Predicted Growth of World's Cities

McKinsey Global Institute and Foreign Policy (FP) magazine published a list (Link) predicting the next decade's 75 most dynamic cities in terms of absolute dollar increase in GDP.  To make the list of 75, a city had to have at least an absolute increase in GDP of $100.2 billion for the 15-year projection.  This list can be looked at in several ways [When I have time, I hope to add figures to help illustrate]:

1. GDP Growth.  China will witness the largest growth in the world with 15 of the top 30 ranked cities.  Grouping by nation shows that 29 (38.7%) are predicted to be cities in China, 13 (17.3%) U.S., 4 Brazil, 3 India, 2 Australia, 2 Turkey, 2 Saudi Arabia.  South East Asia and other parts of South America will also exhibit several cities of growth.

  In terms of rate of growth (percent increase in GDP), China absolutely dominates the list with 27 of the 30 fastest growing cities (the three non-Chinese cities being Bangalore #18, Delhi #23, and Luanda #27).  Perhaps cities do not paint the complete picture, as the IMF, The Economist, and Economy Watch all point out the rapid pace of growth by emerging economies, particularly by African nations.  Luanda, Angola is the sole African city to make the FP list.  In fact for the last decade, Angola as a nation beat even China in GDP growth percentage (China's average annual GDP grew at 10.5%, whereas Angola grew at a pace of 11.1%).  The Economist forecasts that seven African nations will rank in the top ten positions for annual GDP growth % over the next few years:  Ethiopia, Mozambique, Tanzania, Congo, Ghana, Zambia, Nigeria.  China, India, and Vietnam complete the list.

2. Absolute GDP.  New York City and Tokyo will retain the top two spots in absolute GDP.  Underlined are the cities that drop off from or join the top ten.
The top 10 earning cities of 2010: Tokyo, New York, Paris, London, Los Angeles, Chicago, Rhine-Ruhr, São Paulo, Washington, Houston.
The predicted top 10 earning cities of 2025: Tokyo, New York, Shanghai, Los Angeles, Beijing, London, Paris, São Paulo, Moscow, Chicago.

Consistent with China's rise, the Economist predicts that China's overall GDP will match and then overtake that of the U.S. some time between 2018 and 2021.

3. Population. Tokyo and Shanghai would retain the top two spots in absolute population with over 30 million expected each.  This is followed by five cities that will or already do exceed 20 million people: Beijing, São Paulo, Mumbai, Mexico City, and Delhi.  Beijing is expected to add nearly 11 million to their population in the 15 years between 2015 and 2025.  In this same period, Rhine-Ruhr, Germany and Seoul, South Korea are expected to decrease in population by 200,000 and 300,000 people, respectively.

  As this list was created by GDP growth rank, not all large cities made the cut.  Cross-referencing this economic list with the 75 most populous cities (List as of 7-1-2012) provides an off-the-cuff set of locations potentially at-risk for stagnation and the problems associated with urbanization (homelessness, traffic, pollution, limited access to medical/ economic/ educational opportunities and resources).  The cross reference shows that all 12 of China's current most populous cities will experience significant economic growth.  There is also significant overlap for the 12 largest U.S. cities, except for Detroit and Boston which are not predicted to grow as much.  India has nine of the world's 75 most populous cities.  Three made the FP list:  Bangalore, Mumbai, and Delhi. These cities represent 3.5% of the India's population and may find themselves buoying much of the nation's economy for the next decade or exhibiting further economic disparities.  Still India's populous neighbors of Bangladesh and Pakistan had no cities that make the FP list.  Tokyo is the only large Japanese city predicted to have significant growth; nonetheless the situation is quite different from India.  Tokyo represents 28.4% of Japan's entire population with population growth slowing to less than 1%.  This suggests that Tokyo already underpins much of Japan's economy and will probably continue to do so for the next decade.  The concern for Japan is how long can this continue with its aging population.

4. Purchasing Power Parity (PPP = GDP per capita).  As a measure of standard of living, the PPP is predicted to remain highest, in order, for Doha, Abu Dhabi, San Francisco, Washington, and New York.  Paris however will drop from the top five to number nine while Kuwait City enters the top five.  The U.S. will continue to have some of the highest standards of living maintaining 13 of the top 30 rankings for PPP.  China will not rank until Hong Kong at #27, which is not much different from its #26 position in 2010.  China then has a block of ranking cities starting with Tianjin #31 in 2025 as compared to a block of cities start with Dalian #41 in 2010.  This shows that apart from Hong Kong, there would be a general rise in PPP rankings for the listed Chinese cities in the next decade.  In contrast, India's three ranking growth cities would remain in the bottom for PPP for these 75 cities.


In summary, the U.S. as a whole remains an economic bastion with expectations for continued growth and high living standards, but the story for the next decade appears to belong to emerging/newly industrialized economies, particularly China which will see simultaneous growth in population and economy, an economy poised to rapidly surpass that of the U.S.

World Gone Nuclear

India
President Bush and Congress have given India a huge vote of trust in the U.S.-India Civilian Nuclear Cooperation Agreement which provides for trade of nuclear fuel and supplies. This has won over India as a longstanding ally but may threaten to destabilize the relationship India has with Pakistan, given their own arms race in recent history. India has not signed the Nuclear Non-Proliferation Treaty and though the Bush-Singh trade accord provides for nuclear energy it allows India to progress as "nuclear weapons state" without strings attached.

The accord seems to have wide support from India's left and right. Economically, both countries will benefit as India gains energy supply and U.S. receives needed funding. Strategically, the U.S. may have gained a partner in Asia with regards to Iran but also potentially regarding China.

Iran
Iran continues to scorn international overtures to cease its nuclear enrichment. According to Wall Street Journal it will have enough "low-enriched uranium necessary to produce enough weapons-grade uranium for a bomb by mid-January" despite offers for "membership in the World Trade Organization to Western billions and backing for its energy sector, including civilian nuclear reactors. The mullahs mock those entreaties." Most pitiful is how the U.N. Security Council adopted a resolution calling Iran to abide by its previous three resolutions to stop enrichment. What evidence shows that a 3rd repetition would help? In turn Iran has threatened to limit the International Atomic Energy Agency (IAEA) access to known nuclear sites.

It highly unlikely the U.S. would take military action; however this does not stop Israel from striking especially with past threats to destroy of Israel coming from Iranian President Mahmoud Ahmadinejad.

North Korea
The Hermit State with the last standing Stalinist cult of personality, has turned back on its aid-for-disarmament deal and proceeded to rebuild its Yongbyon plutonium processing plant. The IAEA has completed North Korea's orders to remove surveillance camera and seals and no longer has access to the facility.

Addendum
North Korea agreed to stop rebuilding now that the United States has removed it from the terrorist list.