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July 6, 2014

Cities are Driving Employment Growth Worldwide

Kasparas AdomaitisAnalyst Insight by Kasparas Adomaitis - Cities Analyst

Every newly employed person constitutes a new consumer, and a change in the overall employed population is one of the most useful indicators in finding the most prospective markets for sales growth. Over 2005-2013 employment growth was very different across the world, registering a 20% rise in Latin America compared with just a 2-3% increase in North America and Eastern Europe. The key insight, however, lies in highlighting the rapid rate of employment growth in cities. Regardless of the specific region of the world, major cities stand out as generating jobs faster than their respective home countries. Major cities are particularly strong in creating workplaces in Africa and the Middle East, Asia Pacific and Eastern Europe, which is where the world’s new middle-class consumers are emerging.

Growth in Employed Population by Region (Regions vs Regions’ Cities), 2005-2013

Source: Euromonitor International from National Statistics

Urbanisation and Foreign Investment Drive Employment Growth

Over the eight years from 2005-2013 in the aforementioned regions of the Middle East and Africa and Asia Pacific, employment growth was twice as fast in cities as in their respective regions overall. To some extent, the rising number of jobs in cities was both a reason for and the result of an influx in number of immigrants. Asia Pacific, Africa and the Middle East experienced rapid urbanisation. While a couple of decades ago immigration to cities was regarded as a troubling trend leading to overpopulation, in later years (starting from the 1990s) immigration in fact served as a supply of cheap labour for streaming foreign investment in key Asian megacities. Fuelled by the sprawling factories of foreign corporations, Chinese megacities (Shanghai, Beijing, Tianjin and others), Jakarta, Manila, Ho Chi Minh City, Seoul and a number of other cities managed to create between 1-2.5 million new jobs over 2005-2013.

Eastern Europe is in a late stage of demographic transition with an ageing population and a low fertility rate, which means that generally an insufficient workforce is constraining rapid economic growth in most countries in the region. That is not the case in major regional urban areas as Eastern European cities remain dynamic centres of economic development which have performed considerably better than the wider region in terms of employment growth. Namely, over 2005-2013 employment increased by 11% in major Eastern European cities in comparison with 3% growth in the wider region. Urban employment is being boosted both by domestic demand (as cities benefit from growing consumer purchasing power) and foreign investment. For example, Eastern European cities are often perceived as primary destinations for establishing the shared service centres of international corporations. Tholons, a global investment advisory, names Krakow, Prague, Brno, Warsaw, Budapest, St Petersburg, Bucharest and Bratislava among the world’s top 50 outsourcing destinations (along with only Dublin and Belfast in Western Europe).

Rising Employment will Boost Number of Middle-Class Consumers

The rapid growth of urban employment is likely to boost the share of middle-class consumers in cities. In fact, according to the International Labour Organization (ILO), there is an ongoing worldwide structural shift towards more productive jobs (in terms of value added per employee). In 2013, the ILO published a report that anticipates 390 million new middle-class jobs by 2017, most of them in East Asia. These better-paid jobs will be in service industries and it is likely that they will be concentrated in cities, thus boosting the purchasing power of urban populations.

Urban poverty is already on a downward trajectory in many countries, as evidenced by World Bank data. According to the dynamics of poverty rates (see numbers for selected countries below), many of them actually reduced urban poverty over 2003-2011. With poverty in the cities in decline, urban residents are seeking better housing, transportation, services and eating out facilities.

Share of Urban Population in Poverty According to National Poverty Definitions

Geographies 2003 2004 2005 2006 2007 2008 2009 2010 2011
Argentina 54.7 40.2 33.8 26.9 20.6 15.3 13.2 9.9 6.5
Peru - 48.2 44.5 37 30.1 25.4 21.3 20 18
Ukraine 15.7 12.2 6.3 5.1 2.9 2 - - -
Turkey 22.3 16.6 12.8 9.3 10.4 9.4 8.9 - -
Serbia - 10.4 - 5.2 4.3 - 4.9 5.7 -
Russia 13.1 10.1 8.1 7.4 - - - - -
India - - 25.7 - - - - 20.9 -
Indonesia 13.6 12.1 11.7 13.5 12.5 11.6 10.7 9.9 9.2

Source: Euromonitor International from World Bank

June 30, 2014

Combatting Income Inequality in the World’s most Unequal Cities

Neringa_UrnikyteWith Neringa Urnikyte, Cities Data Analyst

Nine out of ten of the world’s most unequal cities in terms of income were in Africa or Latin America in 2005, and governments in these cities have attempted to close the gap between the rich and the poor with varying results. Johannesburg and Cape Town in South Africa both consistently struggle with inequality created by apartheid, and the gap is increasing due to an increase in income levels for the wealthier population. In Latin America, many cities are revamping their education programs, moving more children into schools and subsequently into the labor force. As a result, the middle class is on the rise in cities such as São Paulo, Salvador, Quito, Guayaquil and Guatemala City.

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June 16, 2014

Forecasting Expansion of High Income Households

EMI_richHH2018-v1.2

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The US cities will lead the way into adding the largest number of households with annual disposable income US$100,000+ over 2013-2018, with seven of them on the top 25 list. Yet, the most rapid growth in high income households will come from developing cities. Besides Chinese metropolises, which will see a rapid income growth rebuffing the worst of the economic slowdown, cities in Russia and Central Asia are also forecast to demonstrate a rise of over 60% in the number of high income households.

 

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May 31, 2014

World's Major Port Cities Are Growing Faster Than Inland Cities

Kasparas AdomaitisAnalyst Insight by Kasparas Adomaitis - Senior City Analyst

Global trade is increasing. The value of exported goods as a share of global GDP rose from 15% in 1990 to 25% in 2013. As trade keeps growing, it directly boosts the economic development of the cities which handle cargo traffic. Indeed, a closer look at 126 of the world’s major metropolitan areas reveals that cities which serve as major seaports experienced faster growth than inland cities. Of these 126 major metropolises, 35 were also among the top 100 container ports and their aggregated real GDP increased by 13% over 2008-2013. In comparison, the GDP of the world’s major inland cities grew by only 8% over the same period, while overall global GDP growth was 11%.

Aggregated Real GDP Growth Of Cities By Type, 2008-2013

Source: Euromonitor International

Note:  The chart displays real GDP growth in 126 world’s major cities. 35 of these 126 cities are world’s major ports (19 in developed countries and 16 in emerging), 36 are coastal cities with no significant port (22 and 14), and the remaining 55 are purely inland cities (20 and 35).

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May 25, 2014

Shopping and Tourism in Asian Cities

UgneSaltenyteAnalyst Insight by Ugne Saltenyte - City Analyst

Tourism is growing worldwide and the Asia Pacific region is no exception. In 2013, international tourists accounted for 1,128 million trips globally, of which 256 million were to Asia Pacific, with the region accounting for an impressive tourism share exceeded only by Western Europe. Shopping plays a major role in determining tourist destinations, making numerous Asia Pacific cities compete for the title of “shopping paradise”.

Attractive Shopping Environment Stimulates International Tourism in Asia Pacific Cities

 

Source: Euromonitor International and the Globe Shopper Index from the Economist Intelligence Unit and Global Blue

 

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May 22, 2014

On-Demand Webinar: Uncovering Business Opportunities in Second-Tier Cities

Second-Tier-Cities-Webinar-Banner

International companies often target the largest metropolises when establishing themselves in external markets. However, doing business in these first-tier cities can prevent growth due to intense competition and diverse populations. 

Second-tier cities can provide unexploited opportunities for generating extra revenue. In fact, many smaller cities are growing more quickly than first-tier cities, both in production and consumption.

In this webinar, you will learn:

  • Which second-tier cities hold the most opportunities for your business
  • Consumer trends developing in first-tier cities vs. second-tier cities 
  • How wealth is distributed

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May 21, 2014

The Opportunities and Challenges of China’s Urbanisation Plan

Urbanisation continues to be a national priority in China following the government’s release of an urbanization plan. The government hopes to rebalance the Chinese economy by having 60 percent of China’s population in urban areas by 2020. The plan will lead to improved urban infrastructure, more public services and heavy investment in construction. However, urbanisation can cause problems as well and in China’s case, pollution is the main concern.

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May 18, 2014

Exploring Emerging Cities Beyond BRIC

Cities Beyond BRIC

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BRIC cities are often cited for their market growth potential. Yet, there are relatively few large emerging metropolises outside BRIC that can compare to Moscow, Sao Paulo, Shanghai and Mumbai. In 2013, only Mexico City, Istanbul, Bangkok, Buenos Aires, Santiago, Bogota, Kuala Lumpur and Lima boasted large enough consumer markets with sufficient household income level and proportion of middle-income households (those with income over US$10,000) to compete with aforementioned BRIC megacities.

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May 10, 2014

Urban Corridors to Boost Growth of Second-Tier Cities in India

Kasparas AdomaitisAnalyst Insight by Kasparas Adomaitis - Senior City Analyst

As the world’s megacities are approaching physical limits of growth, large decentralised urban conurbations are emerging across the globe as drivers of urbanisation and backbones of economic growth. For example, in Japan, the Tokyo-Nagoya-Osaka urban corridor is home to some 60 million people and forms the backbone of the country’s economic activities. In the US, Boston-New York-Washington on the northeastern coast is a key agglomeration of 50 million people, with a disproportionately large share of economic output. In China, three such great megalopolises (Bohai Economic Rim, Pearl River Delta, Yangtze River Delta) account for 14% of the country’s population and 36% of GDP. In 2014, India has also recognised the potential of urban corridors and has launched specific initiatives to develop several of them to boost economic growth and the expansion of surrounding second-tier cities.

World's Major Urban Corridors

Worlds urban corridors v5.jpg

Source: Euromonitor International

Note: Urbanised territories are derived from 2002-2003 MODIS satellite data at 1 km resolution, Schneider, A., M. A. Friedl, D. K. McIver, and C. E. Woodcock (2003) Mapping urban areas by fusing multiple sources of coarse resolution remotely sensed data. Photogrammetric Engineering and Remote Sensing, volume 69, pages 1377-1386.

Continue reading "Urban Corridors to Boost Growth of Second-Tier Cities in India" »

April 14, 2014

Chinese Cities Lead the Way in Average Household Spending Growth

Ugne

With Ugne Saltenyte - City Analyst

Six out of the top ten leading cities for household spending growth in 2014 are located in China. The country's rising income levels are creating ideal conditions for spending increase, and businesses in these cities are likely to find growing opportunities for sales in sectors such as communication, education and health goods and services. The top 10 growth cities for household spending will see their average spend expand by 5 to 10 percent in 2014, compared to a worldwide expansion of just 1.2 percent.

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Recent Posts

Cities are Driving Employment Growth Worldwide

Combatting Income Inequality in the World’s most Unequal Cities

Forecasting Expansion of High Income Households

World's Major Port Cities Are Growing Faster Than Inland Cities

Shopping and Tourism in Asian Cities

On-Demand Webinar: Uncovering Business Opportunities in Second-Tier Cities

The Opportunities and Challenges of China’s Urbanisation Plan

Exploring Emerging Cities Beyond BRIC

Urban Corridors to Boost Growth of Second-Tier Cities in India

Chinese Cities Lead the Way in Average Household Spending Growth