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The economy of 1,000 cities

May 29, 20:14 UTC+3
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Cities are evolving into major growth drivers of the global economy. They are developing at a rapid pace and are ahead of their respective countries in most areas. Smaller cities are catching up with the largest metropolises when it comes to the competition for investments and human capital. Generally, cities try to gain the edge by focusing on creating a comfortable living environment.

As the world’s cities grow in number and size, so does their stratification in terms of resources and development priorities. This process is supported by the incoming human capital and the improving living conditions.

  • The UN reports that in 2016 over 54.5% of the world’s population lived in urban areas, and this number is expected to go up to 60% by 2030. According to the Economist Intelligence Unit (EIU), cities generate more than 80% of the global GDP.
  • Globally, one in five people live in a city of over 1 million inhabitants. In 2016, there were 512 cities with over 1 million inhabitants and 31 megacities populated by over 10 million people. The UN projects these numbers to increase by 2030 to 612 and 41, respectively. In 20 years, 8.7% of the world’s population is going to live in megacities.

According to the EIU, the world’s most competitive cities are New York, London, Singapore, Hong Kong and Tokyo, with the rest of the list featuring other largest western and Asian cities (Japanese, for example). Generally, these same cities can also be found on the liveability rankings.

  • The process of determining the level of development takes into account population income, social stability and safety, healthcare and socio-cultural support, as well as the state of the institutional and administrative domains, education, engineering infrastructure, entrepreneurship, environment, etc.

The world’s most densely populated cities are located in emerging economies – China, India, Pakistan, South America and Africa.

  • Many Asian and African cities are far behind their western counterparts, and their growing populations only make urbanisation more difficult.

Experts have worked out several important trends that contribute to successful long-term urban development:

  • Investments in improving city environment: over the next 10 years, New York, Beijing, Shanghai and London plan to invest a total of USD 8 trillion in development of urban infrastructure.
  • Stimulating SME development.
  • The focus on the creative industry (art, culture, media, IT) has emerged as a major global trend. In London and Berlin, this industry contributes an estimated 16% to the economy. Good living conditions are the foundation of these developments, as it was the favourable cultural environment and infrastructure that drove economic growth in many large cities.
  • Integration of modern digital and information technologies (as part of smart city and other initiatives). This works toward continual self-evolution of cities by simultaneously boosting living conditions and attracting competitive human capital.

In Russia, 74% of the population live in urban areas, and 15 million-plus cities constitute the financial centres of the country.

  • There is a stark contrast in the social and economic development of Russia’s central and outlying cities.
  • In the list of the world’s most competitive cities, Moscow and St. Petersburg are ranked 59th and 92nd (out of 120 cities), respectively, and 80th and 76th by liveability.
  • PwC's research places Moscow and St. Petersburg ahead of Beijing, Mexico City, Istanbul, São Paulo, Mumbai and Jakarta in terms of intellectual capital and innovation; technology readiness; transportation and infrastructure; sustainability and the natural environment; and demographics and liveability. At the same time, the two cities lag behind in cost; ease of doing business; health, safety, and security; and economic clout.

Further development of the Russian economy requires the rest of its cities to be up to the mark.

  • The process is underway. The latest research by the Financial University under the Government of the Russian Federation produced a top-10 ranking of the most liveable cities that included not only Moscow, St. Petersburg and other million-plus cities (Kazan, Novosibirsk, Yekaterinburg), but also Grozny, Tomsk and Naberezhnye Chelny; for a number of years now, Tyumen (720,000 people) has been at the top of the list.
  • The Government and municipalities are not the only ones that are improving the city environment and infrastructure: businesses also make an important contribution by investing in culture facilities and better public spaces.
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