A new research report by the Economist Intelligence Unit (EIU) reveals that Asian cities are the world’s strongest economically, which may come as little surprise. However, New York takes the top place and London comes in second in the rankings of the most competitive cities overall.
Singapore ranks first in Asia and third globally, out of 120 of the world’s major cities. The report, which is commissioned by Citi and entitled Hot Spots, ranks the most competitive cities in the world for their demonstrated ability to attract capital, business, talent and tourists.
According to the report, the most competitive cities in Asia are: Singapore (third in the global rankings), Hong Kong (joint fourth with Paris), Tokyo (sixth), Seoul (joint 20th with Stockholm), Auckland (36th), Taipei (joint 37th with Birmingham), and Beijing (39th).
“Asia’s economic rise is clearly reflected in the economic strength of its cities,” said Stephen Bird, Citi's Asia-Pacific CEO. “Cities are engines of global growth that are transforming the landscape of investment, talent and business. We are committed to being a valuable partner to clients and urban centres throughout Asia to enable progress, create value and foster innovation.”
Indeed, Citi, which operates in close to 30 cities in Asia, has been using Asian cities as a launch pad for its new retail banking strategy. Its new Smart Banking service was first launched in Tokyo and then further across the region, before being rolled out in New York.
“Economic dynamism is definitely rising elsewhere, especially in Asian cities, but US and European cities have legacy advantages that give them a strong competitive edge,” said Leo Abruzzese, the EIU’s global forecasting director. “In particular, these developed cities are better at attracting top talent from across the world.”
With a combined population of about 750 million, the 120 cities ranked in Hot Spots represent approximately 29% of the global economy and generated a combined GDP of $20.24 trillion in 2011.
For Hot Spots, the EIU developed a “Global City Competitiveness Index” that measures cities across eight distinct categories of competitiveness and 31 individual indicators. Categories include economic strength, human capital, institutional effectiveness, financial maturity, global appeal, physical capital, social and cultural character and environment and natural hazards. A city’s overall ranking in the benchmark index is a weighted score of the underlying categories.
Asia’s economic rise
In terms of “economic strength,” which is the most heavily weighted category, 15 of the top 20 cities are in Asia. Tianjin, Shenzhen and Dalian top the list, and nine other Chinese cities also rank in the top 20. Singapore (15th), Bangalore (16th), Ahmedabad (19th) and Hanoi and Hong Kong (joint 20th) complete the top 20. The top 32 Asian cities are all forecast to grow by at least 5% annually between now and 2016. Twelve of them are expected to grow by at least 10%, which makes sense because they are often starting at a lower base.
But perhaps the places to look at, are the emerging mid-sized cities. The report found that a “middle tier” of mid-size cities is emerging as a key driver of global growth. Although most companies target a combination of advanced economies and emerging market megacities, the fastest overall growth is found in mid-sized cities with populations of 2 million to 5 million, such as Abu Dhabi, Lima, Bandung, Hangzhou, Hanoi, Pune, Qingdao and Surabaya. In fact, just nine of the 23 megacities (with populations exceeding 10 million) ranked in the top 30 on economic strength. The mid-size cities are collectively forecast to grow by 8.7% annually during the next five years, ahead of the megacities on which many firms focus.
