The Cities
Shaping The Future

The global economy is undergoing the biggest transformation in a generation. Geopolitical tensions, protectionist pressures, and a wave of industrial policies are prompting corporations to rethink where they produce and market their goods and services to make their businesses more resilient. At the same time, demographic shifts are fueling the emergence of new centers of production and consumer demand.

Together, these forces are creating new drivers of growth and innovation, shifting the global economy’s center of gravity away from the North American and European markets that powered the 20th century.

This is happening most dramatically and visibly in the fast-growing cities of Asia, Africa, Latin America, and the Middle East. These four regions account for 45% of global gross domestic product (GDP) and 85% of the world’s population. They also are centers of urbanization, home to more than 1,500 cities with populations greater than 250,000 — more than three times the number of similar-sized cities in Europe and the United States combined.

During the next 20 years, these four regions will account for 95% of the increase in the global urban population, with 1.4 billion new city dwellers by 2045. In a decade’s time, these regions will account for 28 of the world’s 30 largest urban agglomerations, with Delhi, Dhaka, Shanghai, Kinshasa, Cairo, Mumbai, Beijing, Mexico City, and São Paulo, among others, boasting populations of between 25 and 40 million people.

The story isn’t just about megacities

Emerging markets have been increasingly influential drivers of economic and demographic growth for many years. What’s new today is the maturation of many of these markets and the sheer scale and breadth of the opportunity, which extends well beyond the emerging world’s megacities. Cities ranging from the very large to medium sized will play an important role in this tectonic shift.

This new landscape presents an enormous opportunity for corporations looking to secure their supply chains against rising protectionism and geopolitical tensions, grow their customer bases, or find new talent.

Consider the trajectory of Ho Chi Minh City. Thirty-five years ago, the Vietnamese commercial capital was an economic backwater, with a GDP per capita of a few hundred dollars and people living and working mainly in low-slung buildings. But a combination of economic reforms, free-trade agreements, and the relocation of production from an increasingly high-cost China starting in the late 2000s kickstarted the city’s export engine.

These changes have accelerated in the last five years as geopolitical tensions triggered historic shifts in global supply chains. Major multinationals like Adidas, Samsung, and H&M now source from the country. New skyscrapers tower over the city, including the imposing Landmark 81. Glitzy shopping malls are populated by luxury brands. Flights arrive daily from around the world, bringing investors and tourists.

Ho Chi Minh City’s success is being replicated in other cities benefiting from “China plus one” or nearshoring strategies, from Asian metropolises like Bangalore and Chon Buri to farther flung cities such as Monterrey and Tangier.

Dozens of cities have evolved into major commercial hubs in their own right. Hangzhou has become the center of choice for China’s world- leading technology firms and startups, research institutes, top-ranked universities, and five-star hotels. Multinationals use Mexico City both as a regional headquarters and as a global hub for design, finance, and technology talent, taking advantage of the city’s skilled workforce and North American time zone.

These large regional powerhouses are increasingly driving growth in medium-sized cities in the same country. Greater Jakarta’s commercial success has benefited neighboring cities such as Bandung, with the recent completion of a high-speed rail link strengthening commercial ties. Greater Ho Chi Minh City’s industrial parks increasingly blend into those of the neighboring cities of Bien Hoa and Thu Dau Mot.

Then there are cities that capitalize on their strategic location to serve as regional hubs of activity and distribution. Dubai designed its growth strategy as a convenient bridge between Europe and Asia and points beyond; its international airport is now the world’s second largest, serving 87 million passengers in 2023. Nairobi’s airport, meanwhile, plays a vital role in Kenya’s agro-industrial strategy. It ships $660 million worth of cut flowers annually to buyers from Brussels to Beijing.

Some of these fast-growing cities face challenges as well as opportunities, particularly from the impact of climate change. Worsening floods have hit low-income communities in Lagos, for instance, while water shortages are posing a threat to continued growth in Bangalore, the center of India’s high-tech industry, and driving fresh investment in water recycling. Elsewhere, civil conflict has disrupted Addis Ababa’s rapidly growing textile manufacturing sector, and extreme heat creates challenges for workers in Dhaka.

How we identify the opportunities

Business leaders need to understand the forces shaping opportunities and risks in these cities as they strategize about ways to expand or adjust their geographic footprint and grow their customer base. Policymakers, meanwhile, can draw lessons from cities that have developed faster than others, and seek to emulate their success.

The challenge for business leaders and policymakers alike is the lack of quality data on these cities. Most G7 countries have detailed survey data to help with decision-making. Not so in many countries in Asia, Africa, Latin America, and the Middle East. Our data model helps to fill that gap and shed light on the attractiveness of over 1,500 cities.

To overcome the challenges of sourcing and analyzing data from a wide range of cities and levels of development — from Beijing to Cairo, Lome, and Monterrey — we use a novel combination of geospatial analytics, machine learning, and alternative data to create rich insights.

For instance, we recognize that Greater Manila’s international airport and its busy air cargo facilities benefit manufacturers in neighboring cities, not just in the capital itself, so we use spatial analysis to extend our evaluation.

Or consider Istanbul’s retail sector. It’s evidently large, but there’s limited public sector data to track its true strength, so we enrich our insights with location data on everything from the headquarters of major corporations to luxury brand outlets.