CITIES OF THE FUTURE | ONE | JULY 2023

Future Cities: Winners & Losers

Innovating to survive the test of time

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SEGMENTING CITY TYPES AND POTENTIAL BARRIERS TO EVOLUTION

To show the contrast of how different cities tend to react to challenges, the report segments cities into three categories and assesses how each may implement innovative solutions.

1. Mature cities These are cities in developed markets, such as Amsterdam, Chicago and Singapore, which are well-established and have signiﬁcant budgets to invest in urban development.

2. Upwardly mobile cities These are cities in lower-income countries but with fast-growing populations, such as Cairo, Jakarta and Kigali.

3. Innovation frontrunners These are wealthy cities that will expand on the back of rapid economic growth; we highlight new cities being built in Saudi Arabia, Panama City and Sydney.

SECTION ONE

SEVERITY AND NATURE OF CHALLENGES VARY WIDELY FROM CITY TO CITY

Taking these three categories, the report assesses the severity of each of the challenges highlighted in the introduction for each city type. Unsurprisingly, the “upwardly mobile” group of cities with lower-income but rapidly growing populations are likely to be tested most severely.

Take infrastructure, as an example. The demands will be most pressing on those cities with the fastest population growth, a city like Lagos whose population is projected by the UN to increase by over 40% between 2025 and 2035, adding 10 million residents. This is the equivalent of moving the population of Jakarta to Lagos in a single decade.

Note: All scores are out of 5 with 5 meaning very severe and 1 not severe at all. Economic growth and jobs - Unemployment, % of labour force, ave 2023-2032 (BMI); Demands on infrastructure - Population, % change 2025-2035 (UN); Quality of life - Life Satisfaction (World Bank); Social cohesion - Long-Term Political Risk Index, Characteristics of Society (BMI); External shocks - World Risk Report (Bündnis Entwicklung Hilft) and Long-Term Economic Risk Index, External Factors (BMI); Environmental sustainability - Environmental Performance Index (Yale)

Conversely, the typical slower rise of population in more mature cities means that the challenge of providing an adequate infrastructure to serve residents is less severe. Population growth in cities across North America, the EU and Japan will be much slower, with on average an increase of just 8.5% in the same period. The UN forecasts the population of Tokyo will decline by approximately 3% by 2035.

It is not just the severity of the challenge that will change depending on the type of city, but also the nature of the challenge. Economic growth will be a challenge for both Cairo and Amsterdam, but they will be very different in style. At a time when Cairo’s population is set to surge to 28.5 million from 7.6 million between 2025 and 2035, the city will need to create sufficient jobs to absorb the sizeable increase in the youth population. Providing jobs for them will require attracting investment, developing local industries (e.g. retail, tourism, manufacturing) and improving public services.

Rather than dealing with a surging population, Amsterdam will need to attract new workers. Like most large cities in the EU, Amsterdam will grapple with a population decline and an ageing demographic profile. The city will need to attract high-skilled tech workers in the technology, professional services and creative industries, but will also need to fill lower-skilled service jobs in the hospitality, health and retail sectors.

Global - Population change of urban areas 2025-2035 Average change by income level (%)

POTENTIAL FOR INNOVATION DIFFERS FROM CITY TO CITY

The pace of innovation in cities will often be driven by supply factors rather than demand. Each city grouping will have a different potential to develop, adopt and implement innovative solutions, impacted by factors including affordability, legacy infrastructure or the levels of digital literacy of local residents and businesses.

This report evaluates the innovation adoption potential of various cities by segment. As digital solutions are an increasingly important pillar of city planning, the table below assesses the implementation and adoption potential of smart city solutions across a variety of cities from the three groupings.

Note: All scores are out of 5 with 5 meaning very high potential and 1 very low potential. Per capita income - Per capita income, 2022 (World Bank); Economic growth - Real GDP growth, 2023-2032 (BMI); Digital adoption - Smart Cities Index (IMD); 4G coverage - (4G penetration (UN); Innovation - Global Innovation Index (WIPO); Youth population - Median age (UN)

In general, higher-income cities such as Singapore, London and Chicago score well for digital capabilities. High levels of broadband, 4G and smartphone penetration ensure this. But the narrative is more complex, with many lower-income cities also scoring well for metrics such as 4G penetration (Jakarta) and Innovation (Delhi). With young residents ever more likely to drive innovation and adopt new smart solutions, those cities with significant youth populations, such as Lagos, Kigali, Delhi and Cairo, all score highly for innovation adoption.

We will assess the Rwandan government’s focus on promoting its capital city as a centre of technology and innovation later in the report. Indeed, as highlighted by the example of Chicago later in the report, cities in the “mature” grouping also need to address issues around innovation and inclusion by improving the equality of digital literacy.

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DIFFERENT APPROACHES TO INNOVATION

While all cities face the six broad challenges highlighted in this report, they will prioritise these challenges differently, largely based on their most pressing needs. The following table highlights some of the solutions different cities from our groupings are implementing, as evidenced by the case studies we reference in the report.

Broadly speaking, more mature cities such as Amsterdam, Singapore and Sydney will focus on solutions around social cohesion and quality of life for residents, seeking to attract workers and reduce inequalities. The cities termed as upwardly mobile are more likely to be dealing with infrastructure buckling under the strain of strong population growth, high levels of youth unemployment and issues such as sanitation and waste management.

Across all our city groupings, authorities will need to tackle a variety of similar issues, all nuanced by different priorities and framed by different starting points; this report highlights throughout that there is a wide range of solutions to meet these challenges.