The Power of Proximity – the Complex Story of 21st Century Cities

For the first time ever, over half of the global population lives in cities, a number expected to reach 60-80% by 2050. While much of the urbanisation of the previous two decades has been in the Asia Pacific region, the next wave of urbanisation is expected to be in Africa and the Middle East.

Euromonitor International’s latest report, The Power of Proximity – the Complex Story of 21st Century Cities, examines the rise of megacities (with over 10 million inhabitants), and characterises mature, rising and emerging cities. Also considered are the relationships between cities and digital technology and culture, as well those between cities and inequality and political instability.

This report highlights the following issues:

  • Whereas cities have been regarded as the powerhouses of the global economy, now they are the global economy. McKinsey estimates that the world’s top 600 cities account for half of global GDP and accommodate 1.5 billion people;
  • In 1950 New York was the only urban area with a population of more than 10 million; by 1985 there were nine and by 2011 there were 24 megacities;
  • The rise in urban dwellers also reflects the shift of economic power from West to East. China’s economy is now second only to the US and is forecast to outpace the US in the 2020s;
  • There are conflicting views as to whether the key to urbanisation is the megacities or the middle-tier cities. The megacities are the famous cities and appeal to those looking for the stimulus of ideas and culture. The middle-tier cities tend to be more focused on business and industry; they offer opportunities for work but their cultural lives are typically less rich;


Population of the World’s Megacities 2010 Population (million)Growth 2009-2010 (%)Euromonitor city populations
Greater Tokyo
Delhi  23.94.612.6
Mumbai 23.32.914.2
Mexico City
New York City
Sao Paulo 20.81.411.4
Los Angeles
Buenos Aires
Dhaka 14.04.1
Istanbul 13.02.811.2
Rio de Janeiro

Note: A megacity is a metropolitan area (urban agglomeration) with a total population in excess of 10 million people

  • The rise of the city is the story of the rising middle class. Cities have always attracted rich and poor who live in close proximity. But the current burst of urbanisation has been driven by the increasing numbers of middle-class people with the purchasing power to become valued consumers. There are varying definitions of middle class – this strategy briefing looks at three different levels of middle-class consumer. The first is the emerging middle class – those living on US$2-12 a day. US$2 a day is the internationally defined poverty level and US$12 is the US poverty level. The second group is the rising middle class, those earning between US$13-50 a day and able to make daily choices about the goods they buy. The third group is the “mature middle class” – those earning between US$50-150 a day and concentrated in the mature economies of the US, Western Europe and Japan;
  • There is no single story of urbanisation. There are common factors, but the story of cities reflects their history as well as their present and future. Mature cities are affluent and valuable markets but many face challenges in adapting to future demands. With ageing populations many will have to adapt to low levels of growth and spending;
  • Those living in the rising cities are expected to see economic growth and for the benefits of this to become more available to its middle classes. Consumption is rising alongside home ownership and durables penetration. These are the rapidly growing markets of next decades; their better-educated and affluent workers will be the global power consumers. Rising access to financial services and willingness to consider credit will accelerate their spending potential;
  • The emerging cities are among the fastest growing and vibrant but many struggle to keep pace with the population growth. Their economies are weaker than the rising cities and in many cases the infrastructure is failing to keep pace with growth. Mortality rates are high and disease remains an issue. There is an emerging middle class and they are keen to consume but their economic power is weak when compared to mature and rising city dwellers;
  • Cities experience high levels of inequality and this is often most visible in the rising and emerging cities where the rich live in close proximity to the shanty towns and favelas of the poor. However, while inequality will continue, city dwellers are richer than those living in the countryside and have greater access to improved sanitation, health and educational resources. The growing importance of digital connectivity is also much better in cities, further spurring the gap between the urban and rural poor;
  • Urbanisation affects demographic structures. As people move to the cities, age at marriage and parenthood increases and family size falls. This leads to smaller households and in mature cities the numbers of single households continues to increase. And in mature cities there are concerns about resilience and the risk of a crisis of care as increasing numbers of elderly people live alone;
  • The rapid rise of cities can lead to political instability. The recent uprisings in North Africa and the Middle East have been driven by high levels of youth unemployment and rising inflation and a desire for greater economic opportunities. Social media have played a role in raising awareness and confidence among those seeking greater social and economic freedom;
  • Cities become crucibles for dreams of success; those who move to the city (whether in the country of their citizenship or in a new country) do so in the hope of improving their life chances. But there may be a gap between hope and reality. Life in the city is more stressful and image more important. There are greater freedoms – but this can isolate as well as liberate. Social connectivity and stable relationships are indicators of happiness and these are challenged in cities. Some respond to these challenges by placing emphasis on home and see it either as a fortress to be defended or a cocoon into which to retreat;
  • Time pressures rise in the city and people are prepared to spend money to save time. The looser social ties together with increased density means that status becomes more important – one has to judge people on how they look, it is the only indicator. But this means that more (time and money) needs to be spent on personal appearance and maintaining one’s image;
  • Despite higher stress levels health tends to be better in the cities. In many of the rising and emerging cities this is due to improved sanitation and public health. But with affluence and a less physical lifestyle comes a rise in obesity levels. The World Health Organization regards obesity as a major health challenge;
  • There appears to be something of a shift away from the suburban sprawl of the late 20th century as the middle classes moved away from the cities. Perhaps with the rising of the Silicon Age, there is a trend of the middle class moving back to city centres;
  • Cities are resource intensive. They need constant and reliable supply of water, of electricity and food. While the concentration of customers makes it easier for businesses to thrive, cities are also vulnerable to supply problems;
  • Digital technology is transforming cities and mobile phones represent one of the most visible aspects;
  • Cities become high spots for business and retail. Retail has become a key element in development. As cities grow both retail and entertainment become booming businesses.

For more information on this report please click here.