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The global economy is urbanizing, as economic influence shifts to the East. Currently, 600 cities generate close to 60% of the world’s economic output - numbers that are expected to remain roughly constant over the coming decade, though the geographical mix of these core urban areas will change significantly. Only a decade ago, roughly half of all global economic output was generated by fewer than 400 cities, all of them in advanced economies, and many in North America. This is projected to change dramatically, as economic power shifts towards Asia and other emerging market regions. Over half of today’s two dozen “mega cities,” or those with more than 10 million inhabitants, are in Asia, and more than half of these are in China. An urban economy is a city’s economic base, or the mix of economic functions that create value and employment. These functions are continually being transformed; though the pace can vary, depending on demographic or migration factors, local and regional fiscal policy, business cycles, and regional development efforts. In Asia, where the legacy of the developmental state (where economic development is centralized and directed by the government) still looms large, big cities like Seoul have made efforts to transform their economic base by moving large-scale manufacturing to outer regions as they develop more service-oriented economies. Such efforts have been made for years in Hong Kong, and are now gradually being made in Beijing. While policies can transform the trajectory of cities in order to better support growth industries, urban areas also experience restructuring that is brought on by disinvestment, and an exodus of highly-skilled workers; a significant number are trending in this direction. In North America and Europe, for example, there are many examples of cities that are shrinking as their physical and social infrastructures decay. Whether in decline or ascent, cities need to balance their desire for a vibrant culture with a recognition of ways that they can become home to widening disparity. As cities work to embrace the same digital and innovative processes that are transforming business models, and creating economic value, this must be pursued in tandem with stronger social protection and inclusion measures that both help less-skilled and displaced workers find opportunities in expanding sectors, and increase access to the services that matter for households that subsist on stagnating wages.

Urban Economies

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Urban Economies