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The Global Guru: The World's Top Global Cities Today and Tomorrow

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10/13/2015
The World’s Top Global Cities Today and Tomorrow

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Cities play a central role in the global economy. And their importance is growing by the day.

The leading global cities in the world are the centers of innovation, commerce, media, culture and politics that are the drivers of human progress.

Last year marked the first year that more than half of the world’s population lived in cities. And despite the “death of distance,” which allows knowledgeable workers to work where they wish, six out of 10 of us will be living in cities by the year 2025.

Much like with college rankings, a cottage industry has emerged that slices and dices the data concerning cities and churns out new rankings on a regular basis.

Throwing its hat in the ring again in 2015, consulting firm A.T. Kearney recently released its version of the top global cities.

This year’s edition analyzed 125 cities -- 41 of them new to the list, according to their current performance in the “Global Cities Index” as well as their future outlook in the “Global Cities Outlook.”

The Current List: Top Global Cities Today

Here’s the way global cities stack up today, according to their current performance as measured by the Global Cities Index.

In many ways, the list is pretty much as you’d expect. New York, London, Paris and Tokyo dominate, with three other U.S. cities and three Asian cities rounding out the top 10.

Top Global Cities

A Surprising Outlook: Europe Strong, Asia Weak, BRICs Nowhere

More interesting though is what A.T. Kearney tells us about the future of cities.

Top Global Cities Future

San Francisco ranks first in terms of outlook, thanks to nearby Silicon Valley’s relentless focus on innovation.

London comes in second place, matching its performance on the current list, and is behind San Francisco by only a hairsbreadth.

That’s a remarkable change, actually.

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Two decades ago, the joke among American businessmen was:

“Going to London? Make sure to set your watch back 50 years.”

Today, it’s the Brits who feel that way about the United States upon landing in New York at JFK Airport.

Stodgy old Europe fares surprisingly well, with five cities in the top 10 compared to four in the United States. Looking at the top 25, the United States boasts seven cities, compared to 10 in Europe -- though U.S. cities tend to rank higher.

Asia fares surprisingly poorly in its outlook. Beijing cracks the top 10 on the current list and Shanghai comes in at #21. But Beijing and Shanghai drop off the Outlook list altogether. Hong Kong disappears as well. Among Asian cities, only Seoul cracks the top 10, and Singapore and Melbourne break into the top 25.

No cities from any of the BRIC countries -- Brazil, Russia, India or China -- even crack the top 25 in terms of outlook. That’s quite surprising, especially given the conventional wisdom surrounding “the rise of the rest."

But as one hedge fund manager wryly observed, “Don’t expect the next Google to come out of Brazil.”

Speaking of absences, it is notable that not a single South American or Eastern European city makes the list in terms of future outlook.

Both Buenos Aries and Moscow are in the top 25 today but drop off the Outlook list.

Africa, sadly but unsurprisingly, is nowhere to be found.

Finally, the Gulf States’ showing is also surprisingly weak. Flashy Dubai barely edges into the top 25, representing the only economy from the Arab world.

The Global Elite

Finally, 16 cities make up A.T. Kearney’s “Global Elite.” These are the cities that rank in the top 25 on both the Global Cities Index and the Global Cities Outlook and are deemed likely to exert their global influence by A.T. Kearney.

Top Global Cities Influence

New York City and London are in a league of their own, the only cities in both the top 10 of the Global Cities Index and the Global Cities Outlook.

New York is the leading city in the current Index in two of the five measures, business activity and human capital, and tops six of the 27 metrics used.

London ranks high on the current Index based largely on its strong cultural experience, including sporting events and international travelers

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As obvious as New York’s and London’s dominance among global cities may seem today, it wasn’t always so.

When I graduated college in the 1980s, New York had emerged from bankruptcy less than a decade earlier. The city was better known for its high crime rate than it was for Wall Street.

Nor had London attained its reputation as the most international city on the planet. The British capital was still hiding in the long shadow of World War II. Margaret Thatcher had yet to complete the privatization of British industry. Foreign financial institutions -- responsible for putting London back on the global map -- were only welcomed back in 1986.

Overall, A.T. Kearney’s list challenges conventional wisdom in surprising ways.

For all the dynamism of today’s global economy, today’s top performers will remain the leaders of tomorrow.

And the newly rising capital cities of the developing world must prove their mettle in terms of culture, commerce and innovation.

That’s a change that won’t happen overnight.

In case you missed it, I encourage you to read the e-letter column from last week about the damage done to global markets during Q3. I also invite you to comment in the space provided below my Eagle Daily Investor commentary.

Sincerely,
Nicholas Vardy
Nicholas A. Vardy
Editor, The Global Guru

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