From Moscow to Sao Pãulo
Emerging 7 Cities of Opportunity Study 2013
Hazem Galal
Global Leader for PwC´s State and Local G...
Cities have become the economic
engine of the modern world,
and nowhere is this more true
than in the seven leading emergi...
Emerging 7 countries and cities
Moscow

Beijing

Istanbul

Economic growth shifts
to emerging countries

Mexico City

Mumb...
We measured the cities against 10 categories and
60 variables
Tools for a changing world

Quality of life

Intellectual ca...
E7 Cities of
Opportunity
today
How the E7 Cities of Opportunity rank

Intellectual
capital
and
innovation

Technology Transportation Health,
Sustainabili...
Intellectual capital and innovation
Moscow consistently ranks No. 1 in education
Classroom
size

Libraries with Math /
Lit...
City gateway
Beijing dominates this indicator with an almost perfect score
Hotel rooms

1

Beijing

2

Moscow

3

Istanbul...
Technology readiness
Beijing ranks first, with Moscow a very strong second
Internet access in schools *

1

Beijing

2

Mo...
Health, safety and security
Beijing and Mexico City share the top rank, well ahead
of the other E7
Hospitals

1

Beijing

...
Transportation and infrastructure
Beijing and Mexico City tie for first place
Public transport
systems

1

Beijing

1

Mex...
Sustainability and the natural environment
Moscow No. 1, significantly surpassing its peers
Natural disaster risk

1

Mosc...
Demographics and livability
Beijing and Moscow tie for No. 1
Cultural vibrancy

1

Beijing

1

Moscow

3

São Paulo

4

Me...
Economic clout
Beijing tops the rankings, both for the E7 and globally, with
Moscow close behind
Number of Global
500 head...
Ease of doing business
Mexico City tops the rankings, way ahead of the field
Ease of
starting a
business **

1

Mexico Cit...
Cost
Istanbul ranks first, just ahead of Mexico City and Mumbai
Total tax rate

1

Istanbul

2

Mexico City

2

Mumbai

4
...
E7 Cities of
Opportunity
from 2013 to 2025
Population
Aggregate population growth, 2013 – 2025*
Moscow and Mexico City find
themselves in the best position
to limit ...
General employment
Population vs. employment

From Moscow to Sao Pãulo
PwC Russia

2025 employment forecast

Employed in 2...
Employment in E7 cities’ group by industry
2013
25%

20%

15%

10%

5%

From Moscow to Sao Pãulo
PwC Russia

Mining

Agric...
Economic growth from 2013 to 2025 (1/2)
These numbers are striking!

That represents almost a
tenth of Mumbai’s GDP
growth...
Economic growth from 2013 to 2025 (2/2)
This GDP per capita chart
is even more striking.
Mumbai increases its
wealth by 10...
Let’s discuss this!
For an in-depth discussion about
the E7 Cities of Opportunity, please, contact:

Hazem
Galal
Partner
PwC's Cities & Local
...
www.pwc.ru/en/e7

This publication has been prepared for general guidance on matters of interest only, and does not
consti...
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Hazem Galal "From Moscow to Sao Pãulo"

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Hazem Galal "From Moscow to Sao Pãulo"

  1. 1. From Moscow to Sao Pãulo Emerging 7 Cities of Opportunity Study 2013 Hazem Galal Global Leader for PwC´s State and Local Government Sector
  2. 2. Cities have become the economic engine of the modern world, and nowhere is this more true than in the seven leading emerging nations – Russia, Brazil, India, China, Mexico, Turkey and Indonesia. The E7 Cities of Opportunity report provides a detailed, objective and timely study of the business, economic and cultural hubs of the emerging world – Moscow, São Paulo, Beijing, Mumbai, Mexico City, Istanbul and Jakarta. The report presents extensive quantitative research as well as analytical discussion on the health and well-being of each of these cities.
  3. 3. Emerging 7 countries and cities Moscow Beijing Istanbul Economic growth shifts to emerging countries Mexico City Mumbai Jakarta São Paulo Russia should overtake Germany to become the largest European economy before 2020 in purchasing power parity Source: PwC report “World in 2050 - BRICs and Beyond: Prospects, challenges and opportunities” From Moscow to Sao Pãulo PwC Russia India should become the third global economic giant by 2050 China will overtake the US as the largest economy by 2017 in purchasing power parity December 2013 3
  4. 4. We measured the cities against 10 categories and 60 variables Tools for a changing world Quality of life Intellectual capital & innovation Technology readiness • Classroom size • Internet access in schools • Hotel rooms • Broadband quality score • Number of international association meetings • Libraries with public access • Math/science skills attainment • Literacy and enrollment • Percent of population with higher education • Research performance of top universities • Innovation Cities Index • Digital economy score • Software development and multimedia design City gateway • International tourists • Aircraft movements • Incoming/outgoing passenger flows • Airport to CBD access • Intellectual property protection Transportation & infrastructure Health, safety & security Sustainability & the natural environment • Public transport systems • Hospitals • Natural disaster risk • Cultural vibrancy • Thermal comfort • Mass transit coverage • Cost of public transport • Licensed taxis • Health system performance Demographics & livability • Quality of living • End-of-life care • Recycled waste • Working age population • Crime • Air pollution • Traffic congestion • Political environment • Public park space • Major construction activity • Housing • Entrepreneurial environment Economics Economic clout Ease of doing business Cost • Number of Global 500 headquarters • Ease of starting a business • Total tax rate • Financial and business services employment • Resolving insolvency • Cost of business occupancy • Productivity • Employee regulations • Cost of rent • Attracting FDI: Number of greenfield projects • Ease of entry: Number of countries with visa waiver • Consumer price index • Attracting FDI: Capital investment • Flexibility of visa travel • Cost of Internet • Rate of real GDP growth • Foreign embassies or consulates • iPhone index • Level of shareholder protection • Operational risk climate • Workforce management risk From Moscow to Sao Pãulo PwC Russia December 2013 4
  5. 5. E7 Cities of Opportunity today
  6. 6. How the E7 Cities of Opportunity rank Intellectual capital and innovation Technology Transportation Health, Sustainability Economic readiness and safety and the clout infrastructure and security natural environment 1 Beijing 45 20 2 Moscow 47 19 3 Mexico City 4 Istanbul 33 17 22 5 São Paulo 36 14 6 Mumbai 13 7 Jakarta 44 27 22 14 15 30 25 30 27 18 27 19 37 33 28 Ease of doing Cost business Demographics City and livability gateway 38 18 23 35 23 23 19 19 54 20 14 19 35 21 16 21 23 39 23 20 20 23 21 15 21 15 32 27 28 17 29 19 28 13 26 12 297 40 283 32 15 16 Score 21 273 233 29 223 18 10 209 192 18 Highest rank in each indicator 1 Rating position From Moscow to Sao Pãulo PwC Russia December 2013 6
  7. 7. Intellectual capital and innovation Moscow consistently ranks No. 1 in education Classroom size Libraries with Math / Literacy and public access Science skills enrollment * attainment * 1 Moscow 2 Beijing 3 Mexico City 4 São Paulo 5 5 5 Istanbul 4 4 6 Mumbai 7 Jakarta 7 1 6 5 7 2 7 6 7 2 2 3 *Country-level data. From Moscow to Sao Pãulo PwC Russia 1 4 1 1 2 6 6 5 6 6 4 6 5 4 Research Innovation performance Cities Index of top universities 7 3 3 3 Percent of population with higher education 1 3 4 2 3 1 45 6 4 5 47 6 3 2 2 3 4 7 4 7 Entrepreneurial Score environment * 1 7 5 2 Intellectual property protection * 44 3 2 36 7 5 1 6 33 27 2 22 If there is one principle on which virtually all economists concur, regardless of disagreements over other aspects of economic policy, it is that education, research, and scientific and technological innovation serve as the basis of economic and social development. December 2013 7
  8. 8. City gateway Beijing dominates this indicator with an almost perfect score Hotel rooms 1 Beijing 2 Moscow 3 Istanbul 4 Mexico City 5 São Paulo 5 Jakarta 7 Mumbai International tourists Number Aircraft movements of International Association Meetings 7 6 6 5 3 4 1 5 2 3 1 4 1 2 5 1 29 6 3 40 32 4 2 2 2 5 4 3 Score 7 6 5 4 Airport to CBD access 7 7 6 4 5 6 3 7 2 1 7 Incoming /Outgoing passenger flows 21 18 1 18 3 10 This indicator tries to quantify a city’s international connections and its attraction beyond its own region – its “magnetism” worldwide both economically and culturally From Moscow to Sao Pãulo PwC Russia December 2013 8
  9. 9. Technology readiness Beijing ranks first, with Moscow a very strong second Internet access in schools * 1 Beijing 2 Moscow 3 Istanbul 4 Jakarta 5 Mexico City 5 São Paulo 7 Mumbai Broadband quality score 7 5 7 5 1 1 From Moscow to Sao Pãulo PwC Russia 6 5 17 7 7 4 2 19 1 3 3 20 1 2 Score 4 2 6 6 Software development and multi-media design 4 4 *Country-level data. Digital economy score * 6 3 2 15 14 3 14 5 13 Given the speed of “creative destruction” in current technological innovation, the point for emerging economies is not necessarily to be first out of the blocks in technology products, but to adopt the technology best suited to one’s needs. December 2013 9
  10. 10. Health, safety and security Beijing and Mexico City share the top rank, well ahead of the other E7 Hospitals 1 Beijing 1 Mexico City 3 Istanbul 3 Mumbai 5 Moscow 6 São Paulo 7 Jakarta Health system performance * End-of-life care * 5 7 7 7 5 4 1 *Country-level data. From Moscow to Sao Pãulo PwC Russia 3 3 2 5 20 1 18 6 5 27 20 6 1 3 27 3 6 6 4 4 7 1 3 2 7 2 Score 3 6 6 Political environment 4 5 1 Crime 16 2 15 This indicator affects emerging cities even more deeply than mature ones because the former also have to contend with a general skepticism – both from outsiders and their own residents – regarding any shortcomings, inadequacies, and lack of capacity in these areas of public policy. December 2013 10
  11. 11. Transportation and infrastructure Beijing and Mexico City tie for first place Public transport systems 1 Beijing 1 Mexico City 3 Moscow 4 Mumbai 5 Istanbul 6 Jakarta 6 São Paulo Mass transit coverage 6 Cost of public transport Licensed taxis 5 3 5 4 7 1 2 2 1 4 1 5 3 7 6 2 4 5 2 30 30 2 1 7 3 5 3 2 Score 7 4 4 Housing 1 7 3 7 6 6 6 6 Major construction activity 25 1 23 5 22 5 21 6 21 There is no greater threat to the viability of emerging cities than excessively growing populations overwhelming infrastructural capacity. From Moscow to Sao Pãulo PwC Russia December 2013 11
  12. 12. Sustainability and the natural environment Moscow No. 1, significantly surpassing its peers Natural disaster risk 1 Moscow 2 São Paulo 2 Jakarta 4 Mumbai 5 Beijing 5 Mexico City 7 Istanbul Thermal comfort 7 Recycled waste 1 7 2 6 3 5 3 21 3 20 2 6 4 3 28 21 5 1 4 2 2 5 7 2 2 7 6 5 3 Score 7 1 4 5 Public park space 6 5 6 Air pollution 4 19 19 1 14 In fact, Moscow’s achievements in this indicator go much deeper than are apparent. The Russian capital does exceptionally well not only against the emerging cities. It also ranks No. 7 overall in sustainability and the natural environment in the complete rankings of all 27 Cities of Opportunity, tied with Paris and just below Stockholm. From Moscow to Sao Pãulo PwC Russia December 2013 12
  13. 13. Demographics and livability Beijing and Moscow tie for No. 1 Cultural vibrancy 1 Beijing 1 Moscow 3 São Paulo 4 Mexico City 5 Istanbul 6 Mumbai 7 Jakarta Quality of living Working age population 3 6 5 7 7 7 4 3 1 19 1 17 7 2 1 23 2 6 1 23 7 5 4 Score 7 4 5 6 2 Traffic congestion 3 2 15 7 13 7 12 While the world’s emerging cities are undeniably dynamic economic centres, they’ve also increasingly become difficult places in which to live. Emerging cities cannot continue to grow in, or attract, the numbers of people they have until now without at some point overwhelming their infrastructure and their own citizens. From Moscow to Sao Pãulo PwC Russia December 2013 13
  14. 14. Economic clout Beijing tops the rankings, both for the E7 and globally, with Moscow close behind Number of Global 500 headquarters Financial and business services employment Attracting FDI: Number of greenfield projects 7 7 7 1 Beijing 2 Moscow 6 3 Mumbai 6 3 São Paulo 5 Istanbul 5 Mexico City 7 Jakarta 6 4 2 2 1 6 3 4 4 2 23 4 7 3 37 23 1 5 1 Score 33 5 5 3 3 7 1 4 1 1 3 Rate of real GDP growth 2 6 5 5 Productivity 7 6 3 4 2 Attracting FDI: Capital investment 19 2 19 6 15 What is being measured here is not only the aggregate strength of a city’s economy, but the extent of that strength, how far beyond its limits a city’s economic influence reaches, not just regionally or nationally, but globally – a city’s “ability to translate urban strength into a global economic presence.” From Moscow to Sao Pãulo PwC Russia December 2013 14
  15. 15. Ease of doing business Mexico City tops the rankings, way ahead of the field Ease of starting a business ** 1 Mexico City 2 São Paulo 3 Beijing 4 Istanbul 4 Moscow 6 Mumbai 7 Jakarta Resolving Employee Ease of entry: insolvency ** regulations ** Number of countries with visa waiver * 7 7 4 2 7 5 3 6 1 3 *Country-level data. **Based on most populous city. From Moscow to Sao Pãulo PwC Russia 1 4 2 3 2 2 4 7 1 2 7 5 7 1 Score 54 6 6 4 1 4 5 2 3 4 3 7 3 6 5 Operational Workforce risk climate * management risk 7 2 4 6 4 7 6 4 2 2 3 5 Foreign Level of embassies or shareholder consulates protection ** 6 7 5 6 5 3 3 Flexibility of visa travel * 39 7 1 38 35 3 3 35 5 2 32 27 The fact that Mexico City does so well in these nine variables illustrates its evident and unquestionable success in attracting global financial and human capital. December 2013 15
  16. 16. Cost Istanbul ranks first, just ahead of Mexico City and Mumbai Total tax rate 1 Istanbul 2 Mexico City 2 Mumbai 4 Jakarta 5 Moscow 6 Beijing 7 São Paulo Cost of business occupancy 6 5 7 3 5 1 2 5 1 1 3 2 1 28 1 26 7 3 3 28 2 2 2 6 1 29 3 5 6 Score 5 3 7 4 iPhone index 4 7 6 Cost of internet 4 6 4 7 Consumer price index 5 4 2 Cost of rent 6 23 4 18 7 16 There are no surprises in this indicator. If anything, the data confirm most of the media commentary and expert analysis of the past couple of years regarding on-going developments in the economies of the emerging cities and the emerging world as a whole. From Moscow to Sao Pãulo PwC Russia December 2013 16
  17. 17. E7 Cities of Opportunity from 2013 to 2025
  18. 18. Population Aggregate population growth, 2013 – 2025* Moscow and Mexico City find themselves in the best position to limit the environmental, social and economic burdens of continual population growth. Stable populations, or even incremental growth, allow for more systematic planning and for passing on the benefits of economic expansion to urban residents. Thousands 2,998 1,083 123 892 633 192 Moscow Beijing Mexico City 1,102 São Paolo Istanbul Jakarta Mumbai Average annual growth rate 0.1% 1.4% 0.2% 0.8% 0.7% 0.7% 0.4% * Moscow figures are based on publicly available data and do not include data on some newly attached to the city territories (so called New Moscow) From Moscow to Sao Pãulo PwC Russia December 2013 18
  19. 19. General employment Population vs. employment From Moscow to Sao Pãulo PwC Russia 2025 employment forecast Employed in 2013 20 Million people This chart illustrates the impact on economic development of ceaseless population growth: the two cities that currently have the largest number of inhabitants, and will continue to have them in 2025, also demonstrate the consequences of very large populations. Beijing will not be able to maintain its current employment-topopulation percentage of 61% in the future. % of employment compared to total population 15 58% 10 61% 57% 58% 58% 54% 47% 0 61% Moscow Beijing Mexico City 45% 39% 51% 5 35% 51% 39% São Istanbul Jakarta Mumbai Paolo * Moscow figures are based on publicly available data and do not include data on some newly attached to the city territories (so called New Moscow) December 2013 19
  20. 20. Employment in E7 cities’ group by industry 2013 25% 20% 15% 10% 5% From Moscow to Sao Pãulo PwC Russia Mining Agriculture, forestry and fishing Utilities Financial services Construction Leisure, culture and other services Hotels and restaurants Transport, storage and communications Public services Manufacturing Business services 0% Wholesale and retail Wholesale-retail will remain the largest sector in 2025, maintaining its 18% of total employment, while public services will also continue as a significant sector, dropping only 1% from its current level to 14% in 12 years, just below manufacturing. 2025 forecast December 2013 20
  21. 21. Economic growth from 2013 to 2025 (1/2) These numbers are striking! That represents almost a tenth of Mumbai’s GDP growth over the next 12 years and a bit more than a fifth of Moscow’s. 2025 forecast 547 GDP, US $bn As opposed to the forecast annual growth of 3-6% among our E7 cities, the average GDP growth of the OECD* group of 34 (wealthy) countries between 2008 and 2012 was 0.62%! 2013 455 379 310 228 189 339 272 188 247 188 126 123 58 Moscow Beijing São Paolo Mexico Istanbul Jakarta Mumbai City Average annual growth rate * Organisation for Economic Cooperation and Development From Moscow to Sao Pãulo PwC Russia 3.1% 5.9% 4.2% 3.1% 5.0% 5.7% 6.4% December 2013 21
  22. 22. Economic growth from 2013 to 2025 (2/2) This GDP per capita chart is even more striking. Mumbai increases its wealth by 100%, Jakarta by 79%, Beijing by almost 70%, Istanbul by 66%, and São Paulo, Mexico City and Moscow by roughly 43-47% each. GDP per capita, US$ 000s, 2013 prices 2013 2025 forecast 46 32 30 24 14 25 21 17 23 14 23 13 9,3 4,6 Moscow Beijing Mexico City São Paolo Istanbul Jakarta Mumbai Average annual growth rate 3.0% 4.4% 3.4% 2.9% 4.3% 5.0% 6.0% From Moscow to Sao Pãulo PwC Russia December 2013 22
  23. 23. Let’s discuss this!
  24. 24. For an in-depth discussion about the E7 Cities of Opportunity, please, contact: Hazem Galal Partner PwC's Cities & Local Government Sector Global Leader (Doha, Qatar) Tel: +974 4419 2852 hazem.galal@qa.pwc.com From Moscow to Sao Pãulo PwC Russia Ekaterina Shapochka Partner Government and Public Sector Services Leader PwC Russia Tel.: +7 (495) 223 5002 ekaterina.shapochka@ru.pwc.com Vadim Khrapoun Partner Markets Leader PwC Russia Tel.: +7 (495) 232 5408 vadim.khrapoun@ru.pwc.com December 2013 24
  25. 25. www.pwc.ru/en/e7 This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, [insert legal name of the PwC firm], its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. PwC Russia (www.pwc.ru) provides industry-focused assurance, tax, legal and advisory services. Over 2,400 professionals working in PwC offices in Moscow, St Petersburg, Ekaterinburg, Kazan, Novosibirsk, Krasnodar, Voronezh, Yuzhno- Sakhalinsk and Vladikavkaz share their thinking, experience and solutions to develop fresh perspectives and practical advice for our clients. The global network of PwC firms brings together more than 184,000 people in 157 countries. * PwC refers to PricewaterhouseCoopers Russia B.V. or, as the context requires, other member firms of PricewaterhouseCoopers International Limited, each of which is a separate legal entity. © 2013 PricewaterhouseCoopers Russia B.V. All rights reserved.

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