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City landscape

Cities of gold

03 February 2015

The rise of the megacity – those with populations exceeding 10 million – will create both opportunities and challenges for their inhabitants.

Technology and globalisation are creating an explosion in the number and size of cities worldwide. More than half of the world’s population now lives in a city; by 2050 the proportion will have risen to 66%, according to the UN. Four years ago there were 350 cities of more than one million inhabitants; by 2030 there will be 435. The UK currently has two cities – London and Birmingham – whose populations exceed one million; by 2030 China alone is expected to have 128.

These cities, however, are small in comparison with the handful of megacities that have sprung up over the past few decades, each with more than 10 million inhabitants. In 1990 there were 10 of these, but by 2030 there are expected to be 41.

Cities create both opportunities and challenges for their inhabitants and those who run them. At their best, they can be dynamic centres of creativity, enterprise and sustainable living. ‘Cities are our greatest invention,’ says professor Richard Florida of the University of Toronto, an urban theorist. ‘They generate wealth and improve living standards while providing the density, interaction and networks that make us more creative and productive. They are the key social and economic organising units of our time, bringing together people, jobs and all the inputs required for economic growth.’

Cities characterised by innovation, enterprise and culture attract like-minded people, creating a multiplier effect. San Francisco today is at the heart of a high-tech start-up boom, with young technology companies choosing to be there rather than the suburbs of Silicon Valley. IT companies don’t require large physical premises, but depend on creative designers who need to be with other people that have ideas and energy.

Cities can also be more environmentally friendly; political economist Edward Glaeser has demonstrated how city living reduces CO2 emissions because people tend to drive less and live closer together. Doubling a city’s size also has the potential to increase income, wealth, patents, start-ups and universities; but need not involve doubling the number of petrol or train stations, or water pipes and electricity cables, because the existing infrastructure is utilised more efficiently.

Without adequate investment and planning for education, health, housing, environmental and other services, however, cities can descend into squalor. Glaeser has demonstrated that, when a city doubles in size, serious crime also goes up by 16%. The geographic shift in the world’s economic balance of power is also likely to put pressure on rapidly growing cities to provide healthcare, education, housing and other key services.

Most of the new generation of megacities will be in emerging economies, creating a shift in the world’s demographic balance. Indeed, three countries alone are expected to account for 37%1 of the projected growth in the urban population by 2050 – India, China and Nigeria. That means that roughly one billion more people in emerging economies will become significant consumers.1 Evidence suggests that as cities expand, income inequalities increase; and that the bigger the city, the greater the income disparity. Some two-thirds of the world’s urban population now lives in cities where income inequality has increased since the 1980s.1

In China, for instance, the exploding urban population has had a marked impact on income disparity. In 2001 the difference between the average income of the 10% richest and 10% poorest households was 13 times. By 2011 the difference was 35 times.2 Large cities lure the unqualified from remote areas, or abroad, and at the same time magnify the returns of the skilled and talented, leading to income polarisation.

This is by no means just a problem for developing economies. London is a relatively wealthy city by world standards, but a study in 2011 showed that while the most affluent districts had no inhabitants on unemployment benefit in the previous year, in the most deprived areas, some 29% of inhabitants received benefits.3 The only place in the UK with a greater income disparity was Rochdale.

Technology, however, could make a big difference. A number of cities, including Chicago, Rio de Janeiro, Boston, Barcelona and Stockholm, have demonstrated how ‘smart’ planning can help by using IT management and control to improve the quality and efficiency of city services.

Smart cities generally need strong political leadership, and to be relatively independent from central government policy. They tend to have a mayor’s office or similar body that is able to work across the city with different organisations – environmental, education, transport and so on – and place a great emphasis on the technological training of their citizens.

Chicago has invested heavily in broadband infrastructure and projects to encourage technological innovation since the election of mayor Rahm Emanuel, a former Whitehouse chief of staff, in 2011. His efforts to increase minimum wages, encourage tourism and invest in transport and technology – with initiatives to roll out broadband and offer widespread digital education – appear to have been his most successful civic initiatives.

There seems little doubt that, to compete at the top of the table, tomorrow’s cities have to be smart.

1 United Nations, October 2014

2 World Bank, August 2013

3 Communities and Local Government Statistical Release, March 2011

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