There is a change in the air. Economic drivers having shifted from agrarian to information- based, political center is shifting from West to East, more people have shifted to live in cities than in rural areas. Cities and their surroundings areas have become the real economic engines in our time. Cities and their surrounding metro regions are accumulating innovative, ambitious, talented people with assets and propelling innovative, growing enterprises towards long term prosperity. American cities account for 85% U.S jobs and 90% of U.S economic output. The metros, across the globe with population over one million account for more than 50% of the world’s total output, 90% of innovations while only 20% of the housing.
There are many measures that rank world cities according to their financial powers. One of such measure is Global Economic Power Index, prepared by Richard Florida, Director of the Martin Prosperity Institute at the University of Toronto’s Rotman School of Management. This index has placed Tokyo on the top place. A summary of the detailed report on largest financial centres is given in the following table:
|Rank||Name of the City||Economic Output||Global Economic Power Score||Financial Center Score||Innovation Rank|
|2||New York||$1.1 trillion||984||770||4|
|7||Hong Kong||$211 billion||846||760||9|
|Washington, DC||$218 billion||813||621||2|
|9&10 TIE||Seoul||$299 billion||813||649||10|
The Global Economic Power Index reflects three dimensions of economic power—economic, financial and innovative and Economic Power is measured by gross regional product or economic output. Second dimension, Financial Power is calculated on the Global Financial Centers Index based on the performances on the banking and financial power of cities across the world. Last dimension in the analysis is Innovative Power and it is based on the innovative activities.
There is another study “2012 Global Cities Index (GCI)“, performed by the joint work of A.T. Kearney and The Chicago Council on Global Affairs with the support of a panel of academic and corporate executive advisors., In addition to classifying existing global influence of 66 cities, they expanded their study further by developing an Emerging Cities Outlook (ECO) for projecting emerging market cities that may become rival to the established global leaders for dominance. From their analysis of key trends on the “Emerging Cities Outlook” it appears that, in today’s integrated economy, emerging cities have an unprecedented opportunity to rise in power and influence. Beijing and Shanghai may become significant rivals of today’s leading cities like New York, London, Paris, and Tokyo in the next 10 to 20 years.
The GCI or Global Cities Index, based on five dimensions, was first released in 2008 and then again on 2010 for second time. The dimensions used by the study group were, Business Activity (30%), Human Capital (30%), Information Exchange (15%), Cultural Experience (15%) and Political Engagement (10%). Thus, GCI ranking seems to be more comprehensive measurement in comparison to other ranking measurement because other rankings usually focus mainly on business activities.
Analyzing the recent study and comparing it to the earlier study, it offers the following insights:
|Name of the City||Rank in 2012||Rank in 2010||Rank in 2008||Global City Index (Value Calculated on a 0 to 10 scale|
Methodology used in 2012 Global Cities Index (GCI):
- Business activity (30% weighting) is measured by the activities of the headquarters of major global corporations, the value of a city’s capital markets, number of top business services firms in the city, flow of goods through the city’s ports and airport, the number of international conferences held in the city,
- Human capital (30%weighting) measures the city’s ability to attract talents, number of quality universities and international schools, foreign born population living and visiting the city, presence of number of university and post graduate degree holders.
- Information exchange (15% weighting) examines the how well the relevant information is in the air of the city, number of international news bureau, existence of major Television channel, presence of internet and broadband subscriber rate, level of censorship.
- Cultural experience (15% weighting) measures cultural diversity like performing-arts venues number of museums, number of major sporting events hosted, different culinary options, number of foreign travelers, number of sister-city relationships.
- Political engagement (10%) reviews how the city influences international policy dialogue—measured by the number of embassies and consulates, international organizations, major think tanks, number of political conference hosted by the city, local institution with international access.