Big Cities Have Powered Economic Growth This Century

Big Cities Have Powered Economic Growth This Century

about 1 year ago2 mins

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Data out on Thursday showed that a handful of big cities drove half of twenty-first-century global economic growth.

What does this mean?

Cities are hectic, expensive places, but if there’s one thing they’re good for, it’s driving economic growth. That’s hard to remember when you’re spending hand over fist for a dingy shoebox apartment, but pooling so much talent and cash in one place does make trade much more efficient. In fact, the most successful areas in poorer countries are a lot closer to their counterparts in advanced economies than they are to their neighbors. Case in point: Portugal’s five times richer than India – but your average resident of Mapusa, western India had a similar economic output to the typical inhabitant of Porto, Portugal in 2019. All in all, the research showed that over half of global economic growth in the first two decades of this millennium was driven by regions that make up less than 1% of the world's landmass.

Regional inequality

Why should I care?

The bigger picture: Urban decay.

Cities’ heyday might be drawing to a close. After all, remote and hybrid work took off when Covid hit – meaning workers can now clock in from exotic locales like the beach, Alpine log cabins, or makeshift “home offices” subject to frequent raids by impatient children. And with wallet-emptying inflation adding to the appeal of cheaper, quainter areas, more and more workers could take the road leading out of the metropolis – meaning the economic weight of big cities might not be so outsized in the future.

World economic growth

Zooming out: Prepare for change.

Forget the next 20 years: this week Goldman Sachs’s analysts looked into its crystal ball and identified the key themes that’ll be steering the economy until 2075. The takeaway’s that a whole lot’s going to change. Picture this: the US slips from prominence, population levels ease up and slow growth, and emerging markets take center stage. Grab the popcorn.

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