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Capitalizing on the Modern Era of Urbanization

May 29, 2017, 18:03 UTC+3
1 pages in this article

In 2016, some 54.5% of the global population lived in cities. But urbanisation does not stop there: according to the UN, the share of urban population is set to reach 66% by 2050. Urban agglomerations are becoming key markets for a variety of goods and services, while also providing human, financial and information resources to produce them. Urbanisation predicates the need for large-scale investments in the development of high technologies to ensure efficient management of the cities and their infrastructure, and therefore emerges as a new driver for economic growth.

Three quarters of the developed nations' population already live in urban areas.

  • This share reaches 82.3% in the UK, 81.4% in the USA, 79.3% in France, and 75.1% in Germany (UN sources).
  • In Russia, urban dwellers account for 74% of the total population.

In Asia, the urbanisation process still has a long way to go.

  • The shares of urban populations in China and India stand at 54.4% and 32.4%, respectively. Hence, these are the two nations that will be setting the urbanisation trends going forward.
  • Asia has the world's most densely populated metropolises, including Shanghai (24 million people), Karachi (23.5 million people) and Beijing (21.5 million people).
  • There are also examples of big cities built from scratch. In Saudi Arabia, work is underway to construct King Abdullah Economic City (KAEC), which will host a port and major industrial facilities.

The role of big cities in the economic development is set to increase.

  • By 2030, the 500 largest cities will account for 60% of the global GDP growth.
  • Tokyo's GDP is bigger than that of the entire Spain, while London's GDP exceeds that of Sweden (UN's New Climate Economy Report).

Urbanisation clearly provides new benefits and opportunities for businesses.

  • Potential consumers with a stronger purchasing power are concentrated within a limited area.
  • Urban population requires a wider range of products and services.

Urbanisation gives a boost to the service sector increasing its clout in the global economy.

  • In the US, services account for up to 80% of new jobs, with nearly 80% of the nation's GDP attributable to the service sector.
  • In 2016, the share of services in the Chinese GDP exceeded 50% for the first time in history.
  • In Russia, the service sector's share increased in 1990–2014 from 35% to 64% of the GDP (World Bank).

The trend to develop intelligent urban environments, i.e. smart cities, comes as an essential part of the digital economy.

  • The number of smart cities is increasing globally. According to IHS Technology, there will be 88 smart cities by 2025, up from 21 now. IHS names the integration of information, communications and technology (ICT) solutions across three or more different functional areas of a city (transport, energy, infrastructure, administration, security, sustainable development) as one of the criteria to define a city as smart.

According to PWC's Data Driven Cities 2016, Moscow’s achievements in using innovative solutions are comparable to those of the world's leading technology-driven metropolises, including New York and London.

  • For example, the unified medical information and analytical system (UMIAS), free wi-fi on public transport and the portal (a single e-platform for the website of the Moscow Government, the municipal services webpage and other digital projects) were all commended in the report as useful technological innovations.
  • New York stands out with its unique system for security data analysis (surveillance cameras and sensors detect the acoustic fingerprint of a gunshot and route the signal to the police). Other highlights include the efficient fire safety and waste disposal systems, as well as a healthcare platform making it possible to aggregate and analyse information from various wearable devices and helping improve the quality of diagnostics.
  • London excels in urban transportation and fire safety management.


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