The Business of Cities 2013 What do 150 city indexes and benchmarking studies tell us about the urban world in 2013? Authors: Tim Moonen, Greg Clark Editor: Rosemary Feenan November 2013 City Index es 2013 Contents 1. City Indexes, Benchmarks and Rankings in 2013 3 2. Global leaders: Consolidation of the ‘Big Six’ 18 3. Continental Systems of Cities and Dynamics in 2013 22 4. Emerging World Cities: A New Paradigm? 31 5. The Race for Investment in Cities 34 6. The Future of Cities: From Smartness to Resilience and Flexibility 37 7. Self-Government and the Fiscal Capacity of Cities. 39 8. Indexes: 10 Cities to Watch 41 9. Full Review 44 1 Comprehensive Studies 44 2 Finance, Investment and Business Environment Indexes 57 3 Macroeconomic Performance Indexes 91 4 Quality of Life Indexes 104 5 Knowledge Economy, Human Capital and Technology Indexes 136 6 Infrastructure and Real Estate Indexes 157 7 Environment and Sustainability Indexes 177 8 Image, Brand and Destination Power Indexes 194 9 Culture and Diversity Indexes 207 10 Cost of Living and Affordability Indexes 215 COPYRIGHT © JONES LANG LASALLE IP, INC. 1 © Greg Clark & The Business of Cities 2013. All Rights Reserved City Index es 2013 Foreword The urban world is in full swing. The number of people living in cities is increasing by more than the population of the UK, Colombia or South Africa each year, and the present and future performance of cities has never been more important. Cities are now the major sites where challenges around the new economy, sustainability and resilience, equality, infrastructure, leisure and culture are all played out. Five years on from the Global Financial Crisis, the focus is on how cities are navigating new paths towards sustainable growth. The measurement of city performance is one of the critical ways in which we can assess the complexity of urban change, and judge which approaches are successful or not. This report, prepared by Greg Clark and Tim Moonen, makes a valuable contribution in assembling the widest possible collection of global city indexes, benchmarks and comparative rankings. This 2013 edition has been expanded in scope to encompass over 150 indexes, which together offer a comprehensive bird’s-eye view of the state of city watching worldwide. Cities are inevitably responding differently to the demand for new approaches to internationalisation. Some have moved faster than others, whether in terms of trade links, investment sources, sustainability or integrating urban systems. The benchmarks, reports and indexes presented here provide a unique resource for governments, business leaders and investors to learn about city strengths and weaknesses, and assess the progress of new agendas in a fast-moving global economy. Rosemary Feenan, Jones Lang LaSalle COPYRIGHT © JONES LANG LASALLE IP, INC. 2 © Greg Clark & The Business of Cities 2013. All Rights Reserved City Index es 2013 1. City Indexes, Benchmarks and Rankings in 2013 The measurement of city performance is one of the critical ways in which we can assess the complexity of urban change and judge which approaches to managing that change are successful or not. This report assembles the widest possible collection of global city indexes, benchmarks and comparative rankings. These valuable studies are produced by multi-governmental institutions, business consultancies, research foundations and media outlets at national, regional and global levels. They are one of the most important means of tracking city trends, economic and investment patterns, and the effects of political or regulatory adjustment. They also help to crystallise the ingredients of city success over much longer time frames - five or even 10 business cycles. New indexes are spread across the full breadth of the city performance spectrum. Many offer new insights into the power of cities’ brands and their capacity to attract or build investment, two areas of renewed priority for purposeful city leaders. Alongside and complementary to this ever-expanding cluster of benchmarks is an important body of new research covering urban strategy and the models of future urban development. The United Nations, European Union, World Bank and the UK’s Department for International Development, as well as private firms, including the McKinsey Global Institute and PricewaterhouseCoopers, and research specialists, such as the Brookings Institution, have all produced welcome additions to our understanding of the future landscape of cities. Their insights are also introduced in this report. Cities are inevitably coping differently with the accelerated pace of change and the demand for new strategies and approaches to internationalisation. Some are performing better than others, either as engines of trade and innovation, or as exemplars of climate change mitigation and social inequality management. The array of benchmarks, reports and indexes presented here provides particularly useful tools for city governments, business leaders and investors. They offer both opportunities to learn about strengths and deficiencies not previously articulated, and the data to help inform governments or citizens about new agendas. The utility of indexes for stakeholders concerned with urban performance is summarised in Figure 1. Figure 1. Role of city indexes and benchmarks Pedagogy Comparative Leverage and pegging persuasion Urban Diagnostic performance management Home truths assessment through indexes COPYRIGHT © JONES LANG LASALLE IP, INC. 2013. All Rights Reserved 3 © Greg Clark & The Business of Cities 2013. All Rights Reserved City Index es 2013 The range of research mined by these indexes, both quantitative and perception-based, represents one of the most useful ways to track, measure and inform about urban change and competitiveness. There remains, of course, scope for error and distortion in the indexes’ results. Potential problems include data quality, geographic bias, boundary coverage, originality and up-to-date information (Figure 2). These factors must be taken into consideration by any reader, and moderate the findings and conclusions made in this paper. Figure 2. Pitfalls in city indexes and benchmarks Accuracy of data Provenance and Quality of data target audience source Potential Independence of limitations Comparability assessment of indexes of data Over-reliance on perception of performance Geographical scale Many of the best and most established benchmarks are produced by major corporations - consultancies, banks, professional services firms - all with industry expertise and global coverage. They now often combine their resources with public and private research institutions, in order to blend rigour with accessibility. Since 2011 we have also seen the rise of indexes deployed and circulated as marketing and communication tools, sometimes at a cost to data reliability. For those interested in the science of urban performance, the challenge is to use these new data sources as a gauge of citizen and business sentiment and perception, and as indicators of more fundamental processes taking place at the city level – governance, openness, strategy, vision and investor friendliness. Commercial bodies will continue to be the drivers behind much of the comparative information about world cities. Where the rigour and science is open to question, the factors behind competitiveness and success can still be found for those who interpret carefully. The caveats of city indexes are, of course, cautionary, and when understood in context, the potential pitfalls can be safely navigated. In the process of assembling an unprecedented number of urban benchmarks in one document, we also explored the combined implications of the results of every study. In the sections below, we examine what these benchmarks reveal about city performance and perception since 2011. Where relevant and appropriate, we have integrated indices of overlapping theme and amalgamated them in order to obtain an aggregate position in given dimensions, such as quality of life and sustainability. These overall rankings are usually used for indicative purposes, and do not represent definitive analysis, not least because of the challenges of data comparability. The 2011 Business of Cities report: A refresher The 2011 report was published just after the worst of the recession for advanced urban economies. New York had recovered faster than London and had caught up the British capital in measures of financial services provision and business connectivity, and maintained its lead as the global talent capital. The Anglo-American pair COPYRIGHT © JONES LANG LASALLE IP, INC. 2013. All Rights Reserved 4 © Greg Clark & The Business of Cities 2013. All Rights Reserved City Index es 2013 had, slightly unexpectedly, retained a firm grip as the most important nodes in the global economy. Paris and Tokyo performed noticeably well in terms of sustainability, rail transport and R&D bases, but their commercial openness deficits saw them consistently placed well behind the LON-NY axis. 2011 saw Asian cities other than Tokyo arrive in the global top 20 for the first time. Shanghai stood out for FDI and real estate growth, and was routinely identified as a first-rate global business leader of the near future. But the gap between Asian frontrunners and strugglers became more apparent as large South-East Asian capitals straining with infrastructure deficits showed very little headway in global assessments, despite increased visitor traffic. Instead, some of the biggest advances were found in more advanced Eastern