from reliance on manufacturing— to see and build. Shanghai and Beijing will need to invest whatover-dependencies and imbalances can leave represents 42 percent of their GDP just tocities vulnerable. Chamley, for his part, notes a recent triumph satisfy forecast growth from 2012 to 2025. For in his home city. “The construction industrySurf (with the pack) or (defend your) turf? Mumbai, it’s 35 percent. London, by contrast, can look at the Olympics with pride. Wonder- only requires 17 percent and Stockholm 19The question of competing or collaborating ful facilities have been delivered very quickly percent to meet the forecast of investmentwithin and among communities is as old as and on budget. ... It has been a great success in spending relative to growth.the seven hills of Rome. Today’s cities need to regenerating that part of London.” But manyblend some of each strategic outlook into their Most happy cities are alike ... but every other developed and developing cities faceplanning. On one hand, cities can benefit by unhappy city is unhappy in its own way high hurdles including bureaucratic delay,aligning interests and seeking joint action in political gridlock, and systemic corruption. Athens, Dublin, and Dubai each endured the To recall the principal behind Burnham’sa world urbanizing faster and creating more same economic crisis. But each climbed out legacy, which continues to benefit Chicagoans:funding needs than cities are empowered to of the hole or stayed mired in their problems “Make no little plans, for they have no magicaddress. Yet, cities are where the buck stops in in their own way—illustrating the extent to to stir men’s blood. ... Make big plans. Aimterms of the need to get results. Competition which it is more the differences rather than high in hope and work.”with other cities, whether for a new factory the commonalities that distinguish economicor new museum, is a fact of life. breakdown and recovery in a city. Learn moreAs scientist E.O. Wilson told us: “The solution Make my city healthy, wealthy, and wise See for interactive modelers,to our problems is not to expect complete (not necessarily in that order) videos, podcasts, and full-length versions of theharmony among cooperating people, but torealize that group distinctions and group Most of the leaders we spoke to emphasize the interviews; detailed data definitions and sources.competition and individual-level competition need for a safe and secure city as the keystonewithin groups is just the way we are. What we of a healthy community. After that, good edu-really need to do is try to find ... a harmonious cation is most widely cited as a springboardsolution. ... It’s that ferment of the center, for future success. In fact, our own Cities ofbetween the two opposing impulses, which Opportunity analyses have shown that good Partnership for New York City  |  Cities of Opportunity | 7
  10. 10. Overview8 | Cities of Opportunity | PwC
  11. 11. London moves up overall, Asian cities move ahead in some areas, and the future moves in patterns we seek to understand A cityless man is like “a solitary piece in and hospitals to accommodate growth. Both checkers,”1 simply out of the game, Aristotle mature and emerging cities depend on each wrote 2,400 years ago, putting urban life in other to balance their economies. And “only by a clear social context. Then, the polis literally acknowledging our extreme interdependence meant a free city that made laws, sometimes will we make the fishbowl effect work for wars, and on a deeper level signified the com- humanity rather than against it,” in the words munal existence under the rule of morality of Li Congjun, head of China’s official news that only humans are capable of living.2 Being agency.4 Big uncertainties hang over the entire a citizen was a badge of honor for the 30,000 picture from destabilizing climate change to or so politai among Athens’s 140,000 or so political and social tension to technological men, women, children, and slaves. transformation. Realistically, continuation of the 20-year “urban renaissance” cannot be Today many more of us live in cities. Central taken as any more inevitable than the long Athens houses over 1 million people, with climb in house prices that crashed to set off about 3.8 million in the metropolitan area. the economic crisis. A considered look at the Citizenship embraces more than just men. future is in order. And the birthplace of democracy is now better known as the epicenter of the eurozone crisis. The report adds an entire section that (See “A tale of three cities,” page 88.) projects from our 2012 results the sectoral employment, production, and population of However, the foundations of urban life remain our 27 cities in 2025. We examine what might the same. City dwellers still prize living under occur if different city characteristics prove the rule of law and strive to develop the rich- more or less important in attracting invest- est quality of social and economic life they ment and driving growth, and how cities will can. How to govern justly and well—how be affected if the world economy changes best to move the city ahead—is still a point of course. We also veer away from our 27-city debate. In ancient Greece, Aristotle’s biggest study group to examine those cities at the theoretical rival on the topic, Socrates, his immediate forbear and self-described “gad- 1 Politics, I.I.9-10 as translated by I.F. Stone in The Trial of Socrates, 1989, Anchor Books, page 98. fly” of the state,3 favored governing by expert 2 The Trial of Socrates, I.F. Stone translating on page 10 from managers rather than the democratic citizenry Politics 2.1.9-10, “It is man’s ‘special distinction from other animals that he alone has the perception of good and bad and of the just he viewed as a herd. Today, political debates and the unjust.’ It is this intrinsic sense of justice that gives man his around the world appear equally as difficult social instinct, his ‘impulse’ as Aristotle calls it, to a social life, and makes man ‘a political animal in a greater measure than any bee (often lacking the intellectual rigor Socrates or any gregarious animal.’” Interestingly, E.O. Wilson, a renowned and Aristotle brought to the party). scientific observer and thinker today on sociobiology and human nature, parallels Aristotle in speaking to Cities of Opportunity (see page 24), as do a range of others we interviewed including ex-New With that look back for context, Cities of York and Los Angeles head of police Bill Bratton on the primacy of justice in community-building. Opportunity notably looks ahead this year 3 As related principally by Plato, as well as Xenophon and to frame city futures around probable direc- Aristophanes, in that Socrates left no writings of his own. tions and unforeseen turns in the road at a 4 “Frictions are hardly avoidable, but what’s important is for the crucial time. The Great Recession continues to two sides to handle their differences through coordination based on equality and mutual understanding. Only by acknowledgingA street in the Beaubourg area of Paris as hamper mature city governments. Stubborn our extreme interdependence will we make the fishbowl effectseen from the Pompidou Center. joblessness adds a serious problem. Emerging work for humanity rather than against it.” Li Congjun, president of Xinhua News Agency, China’s official press agency, wrote cities are faced with a flood of immigrants in The New York Times, July 18, 2012, in “Rebalancing the and a pressing need to build adequate roads, Global Economy.” water, waste, and energy systems, schools, Partnership for New York City  |  Cities of Opportunity | 9
  12. 12. How the cities rank Intellectual capital Technology Transportation Health, safety and innovation readiness and and security infrastructurefulcrum of change today: first, the megacities 27 New York 189 91 101 97mushrooming especially throughout the 26 London 184 79 99 96emerging world; and second, Athens, Dublin, 25 Toronto 198 66 109 116and Dubai, three cities that suffered throughand managed the economic crisis, each in 24 Paris 194 65 99 89its own way. 23 Stockholm 205 89 103 119 22 San Francisco 191 93 92 107We chose to extend our investigation into thefuture because this seems a natural time to 21 Singapore 122 80 114 103stick our finger into the air and gain a sense of 20 Hong Kong 150 71 103 71the direction of things to come. After decades 19 Chicago 170 81 92 109in which overall growth led to a common,often unspoken expectation of return to 18 Tokyo 167 80 107 93healthy economic equilibrium, we’re now at a 17 Sydney 179 56 66 114moment when a few trends indicate a change 16 Berlin 147 48 95 101in the norm, if not advancement to a newplateau in the industrial/information revolu- 15 Los Angeles 171 79 59 91tion. Economic growth remains slow in many 14 Seoul 137 96 109 61places and municipal budgets strained in 119 44 99 81 13 Madridmature cities. More puzzling, employmentrefuses to bounce back to anything near levels 12 Milan 131 34 86 95before the boom years that preceded the Great 11 Beijing 82 49 71 35Recession. Joblessness, especially among 10 Kuala Lumpur 66 41 80 55the young, persists at high levels. Scientific 9 Shanghai 99 48 80 38advances could be playing a role as “techno-logical unemployment” finally dawns long 8 Moscow 109 54 73 19after Keynes coined the term. 7 Mexico City 82 24 93 42Urban immigration levels never known before 6 Abu Dhabi 87 28 89 93(certainly not beyond New World melting pots 5 Buenos Aires 63 28 93 43like New York and Chicago or Buenos Aires 4 Istanbul 45 33 67 24and São Paulo) threaten the social and politi- 3 Johannesburg 49 23 32 46cal fabric of many cities. When factors likerising income inequality and pervasive social 2 São Paulo 60 22 54 16networking are folded in, cities can become a 1 Mumbai 48 27 70 25volatile mix. And ultimately, while cities maylack the power or funding of national govern-ments, they are the ones that must act asall these forces play out in their streets,businesses, and homes. As David Miller,former mayor of Toronto, told us, “Mayors the promise that innovation offers in urban Asian cities perform very well in a number ofoften don’t have time to wait, and they are clusters. (See The city tomorrow, pages 18-39.) categories. Shanghai and Beijing move upvery practical. Mayor LaGuardia [of New York the ratings, performing in the top five inin the 1930s] quite famously said ‘there is In terms of today, the study finds that despite economic clout and city gateway, the latter ano Republican or Democratic way to pick up a revision of many of our data variables and new indicator that measures global attractive-garbage.’ You become less ideological. ... reorganization of indicator categories, relative ness and accessibility. Four of the five leadersCity governments are good at action.” bands of performance generally continue. Yet in inner-city transportation and infrastructure noteworthy changes do occur. sit in Asia—Singapore, Seoul, Tokyo, andPositive forces are at work also. These include Hong Kong—versus last year when all fivethe upside potential of globalization and the London moves up from number six last year, leaders were in America or Europe. Externalincreasing attraction of cities to travelers of doing very well in many categories and finish- city connections like air traffic also weighedall sorts, the expanding growth of urban ing narrowly as the number-two city behind on the scoring. In demographics and livability,service sectors supported by rising demand New York. The top third is rounded out by Paris moves up 7 spots from the mid-ranksand higher levels of education and training, Toronto, Paris, which advances four spots last year to number one with the indicator cat-opportunities to build new or retrofit crum- from 2011, Stockholm, San Francisco, egory recast in 2012 to stress livability. Paris,bling, old infrastructures, and, of course, Singapore, Hong Kong, and Chicago.10 | Cities of Opportunity | PwC
  13. 13. Sustainability Economic Ease of doing Cost Demographics City gateway Score and the natural clout business and livability environment 83 119 182 70 59 121 1,112 65 119 181 71 72 145 1,111 101 98 175 89 75 69 1,096 86 120 137 58 82 143 1,073 88 83 161 86 73 55 1,062 101 76 154 86 76 85 1,061 69 110 202 71 75 99 1,045 59 99 198 78 78 108 1,015 72 67 158 93 67 88 997 58 92 156 51 59 111 974 103 90 147 54 78 77 964 91 68 135 124 74 72 955 79 59 160 99 65 92 954 58 81 146 108 37 82 915 82 76 136 96 55 115 903 89 90 111 71 51 69 827 65 125 80 79 48 135 769 55 64 154 106 53 87 761 44 118 56 83 40 123 729 86 95 62 77 50 87 712 53 60 117 102 43 57 673 33 68 89 90 57 16 650 74 67 60 80 48 41 597 49 61 78 102 34 85 578 55 42 102 100 46 39 534 64 67 88 57 49 50 527 58 82 59 93 23 30 515 High Highest rank in each indicatorEach city’s score (here 1,112 to 515) is the sum of its rankings across indicators. The city order from27 to 1 is based on these scores. See maps on pages 16–17 for an overall indicator comparison. Medium LowLondon, and New York also narrowly bunch of jobs in Milan, Paris, London, Beijing, San behind. Yet concentration of wealth reflectsat the top of economic clout between Beijing Francisco, and Stockholm. New York leads the inverse relationship. Among the emergingand Shanghai, first and fifth, respectively. the world with 16 percent of employment in cities, only Shanghai is expected to reach healthcare. And a third of Shanghai’s jobs lie productivity per worker (as measured by GDP)Our first detailed look at current employ- in manufacturing, even as that city is expected on a par with mature cities like London, Tokyo,ment, population, and production in our 27 to migrate more toward the service sector. Hong Kong, and Singapore.5 The Americancities shows them producing 8 percent of the cities, as well as Paris, Stockholm, Sydney, andworld’s wealth in 2012 despite being home to Looking ahead toward 2025, our baseline Toronto all remain far ahead of emerging onesonly 2.5 percent of its population. Three major scenario estimates that an additional 19 in terms of wealth. Mature cities retain thejob sectors—business and financial services, million will live and 13.7 million work in spending power, and consumer and corporatewholesale and retail, and manufacturing— our cities. They will generate an additional demand, that drive emerging economies. Indominate many city economies. The latter two $3.3 trillion gross domestic product (GDP)— fact, mutual self-interest would logically unitecategories are particularly large in emerging all predicated on a world of modest growth. emerging and mature cities as one sidecities. Business and financial services when Population and employment will surge in cities continues to need the other.grouped together account for over a third like Beijing, Shanghai, Mumbai, Istanbul, and 5 Abu Dhabi, an emerging city, is among the overall wealth leaders. São Paulo, with the pack of mature cities far But that is driven by the oil economy, hence an anomaly for broad comparison. Partnership for New York City  |  Cities of Opportunity | 11
  14. 14. Yet visions of the future, like all plans put logical connection. In that case, employment Cities of Opportunity also ventures beyondon paper, are made to be altered by the would rise by 8 million versus the 2025 the 27 cities in our study to examine citiesunforeseen. We questioned what might baseline projection. at the edge of change. First, we look atoccur if the urban world takes different turns those emerging giants, the megacities with • If the industrial/information revolutionbased on the relative importance of either staggering growth and an equally impressive moves in the direction in which itcity characteristics (as represented by our 10 challenge to develop infrastructure and quality shows signs of going and technologicalindicator categories) or the direction of the of life at anything near the same speed. The unemployment kicks into higher gear, allworld economy. In looking ahead, we focused population numbers are impressive, of course. cities suffer losses in jobs and production—on understanding the possible journeys rather But the direction is more so. In 1950, seven which are especially painful set against athan the final destinations to provide leaders of the 10 largest metropolitan areas were background of sluggish economic growthin government, business, and the community in the developed world. By 2010, only New coupled with booming urban populations.a pragmatic gauge for their thinking. York and Tokyo remained on the list along Emerging cities do worst in all sectors, with with eight developing megacities. European Beijing, Shanghai, and São Paulo losing“What if” scenarios (see pages 32-38) show that: cities had vanished. By 2025, according to 2.4 million, 1.9 million, and 1.3 million jobs,• If cities succeed based on knowledge, the United Nations, the number of megacities respectively, versus the baseline 2025 projec- technology, and travel connections, the (with population over 10 million) will have tion (see chart on page 35). But London mature cities—notably London but also nearly doubled to 29 from 16 at the turn of and Tokyo also each lose approximately Paris, New York, and Tokyo—benefit the the century, with 12 of the 13 new ones in the 1.1 million jobs. most. This is a logical connection in an inter- emerging world. (See page 79, “Megacities, • If protectionism spreads as a way to coun- megachallenges.”) twined urban world: It’s easy to picture the ter lingering slow growth, all cities will lose cities that prosper as those with the deepest, Anyone who has lived in a big city for long, jobs and production, with Beijing, Shanghai, broadest, and highest-quality education; however, knows that things rarely remain the São Paulo, London, and Tokyo again suf- those that are “wired” most thoroughly and same for more than a few years. For better fering the worst. In fact, the World Trade effectively for businesses and individuals; or worse, change happens. Organization and European Commission and those with infrastructures offering easi- indicate that restrictive trade policies are on Athens, Dublin, and Dubai are three cities est access to, from, and for the rest of the the upswing now as nations seek to put their that dramatically illustrate the toll of the world. All these elements are often viewed own houses in order at the expense of the Great Recession and the differing paths to as leading indicators of urban potential. outside world. recovery. We wondered what lessons might However, the higher productivity that would likely accompany this reality also depresses • If quality of life drives city economies emerge by comparing them. It turns out that overall job numbers. The results brighten as businesses and professionals flock to each city followed its own path into the crisis, notably, though, if 3 percent greater world the most livable cities, London, Sydney, managed its own way, and dug out or sank in trade accompanies this scenario, another Singapore, and Paris benefit the most. deeper in its own way. Therein lies “a tale of three cities” (see page 88).Mature cities benefit if future success is based on knowledge,technology, and travel connections or strong quality of life. All citiessuffer if technological unemployment or protectionism takes holdin a sluggish economy. The Queen Sofia National Center of Art Museum in Madrid.12 | Cities of Opportunity | PwC
  15. 15. Interviews track the big themes of urban life: • Peter Chamley digs deep into the practical vast majority of Indians,” Murthy counsels,the balance required between collaboration challenges of keeping a mature city up “we need to enhance our governanceand competition; the need for visionary lead- to speed from his hands-on perspective as system, enhance our transparency anders to drive critical transformation; the quest chief engineer for Arup Group at London’s accountability, combat corruption, andto build a virtuous circle of economic, social, Crossrail project, New York’s Second Avenue enhance our infrastructure.”and environmental sustainability; the practical Subway, and many other groundbreaking In the end, many implications arise fromtest of how to meet funding needs; and, the infrastructure initiatives. Cities of Opportunity 2012 for cityfoundation of any city, safeguarding justice in governments, businesses, and citizens. • David Miller, World Bank special advisorthe community based on shared respect for law Our goal remains helping to identify what on urban issues and former Torontoand order and quality of life. We spoke with: works for cities, framing thought and action mayor, speaks of Toronto’s ability to• E.O. Wilson, the renowned scientist, sweeten life for many on the cold shores for leaders charged with public and private naturalist, and author, addresses the of Lake Ontario with a recipe that beats decision-making, and, by doing so, bettering potential of cities, good and bad, as they hot Tim Horton’s coffee and maple sugar the lives of the 3.6 billion or so politai, urban work through humankind’s defining chal- donuts, fashioning success from a founda- citizens representing over half the world’s lenge of getting the mix right between tion of economic balance, civility, and social population today. individual and collective interest. “What we cohesion. Miller also addresses the practical- have to do,” he argues, “is make cities a lot ities of city governance in the face of limited If there is a lesson to be drawn from the study, more livable. By that I mean, more consis- power and funding. it is the continuing demonstration that cities tent with the fundamental emotional needs, face similar challenges and opportunities, • Andrew Chan, Hong Kong-based deputy and their intertwined economies depend on the instinctive needs of human beings.” chairman of Arup, dreams of “creating each other to prosper. Coordinated dialogue• Wim Elfrink, Cisco’s chief globalization a true eco city [with] infrastructure that and action around shared goals remain officer, frames the transformative possibili- works together in a holistic way so that the most effective order of the day in a ties of technology backed up by practical energy, water, transport, and waste are all challenging time. approaches to enable progress, such as public- integrated.” He also tells of some of the big- private partnerships and business consortiums. gest urban infrastructure challenges in Asia. Learn more• Bill Bratton, who spearheaded major • Finally, N.R. Narayana Murthy, founder crime reductions in New York and Los of Infosys and as much a father of India’s See for interactive modelers; Angeles, tells how that is done—street economic miracle as any business leader, videos, podcasts, and full-length versions of the by street with respect for citizens’ basic takes a clear-eyed look at the challenges interviews; detailed data definitions and sources. quality of life, attention to law and order, and opportunities that face a nation and ultimate trust that city dwellers are the urbanizing at the rate of 20,000 new city ones who will step up to safeguard their dwellers a day. “To bring prosperity to the own communities.
  16. 16. ApproachWhile the cities and variables may change,the research method remains consistent It should be clear by now, in this fifth edition reexamine our methodology every year, and of Cities of Opportunity, that our annual report why we try to frame our data within a context is a continually evolving project, in which that illuminates the meaning behind the the only constant is the assurance that both raw numbers. its data and criteria are as tested and unim- peachable as possible, and that sufficient Last year, for example, we explored underly- thoughtfulness is invested to make it useful to ing issues such as regional management, cities, their leaders, businesses, and citizens education, cityscapes, sustainability, traffic seeking to improve their economies and congestion, and preservation. This year, we quality of life. No new report is the same as are taking an enormous leap forward by that of the previous year simply because every projecting our 27 cities 13 years into the new report is subject to careful scrutiny and future, for indicative forecasts, under several continuing improvement. scenarios, of the global urban outlook in 2025. But we also continue to focus on the pres- An entirely new future-oriented section, The ent: “A tale of three cities” reports on Athens, city tomorrow, is the biggest change readers Dubai, and Dublin, all of which have been will notice this year. We built from a founda- deeply affected—each in its own way— tion of Cities of Opportunity methodology and by the consequences of the Great Recession. results, complemented by Oxford Economics’s regional and world models, to develop a 2025 The fundamental criteria governing this baseline projection customized for our 27 report’s choices of cities remain unchanging, cities. From that 2025 baseline, we con- however. They are: structed a “what if” scenario modeling tool sensitive to changes in particular city char- Capital market centers. While many of the acteristics as represented by our 10 indicator cities included are hubs of commerce, com- categories or the world macroeconomic munications, and culture, all are the financial picture. In other words, the modeling tool centers of their respective regions. This means can reslice the Cities of Opportunity urban pie that each plays an important role not only according to the relative importance of city locally but also as a vital part of a global eco- traits that we measure, or it can make the nomic network. economic pie itself bigger or smaller depend- Broad geographic sampling. Beyond each ing on growth assumptions. Methodology city’s role as a regional, or even global, is presented in The city tomorrow section center of finance and commerce, the 27 (see page 20) along with “what if” scenarios. cities collectively form a representative Our foundational study of current perfor- international distribution. mance reaches 27 cities this year, up from 11 Mature and emerging economies. Fifteen cities when we began five years ago. But we mature cities and 12 emerging ones are don’t think that the quantity of cities covered included this year, with three new cities added is the most important aspect of Cities of and two removed. At 27 cities, the sample size Opportunity. Rather, it is the quantity and remains small enough to allow for an analysis quality of the variables we have added to that is both deep and broad, but still large— the study during those years. That is why we and inclusive—enough to be representative.14 | Cities of Opportunity | PwC
  17. 17. This year’s total of 27 cities is one more than The 60 variables, down from last year’s 66, of socioeconomic advancement. This effectin last year’s report. More important, we have constituting the 10 indicator groups have might be even more pronounced in developingreplaced two cities with three new ones: changed significantly this year in order to economies and economies with larger ruralBuenos Aires, Kuala Lumpur, and Milan. develop an even more accurate image of populations. Nonetheless, because consistent city success. Indeed, only two indicators— comparisons across all cities are critical toItaly’s financial (and fashion) center was technology readiness and health, safety assure objectivity, country-level data wereadded to enhance the geographic weight of and security—remain unchanged from used when consistent, highly reliable sourcesEurope’s southern tier, to counterbalance the previous year. of publicly available municipal data could notthe continent’s northern cities. Kuala be used for all 27 cities.Lumpur joins this year’s report because it is, The most extensive revisions are in transpor-by general consensus, one of Asia’s most tation and infrastructure, which has seen its The scoring methodology was developed todynamic capitals and increasingly a major focus sharpened from nine to six variables ensure transparency and simplicity for read-global city. Buenos Aires replaces Santiago (of which only three remain the same); ers, as well as comparability across cities. Thein the Spanish-speaking Southern Cone not demographics and livability, which has been output makes for a robust set of results and aonly because of its economic growth but of its realigned around four variables with the strong foundation for analysis and discussion.cultural vitality and influence as well. Finally, emphasis on livability; and cost, which hasHouston has been dropped from this year’s four new variables. But there are substantive In attempting to score cities based on rela-report in order to more evenly balance the changes among other indicators as well, tive performance, we decided at the outsetUS with the rest of the world. including sustainability and the natural of our process that maximum transparency environment, economic clout, and ease of and simplicity required that we avoid overlyWe have also revised our indicators, drop- doing business. complicated weightings of our 60 one and adding an entirely new one: city Consequently, each one is treated with equalgateway. In general, the indicators are con- Because Cities of Opportunity is based on importance and, thus, weighted equally. Thisstructed with a robust sampling of variables, publicly available information supported approach makes the study easy to understandeach of which has been chosen because it is: by extensive research, three main sources and use by business leaders, academics,relevant; consistent across the sample; are used to collect the relevant data: policymakers, and laypersons alike.publicly available and collectible; current;free of skewing from local nuances; and Global multilateral development Taking the data for each individual variable,truly reflective of a city’s quality or power. organizations such as the World Bank and the 27 cities are sorted from the best perform-(See pages 92-95 for a brief key and International Monetary Fund, national ing to the worst. The cities are then for a detailed listing statistics organizations, such as UK National a score from 27 (best performing) to 1 (worstof definitions and sources.) Statistics and the US Census Bureau, and performing). In the case of a tie, the cities are commercial data providers. The data were assigned the same score.Data this year were normalized for factors collected during the latter half of 2011 andsuch as relative geography or population in first quarter of 2012. In the majority of cases, Once all 60 variables are ranked and scored,almost all cases, minimizing the likelihood the figures used in the study refer to 2010 they are placed into their 10 indicatorsof a city doing well solely because of size or and 2011 data. (for example, ease of doing business or cityhistoric strength. This process eliminated the gateway). Within each group, the variableneed to differentiate between variables that In some cases, national data are used as a scores are then summed to produce an overallreflect a city’s raw power (such as number proxy for city data. Use of national data tends score for that indicator. This produces 10of foreign embassies or greenfield projects) to disadvantage the 27 cities in our study, indicator league tables that display the relativeand the quality or intensity of a given all of which are either national or regional performance of our 27 cities.characteristic (such as percent of population capitals of finance and business that tend towith higher education). outperform national averages in measures Partnership for New York City  |  Cities of Opportunity | 15