The Competitiveness of Cities

It was in the news today that London tops Forbes list of the World´s most influential cities in 2014. Forbes lists finance, flight connections, technology industry, number of multinational headquarters and time zone in relation to Asia among the United Kingdom´s capital’s strengths. It also says “A preferred domicile for the global rich, London is not only the historic capital of the English language, which contributes to its status as a powerful media hub and major advertising centre, but it’s also the birthplace of the cultural, legal and business practices that define global capitalism.”

In Forbes list, New York ranks as number two and Paris as number three. No city in the top 20 came from the developing world. I think we can expect that to change in years to come as the power centres of the world migrate towards Asia.

Forbes says “In the past century, the greatest global cities were generally the largest and centres of the world’s great empires: London, Paris, New York and Tokyo. Today size is not so important: Of the world’s 10 most populous cities, only Tokyo, New York and Beijing are in the top 10 of our ranking of the world’s most important cities. Instead, what matters today is influence.”

But what makes a city influential? We can measure that it is, but how does it become so?

In today´s global village, where distance means less than ever before and where cities increasingly compete for capital, talented people, companies and tourists, there the cities competitiveness have become more important than ever.

In 2012, the World Economic Forum identified the leadership role that cities are taking in stimulating the competitiveness of countries and regions as a key issue for further study. Cities have been the engines of productivity and growth throughout history, and will be essential to the future growth and competitiveness of nations and regions. This is especially true at a time of massive and rapid urbanisation in emerging markets.

The World Economic Forum have issued a report that focus on the competitiveness of cities with examples from a number of countries. In the report, a method to measure city competitiveness was developed, including (1) institutions, (2) policies and regulation of the business environment, (3) "hard connectivity", and (4) "soft connectivity". This was applied to 26 cities, with a mini case study on each, and to a short list of seven cities, each of those with a full case study.

The report also identifies six global "megatrends" especially relevant to cities, being (1) urbanisation, demographics and the emerging middle class; (2) rising inequality; (3) sustainability; (4) technological change; (5) industrial clusters and global value chains; and (6) governance. Led by urbanisation, they condition the greater operating environment for cities around the world. It is up to cities to take advantage of these megatrends, as well as to mitigate negative forces such as rising inequality, pressure on natural resources and the environment, and a diminution of trust in public authorities.

The World Economic Forum have also published a series of blog posts on individual cities as can be seen in the illustration below, making for very interesting reading.