The idea of cities serving as the dynamos of the world’s economy for the past few decades has long been an established fact. However, their rapid growth of expansion has even become unparalleled nowadays. It is estimated that by the year 2025, developing cities can contribute as much as $30 trillion annually to the world’s economy through combining physical capital investments and consumptions. To appeal to the urban consumers and to get ready for the various challenges which may arise due to the rapid growth of the demands for essential natural resources like energy and water as well as for funds to venture in different establishments such as housing and office buildings, it is crucial to understand these emerging cities and their respective ever-changing demographics.
According to the McKinsey Global Institute in their quarterly report entitled “Urban world: Cities and the rise of the consuming class”, by the year 2025, the 600 developing cities (City 600) responsible for a huge portion of the increase in global GDP will make up about 65 percent of the world’s economic development. Unfortunately however, only 440 of the 600 boast of emerging economies and these particular cities (Emerging 440) will contribute nearly half of the total growth.
Moreover, the report also presented that by the year 2025, about a billion people will become a part of the world consuming class. These people will be earning considerably enough to be classified as valuable consumers of services and goods and about 600 million of their population will be in cities that are part of the world’s Emerging 440.
To address the needs brought about by urbanization, it will be very essential for industries have an extensive intelligence about the market. Many middleweight cities that belong to the Emerging 440 are not as popular worldwide as they are in their own respective nations.
The trends on demographics and income vary extensively across countries and across cities. Moreover, demands for various product consumption and service begin to grow at diverse levels of income. Equipped with in depth information regarding related urban markets, firms must distribute their resources aggressively and proactively to bag numerous opportunities. Companies with utter and complete understanding and are able to respond to changing urban markets have higher chances of reaping great benefits. However, another survey conducted by McKinsey showed that not more than 20 percent of the population of executives decides to set up businesses at city level.
Policy makers are faced with a different collection of challenges. The goal in the emerging world is to be able to bring about development that creates a basis for sustaining the performance of the economy but at the same time does not allow scaling diseconomies to happen. The goal in the urbanized world however is to be able to sustain a healthy growth rate of higher production, new business ventures and improved relations with various emerging areas.
The center of the world’s economic gravity significantly shifted over time. However, ever since the middle of 1980s, the speed of this particular shift, from the west to the east, has been dramatically increasing. As this trend is expected to carry on, policy makers and executives must be adequately ready to cater it.