Shanghai comes in first in economic clout among 10 emerging market centres featured in the fourth edition of Cities of Opportunity, a new report released by PwC and the Partnership for New York City. According to the 26-city study, it also leads the world in foreign direct investment for both greenfield and capital invested and contends strongly with global leaders in domestic market capitalisation, ranking fifth - just below London and above Hong Kong.
Shanghai also performs very well in other measures of urban economic strength in the study, which analyses and ranks how 26 global centres of finance, business and culture perform across 10 key indicators. It ties with Toronto in transportation and infrastructure, outperforms London, Singapore and New York in sustainability and ranks in the top four in the visual impact of its skyline.
"The results are very welcome," notes Nora Wu, PwC China Lead Partner for Shanghai. "The study shows Shanghai is moving in the right direction strategically and achieving success on a range of policy issues. But we also see areas, like ease of doing business and higher education, where the city has room to grow to lead even more in China and the world."
Over all, Cities of Opportunity shows this year that the finance and business centres of the future may not be the traditional capitals of global dominance. The study shows that in a more virtual and mobile world, holistic cities with balanced economies and strong quality of life offer an attractive alternative: resilience during downturns and allure for skilled people who will build the future.
New York leads the study, but is followed closely in the top five by Toronto, San Francisco, Stockholm and Sydney - cities more notable for quality of life and balance than global business dominance.
Their performance is impressive: Toronto does broadly well, making the top five in seven out of 10 indicators; San Francisco also shows strong balance in its first year in the study, finishing in the top four in six out of 10 indicators; Stockholm falls in the top three in half the indicators, including three number ones; Sydney climbs two places this year, finishing top three in two indicators.
While these cities cannot match the size or economic clout of longstanding commercial hubs like London, New York, Paris or Tokyo, their performance highlights a changing global dynamic. Modern cities are less dependent on geography and historic connections and more reliant on holistic approaches to attracting and keeping creative minds and cutting-edge businesses that will build the future with fresh eyes.
The traditional alpha cities - London, number six this year and first in economic clout, Paris, number eight overall and first in transportation and infrastructure, and Tokyo, number 14 overall - retain their power and allure. But they do not congregate at the top as might reflexively be assumed based on recent history. New York, despite finishing first, hardly dominates. It leads because of balanced performance across the indicators, likely a key to the city’s continued economic resilience, and outstanding performance in measures of intellectual capital, lifestyle assets and technology readiness.
The Cities of Opportunity key indicators and top three cities in each are:
* Intellectual capital and innovation - Stockholm, Toronto, New York/San Francisco (tied for 3rd)
* Technology readiness - New York, Seoul, Stockholm
* Transportation and infrastructure - Paris, Chicago, New York
* Demographics and livability - Stockholm, Sydney, Toronto
* Economic clout - London, Paris, New York
* Cost - Houston, Los Angeles, Chicago
* Lifestyle assets - New York, Paris, London
* Health, safety and security - Stockholm, Toronto, Chicago
* Ease of doing business - Hong Kong, Singapore, New York
* Sustainability - Berlin, Sydney, Stockholm
This shift is reflected in the composition of the report’s top five cities since its first release in 2007. In that year, New York and Tokyo ranked first and second; London and Paris tied for third, with Toronto rounding out the top cities. In 2008, London moved up to second place, replacing Tokyo, which dropped from the top five. Last year, Singapore took the third spot from Chicago, behind New York and London, with Chicago and Paris tied for fourth.
"Changes in communications, education and knowledge - sharing, transportation and urban migration are transforming world dynamics," said Bob Moritz, US Chairman and Senior Partner of PwC. "Cities that want to thrive, need to adapt to these changes. Size is no longer a leading predictor of influence. The success of cities such as Toronto, San Francisco, Stockholm and Sydney sends a clear signal that holistic balance makes a real difference."
David Wu, PwC China Lead Partner for Beijing, said, "Beijing is a major destination city for FDI as well, ranking 3rd in invested capital and 4th in number of projects. Meanwhile, in terms of number of Global 500 headquarters, Beijing climbs one spot, ranking second this year, which means it continues to develop its capabilities in attracting FDI."
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