cities of opportunity (1)

Cities of Opportunity

www.pwc.com© 2011 PwC. All rights reserved. “PwC” and “PwC US” refer to PricewaterhouseCoopers LLP, a Delaware limited liability partnership, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. This document is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

www.pfnyc.org

©2011 The Partnership for New York City, Inc. All rights reserved.

Cities of Opportunity 2011 makes its fourth analysis of the trajectory of 26 cities, all capitals of finance, commerce and culture—and through their performance, seeks to open a window on what makes cities function best.

The Upper East Side of Manhattan, with Midtown in the background.

The more cities change, the more forward-looking perspective matters…

Robert Moritz Chairman and Senior Partner PricewaterhouseCoopers LLP

Kenneth I. Chenault Chairman and CEO American Express Co.

Co-chairman Partnership for New York City

Terry J. Lundgren Chairman, President and Chief Executive Officer Macy’s Inc.

Co-chairman Partnership for New York City

Yours truly,

The notion of the city has come a long way. But the heart of what a city is remains the same: people drawn together, today in ever-increasing densities and numbers, to work as a community.

Cities of Opportunity is dedicated to understanding what makes urban dynam-ics work, and communicating what we learn to government officials, policymakers, busi-nesspersons, scholars and citizens mutually invested in the success of their city or cities.

This marks our fourth study. Like cities them-selves, we keep evolving. Cities of Opportunity 2011 includes more cities, greater analysis and

deeper exploration of core issues. This year we compare 26 cities—with San Francisco, Berlin, Madrid, Moscow, Istanbul and Abu Dhabi joining and Houston rejoining. We also look closely at a few of the challenges that are most pressing at the moment—regional management, education, sustainability, density, transportation and preservation.

It is not a coincidence that images of innovative and historic libraries (in Seattle and Stockholm) begin and end the interviews in our study. Nor is the focus on transporta-tion, energy, environment, housing and health that weaves throughout. Both tangible and intangible—physical and intellectual capital—

have to be in balance for modern cities to enjoy healthy growth. Minds spur innova-tion; roads, rails, communications networks, schools and hospitals lay the groundwork on which new ideas can grow. In an ideal world, prosperity follows. But, as we all know, progress toward any ideal requires day-today work. This study represents our part in the effort.

Yes, Cities of Opportunity is changing. But the heart of what we are doing—trying to shed light on what makes major cities healthy—remains the same. All three of us sincerely hope you find value and interest in the study.

Contents

1. About the study

2. City in focus

3. Rem Koolhaas

4. Intellectual capital andinnovation

5. Technology readiness

6. Judith Rodin

7. Transportation andinfrastructure

8. Klaus Baur and Guenther Krug

9. Health, safety and security

10.Sustainability

11.Kerry Zhou

12.Economic clout

13.Mortimer Zuckerman

14.Ease of doing business

15.Cost

16.RenÃ© Gurka

17.Demographics and livability

18.Lifestyle assets

19.Leif Edvinsson

20.Indicator definitions

21.Chart pack

22.The city-suburban conundrum:With all politics local, regionsoften get lost in the sauce

23.The sky above, the streetsbelow: One size does not fit allwhen it comes to cityscapes

24.Better cities, better lives:Planning for sustainabilitytakes the first step towardresults

25.Are we there yet? On the slowlane to congestion management

26.Past perfect? Cities walk a fineline between welcomingprogress and preservinghistoric structures

About the study

Traffic traverses a new diagonal crossing at Oxford Circus, London, inspired by the Shibuya crossing in Tokyo.

6 | Cities of Opportunity | PwC

In terms of overall results this year, New York finishes first with a slim, perhaps ephemeral, lead (see page 12). But the real news lies elsewhere.

Toronto, San Francisco, Stockholm and Sydney round out the top five after New York. These beta cities arguably may not “have it all” if you’re seeking to crown a heavyweight champion among world cities where size, a major capital market and 24/7 buzz do matter. But they just may have what they need for a world that is growing less reliant on geography and more dependent on attracting and nurturing good people to innovate and build the future with fresh eyes.

Interestingly, the cities of Toronto, San Francisco, Stockholm and Sydney all are part of vital regions—a relationship we examine this year.

Notably also, the “alpha” cities like London, Paris, Tokyo and New York are not bunched at the top. These “usual suspects” of broad, Western socioeconomic leadership (with rich recent histories, deep resources and major capital markets) are spread through the top 10 and, in the case of Tokyo, fall to 14th overall.

Taking a step back, there actually are no alpha and beta differentiators among our 26 cities—nor is there any reason to catego-rize cities as one or the other more than to acknowledge differences among histories, opportunities and challenges. As all city

Overview: Looking closer at the alphas, betas and chais of holistic cities

When the first edition of Cities of Opportunity was developed, we made a decision to rank cities only in their 10 indica-tor categories and to forego showing overall rankings to avoid the misperception of a con-test. That risk seemed especially significant in 2007, when the media cast New York and London in a death match for global capital market kingship.

In hindsight, the New York versus London tug of war seems a figment of the about-to-burst bubble, a comparison that deserved headline attention only through the looking glass of irrational exuberance. And a curious reader, then and now, might be expected to ask, quite commonsensically, ‘who does win?’

This fourth edition of Cities of Opportunity for the first time shows an overall ranking. But which city wins is far from our message or motivation. If anything, we honor the admonition of Walt Whitman, a 19th century editor of The Brooklyn Eagle: “Be curious, not judgmental.”

Rome, Amsterdam, Beijing were all once the centers of their worlds. Each remains a great city but at a different stage of evolu-tion. Detroit stood mid-20th century at the epicenter of the US economy, to the point that it was said, “What is good for the nation is good for General Motors and vice versa.” Today, that story has taken a different turn. But even for Detroit, detours don’t doom the city to dead ends.

Partnership for New York City | Cities of Opportunity | 7

dwellers know (at least in quiet moments), the density that packs us on metros, high-ways, markets and streets guarantees that we’re “all in it together.” Sooner or later, cities and their citizens prosper or fail as a piece. What one person or city learns can help another; and our objective is to look at policies and performance to communicate useful insights.

Winners also would be much different if Cities of Opportunity were recast as Cities of Growth or Cities of Fun. As it is, our study defines the ideal differently. Perhaps we’re seeking the chai of cities, to switch from Greek letters to a Hebrew character that signifies life force.

Our measures are designed to favor holistic capital market centers with vibrant economies and strong quality of life. Our thesis is that a successful city going for-ward will balance both social and economic strengths so the people and infrastructure support each other. The challenge of building a city, keeping it on top and evolving with changing needs is the dynamic we’re seeking to illuminate. The measures we use—recon-sidered and significantly recast this year—are selected to develop an accurate reflection of that balanced city and its metamorphosis.

Correlation analyses provide one signal we’re going in the right direction. A parallel exists between good economic indicators and social ones. Among the 10 indicators, five corre-late in a close positive pattern—intellectual capital and innovation; health, safety and security; ease of doing business; technology readiness; and demographics and livability. In other words, when one goes up, the other tends to do so as well. For instance, the indicators that include health and intellectual capital correlate a striking +87%. (See page 16 for a heat map of the 10 indicators and www.pwc.com/cities for a look at all

66 variables, also offering users the interac-tive ability to customize any combination of 10 variables.)

This year in addition to refining our data selection and analysis and presenting inter-views with authorities at the center of urban ideas and action, we discuss several critical urban issues in depth. These include the:

Paradox of measuring and improving education in a world where intellectual capi-tal and innovation increasingly form the brick and mortar of future cities (see page 28).

Regional struggle from Beijing to Berlin to São Paulo and Sydney to effec-tively manage cities in the contexts of their surrounding areas—often places with dif-ferent governments, measures of success, funding sources and economic motivations (see page 36).

Changing popular and real definition of what a cityscape looks like as some cities rise, some spread, some choose to stay low and some combine a bit of each (see page 40).

Progress being made on sustainability as cities from Mexico City to Johannesburg to Shanghai, Abu Dhabi and New York adopt plans to suit their own situations to clean their environments and conserve resources (see page 47).

Costly and maddening toll of traffic congestion and what Singapore, Stockholm and London are doing to solve the problem (see page 68).

Friction playing out between prog-ress and preservation as governments, businesses, developers, architects, historic conservationists and citizens each regard the value of the past and road to the future through slightly different prisms (see page 72).

Interviews add an extraordinary level of insight from people at the center of thought and action. These include con-versations with: Rem Koolhaas, architect, writer and Harvard professor; Judith Rodin, president of the Rockefeller Foundation and formerly the University of Pennsylvania; Mortimer Zuckerman, developer and publisher; Klaus Baur and Guenther Krug, chairman of Bombardier Transportation, and a member of Berlin Parliament and advisor to Bombardier, respectively; Kerry Zhou, director of strategy and planning at Goldwind Technologies, one of China’s leading wind power companies; René Gurka, managing director of Berlin Partner, and Leif Edvinsson, an urban futurologist and pioneer in under-standing the dynamics of intellectual capital.

Our website, www.pwc.com/cities, offers much more. Interactive tools allow users to perform their own correlation analy-ses and comparisons for any city. Videocasts are available with Rem Koolhaas and podcasts with Mortimer Zuckerman. Full-length tran-scripts of the interviews are posted. You can also find detailed background on all sources and definitions of the variables.

In closing, we hope all this proves entertaining, enlightening and valuable to everyone inter-ested in the factors that make cities thrive.


Approach: The mix of variables and cities is refined; the parameters of research stay consistent

Like cities, Cities of Opportunity continues to evolve. PwC and the Partnership for New York City first considered the report seven years ago asking what New York had to do to remain competitive on the world stage. We immediately extended the research to other cities around the world to find patterns and lessons. In four editions of our report, we have grown from 11 to 26 cities.

Last year, we reported that economics and quality of life are tightly linked in successful modern cities. The study continues to grow into a more holistic look at socioeconomic balance.

We moved deeper into underlying issues this year, realizing that numbers themselves may create interest, but, very often, the policies behind statistics require analysis and comparison to tell the story

properly. Discussions are included on regional management, measurement of education, cityscapes, sustainability, traffic congestion and preservation.

This fourth edition of our report expands and changes the mix of cities, enriches the data with more and different variables, and further complements the quantitative nature of the research with insight from world authorities on urban issues.

Three key factors governed the cities we chose:

Capital market centers. Many of the cities included are hubs of commerce, communica-tions and culture. But all are financial capitals of their region—meaning each plays an important role not only locally but also as a vital part of a globalizing economic fabric.

Broad geographic sampling. While each city is a center of finance and commerce in its own region, and in many cases the world, collectively, the 26 cities form a representative international distribution.

Mature and emerging economies. Sixteen mature cities and 10 emerging ones are included.

This year, six new cities joined the study, one rejoined from the 2008 report and a few were removed. At 26 cities, the sample size remains small enough to allow deep and wide-ranging research yet large enough to be representative.

Madrid, Moscow, Istanbul and Houston were added in order to create better regional coverage.

Abu Dhabi replaced Dubai as the former is rising as a business center while the latter’s growth slowed markedly during the Great Recession.

San Francisco joined for a number of reasons. Close links to Silicon Valley provide

San Francisco Bay Area.


Madrid, Moscow, Berlin, Istanbul, Abu Dhabi and San Francisco join the study and Houston rejoins. Variables are added on airport transit, health systems and end-of-life care, among others.

a useful regional focus. As the financial hub of that area, the city itself plays a major role in one of the most innovative economies in the US. It also is at the leading edge of US cities enacting social policies that affect busi-ness, which adds interest to its performance.

Berlin replaces Frankfurt, the nation’s financial and banking hub, to represent Germany. The capital’s fast and targeted growth in recent years adds a layer of interest in seeing if it can accomplish in business what it already has achieved in government and culture, becoming the heart of a reunified nation.

In terms of the data indicators, we constructed a robust sampling of variables, each of which had to be: relevant; consistent across the sample; publicly available and collectible; current; free of skewing from local nuances; and truly reflective of a city’s quality or power. (See pages 79-82 for a brief key and www.pwc.com/cities for a detailed listing of definitions and sources.)

Data this year were normalized where appropriate, minimizing the likelihood of a city doing well solely because of its size and historic strength. This eliminated the need to differentiate between variables that reflect a city’s raw power (such as the number of foreign embassies or greenfield projects) and its quality or intensity (such as percent of population with higher education). Now more variables are stated in a way that is normalized for either land area or population than in previous editions.

The 66 variables selected and divided into 10 indicator groups changed significantly this year in order to develop an even more accu-rate image of city success.

Intellectual capital and innovation and technology readiness indicators were more cleanly delineated this year. The former shows what hardware facilitates in a city, such as education, R&D effort and entrepreneur-

ism. The latter measures hardware itself. The demographics and livability indicator focuses more closely on how pleasant people find living in a city. Only working age population remains to show the size of a city’s potential workforce.

New variables include: airport to central business district access to measure the ease of using public transit between those two key places; health system performance; and end-of-life care. We strengthened our sustainability indicator variables, adding newly available data. The study’s result is an unbiased, quality-controlled and rich look at the pulse of key cities at the heart of the financial, commercial and cultural world.

Understanding the scoring: Seeking transparency and simplicity

Because Cities of Opportunity is based on publicly available data supported by extensive research, three main sources were used to collect the relevant data:

Global multilateral development orga-nizations such as the World Bank and the International Monetary Fund, national statistics organizations, such as UK National Statistics and the US Census Bureau, and commercial data providers.

The data were collected during the second and third quarters of 2010. In the majority of cases, the data used in the study refer to 2009 and 2010.

In some cases, national data were used as a proxy for city data. Renewable energy consumption is an example. Use of national data tends to disadvantage the 26 cities in our study, all of which are either national or regional capitals of finance and business that would be expected to outperform national averages in measures of socioeconomic advancement. This affect might be more pronounced in developing parts of the world and areas with greater rural populations.

However, because consistent comparisons across all cities are critical to assure objec-tivity, country-level data were used when consistent, highly reliable sources of publi-cally available data were unavailable for all 26 cities.

The scoring methodology was devel-oped to ensure transparency and simplicity for readers, as well as comparability across cities. The output makes for a robust set of results and a strong foundation for analysis and discussion.

In attempting to score cities based on relative performance, we decided at the outset of our process that for maximum transparency and simplicity, we would avoid applying overly complicated weights to the 66 variables and, in so doing, treat each variable with equal importance. This approach makes the study easily understandable and usable by business leaders, academics, policymakers and lay persons alike.

Taking the data for each individual variable, the 26 cities were sorted from the best performing to the worst. The cities then were assigned a score from 26 (the best perform-ing) to 1 (the worst performing). In the case of a tie, the cities were assigned the same score.

Once all of the 66 variables had been ranked and scored, they were placed into their 10 indicators (for example, economic clout or demographics and livability). Within each individual group, the variable scores were summed to produce an overall indicator score for that topic. This produced 10 indicator league tables that display the relative perfor-mance of our 26 cities.

Definitions for all variables are provided on pages 79-82.

The city in focus

Visitors walk through the glass cupola of the German lower house of Parliament, the Bundestag, designed by Sir Norman Foster.


A look across the overall rankings reveals several interesting patterns. Our top five cities include only one, New York, that might be called a traditional economic powerhouse. Most of the other alpha cities—London, Paris and Hong Kong—finish in the bottom half of the top 10. Tokyo falls to number 14. Toronto, San Francisco, Stockholm and Sydney round out the top five this year rather than the historic centers of global finance, commerce and culture.

Holistic balance characterizes the top 10 cities in our rankings: all are well established centers of economic energy and intellectual vitality. Although dispersed among four con-tinents, their common bond is depth: of eco-nomic infrastructure and networks; of law and jurisprudence; of commercial protection; of educational systems and cultural foundations; of civic organizations; and of social security.

These cities are hardly identical, and they do not excel in every indicator. But they all rep-resent a modern consensus that cities are the most effective agents of what Leif Edvinsson calls “social intelligence” (see page 76); that is, the concentrated knowledge and insight of an entire human network.

The most resilient societies are those in which citizens feel they have a stake; economically, politically, socially, and even emotionally. As it turns out, emotion—which we tried to mea-

sure with our life satisfaction variable—might be an especially sensitive indicator of the top and bottom of our rankings given that seven out of 11 cities scoring least in life satisfaction also were at the bottom of the overall rankings.

Still, the notions of top and bottom in this report, by definition, are relative. A major reason to look at every ranking indicatively rather than literally—as guideposts to the future rather than markers of the past—is precisely because every city in this study does something, or many things, well. Looking at the overall rankings without examining the actual details behind them, therefore, obscures the compelling reasons why each city here has been included as one of the foremost cities in the world today.

New York narrowly finishes first in terms of rankings, dominating only the lifestyle assets indicator measuring cultural vibrancy, sports, hotel rooms, skylines, tourism and green space. But balance may be the city’s greatest strength. New York finishes in the top three places in six out of 10 indicators.

By contrast, London maintains the greatest economic clout (coming in ahead of Paris and New York in that indicator, respectively) but finishes in the top three overall only one other time. In context, balance may have helped New York weather the worst of the Great Recession and hurt London, whose economy relies more heavily on one sector: financial services.

A potential sign of shifting patterns emerges looking at the four cities that follow New York in the top five—Toronto, San Francisco, Stockholm and Sydney. In an increasingly virtual world, these beta cities

Holistic balance characterizes the top 10 cities in our rankings: all are well established centers of economic energy and intellectual vitality. Although dispersed among four continents, their common bond is depth.


174

186

205

168

162

166

172

119

118

168

169

149

168

120

130

77

74

83

77

107

68

38

58

51

41

174

Intellectual capital and innovation

90

59

84

47

68

80

58

78

77

74

76

48

74

40

89

45

24

47

21

51

28

29

28

13

18

83

Technologyreadiness

158

127

134

129

149

159

168

126

149

92

93

113

152

154

145

133

104

127

134

128

82

99

80

55

80

156

Transportation and infrastructure

16

13

11

8

6

New York

Toronto

San Francisco

Stockholm

Sydney

London

Chicago

Paris

Singapore

Hong Kong

Houston

Los Angeles

Berlin

Tokyo

Madrid

Seoul

Beijing

Abu Dhabi

Shanghai

Mexico City

Moscow

Santiago

Istanbul

São Paulo

Johannesburg

Mumbai

21

20

19

18

17

15

14

12

10

9

7

5

4

3

2

1

22

23

24

25

26may pose significant competition to great cosmopolitan centers such as London, Paris, Tokyo and New York.

Toronto, San Francisco, Stockholm and Sydney all are smaller cities that, a quarter of a century ago, were regarded as regional or national centers. Not any more. Stockholm ranks first in intellectual capital and innova-tion; health, safety and security; and, remark-ably, demographics and livability, which includes the thermal comfort variable that quantifies the idea that more temperate and consistent climes are more attractive.

Toronto, meanwhile, finishes second overall and also ranks second in intellectual capital and innovation as well as health, safety and security, the two indicators that are most highly correlated in a positive way (see page 16).

Findings of interest arise throughout the results. São Paulo, for example, finishes in the top 10 in cultural vibrancy and fourth in the “zeitgeist” portion of that variable, signaling the city’s global appeal as a dynamic metropolis coming into its own as the largest city in the Southern Hemisphere. It also does very well in sustainability, performing in the top 10 overall and ranking second in both carbon footprint and renewable energy consumption.

Johannesburg, too, does extremely well in sustainability, coming in fourth overall. While its top ranking in cost of business occupancy might be expected, coming in second in air-port to central business district (CBD) access is both surprising and impressive.

Istanbul ties for third place with Abu Dhabi and New York in skyscraper construction activity; equals every US city in ease of starting a business; beats Tokyo, San Francisco and Berlin in international tourists; and, finally ties for third with San Francisco, Sydney and Singapore (among other cities) for the quality of its air.

Abu Dhabi itself ranks in the top three places in 10 different variables, from the quality of its air to its hospitals to commute time to its economic competitiveness in everything from tax rates to ease of hiring to working age population.

How the cities rank

At a time of great nation and city building in China, Shanghai leads all cities in attracting foreign direct investment in terms of both capital inflow and new greenfield projects. Beijing comes in third and fourth in these variables, respectively, and posts the best airport to central business district commute in the study. Shanghai’s modern skyline is the fourth most powerful in our study.

Shanghai and Beijing jointly finish in the top 10 in nearly a third of the variables (21 of 66); notably including software and

multimedia design and development, recycled waste and renewable energy. All this shows China investing to continue the growth of its cities and taking actions now in the economy and environment to yield dividends in the future.

Beyond the highs and lows, two notewor-thy points should be made about the middle range of this table. The first is that Tokyo dropped from eighth in last year’s ranking to 14th this year—a steep drop by any measure

Continues on page 14


97

133

137

134

83

116

116

113

107

116

124

122

81

124

83

78

110

49

90

47

76

74

92

71

49

131

Demographicsand livability

163

139

103

107

170

101

166

140

149

100

84

100

114

144

89

114

71

119

66

88

65

68

80

67

88

101

Economic clout Score

1226

1195

1172

1147

1126

1122

1120

1117

1067

1061

1050

1043

1016

1013

967

882

729

705

697

692

664

658

598

595

593

492

Cost

77

94

79

87

59

99

51

64

60

116

101

91

45

62

57

39

70

41

58

37

86

46

30

86

29

96

Lifestyle assets

147

111

68

105

123

94

125

90

97

94

102

88

103

84

56

83

21

86

65

95

24

72

65

43

30

104

Health, safety and security

93

112

113

104

90

107

85

97

66

103

89

98

91

79

58

37

86

37

41

18

30

25

21

42

25

104

Ease of doingbusiness

178

163

143

162

166

156

119

188

191

152

159

121

140

102

119

76

117

54

97

60

138

90

74

87

61

154

Sustainability

49

71

81

83

52

42

57

52

47

35

46

86

45

58

56

47

28

54

43

33

61

57

67

78

71

69

Each city’s score (here 1227 to 492) is the sum of its rankings across indicators. The city order from 26 to 1 is based on these scores. See maps on pages 18–19 for an overall indicator comparison.

High

Low

Medium

Highest rank in each indicator


but one with clear causes. While it reached the top 10 in six indicators, Tokyo ranked 12th in ease of doing business; eight places from the bottom in the key variable of demograph-ics and livability (with a correspondingly low score in life satisfaction); and six places from the bottom in cost and sustainability—unusual results for one of the leading cities in the world with extraordinary human capital.

Berlin ranked immediately above Tokyo in this year’s study and is reinvent-ing itself—or, more accurately, reintegrating itself into the international economy—for the second time since it became the capital of Imperial Germany in 1871 and burgeoned in size and population in the first decades of the 20th century.

The fall of the Berlin Wall in 1989, the city’s reunification and its reinstatement as the political center of a united Germany have restored Berlin to the mainstream of European and global history. It looks like it intends to stay there, certainly as a creative center—and not just in the arts but in IT, life sciences, and services (see page 64 interview with René Gurka of Berlin Partner).

Returning to overall messages in the findings, it may be telling going forward that New York ranks 14th in demographics and livability, with low scores in quality of living and commute time. Weakness in these areas may be a future threat not only for New York

but for cities such as Paris and London. Both these cities complete the top three, respective-ly, in lifestyle assets; but they do not perform nearly as well in demographics and livability. (Paris does best, tied for eighth; but London comes in at a tie for 17th.) Meantime, Stock-holm, Sydney, Toronto and San Francisco lead the category.

Results in health, safety and security may expose another significant risk going forward in terms of any city’s success. In our heat map analysis this year, a highly positive correlation arises between health, safety and security and intellectual capital and innova-tion (see page 26). Clearly, the people who constitute a city’s intellectual capital, and are its leading innovators, need to feel healthy, safe and secure in their working and personal surroundings in order to put down roots and prosper.

Taking a step back, high or low overall scores are only guideposts. One pragmatic policy implication of the study is that a broadly positive quality of life may serve as a founda-tion of both a resilient economy and lasting global success.

While none of our beta cities are world eco-nomic powerhouses, they perform very well overall. This is important at a time of urban growth when residents are looking for more than just a place to work but also a place to live, build families and invest in the future. The cities that perform well in Cities of Opportunity are those that reflect that balance.

While none of our beta cities are world economic powerhouses, they perform very well. This is important at a time of urban growth when residents are looking for more than just a place to work but also a place to live, build families and invest in the future.

Continued from page 12


Grande Arche de la Défense, Paris.


Average correlation

Grand total



Ease of doing business

Technology readiness

Demographics and livability

Lifestyle assets

Economic clout


Cost

Sustainability

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Strong positive correlation

Weak positive correlation

Weak negative correlation

Strong negative correlation-100%

100%

0%

55% 74% 70% 67% 61% 60% 57% 53% 50% 48% 43% 27%

27% 32% 36% 30% 6% 5% 38% 9% 15% 3% 24%

43% 56% 55% 68% 62% 35% 67% 11% -5% -6% 24%

48% 65% 60% 46% 37% 63% 30% 62% 68% -6% 3%

50% 67% 54% 47% 47% 52% 27% 76% 68% -5% 15%

53% 71% 63% 46% 51% 63% 28% 76% 62% 11% 9%

57% 76% 69% 84% 67% 43% 28% 27% 30% 67% 38%

60% 81% 81% 65% 69% 43% 63% 52% 63% 35% 5%

61% 83% 69% 78% 69% 67% 51% 47% 37% 62% 6%

67% 91% 87% 78% 65% 84% 46% 47% 46% 68% 30%

70% 94% 87% 69% 81% 69% 63% 54% 60% 55% 36%

74% 94%100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

91% 83% 81% 76% 71% 67% 65% 56% 32%

Practical correlates:The patterns of a successful city reflect the people who work toward success

Correlation analysis adds a fascinating aspect of our study in which the data create their own patterns, on a kind of random walk that leads to new, and often unexpected and coun-terintuitive, conclusions that challenge some theories and confirm others.

What stuck out in the heat map of our 10 indicators this year was the strong positive correlation between intellectual capital and innovation and health, safety and security.

Simply stated, the most globally competitive cities are almost always those in which the men and women who gener-ate a city’s intellectual resources are offered professional and personal surroundings that can reasonably ensure their health and safety. Put another way, a city’s creators and innovators—those who design and devise its products (whether buildings, financial instruments, media or works of art) and set its trends—actually choose where they want to live.

This illustrates a broader competitive land-scape. The five indicators that correlate very positively among themselves lie in the “north-


west” corner. In addition to the two discussed above, they include ease of doing business, technology readiness, and demographics and livability. What is noteworthy about this cluster is that only ease of doing business is a “hard” economic or financial measure. The other four are more properly social, educa-tional or technological indicators—not the conventional stuff of economic analysis.

Most of those hard economic indicators—economic clout, transportation and infra-structure, and cost—lie in the bottom half of the map. Interestingly, cost, the “hardest” and bluntest economic measure of all, shows weak negative correlations with economic clout, as well as with transportation and infrastructure.

This is a striking illustration of the transfor-mation of modern metropolitan economies, now based and dependent on education, science and technology rather than on traditional industry. Moreover, to sustain success, cities today must continually attract and retain highly educated, technologically adept and digitally connected knowledge workers who increasingly make up the core of their human capital and whose definition of quality of life is exacting and not easily compromised.

This extremely positive correlation of social and educational variables in our study is borne out by our large heat map, which includes all 66 variables (see www.pwc.com/

cities). Of the top 10—those, in other words, most positively correlated with each other—three are social (end-of-life care, housing and quality of living); two involve intellectual capital and innovation (literacy and enroll-ment and intellectual property protection); one is technological (digital economy score); one is political (political environment) and as relevant to personal freedom as to prudent investment; and only three are economic (workforce management risk, entrepreneurial environment and business trip index).

That, in the end, is the new urban terrain. Intellectual capital and innovation has the highest average positive correlation with every other indicator. Health, safety and security has the second highest. And the two are more positively correlated to each other than is the case with any other indicators.

According to the data, therefore, the success-ful modern urban economy is reliant on, if not yet solely the product of, intelligence and social well-being—a methodological conclu-sion that seems not so much to challenge any theory as to confirm common sense.

Simply stated, the most globally competitive cities are almost always those in which the men and women who generate a city’s intellectual resources are offered professional and personal surroundings that can reasonably ensure their health and safety.


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BeijingSeoul

TokyoShanghai

Hong Kong

Singapore

Sydney

Mumbai

Abu DhabiIstanbul

Johannesburg

London

BerlinMoscow

ParisMadrid

São Paulo

New York

TorontoChicago

HoustonLos Angeles

San Francisco

Mexico City

Stockholm

Santiago

Intellectual capital and innovationpage 26

17

Technology readinesspage 29

Health, safety and securitypage 45

Demographics and livabilitypage 66

Economic cloutpage 54

Transportation and infrastructure page 34

Lifestyle assetspage 70

Ease of doing businesspage 60

Sustainabilitypage 46

Costpage 62

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Johannesburg

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BerlinMoscow

ParisMadrid

São Paulo

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TorontoChicago

HoustonLos Angeles

San Francisco

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Stockholm

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26

2523

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118

5

BeijingSeoul

TokyoShanghai

Hong Kong

Singapore

Sydney

Mumbai

Abu DhabiIstanbul

Johannesburg

London

BerlinMoscow

ParisMadrid

São Paulo

New York

TorontoChicago

HoustonLos Angeles

San Francisco

Mexico City

Stockholm

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16

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26 25

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19 18 18

1514

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98 7

66

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BerlinMoscow

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HoustonLos Angeles

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TokyoShanghai

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Sydney

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Abu DhabiIstanbul

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ParisMadrid

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The maps below show city rankings in each of the study’s 10 overall indicators. A brief key to the 66 variables is available on pages 79-82. Interactive tools and detailed listings of definitions and source documents used to develop Cities of Opportunity are offered at www.pwc.com/cities.

Indicator rankings at a glance


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BeijingSeoul

TokyoShanghai

Hong Kong

Singapore

Sydney

Mumbai

Abu DhabiIstanbul

Johannesburg

London

BerlinMoscow

ParisMadrid

São Paulo

New York

TorontoChicago

HoustonLos Angeles

San Francisco

Mexico City

Stockholm

Santiago

Intellectual capital and innovationpage 26

17

Technology readinesspage 29

Health, safety and securitypage 45

Demographics and livabilitypage 66

Economic cloutpage 54

Transportation and infrastructure page 34

Lifestyle assetspage 70

Ease of doing businesspage 60

Sustainabilitypage 46

Costpage 62

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São Paulo

New York

TorontoChicago

HoustonLos Angeles

San Francisco

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ParisMadrid

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TorontoChicago

HoustonLos Angeles

San Francisco

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TokyoShanghai

Hong Kong

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BerlinMoscow

ParisMadrid

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New York

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HoustonLos Angeles

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The 26 cities are sorted from the best to the worst performing, with each receiving a score ranging from 26 for best to 1 for worst. In ties, cities are assigned the same score.

High

Low

Medium

Map Key

Interview

How is the nature of cities changing?

It’s a total cliché now to say that more than half of mankind lives in cities. What it actually means is that there has been an enormous influx from the countryside to urban condi-tions, and that influx has led to an enormous scale of city building—particularly in Asia and, almost by default, in Africa and Latin America. So, we are confronting a unique situation where cities are becoming so ubiquitous that they have ceased to be able to be defined as single entities with a single character. They are now almost always so big that they have fallen apart into fragments. Almost every new city now has dense parts, empty parts, low parts and high

Few people have thought as profoundly about cities as Dutch architect, author and Harvard School of Design professor Rem Koolhaas, head of the Office of Metropolitan Architecture in Rotterdam. In books such as Delirious New York and S,M,L,XL, he has redefined attitudes toward urban architecture. But Koolhaas, winner of the coveted Pritzker Architecture Prize in 2000, is no mere theorist: his iconic buildings include Seattle’s Central Library and Beijing’s dazzling CCTV tower. Here, Koolhaas discusses the startling transformation of cities such as Beijing and Dubai, the wonders of Berlin, and how New York lost its creative mojo.

parts. So, you can no longer talk about a city as a single typology. Only in the cities that are old and ancient can you actually talk about character: as soon as they’re new or undergoing all this transformation, it becomes impossible.

The new cities are only cities in name. I would say that the most important features that we use to define cities—which we typi-cally define in terms of public spaces, the coherence of streets, plazas, the overall composi-tion—that those terminologies are becoming less and less rel-evant to really understand what cities are. If you look at Dubai or Beijing or anything in the Pearl River Delta, for instance, what we see are vastly greater

Striding across the Seattle Central Library, recently called Rem Koolhaas’ “masterpiece” by The Financial Times.

Rem Koolhaas muses on changing cities…and on his own quest to reinvent them in a way that serves the public good

freedoms that are applied to the notion of what a city is. The architecture profession, which is really still fundamentally set, is equipped to deal with one kind of city—the city that has form—and remains, almost in its entirety, inadequately equipped to think of the other kind of city. So, my role is, to some extent, a matter of mediating between an old and a new conception of the city.

How does your hometown, Rotterdam, fit into this concep-tion of modern cities as being increasingly fragmented and lacking in coherence or unified character?

We’re in Rotterdam. But, if the snow stops, you see another city five kilometers away; and


another city 10 kilometers away. So, you see no evidence of den-sity here, but actually we have 10 million people living in this mess. And yet we are stubbornly clinging to the notion that we are inhabiting a city called Rotterdam. I would say we are inhabiting a situation called vaguely Belgium, Netherlands, et cetera.

What can architecture do for a city?

What architecture can do is seemingly the same in almost every decade, but actually com-pletely different. In antiquity, architecture was occasionally expressing the core values of and for a society by building temples. In the Renaissance, architects were presumably working for the powers that be or for the Pope or aristoc-racy. In the 19th century and a large part of the 20th century, architects worked for the public sector and articulated how industrial society should look and cohere. A lot of private commissioners were a part of that, but, on the whole, cities were shaped by collective forces.

If you look at the current situation, which has been characterized by maybe 20

or 30 years of market economy, there’s been a drastic change because that public dimension has weakened almost immeasur-ably, so we are now very often serving private interests. And so, if you ask what can architec-ture do, we could do workers’ housing 30 years ago or cheap housing 40 years ago. Now, I can’t do it anymore, simply because nobody asks me. And it’s assumed that an office like ours would not be interested in it, even though, in fact, I really want to do it and I’m very interested in trying to find it. So, invisibly, what we do and can do changes unbelievably. For instance, if you look at the amount of museums that the elite of architecture is building, you get the sense that, okay, apparently they can build museums. But we’re building other large-scale public investments—airports, railway stations and other infrastructure—less and less.

So you’re not getting to design huge public projects anymore—things like Euralille, the massive urban development you finished building outside Paris in 1994?

Euralille was really a beautiful moment because it was commis-

sioned by the French state when Mitterrand was president. It was when the French state had the means to be a public strength and force. So, I know what it is to have the full support of the state behind you, and all the deadlines of the state, because it had to coincide with the comple-tion of the tunnel under the Channel and the connection between Paris and London. I seriously doubt whether today a commission like that would ever go to me or one of my peers. We get more and more emblems or things that can be icons. But a serious work of planning infrastructure, I don’t think they would ever entrust it to us anymore.

Why not?

Architecture has been in a strange situation where we have become more prominent but less important, less crucial. We looked at the architects on the covers of Time, and it’s a very interesting statistic: the last architect ever was Philip Johnson in ’79. That was a year before Reagan and before the real launch of the market economy.

I’m really interested in doing something useful. So, a country like China is unbelievably interesting because it needs thinking about what it’s going to be and what it wants to be.

Beijing’s CCTV Tower

Partnership for New York | Cities of Opportunity | 3

New York was the site of an unbelievable explosion of creativity. But in the past 30 years, I’ve seen little of that same creativity… The real difficulty of New York is that the quality of buildings has become so unbelievably low… that it prevents you from appreciating the city’s initial genius.

Twenty years ago, when you were designing huge European projects like Euralille and the Zeebrugge Sea Terminal, you remarked that a “constellation of need, means and naivete” was coming together that was similar to that which had triggered New York’s miracle. What produced this phenom-enon in Europe?

Mainly, it was the last moment when the European Union was a very confident and inspir-ing entity, and when, instead of a gloomy, constant friction and negotiation, it was: “We’re Europe. We’re big. We have something to do. We have ambition.” And there were, in many countries, ambitions that really articulated that. We felt it almost like a surge, almost in the same year, where all these things came together in the late ’80s, and we had to operate on projects either bigger than had ever been the case in Europe or more ambitious—particularly in the mixing of ideas. So, it was a moment really of renewal, when people were asking: what can you put together to create a new culture?

Given your strong sense of public service, do you lament not getting these large state projects today where you’re basically building the Grand Central Stations of tomorrow?

I’m not spending a lot of time lamenting things. What’s ironic

about the position of the architect is that it essentially has a very important passive component. An architect waits for somebody to come to them wanting something, and then the architect becomes the instru-ment by which this desire is realized. But in the last 10 years we’ve been able to say, “We’re not going to wait. This is what we want to do.” And since we’re interested in doing this, we’re looking for an environment or a client or a country or a terri-tory where we can actually do this. What made this possible is partly becoming a so-called public figure, maybe partly also teaching at Harvard and there-fore having a position external to simply being an architect. But, maybe more than anything, it was creating this second office, AMO [the research and analysis arm of the Office for Metropoli-tan Architecture], which enables us to engage in some activism, even though we are architects. So, instead of lamenting, we’ve really tried to develop tools that operate in the current world, that enable us to do other things than what we would typically get.

Would a good example of that be the renewable energy project the EU commissioned you to design in Europe that extended into Africa?

Yeah, of course. I was interested in thinking about Africa and thinking about the connection

between poverty and the enormity of sizes there. I’ve also become very interested in the idea of preservation. So, I consider one of the most crucial things we’re doing right now is the massive planning of the Hermitage museum in St. Peters-burg, which to some extent was also partly an initiative of ours, or a way in which we could form a relationship with the director and strategize together what the Hermitage could be, rather than the director saying to the architect, “This is what I want. You do it.” So, it became more of a joint effort or collaboration. By developing these models, we are getting to projects that are a little bit outside what we’d typically get without this more energetic and more critical approach to what the archi-tectural field produces today. That is the key thing. It’s really a constant sense of criticality, and also a constant sense of dissatisfaction with the current procedures—a kind of produc-tive dissatisfaction.

When it comes to preservation, should cities try to balance old and new, making more effort to retain what was good about older ways of living?

It’s a very complex situation. The times when there was a huge political enthusiasm for uprooting entire urban condi-tions—as in Singapore, for instance—are actually gone.


The more traditional side, so to speak, has made important inroads, and there are very few situations I’m aware of now where they’re really just bulldoz-ing. Even in Beijing, there’s a lot of reconsideration of the center—the hutongs. Even if you look in Rio now, you see that some of the favelas are being considered for World Heritage status. So, there’s obviously a great awareness of the value of existing things. But that has one paradoxical effect: that the exist-ing things in themselves are very uncritically maintained because not all existing things really deserve eternal life.

On the other hand, there are many conditions that are new and are not based on eliminat-ing the old—conditions that are simply new and started from scratch. That is the typical city like Atlanta: it’s not that there was a wonderful city there that they got rid of. There was little there. And now it’s a metropolis. So, I think this getting rid of the old is really a very American and European trauma—and what is really the key is, what happens if there is no old. In Shenzhen, there simply was nothing. There were rice fields and a fishing village—and now it’s 10 million people. That’s a very important discussion: can you be happy in that environment? Can archi-tecture be legitimate in that

environment? What are the qualities of that environment? Because most people tend to criticize them and tend to not be happy with newness only. But it’s possible to find posi-tive things where typically few people find them: for instance, if a city is a mess of completely random things, you have an enormous freedom to move in any way. In the same way, even Rotterdam has a lot of freedoms that an older envi-ronment doesn’t really have.

What about Berlin, which seems like the opposite of Shenzhen?

Oh, it’s a fantastic city. It’s one of my favorite cities.

You built housing in Berlin at Checkpoint Charlie 20 years ago, and you built the Nether-lands Embassy there in 2003. How has the city changed in the decades you’ve known it?

I was born in the last year of the war. But, first of all, maybe out of a spirit of contradiction, I was never anti-German, even though that was the obvious way to be, and that was certainly encouraged by my parents and schoolteachers. So, when I was a journalist and a scriptwriter, we wrote a movie about a good German. And that was really a very strong statement in 1968. I was interested in both politics and not anti-German. So, when I was in architecture school,

the idea that a city could be divided and accommodate two completely opposite political systems really fascinated me. I made a study of the Berlin Wall, which was in a way the interface between those two systems, and therefore, on the two sides, represented those systems in a very pure and almost propagan-distic way.

Of course, one of the funny things about getting older is that it gives you a confidence that no situation is ever permanent. And if you look at younger col-leagues, there are a number of people who believe that the cur-rent situation will be indefinitely prolonged somehow, that for the rest of their lives they will be in front of laptops. Actually, if you see the number of real upheav-als that took place in my life, you can be sure that there will be more. The beauty of Berlin, of course, is that it’s the stage of a number of very radical trans-formations, and that it wears the traces of those transformations in a very poetic way—but that there is still a real substance that was always there. That’s what makes it, right now, such a wonderful city. Also, frankly, the fact that it had a rich part and a poor part, and that you still feel that opposition, and that it’s not luxurious in its entire center like Paris, for instance. It is also very pleasant right now.

I was just in Dubai. There was this skyscraper there. It’s maybe absurd; it’s maybe totally unsustainable... Nevertheless, I have a sense of exhilaration and awe because it’s so extreme… It’s so stunningly, stunningly present that I cannot deny there’s an excitement in it.


You’ve written lovingly of New York. Does it still hold a special place in your heart in terms of what it represents?

Yes, it remains for me a city that had a crucial role in developing a particular repertoire. In that way, it was the site of an unbe-lievable explosion of creativity. But I have to say that, in the past 30 years, I’ve seen little of that same creativity in terms of being inventive or critical or demanding. I think the real difficulty of New York is that, in the last 30 years, the quality of buildings has become so unbelievably low; there’s so little newness that, in a way, it now acts like a bulk of mediocrity that almost prevents you from appreciating the city’s initial qualities or initial ingenuity or initial genius.

Does this decline in creativity reflect the competitive pressure to do everything cheaper and faster? Or is this just an era in which public spiritedness has diminished?

I have a feeling it’s both.

Is this more the case in New York than elsewhere?

No, no, no. It’s the same here. I don’t think at all that it’s just a New York issue. But it’s more noticeable in New York because

there was so much that was different there, and the city was so fresh and was really the essence of newness.

Chicago is another interesting American city in that it had a fire, was rebuilt with collabra-tion from planners, architects and business, and it’s now a pleasure to walk around, to see.

Very much, yeah. Chicago has always had a discourse about planning, and has had planners. Therefore, it has results that are recognizable as planning. Perhaps in New York you have that, too, but both the beauty and the tragedy of New York was that the first gesture was so over-whelmingly genius and powerful that everything else after that never had the same impact or the same status. In Chicago, they continued to think about the city in a more creative way, perhaps because the beginning was not so overwhelming. But the result is that it’s a very impressive, beautiful city.

You were asked to enter a contest to design the new World Trade Center in Manhat-tan, but chose instead to focus on CCTV’s headquarters in Beijing. Why?

To be honest, I felt more engaged with the issue of trying

to imagine China, of trying to participate in an effort of really drastic renewal and drastic change, rather than being involved in an effort of con-solidation. Plus, I have to admit that there was another issue: I thought the World Trade Center buildings were so superb. I liked them so much that the idea of trying to even imagine some-thing different on that same site really seemed impossible.

You’re saying that architectur-ally, not sentimentally?

Architecturally, yeah. They were not simple. But they were obviously simple. Did you like Man on Wire, the movie about the guy who walked between the towers on a tightrope?1 You should see the movie, because then maybe you’ll understand why I like the buildings.

What else appealed to you about the project in Beijing?

As an architect, I definitely hoped that I could do something useful and something that is not necessarily connected either to fashion or to, let’s say, the more glamorous part of contempo-rary life. I’m really interested in doing something useful. So, a

Are we actually able to reinvent things? Are we as creative as our forefathers? Are we able to really renew ourselves in a way that is significant? Or are we hiding in our caves or in our familiar world?

The Netherlands Embassy in Berlin

1 Man on Wire, 2008, directed by James Marsh, documents the 1974 walk between the World Trade Center towers by Philippe Petit.


country like China is unbeliev-ably interesting because it needs thinking about what it’s going to be and what it wants to be. And, by coincidence, at that point I was in a moment when I could actually contribute to that. Very literally, if a city like Beijing is building so much, then I find it very interesting to do a building there which is more original than what you would typically get, and that also shows that certain enormous programs of enormous skill can have properties that are slightly less alienating or slightly less egotistical. And then, with the building itself—a project for Chinese Central Television—it would really be interesting to think of a media company, what it represents, what its relation-ship with the public can be, how open or closed it can be. That’s another really challenging thing. So, it represented a number of challenges that were good for me to think about.

What else strikes you about the extraordinary transformation China is undergoing?

It’s totally contrary to the com-mon interpretation, but one thing you see is how seriously China is dealing with climate change. I think that needs to be noted. If you see what they do with wind energy, solar energy, and how pervasive it is, I really

find that exciting. They are even making a really serious effort to take the super-tanker in a differ-ent direction. For me, that’s one of the positive things I can see.

Were newer Chinese cities like Shenzhen designed with any kind of model in mind?

No, no. The problem is that urbanization in America and Europe flattened around 1900, and urbanization in Asia started taking off in a really harsh way maybe in the ‘70s. If you look at all the manifestos that were written about urbanism by Europeans like Le Corbusier, it basically ends in 1930. Previ-ously, when we were urbanizing, we thought about cities, and we had opinions about how they should be. Now, we stopped having opinions about how cities should be. So, the irony is that when a lot of these new cities were being built, we stopped thinking, and they didn’t yet have the routine or tradition of thinking about that kind of modernity. It happened in a fallow period—in a strange, in-between state. That’s why I think that to make a contribu-tion to this and to try to develop models for urbanization is, in itself, very valid because, at this point, the city is defined by a kind of Western default. That’s also why I wrote Generic City. It’s like the default, the obvious

skyscraper or the obvious city block, the obvious curtain wall, put together in an obvious way.

Is there an optimal density for a city, whether in China or elsewhere?

No. Within the current condition the city will neither be dense nor not-dense. It will have density, but in parcels and in locations. But it also will have its counterpart. That’s why I’m so fascinated by the image of Shenzhen where you see the big-gest intersection of the city 400 meters away from a rice field. So, it’s no longer either dense or not dense. You’ll have the same thing everywhere. And that’s the irony in the 21st century. The skyscraper is combined with the hovel, and so you can have a skyscraper anywhere, even if it’s in a desert. It’s no longer a system of density with all the repercussions. You have a very local, contained and unique point of density that can exist in relative isolation.

Does this create aesthetic problems in places like Dubai?

You can see it either as an aesthetic crisis or new aesthetic conditions.

There’s something good about it?

Yeah. I was just in Dubai. There was this skyscraper there.

The beauty of Berlin is that it’s the stage of a number of very radical transformations, and that it wears the traces of those transformations in a very poetic way—but that there is still a real substance that was always there. That’s what makes it such a wonderful city.


It’s maybe absurd. It’s maybe unsustainable. Nevertheless, if I see it there, I have a sense of exhilaration and awe because it’s so extreme, and exactly because it’s not surrounded by anything like it. It’s so stun-ningly, stunningly present that I cannot deny that there’s an excitement in it.

How do cars fit into cities like this? Should we think about different ways to get around?

A car in a city like New York is, of course, totally different than a car in a city like Dubai. Dubai is actually designed for it, and is relatively straightforward. You have a highway, then you go off the highway, then sooner or later you get into a garage. So, I would say that certain cities now accommodate cars quite well. If cars change or become more sustainable, I think that will remain quite a persistent model, simply because it gives so much flexibility, and this flex-ibility is almost unimaginable through any other device. As long as we are politically able and willing to give everyone the freedom to essentially go where they want, that’s a fairly unavoidable model—these individual capsules.

But in existing cities, it’s much more problematic. Traffic in New York is truly a nightmare

of constant frustration. One of the problems of the market economy has been that, rather than enriching the public sector or reinforcing public transport, they started to undermine it. So, what you have in many Euro-pean cities is the worst of both worlds. You have a weakened public transport, weakened infrastructure of trains, and almost pervasive car use. They could have avoided a lot of this if the public sector had been enhanced. But they bought all the arguments for privatization, all the virtues of the market economy. And the result is a nightmare.

Another place you’ve studied is Lagos, Nigeria, one of the world’s biggest and seemingly most chaotic cities. Why has it fascinated you?

We started looking at it in the mid-’90s, which was literally the pits. It was also politically the pits. It was really the end of a very decadent period of dictator-ship. So, the public sector had almost ceased to exist. People were simply condemned to be on their own and survive on their own, without any support. And I realized that this was a condition that is, in a way, very cruel, but I also saw a lot of evidence of how it stimulated incredible smartness in a city like that.

If we have to take maybe 12 important decisions a day in our life—you know, what time do we go to work, what time do we go back, what do we eat—they really have 500 or thousands of decisions to make in Lagos. For instance, “Can my kid go to school right now? How do I do that—with which bus? What’s functioning?” It’s so much more intricate that you realize that there’s really a driving intelli-gence simply of survival in that kind of environment. Lagos is now actually doing relatively well. So, some of the exces-sive conditions that I saw there are rapidly diminishing. It was fascinating to see that every dysfunctionality triggered a new functionality there. Okay, if traf-fic doesn’t move, it means that the accumulation of stranded vehicles represents a commercial opportunity to sell things. But it’s relatively normalizing. And now that it normalizes, you see that it actually benefits from a series of quite traditional urban interventions—like bridges, planning traffic intersections, and efforts for hygiene that were partly put in there already in the ’70s and ’80s and that are slowly being resumed. So, it’s going in a great direction, partly because of the restoration of democracy of a kind and of political process, partly because of a lesser degree of tribalism, and also because of more money.

The beauty and the tragedy of New York was that the first gesture was so overwhelmingly genius and powerful that everything else after that never had the same impact or the same status. In Chicago, they continued to think about the city in a more creative way.


You wrote 15 years ago that “globalization astronomically expands the realm of possibility for better or worse.” Where does globalization stand today?

Globalization is undergoing constant change, and we’re very clearly in a period of waning enthusiasm for it. With the economic crisis, you see it on every level. And so we have an ironic situation where we live in a period of globalization, yet every single nation wants to be more itself. I find this also very noticeable in our clients. For the first time, Chinese projects have to be Chinese; Arab projects, Arabic; Dutch projects, Dutch. So, we are losing a kind of internationalism as a virtue or as a positive thing. On the contrary, there’s a fear of that. It’s a very clear and marked difference, which also has a lot of political repercussions. You see it in a of lack of generosity toward travel-ers, toward immigrants. It’s not grinding to a halt, because it’s clearly proceeding, but it’s slow-ing down, perhaps, or provoking very strong counter-movements, and provoking a huge anxiety about identity.

Is it because there’s less money around due to the financial crisis?

Perhaps. But it’s also indepen-dent of that. I’m Dutch, and the great thing about Holland is that we were always happy to change our identity, so long as we could earn money and could sell everything for this, even our grandmothers. Therefore, I’ve experienced the incredible vir-tues or rewards of that freedom. But it’s very rare now. I used to compare Europe to a suicide pact where we all said, “Okay, we forget about our nation; we become something else that is, in itself, a great enterprise.” But then only the small countries proceeded with the suicide, and then the big ones stood up and said, “Hey, we are not going to do it. You are dead, but we …” You see that kind of tension everywhere now.

Your own perspective is unusu-ally international. How were you were shaped by being born in Rotterdam, then living in Indonesia before returning to this bombed-out city?

It was very important, particu-larly because I went with my parents in ’52 when Indonesia had become independent.

It was not a colonial situation but actually the immediate exhilaration of the post-colonial moment, so we had to behave like Indonesians. And I went to an Indonesian school and joined the Indonesian Boy Scouts, and so I knew from a very early age what it is to be among differ-ent people and to enjoy being among completely different people. I think it gave me simply a versatility and an anthropologi-cal interest in how other people live and what they believe in and what is important to them. That has hugely informed everything we do. So, that’s maybe the most crucial thing. Also, it made me physically less obsessed with ownership or material things. Of course, that is, in a certain way, the thing of the ‘60s genera-tion. But even before I could be affected by that, I experienced how happy you can be without possessions, or how life can be almost independent of posses-sions. And I think that’s also a very important thing.

Given how consumerism domi-nates many of our lives, what’s your view of the role shopping plays in cities?

Well, my relationship to shopping was profoundly marked by the fact that I became a shopper first

Cities are becoming so ubiquitous that they have ceased to be able to be defined as single entities with a single character. They are now almost always so big that they have fallen apart into fragments.

View from the CCTV Tower in Beijing.


in Indonesia, so for me the ideal form of shopping is markets. I almost don’t know a single market that I don’t profoundly like and where I don’t like walking, whether it’s in Asia, here, in France or in Africa. It’s almost always a wonderful and vivid experience. But there was a time when shopping and its integration and consolidation in the department store did have a certain excitement and beauty. Some of the first department stores in Paris were almost tangi-ble moments of euphoria about what the world was capable of producing, a little bit like the Great Exposition in London in the mid-19th century. Even after the war, there were moments when department stores had a kind of message. There’s a department store here called De Bijenkorf; I remember how, if you wanted to be modern and buy fresh and well-designed and intelligent things, you would go there, and that excitement was still there.

I would say that, with the proliferation of brands and their increasing occupation of the center, there is a very nega-tive effect on the whole notion of adventure because a brand and adventure are not quite compatible terms. That is why we were interested in working for Prada, because their explicit obligation or explicit task was to

undo that kind of predictability, and to reintroduce a degree of unpredictability. We did it by, for instance, making some of the Prada stores able to perform also as a public space. At the Tribeca Film Festival in New York, the Prada store changes form and becomes a cinema. With Prada, on the whole, we have worked on trying to undo the rigor mortis that a brand typically acquires.

What do you mean by combating rigor mortis?

Well, they’re really creative [at Prada]. And as long as there is creativity, there is newness and freshness, while what you see with many brands is that they can flourish even after the disappearance of their original maker—so, we are almost in the domain of ghosts or memory. And, ironically, even in the world of fashion, they’re now talking about heritage. Fash-ion used to be basically about new things. Now, suddenly, it’s about heritage. So, I think this is all part of a huge pessimism, perhaps, or a huge fear that is driving a lot of our culture at this moment. Are we actually able to reinvent things? Are we as creative as our forefathers? Are we able to really renew ourselves in a way that is signifi-cant? Or are we hiding in our caves or in our familiar world?

What’s your answer? Are we as creative as our forefathers?

I’m not convinced what we do is a lot better than what architects did in the ’30s and ’40s. It’s certainly less messianic, less ambitious in terms of its social impact. But, on the other hand, I’m also very optimistic because, yes, we can invent really new experiences. And I’m confident that we have introduced a few.

One realm where you’ve reinvented things was in your design for the Seattle Central Library. What challenges did you face in rethinking the function of a library at a time when many people are betting against books even being around in future?

Well, with the gaining strength of the virtual and of all these other forms of networks that are intangible and cannot express in form, it seemed to me that one of the last remaining powers that architecture would still have is to express the public and the collective. The first library where we really tried to articulate that was a project in Paris. So, although the Seattle library was a very precise effort to think about libraries, and although our concert hall in Porto was a very precise effort to think about music, there is also a way in which they are both conceived simply as spaces that are neces-sary to allow gathering. There

That’s the irony in the 21st century. The skyscraper is combined with the hovel, and so you can have a skyscraper anywhere, even if it’s in a desert.


are so many competing domains today that don’t require gather-ing, that the act of gathering in itself has become crucial. No matter what technical evolution is, it seems as if this need to gather is actually fairly consis-tent. I think that is partly the reason those two buildings work well—that they accommodate the gathering, regardless of whether it’s for a concert or a specific library.

But, in addition, Seattle was, of course, the ideal place at that point to think about the future of the book because there were so many people plotting the demise of the book. We did extensive research, so I still remember that Microsoft people showed us for the first time their tablet that was going to make it [the book] completely redun-dant. And we could devise a situation where we said, “Okay, so there will always be books. But there will also be a lot of other things.” So, the main issue was that we surround books with other possibilities and enhance books through other possibilities. We also decided not to claim that the real had more value than the virtual; on the contrary, we tried to justify both. And what we tried to do maybe more than everything else is show that the main quality of both a book and a library is that you can have randomness in terms of getting access.

The great thing in a library is to find things you’re not looking for, and I think that kind of randomness is stronger in a library than on the Internet. So, we were there when the death of the book was declared; we worked with the people that actually had launched the war. But, 20 years later, the book is still around and flourishing almost like never before. The interesting thing is that the book itself is now showing the effects of the Internet in its whole appearance. And books are now made with greater freedom, greater virtuosity of navigation, more like hypertext than before. So far, I would say that it’s a pretty permanent form, and that it has been able to absorb a lot of the better qualities of the Internet quite successfully.

You get a lot of requests to design museums. Where do museums fit into city life?

The museum is partly defined by its architecture and partly by its contents. And, of course, the most wonderful conditions are when the two coincide. But they don’t have to coincide. I mean, I love certain museums that have incredible contents but are housed in terrible environments and vice-versa. But what has happened to the museum is, in a way, that it’s become part of a city branding effort. So, what used to be almost the symbol of

patience and of accumulation over time, and therefore a deep relationship with history, is now ironically a symbol of newness. And we, as architects, have been very much benefiting from that tendency in terms of getting a lot of work. But we haven’t really thought of the conse-quences in a very thorough or smart way yet. That’s why I try to step out of that situation and try to simply look at the work with the Hermitage Museum, which undeniably has one of the most amazing collections and is also undeniably one of the most amazing architectures, and see whether we could do new things in the combination of these two, rather than add our own new museum. So for me, it’s a matter of taking a step aside.

What are you trying to achieve at the Hermitage?

The buildings started as a palace—a private museum for the tsars. Then, later they built a public museum and a small the-ater. It’s basically a collection of four buildings. Each of these has a separate status, and they’re connected by bridges. If you go now to the museum, you move through the whole thing as if it’s a single entity. And they’re going to add another museum to it. So, this idea that it’s a single entity cannot be extended here because it’s simply become too big, like an airport.

One of the problems of the market economy has been that, rather than enriching the public sector or reinforcing public transport, they started to undermine it. So, what you have in many European cities is the worst of both worlds. You have a weakened public transport, weakened infrastructure of trains, and almost pervasive car use.


What we are beginning to do is to say: maybe we should not only emphasize the art and use each of these as a museum, but maybe we should look again at the history. This is where the tsars lived; it’s also where the Russian Revolution broke out. So, let’s see whether we can make the experience of this building reveal more about that period. Let’s see whether we can make part of the building talk more about the collections of the tsars. What we’re trying to do, instead of seeing it as a continuous thing that you can take in over a few hours, is to disconnect them—to look at the specificity of each as a way of exploring more layers than simply art. We want to create a greater complexity, but maybe also greater transparency, regarding what happened there. What was the point of different collections? What were they trying to say?

While you’ve typically had an urban focus, you’ve also written about the “thinning” process that occurs in rural areas when people move to cities. What impact has this demographic shift had on the countryside?

In my own writing, I basically stopped being interested in the city, and I’m writing about the countryside now because I think that’s the area of greatest change. It’s based on experience:

my partner has parents with a house in Switzerland. So, I’ve been able to see the evolution of the so-called “village” over time, and it’s breathtaking how much happens there and how completely transformed it is. It’s a surreptitious transforma-tion. I’ve seen, for the first time, robotized tractors now working in Swiss alpine meadows. You see Thai maids looking after the children of people who are living two weeks a year in transformed barns. It’s at least as radical and probably also as artificial as what’s happening the city. So, the thinning is, for me, an inter-est in the question: if everyone moves to the city, what happens to the territory they left behind?

Do you have theories yet?

No, I don’t have theories. I’m very skeptical of the word “theory.” In a certain way, I never had theories. I just had interests, and was interested in subjects that I tried to analyze. I would say I have analyses, not really theories.

In forming these analyses, is your work process to send colleagues out to study issues, take in lots of information, then emerge at the end with something intelligent?

Yeah. I basically remain a journalist, I think. Also, at this point, we add elements of a historian, of an anthropologist,

of a sociologist, of an economist, of a politician—all aspects that we’re trying to cover or that we occasionally intersect with. So, it’s not only that we send people out. We also collaborate increas-ingly with people from those sectors and those professions.

If someone said you could design anything, anywhere, what would you like to do?

I don’t have a particularly intense desire to do any one particular thing. I think the issue is whether we can do useful things and things that are politi-cally significant and that are not supporting the wrong side. That would make me happy, and makes me happy.

In youthful photos of you and also throughout your work, there’s a sense of playfulness. Is architecture a form of play and fun for you?

That’s actually a really good question because I’m always really surprised that nobody gets our sense of play or our sense of humor, because we are hav-ing—and I am having—huge, huge fun. I’m not always seri-ous, and I think in my writing it’s always ambiguous whether it’s entirely serious. The irony and the sadness for me is that the architecture profession is so humorless, even though it’s a very crucial part of thinking: irony, sarcasm—all these modes

We have an ironic situation where we live in a period of globalization, yet every single nation wants to be more itself. For the first time, Chinese projects have to be Chinese; Arab projects, Arabic; Dutch projects, Dutch. We are losing a kind of internationalism as a virtue or as a positive thing. On the contrary, there’s a fear of that.

www.pwc.com/cities

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© 2011 PricewaterhouseCoopers LLP. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers LLP, a Delaware limited liability partnership, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. This document is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

are crucial to approach some-thing from every different direction. And they’re very important for me personally. So I’m very happy you ask it, and also very happy that you actually see it.

Has serious society forgotten the importance of play, fun and healthy creativity?

I don’t know. You certainly cannot say it’s an uncreative moment because there is incred-ible creativity. But I think one thing is that each of us has become more oversensitive, or less willing to put ourselves into question.

More self-protective?

Yeah, I think so, and more easily hurt. And I think that simply is a humorless tendency.

What’s your favorite city to visit?

Extremely difficult to say. I visit cities for different reasons.

I looked at PwC’s list [of 26 cities in the study] and there’s almost not a single city on it that I don’t in many ways like. I love Rome. I love Istanbul. I love Damascus. I’ve just recently dis-covered Damascus; it’s amazing. Maybe all these cities have some of that quality—that your time is not a linear sequence, but it’s a series where every period is still reflected there as if it didn’t pass. That richness is really irresist-ible. But I also like entirely new things, like Shenzhen and Dubai. I’m very promiscuous in that sense.

If you were told that you couldn’t keep globetrotting and had to stay permanently in one city, which one would you choose?

That’s a very, very difficult question. There was a period when I felt that Paris would be a wonderful place to find some stability, but I really can’t say.

One last question. You’ve writ-ten that you’re not an optimist, but that optimism is implicit in being an architect. Is it natural for thoughtful people to be pessimistic and melancholy, not least in the knowledge that we all eventually die?

It’s not dying that makes me pes-simistic or melancholy. I’m not pessimistic. But, if you’re intel-ligent, there is so much evidence of evil things that melancholy is, I think, a totally inevitable posi-tion. But, at the same time, if you want to be active, you have to be an optimist. And so it’s that simple. Thank you.

With the proliferation of brands and their increasing occupation of the center, there is a very negative effect on the whole notion of adventure [in shopping] because a brand and adventure are not quite compatible terms.


16

23

12

15

12

22

19

12

12

17

18

24

14

26

25

7

21

21

4

2

6

3

1

13

5

12

Math/scienceskills attainment

25

21

18

16

11

19

26

12

17

24

20

4

13

5

9

22

8

1

23

7

10

6

14

3

2

15

Libraries with public access

20

25

19

17

22

9

14

21

13

12

18

6

24

5

7

26

3

3

23

16

8

11

4

1

10

15

Classroom size1

16

13

11

8

6

Stockholm

Toronto

New York

San Francisco

Paris

Los Angeles

Tokyo

Sydney

Houston

Chicago

London

Berlin

Seoul

Madrid

Singapore

Hong Kong

Moscow

Shanghai

Beijing

Mexico City

Abu Dhabi

Santiago

São Paulo

Johannesburg

Mumbai

Istanbul

21

20

20

20

17

15

14

12

10

9

8

5

4

3

2

1

22

24

24

25

26Of all the indicators, this is the one that has undergone the most profound enhancements this year. As virtually all observers, both aca-demic and in business, consider intellectual capital, and the innovation that springs from it, to be the engine of both social and eco-nomic development, it is important to design as robust an assessment of it as possible.

The fact that Stockholm ranks first, by a significant margin, is both striking and unsurprising. Unsurprising because as our interview with the “father” of the concept of intellectual capital, Leif Edvinsson, confirms (see page 76), Swedes are in the vanguard of thinking about this issue; and Sweden is in the forefront of embracing the policies needed to expand and reinforce its own intellectual capital.

What is striking is how thoroughly Stockholm commands the category, how-ever. It ranks first in three variables, second in two, third in one and within the top 10 in two others. Indeed, it (just barely) falls out of the top 10 in only one out of nine variables (albeit an important one), math/science skills attainment. This, by all objective measures, is an impressive performance.

Toronto also excels in this section of the study, ranking second overall and placing in the top 10 in seven of the nine variables. But the United States does particularly well, with five cities in the top 10, New York ranking first overall in terms of the research performance of its universities and San Francisco placing first in the percentage of its population with higher education.

Perhaps even more conspicuous than the cities that made the top 10, however, are the ones that did not, most obviously those in Asia. Only Tokyo managed to break into the highest ranks this year. That left out every other Asian city, including Hong Kong, which fell six places from last year, when a more limited range of measurements was used. At a time when Asia is advancing into the highest levels of the value chain, these results confirm the arduous road ahead of it.

There is one other noticeable result in this year’s findings. The bottom 10 cities represent some of the most dynamic

Intellectual capital and innovation: Developing the ‘mindware’ that will build future cities

economies of the last decade. Clearly, there are structural issues that these economies confront as they compete in economic (and social) value creation with the top 10 cities in this chart.

At the very least, this proves, once again, that it is extremely difficult to compete with the power of a long-established and globally dominant city whose institutional networks and sophistication were specifically designed to extend and maintain its dominance.


High

Low

Medium

Highest rank in each variable

17

16

13

19

22

24

15

23

20

25

14

21

9

10

18

5

8

11

6

1

7

12

3

4

2

26

Research performance of top universities

24

21

26

25

16

22

11

14

18

19

13

15

17

7

8

23

12

10

6

9

3

4

1

5

2

20

Percent of population with higher education

Score

205

186

174

174

172

169

168

168

168

166

162

149

130

120

119

118

107

83

77

77

74

68

58

51

41

38

Literacy and enrollment2

25

24

22

23

22

17

26

22

22

16

15

13

14

8

9

12

3

3

6

7

11

10

5

1

4

22

Percent of grossdomestic expenditure on R&D

26

14

23

15

23

25

16

23

23

13

18

24

10

17

6

9

12

12

2

1

4

8

7

5

3

23

Intellectualproperty protection

26

22

16

24

16

17

21

16

16

20

23

9

10

25

19

1

8

8

4

18

6

3

11

5

2

16

Entrepreneurialenvironment

26

20

25

18

25

13

20

25

25

16

10

14

9

16

17

2

8

8

3

13

13

1

5

4

8

25

16

13

11

8

6

21

20

20

20

17

15

14

12

10

9

8

5

4

3

2

1

22

24

24

25

Each city’s score (here 205 to 38) is the sum of its rankings across variables. The city order from 26 to 1 is based on these scores. See maps on pages 18–19 for an overall indicator comparison.

1. Where average class size data were unavailable, pupil-teacher ratios, or the number of students divided by the number of teach-ers in primary education, were used as substitutes.

2. The World Bank’s Knowledge Index (KI) measures a country’s ability to generate, adopt and diffuse knowledge. This is an indica-tion of overall potential of knowledge development in a given country. The KI is derived by averaging a country’s normalized

performance scores on the key variables in three Knowledge Economy pillars—education and human resources, the innovation system, and information and communication technology (ICT). The variables that comprise education and human resources are adult literacy rate, secondary education enrollment and tertiary education enrollment.


One of the clearest messages in this year’s rankings of intellectual capital and innovation is how complex the issues of educa-tional reform are. We became particularly aware of this after the global attention generated by the publication of the latest Programme for International Student Assessment (PISA) results in early December 2010 (released after compilation of this report), which showed Shanghai’s 15-year-olds outperforming every other nation’s students in math, science, and reading, in what was reported internationally as a perfect educational trifecta.

It is impossible—and not our intention—to diminish the scope of this achievement by Shanghai’s educational authorities. Yet, it would be wise to look at the data in our rankings holistically and analytically before we draw any premature conclusions from the undeniable feat of Shanghai’s schoolchildren.

The first dissonant note is struck in the column measuring precisely that attainment in math and science in which Shanghai’s youngsters excelled. Stockholm ranks eleventh with a score of 16, which is actually the city’s worst ranking in the entire chart. This datapoint in itself causes us to pause. If Stockholm—which ranks first in R&D expenditure, second in literacy and enrollment , and third in population with higher education—misses the top ten altogether in math and science, what does that tell us about the relative importance of that cat-egory as a whole in the creation of a dynamic, and dynamically innovative, society?

The fact that Western educators reacted strongly, not only to Shanghai’s students’ stellar perfor-mance on the recent PISA, but to some disappointing results in their own countries, makes clear that math and science skills are impor-tant measures of educational progress. However, they are only two among many critical factors that contribute to high achieve-ment. Our research shows that cities like Toronto—which ranks second in the indicator despite not placing first in a single variable—can excel in providing high-quality education and engendering an innovative environment without besting their competitors in any particular performance measure.

Over-reliance on any single measure is also ill-advised. For example, while Mexico City comes in fourth in classroom size, its low ranking in literacy and enrollment and even lower ranking in math and science skills suggest that its small classrooms have not led to significant leaps in learning.

Given the academic support for the relevance of classroom size, this outlier does not undermine the variable’s legitimacy. How-ever, it does underscore the value of examining educational performance through several different lenses. Success in one area of education does not neces-sarily indicate high achievement throughout the educational system. The American cities in our report—which consistently perform well in one or both of our measures of higher education, yet place in the bottom half of cities in math/science skills attainment among secondary students—illus-trate this point. Singapore has the

opposite problem: it outperforms other cities in math/science skills attainment, but has not been able to translate high academic achievement among its youth into a high college completion rate.

Looking beyond the class-room, cities have to find ways to harness intellectual capital for economic growth. Even cities with a wealth of world-class research universities, youth and adults with high educational achievement, and a demonstrated commitment to supporting R&D do not neces-sarily convert intellectual capital into economic success.

Tokyo’s entrepreneurial environ-ment ties for a lack-luster 14th in our report despite the fact that

the city places in the top five in research performance of top uni-versities, percent of population with higher education, math/ science skills attainment, and percent of gross domestic expen-diture on R&D.

In the end, what makes the data in this chart so challenging is that they do not lend themselves easily to superficial analyses or solutions. But they do help us formulate the questions and per-spectives that can lead to a richer analysis of what “education” means, both for the individual and the society at large.

The paradox of education: Translating educational theory into classroom reality and practical results transcends the ABCs

A classroom in Paris.


25

16

25

25

20

20

25

25

14

15

17

12

1

13

4

18

4

11

5

10

6

9

7

2

8

26

Digital economy score1

23

24

16

12

20

17

15

11

26

25

10

18

22

6

21

5

19

13

4

2

14

1

8

9

3

7

Software and multi-media development and design2

21

26

21

22

13

16

15

17

24

12

10

19

23

18

7

11

7

9

14

8

5

2

4

3

1

25

Broadband quality score

21

23

21

21

25

24

21

21

10

16

22

9

5

11

15

13

15

7

6

8

3

12

2

4

1

26

Internet accessin schools

Score

90

89

84

83

80

78

77

76

74

74

68

59

58

51

48

47

47

45

40

29

28

28

24

21

18

13

16

13

11

8

6

New York

Seoul

Stockholm

San Francisco

Chicago

Singapore

Hong Kong

Los Angeles

Houston

Tokyo

London

Toronto

Paris

Moscow

Berlin

Shanghai

Sydney

Beijing

Madrid

Istanbul

Santiago

São Paulo

Abu Dhabi

Mexico City

Mumbai

Johannesburg

21

20

19

18

18

15

14

12

11

9

7

6

4

3

2

1

22

23

24

25

26

Technology readiness:Honing the right stuff for the digital age

This year’s study clearly distinguishes between the tangible and intangible assets a city needs to lead in intellectual capital and innovation and straightforward technological prepared-ness. Here we focus purely on the software, hardware and bandwidth that are required for economic and academic progress. And correlation analyses of all the data do show an 81% positive correlation between cities with a robust technology backbone and strong intellectual assets. (See page 16 for an indicator heat map and www.pwc.com/cities for amodelling tool.)

Forward thinking nations and the top cities within them have had the resources and foresight to make high-tech plans, put them into action, and attract

big populations of tech-heads and related investors; notably including New York, Seoul, Stockholm, San Francisco, Chicago, Singapore and Hong Kong.

New York, home to more than 10% of the nation’s financial technology workers, tops the list overall in technology infrastructure and measures of the city’s potential to nurture a high-tech future. Stockholm scores near perfect in every area except software develop-ment and design and is the only European city among the top 10 finishers. San Francisco performs lower than might be expected not because creative, high-tech drive is lacking but rather because funding sources are more likely to be found in Silicon Valley than in the city itself.

1. The Economist Intelligence Unit (EIU) renamed this study this year. It previously was titled, “E-readiness.” Given the prevalence of Internet-connected consumers, businesses and governments and the indispensable role that digital communications and services now play in most of the world’s economies, the EIU believes that the countries included in its study already have achieved at least some degree of e-readiness. The study’s new title, the “Digital Economy Rankings,” captures the challenge of maximizing the use of ICT that countries face in the years ahead.

2. The index takes into account factors such as: education levels; size and track record of the ICT sector; quality of IT, air, port, road and railway infrastructures; quality of electrical supply; size of labor force; labor productivity; hiring and firing flexibility; labor relations; foreign ownership restrictions; business costs of terrorism; and cost of establishing a business.


High

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Interview

As President of the University of Pennsylvania, you tackled the dire urban problems confronting a depressed Philadelphia neigh-borhood near the campus. What motivated this initiative?

The neighborhood on the western edge of campus was in dreadful shape: crime had soared; one in five residents lived below the poverty level; the streets were filled with trash. Some of us believed the prosperity of the neighborhood and the university were inextri-cably linked. We felt we couldn’t have a future as a truly great university in a disintegrating community. Either the neigh-borhood would improve or the

As one of the most prominent property developers in the US, Mortimer Zuckerman honed a sharp focus on what makes cities founder or prosper. Zuckerman co-founded Boston Properties in that city, then broadened to real estate ventures in New York and other cities. He also owns US News & World Report and the New York Daily News and served as an associate professor at Harvard Business School. Here, he shares his views on politics, immigration, public employee obligations and the media— and offers special praise for the meritocracy that defines New York.

university would deteriorate. What galvanized us to action was our sense of civic duty. We decided that to be a role model for our students—to teach them the importance of civic respon-sibility and engagement—the university itself had to be civi-cally engaged.

Are universities in a good posi-tion to address such issues?

Yes, absolutely. Universities and medical centers—or “eds and meds”—are strategically positioned to drive community revitalization. They are poised with the resources and deep knowledge base to address pov-erty, unemployment, crime and

Ur am lam, que nis moditas sit eniaerio. consed sequodipid milic quisquiat.

Dr. Judith Rodin…Uses philanthropy to steer cities in new directions

affordable housing. In America’s 20 largest mega-regions, insti-tutions of higher learning or academic medical centers are among the top ten employers.

What sort of challenges arise when you nurture this kind of town–and-gown relationship?

Countless anchor institutions in struggling communities have tried to address individual issues, one at a time. If these efforts are piecemeal and tepid, they will fail spectacularly. How-ever, if they are systematic and holistic, the impact will be last-ing and transformative. Rarely do institutions make a commit-ment to work aggressively on all

2 | Cities of opportunity | PwC

fronts, all at once. At Penn, we reasoned that economic development, retail construc-tion, public education, home ownership, affordable rental housing and safe, attractive streets could leverage one another, creating powerful multiplier effects. And we found that when you tackle all these issues simultaneously, forging alliances with all of the stake-holders, urban transformation not only becomes very possible but becomes a lot easier.

As president of the Rockefeller Foundation, you’ve also been deeply involved in urban improvement. What have you found makes cities more livable?

We’ve identified three critical types of infrastructure that make a city livable. The first is its physical infrastructure, which makes a city attrac-tive and easy to navigate, but also relates to its capacity to withstand and deflect disrup-tive, climate-related shocks and other emergencies. This physical infrastructure includes diversity of transportation options, good housing, and access to clean water. Second, livable cities have a strong and resilient economic infrastruc-

As we dig our way out of the Great Recession, we shouldn’t just replicate the old, consumer-driven economy. We need to build the next economy. The key is for our metropolitan areas to develop their own economic plans tailored to their own strengths and assets. For example, the Seattle area is known for its high-tech industries and environmentalism, so they’re developing a whole new industry retrofitting buildings around the world to make them green.

ture, which means they must be diverse enough economically to withstand financial shocks and innovative enough to seize opportunities presented by challenges. Finally, cities must be sustained by a resilient social infrastructure. When all three of these infrastructures are strong, a city will not only create a better quality of life, but also greater economic success.

How key are cities as drivers of national economic growth?

In the US, metropolitan areas are the principle source of economic growth and innova-tion. The top 100 metro areas comprise two-thirds of our population but fully three-quarters of our GDP. They drive the national economy. As we dig our way out of the Great Recession, we shouldn’t just replicate the old, consumer-driven economy. We need to build the next economy. If we do the same old things and fail to innovate, we won’t compete in the global economy. The key is for our metropolitan areas to develop their own eco-nomic plans tailored to their own strengths and assets. For example, northeast Ohio has a long tradition in manufacturing,

and they are building on that today. The Seattle area is known for its high-tech industries and environmentalism, so they’re developing a whole new indus-try retrofitting buildings around the world to make them green.

What role do business and government play in nurturing a city’s economic growth?

For metropolitan economies to succeed, everyone needs to be at the table both to design the plan and execute it—govern-ment, business leaders, the local chamber of commerce, universities, civic leaders and more. Business is a key sector to include at the table. But an economic growth plan cannot succeed with business alone. We need government to provide investment incentives and to set the right policy framework and actions that enable business to grow. Universities conduct research and innovations that keep businesses competitive, and community colleges train workers that businesses need. All of these players, acting in concert, can produce the economic growth and jobs we need. Growing an economy doesn’t just happen. It must be intentional and grounded in system-wide strategies.

Partnership for New York | Cities of opportunity | 3

How can public-private partnerships help to produce vital cities?

Public-private partnerships are essential in tackling the complex problems of the 21st century. A hundred years ago, when the Rockefeller Foundation pio-neered American philanthropy, foundations served as social venture capitalists, testing novel ideas in small doses, then handing successful innovations over to governments, which scaled proven models in order to benefit large constituencies. The private sector simply gener-ated wealth, which gradually found its way into the coffers of social-sector investors. But globalization has changed everything. As a consequence, we can no longer maintain that neat division of labor in the realm of social innovation. The challenge today is to lever-age the unique assets of each sector—public, private and social—in unison, so that each becomes an engine of innova-tion. New forms of creative public-private partnerships are critical. For example, in New York and many other growing cities the world over, the lack of affordable housing is a criti-cal issue. To meet New York’s goal of building 30,000 units of affordable housing, the city needed for-profit and not-for-profit developers to assemble land and invest pre-construction dollars. And this pre-investment was just too high-risk for most commercial lenders. At Rock-efeller, we set out to bridge this gap by organizing the right players, respecting different

incentives and different degrees of risk tolerance. Our solution was to create the New York City Acquisition Loan Fund — a group of foundations, led by Rockefeller, that put up the first, high-risk tier of $36.2 million in capital for new affordable housing projects. This allowed commercial lenders such as JP Morgan, HSBC and other large banks with lower risk tolerance to provide the second tier of debt—about $190 million. This partnership enabled the city to build more than 3,000 units of affordable housing, with the option of thousands more in the pipeline.

What more can governments to do stimulate innovation?

Governments needs to create the right policies and incentives to design and scale innovative solutions. But it’s often challeng-ing for them to find promising projects and to sustain their success at a larger scale. Gov-ernments can also be inwardly focused and may not foster the culture of collaboration needed for innovation. New thinking is sometimes discouraged among government employees because ideas that fail translate into wasted funds. The Rockefeller Foundation is currently mak-ing grants to several city, state and US government agencies to adopt innovation processes and incorporate new models that leverage both networks and markets to help spot and scale solutions for more effec-tive delivery of service. We see networks and market-based mechanisms as innovation tools

the public sector can deploy to address social and economic challenges. Networks help forge relationships of trust, create systems for rapid diffusion of information and innovation, and bring to light the best ideas from the periphery. We’re piloting various projects to test how government can leverage networks: for instance, we’re supporting a pilot program in which the Federal Emergency Management Agency is seeking innovations from community-based networks to improve the handling of crises. Given the right incentives, market mechanisms can also address social need. So, we’ve also sup-ported the Social Impact Bond, a novel idea that raises capital for investment in the social sec-tor. This was piloted in the U.K. to fund a program designed to prevent prisoners from re-offending. It’s designed so that a share of the government’s savings is returned to investors. We’re now supporting a feasibil-ity study on implementing this scheme in US cities.

The Foundation takes an approach that it calls “impact investing.” How can this help revitalize cities?

We recognized that tackling issues like poverty, hunger and weak economic growth will require more than just donor aid and government subsidy—and traditional capital markets don’t yet see widespread opportunity in this space. So, we’re working to create infrastructure and momentum for impact invest-ing, a new category of finance


that focuses on investments designed to create both rea-sonable financial returns and positive social outcomes. For example, the Evergreen Coop-erative Development Fund, managed by ShoreBank Enter-prise Group in Cleveland, provides low-interest financing through a community-develop-ment loan fund, which invests in businesses linked to the procurement needs of local institutions such as hospitals and universities. These businesses, which are employee-owned or have a cooperative legal structure, are specifically designed to create living-wage jobs and asset-accumulation opportunities for employees living in low-income neighbor-hoods. Each cooperative that receives initial financing from the fund will repay the loan and is obligated to pay 10% of its pre-tax profits to the fund to help seed the development of new jobs through additional cooperatives. By demonstrating the viability of this approach in Cleveland, ShoreBank hopes to create an investment model that can be established in other urban areas beset by poverty, job dislocation and capital flight.

In 2008, the Foundation sponsored an initiative called Blueprint America to promote healthy urban expansion, including improvements in transportation. What needs to be done?

Transportation investment choices affect everything from access to jobs and services to the cost of goods. Each year, Americans lose 4.2 billion hours and $87 billion in productivity and wasted fuel stuck in traffic. Transportation is the second-highest expense for American households, and it’s the highest expense for low-wage, working families—a staggering 30% of household income. This unfair burden denies millions the opportunity for social mobil-ity and wealth creation, and it has a significant impact on the economic resilience of any community. Reforming our transportation system is critical if the US is to prosper and lead. Blueprint America, in partnership with the Public Broadcasting System, is raising awareness that America needs a fundamental restructuring of federal transportation policy. This will hopefully stimulate a very important national conver-sation, and ultimately lead to

legislative change. Rockefeller is engaging a diverse constitu-ency that includes civic leaders, grass-roots groups and system insiders who embrace a new transportation paradigm that promotes a low-carbon, transit-supportive policy. Both public and private sector resources must be mobilized in new partnerships, working with mayors and county executives in mega-regions like New York to help them frame smarter, more sustainable transportation policies, to elevate the stature of transportation challenges on the national agenda, and to help broker new financing models for effective private investment.

How has massive migration toward larger cities intensified urban challenges?

The main concerns we face today are climate change; rapid, unplanned urbanization; poverty; water and resource scarcity; and rising inequal-ity. To take just one of these challenges, let me focus on climate change. A year ago, leaders of 192 nations gathered in Copenhagen with the aim of negotiating an agreement to reduce carbon emissions glob-ally. Copenhagen didn’t yield

The impact of rapid urbanization is a great concern. For the first time in history, more people around the world live in urban communities than in rural areas, and cities can’t cope with this massive migration. In nearly all the urban areas that will experience the most dramatic growth, we find in-adequate housing, food and transportation—let alone jobs, schools or health care. And the floods, droughts and other perils resulting from climate change only multiply the dan-gers in these overcrowded areas.


the desired agreement, but did result in the developed world committing $30 billion by 2010 and $100 billion by 2020 to help the developing world take action on climate change. This support was supposed to be balanced between helping developing nations make greenhouse gas reductions and helping vulnerable nations build resilience to the chang-ing climate system. Since these commitments were made, floods in Pakistan have killed over 1,600 people and destroyed the homes of millions more; wildfires and heat in Russia have led to over 50 deaths, burned over 2,000 homes, and destroyed a third of Russia’s wheat crop; and Hurricane Thomas has caused even more devastation in Haiti, flooding makeshift villages and doubling the number of deaths due to cholera. While it’s impossible to tie any of these individual events exclusively to climate change, they collectively paint a picture of what our future may look like as the planet warms. To help address such concerns, the Rockefeller Foundation committed $70 million three years ago toward an initiative on building climate change resilience in vulnerable cities in India, Thailand, Indonesia and Vietnam where populations are growing significantly. We’ve also created a network so that such experiments will teach other countries what does and doesn’t work—and show them how to develop an implementable plan that can ultimately save billions of dollars and countless lives.

What about the challenge you mentioned of dealing with such rapid, unplanned urbanization?

The impact of rapid urbaniza-tion is a great concern. For the first time in history, more people around the world live in urban communities than in rural areas, and cities can’t cope with this massive migra-tion. The growth of slums is symptomatic of this new reality in which urban expansion is characterized by informality, illegality and unplanned settle-ments. In nearly all the urban areas that will experience the most dramatic growth, we find inadequate housing, food and transportation—let alone jobs, schools or health care. And the floods, droughts and other perils resulting from climate change only multiply the dangers in these overcrowded areas. This huge urban migration presents other problems, too, as cities grow to form mega-regions, urban corridors and city-regions. While the clustering of cities can drive economic growth, it can also lead to unbalanced regional and urban development.

So what needs to be done?

As global leaders, we face a choice: either we watch as a deluge of billions of people surges into unplanned urban regions around the world—depleting the natural resources on which our survival depends, fueling the spread of disease and possible pandemics, and jeopar-dizing national security—or we lead by developing innovative, collaborative responses. Every

community has a stake. And we must start with the recognition that none of us can solve these challenges alone, which again speaks to the importance of public-private partnerships.

What’s the Foundation doing to combat the enormous environ-mental threats facing cities?

In the last two years, we’ve committed more than $200 mil-lion to shaping innovations that address the interconnected chal-lenges of expanding economic opportunity, while mitigating and adapting to global climate change. This is one element of our effort to spread smart globalization—helping com-munities become resilient in the face of grave global perils, while tapping into the promise of interdependence and technol-ogy to promote more equitable growth. One of our efforts is a targeted attempt to build a body of knowledge around the planning necessary to create a resilient urban physical infrastructure where it doesn’t exist—and, where it does, to identify the points at which it might buckle under the pres-sures of global warming and severe weather. For instance, cities must have provisions for temporary shelter in the wake of a natural disaster induced by climate change. So, in New York, we sponsored “What if NYC… A Design Competition for Post-Disaster Provisional Housing,” which led to a fabu-lous modular design solution to housing the city’s population after an environmental catastro-phe like a Category 3 Hurricane.


We also recently helped to fund the Rising Currents project, which was exhibited in Man-hattan’s Museum of Modern Art. Interdisciplinary teams of engineers, architects and urban planners proposed the rede-sign of New York’s shoreline to withstand an impending rise in the sea level. The designers developed innovations to deal with rising waters such as a fingered shoreline that reduces wave velocity, the introduc-tion of porous materials into the streets of lower Manhattan to absorb water quickly and release it slowly, and hous-ing built to hang above the shoreline. This was more than merely a fascinating thought experiment. Forty years from now, three-quarters of people on the planet will be packed into cities. The majority of these cities will be on or near water. It’s not far-fetched to think that an artistic conception of sustainable urban planning that focused on water’s rise and flow might just inform the real-world infrastructure of cities in coming decades. We’re also working globally through projects like the Asian Cities Climate Change Resilience Network, which was one response to a mounting consensus that no growing cities find themselves in greater peril than those in Southeast Asia. By mid-century, climate change could subject 132 million people in Asia to resurgent hunger and poverty, and a billion people across the continent could struggle to find fresh water. This intervention is designed to test strategies that can also be adopted around the world.

The Asian Cities Network will chart new approaches for cities everywhere to prepare for and recover from very local impacts of the global environmental cri-sis, while aggressively courting governments and donors who can apply successful approaches on a wider scale.

Many urban workers in the US and other developed economies have felt the impact of jobs being outsourced. Are there creative ways of addressing this economic insecurity?

Millions of workers have been left economically insecure by the fraying of our social safety nets in recent decades—and this insecurity has only been exacerbated as jobs have been offshored and outsourced, and as the economy has contracted in the last two years. Indeed, many cities in the US and Europe have been hit par-ticularly hard by the Great Recession and the increased international mobility of capital. What’s needed is a mixture of different approaches—some that focus on building export-ori-ented markets, others that place greater emphasis on develop-ing new local markets and economies. We recently forged a partnership with the Brook-ings Institution to give greater attention to the role of business in US metropolitan regions in building an economy that will be increasingly export-oriented, lower-carbon and innovation driven. Our focus is on creating more and better jobs. Recog-nizing that the world we’re living in is so interconnected

and interdependent, we must begin to identify and meet the demands of emerging-market metros by building on endemic market strengths here in the US This will involve careful assess-ment, planning and execution. We also recognize that the very interconnectedness of our world can lead to devastating envi-ronmental shocks and on-going boom and bust cycles that can wreak havoc on families and households. With the dual pur-pose of fighting climate change and boosting quality employ-ment in a new, green economy, we’re supporting locally focused market-based solutions that can be replicated around the country. For example, the Rock-efeller Foundation is supporting a coalition of organizations to develop the policy design and implementation roadmap for Green Jobs Green NY, which was passed into law last year with an allocation from the state government of $112 million. This program aims to retrofit one million homes through-out New York, and will use a financing mechanism in which a portion of savings in home utility bills are reinvested for more retrofits. A resilient, green economic infrastructure can ensure high-quality jobs for city dwellers and a sustainable path to growth.

What can be done to improve the world’s slums?

It’s critical to think and act holistically to ensure that people in rapidly-growing urban com-munities can access resources such as housing and sanitation,


water and electricity, health services and public safety. With that in mind, we’ve sought to identify new solutions, recog-nizing that cities are often the first to adopt breakthrough technologies and innovations. We experiment through a broad spectrum of urban innovators, including the University of Cape Town, which launched the African Center for Cities—the continent’s first urban issues think tank—and Slum Dwell-ers International, which is a grassroots confederation of slum dwellers, civil society leaders and other professionals that helps people in slums to access services and claim basic rights. We’ve learned that urban devel-opment is more sustainable and effective if poor communities are involved as partners and not only as beneficiaries. With this in mind, we invested in 11 networks of community-based organizations and their part-ners from low-income urban areas around the world. They work with municipal govern-ments, multi-lateral donors and private benefactors. And together they form partner-ships, collect data, co-ordinate efforts and leverage resources to improve local circumstances. For instance, Slumdwellers Inter-

national Kenya, a network of community-based housing orga-nizations, is developing housing for the urban poor in Nairobi. We’re assisting their outreach to global funders like the World Bank, and also to the Kenyan government, local universi-ties and think tanks. The idea is that they can solicit funding from international sources, but deploy it to capitalize solutions that come from local com-munities. This enables people impacted by policy to have a voice in shaping it. In 2010, we also co-hosted a conference in Nairobi on upgrading slums, with over 60 participants from 10 countries, including World Bank representatives and Minis-ters from Tanzania, Uganda and Kenya. The talks that started there have continued with our partners: we’re funding SDI-Kenya, the University of Nairobi and the University of California, Berkeley to work with poor communities in putting forth ideas for investing in slums. The World Bank has also agreed to work with our partners to test this approach in selected settle-ments. This is significant, since it’s essential for communities to be key partners in creating more inclusive models for urban development.

How is the foundation trying to get quality health services to people in cities who might oth-erwise be impoverished by the crushing cost of medical care?

The World Bank says that in low-income countries, out-of-pocket spending accounts for 93 percent of private spending, and more than 60 percent of total health spending. While, on average, only 5 percent of people fall ill in a given year, the lack of health insurance and effective social protection programs means that these people pay the lion’s share of the national health-spending bill. When it comes to health-care access and quality, the discrepancies that burden the poor aren’t limited to develop-ing countries. Global spending on health has increased to some $7 trillion annually, yet access to affordable, quality services hasn’t improved—including here in the United States. We’re working to advance universal health coverage, which would mean more affordable and equi-table access to healthcare for large urban populations. We’ve initiated a global task force on universal health coverage, made up of national and international leaders, in an effort to align

Each year, Americans lose 4.2 billion hours and $87 billion in productivity and wasted fuel stuck in traffic. Transportation is the second-highest expense for American households, and it’s the highest expense for low-wage, working families—a staggering 30% of household income. Reforming our transportation system is critical.

www.pwc.com/cities

www.pwc.com


institutional efforts and har-ness political will in low-income and middle-income countries. Achieving an impact in cities will require a reorganization of health financing at a national level. So, we’re supporting gov-ernments with the technology, talent and training to become better stewards of health systems—from planning to financing to delivery. We’re also facilitating cross-border learn-ing—for example, by organizing a workshop earlier this year at which health officials from Ghana, Vietnam, Rwanda, India, Indonesia and the Philippines discussed best practices and new ideas for implementing universal health coverage. In addition, we’re supporting various online health initiatives that will build on immense leaps made in maternal and child healthcare, while also helping to acceler-ate efforts to combat diseases such as AIDS. This includes our support for Heartfile, an NGO in Pakistan, where three quarters of the population is uninsured and therefore deeply vulner-able to the risk of emergency health expenditures. Heartfile launched a trial of a new fund-ing mechanism that streamlines philanthropic donations into a healthcare fund for the unin-sured: using a mobile device, a healthcare worker verifies the patient’s poverty status with a government database, then relays a request to Heartfile for

financial assistance; the health-care fund then appeals to donors around the world on behalf of this particular patient through a Web-based platform, and fund-ing is released to that specific patient within 72 hours. Donors are updated on the use of their contribution in real time through SMS messaging.

Why did the Foundation decide to award “Cities of Service” grants to 20 American cities to foster volunteerism?

America is a nation founded on citizen activism; it’s an under-current that has run throughout our history. During this time of mass urbanization, our needs are growing in scale and complexity. Engaging citizens in community service can help elected officials respond to these needs. That’s why we invested in the Cities of Service initiative. This initiative started in 2009, when a group of forward-think-ing, bipartisan mayors led by Michael Bloomberg in New York wanted to dramatically increase civic engagement in cities across the country. The organization was designed to co-ordinate city-wide service strategies, engage the service world as partners with cities, and focus volunteer efforts on urban priorities. We held a competition and received hundreds of applications from cities throughout the nation, each developing a compre-hensive service plan to match

volunteers and community partners to the areas of greatest need. Partnering with Bloom-berg Philanthropies, we selected the 20 best applicants and funded a newly created role—a chief service officer—in 20 mayors’ offices. So, these cities now have a point person with full-time responsibility for foster-ing volunteerism. Already, the program has shown dramatic results. Last spring, when tre-mendous flooding in Nashville killed nearly three dozen people, the city’s chief service officer used her award-winning plan to activate 17,000 local residents to assist in the relief and clean-up effort. Nashville’s mayor, Karl Dean, attributed the city’s swift response and recovery to the volunteerism plan the city had developed as part of its applica-tion to Cities of Service.

The Foundation also earmarks funds for cultural innovation in New York. Why is it necessary to nurture the arts in a city?

Several years ago the founda-tion helped fund a report by the Center for an Urban Future about the role of the creative sector in New York’s economy. The report firmly established the link between a vibrant arts sec-tor and strong neighborhoods. It also affirmed that creativity is New York’s most precious natural resource, and that we all have a role to play in stewarding it. The Rockefeller Foundation

Cultural Innovation Fund grew out of that important realiza-tion. So, this is all grounded in our conviction that the arts are essential for the lifeblood of a great city. We also believe that supporting innovation in creative expression can spark innovation in areas like housing, education, the environment and the economy.

Which are your favorite cities to visit?

I love all cities that are walkable, well-lit, teeming with energy day and night, architecturally exciting, and with great local cuisines.

What do you like most about the cities where you’ve lived? And what would you do to improve them?

New York has all the charac-teristics I just described. I also love Philadelphia for its history and its ineffable spunkiness; Miami for its pulsating energy and Latin influence; New Haven for its New England charm and spirit. To improve them, I’d kill the highways in Philadelphia and New Haven that challenge easy access and visibility to the waterways; I’d unite the various municipal governments that make governing Miami so tough; and I’d give Mike Bloomberg a fourth term in New York.


19

21

23

18

12

16

15

13

9

24

7

26

17

11

20

10

25

2

4

14

3

8

6

5

2

22

Miles of mass transit track

10

8

12

17

11

2

24

23

26

4

25

1

21

15

3

13

5

19

20

14

18

22

6

16

9

8

Cost of public transport2

26

20

23

17

13

14

15

19

10

25

8

12

21

9

16

11

22

2

4

7

3

5

18

6

2

24

Mass transit coverage1

17

13

12

8

6

Paris

Chicago

New York

San Francisco

Madrid

Tokyo

London

Hong Kong

Seoul

Mexico City

Stockholm

Beijing

Sydney

Moscow

Shanghai

Toronto

Singapore

Berlin

Abu Dhabi

Istanbul

Los Angeles

Houston

Santiago

Mumbai

São Paulo

Johannesburg

21

20

20

18

17

15

14

12

10

9

7

5

4

3

3

1

22

23

24

25

26Nothing is more fundamental to a city’s definition than its built environment. Yet long before the Internet, people knew that it takes more than bricks and mortar to make a community: it’s the connections—the indi-vidual, social and economic networks—that transform a thriving city into a global center and, more rarely, a metropolis of historic resonance.

It is no accident, therefore, that one of the most culturally evocative icons of each of the top four cities in this category (in ascending order) is its respective transport system: San Francisco’s cable cars, New York’s subway, Chicago’s “L” and Paris’ Métro—a particularly apt example of municipal infrastructure becoming a part of, and reinforcing, a city’s cultural identity. (Although it is now mostly tourists who ride them, cable cars remain emblematic of San Francisco’s robust transit network.)

Still, an iconic rapid transit system does not ensure optimal performance in this category. Moscow has one of the most cel-ebrated metros in the world—and does very well in cost and coverage of mass transit— but just misses the top half of cities here. (If nothing else, traffic above ground should ideally, flow as well as traffic below the surface; Moscow, however, is less effective in dealing with its traffic congestion than most cities and is tied for last in the number of licensed taxis.)

On the other hand, Sydney, not known for mass transit, scores highest in miles of track, while Stockholm scores second in coverage, just below Paris. Unsurprisingly, Stockholm also is tied with Singapore at the very top for alleviating traffic congestion, as both cities are famous, each in its own way, for their commitment to sustainable urban develop-ment—which, in this case, means congestion charges and, in Singapore at least, severe con-straints on vehicle ownership (see page 68).

While Mexico City’s metro system is the larg-est in Latin America, it has been operating for only 40 years and, so, cannot compete with longer established systems either in terms of coverage or extent of track. Nonetheless, the Mexican capital leads the rankings in keeping

Transportation and infrastructure: Good connections remain at the nexus of strong cities

down the cost of mass transit and also is first in licensed taxis, which are widely considered part of public transport (because of the low fares) and, therefore, used to supplement the city’s transportation needs.

Cost of public transport, it should be noted, shows the strongest negative correla-tion with measures such as housing, quality of living or literacy and enrollment of all variables in this year’s report. In fact, it moves in the opposite direction from them, tending to fall as they rise, which suggests that a rela-

tively higher cost of transport is acceptable if the system provides access and convenience to citizens. (See discussion of indicator cor-relations on pages 18-19 and customizable heat maps for the 66 variables on www.pwc.com/cities.)

New York leads in aircraft movements, fol-lowed by Chicago, London, Paris and San Francisco. What is interesting about these rankings is that Paris, Chicago, New York and San Francisco also are, in that order, the leading cities in this indicator.



24

11

8

19

17

15

12

23

26

22

18

6

2

14

9

20

10

25

5

3

4

21

16

13

2

7

Licensed taxis

23

25

22

16

21

24

10

12

14

4

20

9

17

19

15

8

7

2

13

18

11

1

6

5

3

26

Aircraft movements

18

18

24

18

18

18

18

9

2

26

2

24

9

12

21

26

24

21

9

9

21

12

4

9

4

12

Traffic congestion4 Score

168

159

158

156

154

152

149

149

145

134

134

133

129

128

127

127

126

113

104

99

93

92

82

80

80

55

23

22

16

17

24

26

15

14

8

4

21

10

13

19

9

12

6

3

11

20

18

2

1

7

5

25

Incoming/Outgoingpassenger flows

3

12

6

8

21

16

18

20

25

9

6

17

11

16

26

13

6

24

24

3

10

8

20

16

3

24

Skyscraperconstruction activity5

22

22

22

24

15

18

22

12

14

16

26

24

17

12

8

13

8

6

9

5

4

3

3

3

25

10

Airport to CBD access3

17

13

12

8

6

Paris

Chicago

New York

San Francisco

Madrid

Tokyo

London

Hong Kong

Seoul

Mexico City

Stockholm

Beijing

Sydney

Moscow

Shanghai

Toronto

Singapore

Berlin

Abu Dhabi

Istanbul

Los Angeles

Houston

Santiago

Mumbai

São Paulo

Johannesburg

21

20

20

18

17

15

14

12

10

9

7

5

4

3

3

1

22

23

24

25

26


High

Low

Medium


1. Kilometers of mass transit track for every 100 square kilometers of developed and developable land area.

2. Cost of public transport data refers to the cost for the longest mass transit rail trip within the city boundaries. However, bus trips are used for cities without rail systems.

3. Measure of the ease of using public transit to travel between a city’s central business district and the international terminal of its busiest airport in terms of international passenger traffic. Cities with direct rail links are preferred to those with express bus services. Cities with rail links with fewer transfers are ranked higher than those with more.

4. The traffic congestion variable is taken from the 2009 Mercer Quality of Life Reports and adjusted using two additional sources. This reflects not only traffic congestion but also the modernity, reliability and efficiency of public transport—measures of a city’s active management of the issue.

5. A skyscraper is defined as any building 12 stories or greater in height.


Modern urban thinking has to embrace the regions into which big cities are interwoven in order to be effective.

The city-suburban conundrum: With all politics local, how can regions avoid getting lost in the sauce?

While the suburbs may never ignite the imagination in quite the dramatic way cities have—from Berlin Alexanderplatz to Last Exit to Brooklyn, “Metropolis” to “Slumdog Millionaire”, Carl Sandburg to Karl Marx—it is clear that cities no longer are the lodestars of socioeconomic activity they once were. Modern urban thinking has to embrace the regions into which big cities are interwoven in order to be effective.

In order to craft regional policies, the first step is understanding what exactly constitutes a region. This seemingly straightforward task is complicated by the fact that metropolitan regions are measured differently around the world. The US and Canada focus on commuting ties in determin-ing regional boundaries.1 Mexico weighs planning and political considerations, among others.2 Australia accounts for transport patterns, telephone traffic, retail shopping, fresh goods marketing, provincial newspaper circulation and radio coverage when drawing regional boundaries for cities in New South Wales, where Sydney is located.3

Policymakers interested in stimu-lating regional development also must contend with the reality that metropolitan regions often are informal groupings of various ad-ministratively separate localities. These are often larger than any individual cities but smaller than states or provinces.4 The techni-cal director of the São Paulo State Metropolitan Planning Public Company noted in late 2006 that dealing with metropolitan prob-lems is significantly hampered by the absence of formal regional governments in Brazil, especially due to difficulties securing fund-ing for infrastructure projects that extend beyond local borders.5 These problems are not isolated to emerging economies. In New York City, a plan to add another tunnel

But how can regional urban-ism be managed in a world with overlapping jurisdictions; competing needs; and incom-plete, inconsistent measurements? Cities of Opportunity found it nearly impossible to recreate our core cities study at the regional level. The analogous data do not exist. However, our research did reveal some useful insights into challenges and opportunities for the world’s key urban regions.

into Manhattan hit a speed bump when the state governor in New Jersey across the river decided the project was not affordable.

Intraregional competition adds another difficult dimension to the puzzle. A comparative study of greater Beijing and Berlin-Brandenburg that was presented at an international conference of planning professionals in 2008 pointed out that even in the capital region of China, a nation with more central planning than most, Beijing competes fiercely

1. “OMB Bulletin No. 10-02: Update of Statisti-cal Area Definitions and Guidance on Their Uses,” United States Office of Management and Budget, December 1, 2009, accessed January 10, 2011, http://www.whitehouse.gov/sites/default/files/omb/assets/bulletins/b10-02.pdf; and “Information on Standard Geographical Clas-sification (SGC) 2006,” Statistics Canada, last modified August 18, 2008, http://www.statcan.gc.ca/subjects-sujets/standard-norme/sgc-cgt/2006/2006-intro-fin-eng.htm.

2. “Delimitación de las Zonas Metropolitanas de México 2005,” Secretariat of Social Develop-ment, National Population Council, and National Institute for Statistics, Geography, and Informat-ics, November 2007, accessed January 10, 2011, http://www.conapo.gob.mx/publicaciones/dzm2005/zm_2005.pdf.

3. Brian Pink, “Australian Standard Geographi-cal Classification (ASGC),” Australian Bureau of Statistics, July 2010, accessed January 10, 2011, http://www.ausstats.abs.gov.au/Ausstats/sub-scriber.nsf/0/0001EA65CA16C1B9CA25779F00179316/$File/12160_july%202010.pdf.

4. Rui Antonio Rodrigues Ramos and Antônio Nélson Rodrigues da Silva, “A Data-Driven Approach for the Definition of Metropolitan Regions,” University of Minho Institutional Repository, accessed on January 10, 2011, http://repositorium.sdum.uminho.pt/bitstream/1822/2320/1/1c2.pdf.

5. Eloisa Rolim, Technical Director, São Paulo State Metropolitan Planning Public Company, “Metropolitan Regions in Brazil: A Model of Shared Management,” November 29, 2006, obtained via the World Bank, accessed January 10, 2011, http://info.worldbank.org/etools/docs/library/238536/13_Summary_Sao_Paulo.pdf.


Chicagoland sprawls for miles beyond the heart of the city and its municipal borders and into two neighboring states.


with nearby municipalities.6 For regions that cross over mid-level administrative divisions, the problem goes a step further. An October 2010 report from the Center for American Progress highlighted several ways that state-oriented policymaking can run counter to regional economic and social needs in the 44 met-ropolitan statistical areas in the US that cross over state boundar-ies, which include the regions surrounding New York City and Chicago.7 In the end, intraregional competition can make policy-making and funding for regional projects a free-for-all with unpre-dictable outcomes.

However, solutions are bub-bling up as awareness of the critical importance of a regional focus broadens. The officials and policy advisors from 50 metropolitan areas across Europe that comprise the Network of European Metropolitan Regions and Areas (METREX) have backed the notion that metropolitan areas are now the level at which many urban objectives can be realized

most effectively.8 As a result of this heightened focus on regions, more policymakers are embracing regional governmental models.

Some areas have taken the most straightforward approach to regional governance: creating an administrative division that includes both the city center and its surroundings. Mumbai was a pioneer in this regard, hav-ing merged its suburbs into the municipality over the course of the 1950s.9 However, this is by no means the only structural arrangement that is conducive to metropolitan development. The Organisation for Economic Coop-eration and Development (OECD) contends that there is no optimal regional governance strategy and instead advocates that each metropolitan area develops its own responses tailored to specific regional challenges.10

Other cities have combined some but not all of their governmental functions with satellite localities. Berlin joined with neighboring Brandenburg to create the Joint

The private sector is getting in on the act as well, thanks to the increasing realization that the problems and solutions of cities and regions will not be crafted unilaterally.

Spatial Planning Department (JSPD), thereby carving out a specific policy area for joint management while otherwise remaining independent.11 JSPD does not replace but is interwo-ven into both local governments.12 JSPD has facilitated cooperation between Berlin and Brandenburg on crucial regional projects such as laying the groundwork for the new Berlin-Brandenburg Interna-tional airport in Schönefeld, on the southeastern outskirts of Berlin.13

The private sector is getting in on the act as well, thanks to the increasing realization that the problems and solutions of cities and regions will not be crafted unilaterally. The European Union’s “Joining Forces” study under-scored the importance of local and regional authorities actively seeking opportunities to involve the private sector in metropolitan governance.14 Businesses also have taken the initiative to get involved in regional development on their own. For example, the Ford Foundation’s “Metropolitan

Sydney harbor.

6. Yan Tang and Jingquan Xu, “Regional Gov-ernance of the Capital Metropolitan Region: A Comparative Study of Berlin-Brandenburg and Beijing” (paper presented at the 44th annual congress of the International Society of City and Regional Planners, 2008), accessed January 10, 2011, http://www.isocarp.net/Data/case_stud-ies/1242.pdf.

7. Brian A. Sponsler, Gregory S. Kienzl and Alexis J. Wesaw, “Easy Come, EZ-GO: A Federal Role in Removing Jurisdictional Impediments to College Education,” Center for American Progress, Octo-ber 2010, obtained via the Institute for Higher Education Policy, accessed January 10, 2011, http://www.ihep.org/assets/files/publications/a-f/(Report)_Easy_Come__EZ-GO.pdf.

8. “METREX Brochure: Making a Metropolitan Contribution,” The Network of European Metro-politan Regions and Areas, accessed January 10, 2011, http://www.eurometrex.org/Docs/About/EN_Brochure.pdf.

9. “Evolution of the Corporation,” Municipal Corporation of Greater Mumbai, accessed Janu-ary 11, 2011, http://www.mcgm.gov.in/irj/portal/anonymous/qlhismilestone.

10. Lamia Kamal-Chaoui, “Metropolitan Gov-ernance in OECD Countries,” OECD Territorial Reviews and Governance Division, accessed January 10, 2011, http://www.oecd.org/ dataoecd/59/40/6100078.pdf.

11. “About Joint Spatial Planning,” Berlin- Brandenburg Joint Spatial Planning Department, last modified January 2011, http://gl.berlin- brandenburg.de/ueber/index.en.html. See also Tang and Xu, “Regional Governance of the Capi-tal Metropolitan Region.”

12. Ibid.

13. Tang and Xu, “Regional Governance of the Capital Metropolitan Region.” See also “About Joint Spatial Planning” and “Airport BBI,” Berlin Airports, accessed January 11, 2011, http://www.berlin-airport.de/EN/UeberUns/index.html.

14. “Joining Forces: Final Outputs - Fact Sheet,” European Union URBACT Program, May 2010, accessed January 11, 2011, http://urbact.eu/fileadmin/Projects/Joining_Forces/documents_media/JoiningForces-FinalOutput-May2010.pdf.

15. “Helping America’s Metropolitan Regions Build Prosperity and Expand Innovation,” Ford Foundation, May 18, 2010, accessed January 11, 2011, http://www.fordfoundation.org/ issues/metropolitan-opportunity/promoting- metropolitan-land-use-innovation/news?id=375.

16. “Context: What Is a Metropolitan Region? Why Do They Matter? What Is “Effective Met-ropolitan Management”? or What Performance Should We Be Aiming For?” (presentation pre-pared by Chreod Group, Inc. for the World Bank, May 24, 2007), obtained via the World Bank, accessed January 11, 2011, http://siteresources.worldbank.org/INTURBANDEVELOPMENT/Resources/336387-1180031098365/Leman.pdf.

17. “METREX Impressions: The First Ten Years 1996 – 2006,” The Network of European Met-ropolitan Regions and Areas, 2006, accessed January 11, 2011, http://www.eurometrex.org/Docs/About/EN_METREX_Impressions.pdf.

Opportunity” grant-making program has launched a $200 million, five-year campaign to promote economic growth in US metropolitan areas by integrating housing, transportation and land use policies.15

So what should all of the players in regional develop-ment be working toward? A World Bank-commissioned study of regions in the Yangtze Basin found that effective metropolitan management requires satisfying the demand for housing and buildings; constructing and maintaining affordable, safe and reliable transport, water, telecom-munications and utilities infra-structures; ensuring that firms locate in the region and have ac-cess to supply chains and output markets for their products after doing so; and minimizing any economic disadvantages associated with regionalization for indi-vidual cities within the region.16 These principles have internation-al appeal. METREX has laid out a similar set of key issues that affect the competitiveness and cohesion of European urbanized areas

and additionally has stressed the need for strategies that promote sustainability and the integration of infrastructure and services.17

In the end, modern urban think-ing can only be effective if it is framed in terms of cohesive urban regions. And here John Updike, who celebrated the passions of the suburbs but rooted for his local city team, the Boston Red Sox, may be setting the right tone for the future.


It has been quite a while in the popular imagination since the thought of a skyline conjured up the image of the “apparent juncture of earth and sky, an outline … against the background of the sky.”1 Most of us associ-ate skylines with the dramatic contours of cities like Hong Kong and New York. But the fact that Paris led the transportation and infrastructure category this year, although it fell near the bottom in skyscraper construction, prompts the question: What type of skyline defines a city today?

The answer is not made any easier by the city leading the rankings in skyscraper con-struction, Toronto. Even as its business district has sprouted with skyscrapers, its residential

neighborhoods have contributed to consistently putting Toronto toward the top of our study on measures of demographics and livability, including a first-place finish in the quality of living vari-able this year. More than a center of global business and finance alone, Toronto is a community in which people want to live and expect to lead rich and meaningful lives.

What is clear is that all human communities, but particularly cities, which are the most com-plex, require multiple systems of connectivity. Just getting around efficiently, comfortably and safely—to work, to the theater, to a stadium, to a café or restau-rant—is a fundamental act of

The sky above, the streets below: One size does not fit all when it comes to cityscapes

Aerial view overlooking Wanchai, Hong Kong.

1. http://www.merriam-webster.com/dictionary/skyline.

This variable appears to confirm what most people understand intuitively: World-class infrastructure plays an important part in bestowing world-class status to a city. (Although it also should be said that maintaining world-class status demands continually upgrading one’s infrastructure—and airport facilities, in particular—especially when so many cities in Asia and Latin America are competing with the established cities of Europe and North America for global prominence.)

Just as one would expect given their mature global presence, London, New York, Paris and Chicago also are among the top five cities in incoming/outgoing passenger flows, with Tokyo joining the group here (in lieu of San Francisco). Nonetheless, Beijing and Johan-nesburg are on top of the rankings in airport to CBD access. In taking the lead in this variable, Beijing and Johannesburg confirm that newer cities—or, as in the Chinese capital’s case, cities with a more recent return to global prominence—can leapfrog ahead of more established cities to put in place the infrastructure that will ensure future success. Finally, another city that has also recently entered the global arena with great confi-dence and effect, Toronto, leads in skyscraper construction activity.

In closing, it is difficult to avoid one last observation: By the signs of this indicator at least, while the FIFA World CupTM held in South Africa last year certainly expedited essential infrastructural projects in Johannes-burg (Phase 1 of the Gautrain Rapid Rail Link to the airport and, even more important, the Rea Vaya Bus Rapid Transit System), the city still has much to do to improve the daily lives of its citizens.



cohesion and connection in the urban experience. High density is thoroughly debilitating when it leads to isolation and a feeling of entrapment (as all urban planners learned following the experience on both sides of the Atlantic with public housing in the fifties and sixties).

The reason why many European (and other) cities have opted to restrict skyscraper construc-tion in the heart of their historic centers is because the phrase “human scale” has an undeniable resonance to most people. On the other hand, New York proved a long time ago that humans have an extraordinary capacity to define for themselves what is a comfortable scale for modern life.

Residing in a Manhattan high-rise does not preclude being extremely connected, not only to your neighborhood but to an entire

world of other neighborhoods. On the contrary, living in a low-rise city such as Paris, Berlin, Madrid or Stockholm does not necessarily lead to enhanced connections between people if there are not other, more important bonds to bring them together. Under the circumstances, a “skyline,” and the values ascribed to it, seems to be less relevant to the urban experience than the more flexible notion of a “cityscape.”

No one would argue that Hong Kong’s skyline is not impressive; or that the extraordinary sky-scraper construction throughout Asia’s major cities has not created skylines of considerable verve and cultural presence; or that a mas-sive spire rising out of a Middle Eastern desert is not exhilarating. But the view of San Francisco Bay from any number of spots on Pacific Heights is breathtaking. Much less open but equally

stunning views can be had in any direction, up or down the canals, throughout Amsterdam’s Nine Streets.

And is there a more magnificent, more historically awe-inspiring vista in any city than that of the Golden Horn, whether one finds oneself on Istanbul’s Asian or European shores? Finally, and most famously, having been reproduced in countless movies (and certainly destined to be end-lessly reproduced on postcards), is the vista up or down the Seine from the Pont des Arts. It may have become a tourist cliché by now, but it remains, year in and year out, a genuinely spectacular cityscape.

If nothing else, a cityscape reveals more about a city’s sense of itself —and perhaps even of a commu-nal aesthetic and an openness to diverse, evolving possibilities of

Stockholm, a busy regional hub with a low-density lifestyle.

what a city may be—than a sky-line does, which probably is why both admirers of Jane Jacobs and Rem Koolhaas agree on the term. Put another way, a skyline is a quantitative measurement that becomes significant only when it is transformed, as New York’s was in the early decades of the previ-ous century, into a shared emblem of sophistication, imagination, sociability, ambition, and promise. The cityscape of tomorrow will surely come in different sizes.

Interview

What advances are occurring now in transportation that will change life in cities and the metropolitan beltways around them?

KB: We see more congestion due to the use of cars, resulting in pollution and other negative effects. The solution is public transportation, starting from railways, and that comes in a variety of modes. Trams, for example, are more adaptable for smaller cities or smaller numbers of passengers. The ride is pleasant because you can see outside, you’re not in a tunnel. Vehicles are modern and stylish with huge windows and wide doors with low floors almost at street level. For moving a lot of

people quickly within a city we have the metro. And for connect-ing big cities with their outer regions we have commuter, or regional, rail links with comfort-able, air-conditioned trains.

Why are trains the wave of the future now?

KB: Because they solve many of today’s traffic problems better than cars. They can transport huge numbers of people—each day our national railway com-pany transports as many people as our largest airline, Lufthansa, carries in one year—using very limited space and with little impact on the environment. This also eases traffic on the roads.

Dr. Klaus Baur, left, and Guenther Krug stand against the ZEFIRO—the train that will drive China’s high speed rail network toward what Bombardier calls “the fastest way to save the planet.”

In the past it was very important to have your own car, to be in your own space. Public transport was more for the ordinary peo-ple who couldn’t afford to drive their own car into the city. Now there is an emphasis on clean, efficient, comfortable transpor-tation, so businessmen will want to take the train too. In many European cities, where mass transit had been a bit neglected, it now has become efficient and comfortable. The stations are improving. If you go to the new Hauptbahnhof [central station] in Berlin, it’s like a small city. You can stroll around and even do your shopping. It really is a kind of meeting point.

Sustainable mobility goes back to the future… as Klaus Baur and Guenther Krug explain why railways make so much sense for the planet and its cities

With cities and surrounding metropolitan beltways choking on auto traffic and fumes, it appears a 200-year-old solu-tion is charting a sensible, safe track ahead. Intra- and intercity rail transport is discussed here by Dr. Klaus Baur, chairman of Bombardier Transportation Germany, and Guenther Krug, a member of the Berlin Parlia-ment and the Council of Europe as well as a senior advisor to Bombardier. Speaking in Berlin at the world’s largest rail technology fair, Innotrans, Baur and Krug also discuss Berlin’s renaissance.


GK: To put it simply, to me trains and trams are the only way to efficiently organize the transport of millions of citizens. And since the number of mega-cities on our planet is growing immensely, there is no alterna-tive to rails and trains, but of course in an integrated way with other means of transport.

How do you see the mix changing among cars, bicycles, buses, trains, and trams?

KB: I think that we will have more park-and-ride and less car traffic in the cities. Berlin, for example, is well-suited to bicycles. So we will have more of a combination of walking and bicycle riding and less use of cars. It is all about the best combination and integration of transport modes where each can leverage its unique advan-tages for the betterment of the entire system.

Name cities that are handling transportation most efficiently.

GK: Berlin is certainly one of them. The transportation system is so good that many Berliners don’t even own cars, and there is so much less congestion than in other cities. The public trans-portation is so efficient that you travel as fast as you would by car, and you don’t need to find a parking space.

In the past it was very important to have your own car, to be in your own space. … Now in cities there is an emphasis on clean, efficient, comfortable transportation... In many European cities, where mass transit had been a bit neglected, it now has become efficient and comfortable.Klaus Baur

KB: One-third of the Berlin pop-ulation owns a car, and in other cities it’s a half or two-thirds. That means a huge percentage is using public transport. But also bicycle riding is popular, and we have many special bike lanes. To fight pollution, Berlin has established a so-called ‘green environmental zone’ where old cars are not allowed in the city center. Cars have a green, red, or yellow dot indicating the zone in which they are permitted.

Is that system throughout Germany or just Berlin?

GK: It’s in a lot of cities in Germany, but it was started here in Berlin. There are similar sys-tems in London and Singapore.

What should a developed city do to become more environmen-tally friendly and to have more efficient transportation?

KB: It’s important that people actually live in the city. And it’s a problem if the suburbs are for the poorest people and the city center only for business. A city must be alive, not just during the workday, but day and night. But to attract people to live in cities, you need to have clean air, and you need green areas and recreation opportunities. And you need mobility to get where you need to be quickly.

It’s difficult to say which city is better than another. I work in Berlin, of course, but I have been to a lot of other cities, Mumbai and Paris among them. Paris has a lot of parks, and attractive areas within the city, and very efficient transportation. A developed city would certainly have integrated its different modes of transport very well.

GK: Yes. Managing the right mix of business and living areas in the city center is a major challenge. It’s important for businesses themselves to think about managing the mix of busi-ness and living areas in the city center. A big question is how to organize a public housing sector to ensure that prices don’t rise rapidly. Right now housing is very affordable in Berlin, but you see a tendency for it to go up, forcing lower income people to live in the suburbs. The center of the city then becomes only for business and is not as lively a place as you would like.

How is development different in fast-growing cities in Asia, for instance?

KB: In China you see a lot of metro systems being built. They can afford it and they are doing it quickly. India is also start-ing to make progress on this. But in other areas in Asia with megacities it is going very slowly


Managing the right mix of business and living areas in the city center is a major challenge. It’s important for businesses themselves to think about managing the mix... A big question is how to … ensure that prices don’t go rapidly upward.Guenther Krug

because it’s expensive. Public transportation relies on buses, and that brings congestion. Take Indonesia, for example, where in Jakarta there is nearly no rail transport within the city. They use buses, and congestion makes it difficult to get around. They would like to do something about it, but they have limited money.

As an industry, we have to develop systems that are more affordable. Going elevated is cheaper than underground. Streetcars are cheaper than metros. But you need a system that is fast enough and efficient.

Streetcars seem a throwback to earlier times. Do you think we will have them again in big cities?

KB: In Europe we have been see-ing a revival of streetcars in the last 10 years or so. Many cities have started widening their tram systems or building new lines, mostly not in the city center, but to connect the outlying areas. But these modern cars don’t have much in common with the old, uncomfortable streetcars that have been in operation for decades in many cities of the world.

Many say the world will soon be one large metropolitan beltway. What needs to be done about intercity transportation?

KB: You have to connect the transport systems very well. If there is an airport, you have to have connections from the metros or commuter trains directly to the airport. We have some examples in Germany, like Frankfurt, where a high-speed train goes directly to the airport, and commuter trains also stop there. You can easily get to the airport even from outlying cities. And since intercity connections go from city center to city center, they are faster than planes for distances between cities of up to 650 kilometers because you save the long trip to the airports and the pre-boarding time.

Where else can you make those kinds of airport connections?

KB: In London they have a very well connected airport, and in France Charles DeGaulle. Also in Berlin there’s a new airport being built just south of town in Schönefeld and it includes a rail station. The connection from Berlin to Dresden in the south will go via the airport, so you will have an intercity line, and regional and commuter connections.

GK: This is much better than in other cities. The new Berlin airport, opening in 2012, will have high speed and commuter rail service. That means that every 15 minutes you have a connection to the city center via two routes. But a recent discus-sion in the Parliament was not about the good connections we will have but about the noise we will get due to the much higher number of planes taking off and landing. Looking to the future, along with the benefits of the new airport nearby, you have to consider the airplane noise it will create. And you must find solutions acceptable for the citizens.

So the protest is about the planes?

KB: Yes, but there is a similar discussion about trains, both passenger and freight. You have to make sure that the noise is limited. In many rail systems walls are built along the tracks. Noise control is very important so that people accept trains, or planes, or any mode of transport.

Dr. Baur, you called the ET430 the right concept for future commuter traffic. Why?

KB: The ET430 is a modern, very efficient train. It can


accelerate and brake very fast. It uses regenerative braking, so we can give the braking energy back into the network. It is air conditioned, spacious and very comfortable.

And the Talent 2?

KB: The Talent 2 is similar. It is used for commuter service, but also for regional transportation, going farther out from the cities. The Talent 2 is specially made for German cities, although it can be used in other countries and it can be applied to different regions very easily. For example, in our regional transport system platforms are not of the same height, so we have steps which move out to give easy entrance to the train. And that is part of the Talent 2 concept. It’s also a very comfortable train.

Is the renaissance of trains today more a shift in awareness than a change in technology?

GK: There is clearly a shift in awareness in Europe driven by the recognition of the envi-ronmental friendliness of rail travel. Rail causes only 1% of all CO2-emissions of the transport sector compared to 74% caused by road transport. That together with rising fuel prices makes people rethink. The change in technology is running in parallel; we focus very much on comfort, easy access to the system, and safety.

It’s very important not only that you have no accidents, but that people feel safe. Take the metro in Berlin for example. It was one of the first systems we built in Germany where you can walk through the whole train. There are no doors between cars. So if you feel uncomfortable or alone, you can walk to the front part of the train where the driver is.

It’s 120 meters long and you can walk through the whole train.

What feedback are you getting from passengers and officials? What do they want from train service?

KB: It’s very important today for people to feel attracted by the trains they are riding. Passengers want to be able to move quickly from one point to another in safety and comfort. Pollution control is very important and we have electric trains today that run very clean. We mentioned noise, and we have electric trains that make little noise. In cities we have streetcars that are so quiet we need bells to alert pedestrians that they are coming so there are no accidents.

What are the infrastructure chal-lenges to building rail systems?

KB: It’s always challenging to introduce new rail lines in cities, but you have the same problems building roads. There is still a priority on individual transportation, but that is slowly changing as cities realize they need efficient public transport.

Do we need a consciousness change where government, busi-ness and citizens realize that trains should be a greater prior-ity than highways?

KB: Very often the political people say, yes, we need trains but there is still an emphasis on roads. So it’s a mixture. The pri-orities are slowly changing. The motorways in Germany today are congested with one lorry [truck] after another. At least our minister of transport said that we should move to rail, but that requires a lot of investment.

GK: Financially, a good city transport system cannot be paid for solely by the citizens. In Berlin, subsidies go to the BVG

[Berlin Transport System]. We now pay 2 Euro-10 for a single ticket on the system, and that means it’s subsidized. Local government must make keep-ing prices low a priority. If you don’t subsidize the tickets and they are too expensive, people say “No, I’ll take my car,” as you have it in America.

If you were the mayor of a crowded developing city, São Paulo for example, what would you do about transportation?

KB: Try to find the financing means to build metros and commuter train systems. And it’s feasible to do either under-ground or elevated. Rail transit is absolutely essential as a back-bone of transport, thus driving economic development and offering a better quality of life.

What would you do if you were the mayor of New York?

GK: The former mayor, Rudolf Giuliani, has done a lot to increase the safety of the metro system, and that’s what you need to do, provide safe and clean transportation. Now I would increase the speed and attractiveness of the trains, make them more comfortable, improve passenger informa-tion and maybe even provide entertainment.

In America, it’s hard to get high-speed rail because everybody wants their stop, say every 20 miles, and a fast train can’t keep making stops. Is that a problem elsewhere?

GK: We have this same discus-sion in Germany, because we have different states, and each has its capital, and each state wants its capital in the high-speed network. For instance, Potsdam, the capital of Branden-burg, has no stop for high-speed trains.

KB: But they don’t need a stop, because the solution is very fast regional and commuter trans-port feeding into the high-speed stops in order not to slow down the very high-speed system. Real high-speed trains run as fast as 350 kilometers per hour, take around 20 kilometers to acceler-ate to full speed and around 10 kilometers to come to a halt from full speed.

KB: If you look at the example of Frankfurt, we still have the main station in the city and we now have the new high-speed station at the airport. A lot of trains do not stop at the main station anymore, but it’s no problem because if you arrive at the airport, you can change to a commuter train, so you can still move around the city. You don’t always want to go into the city center.

So, it’s an issue with the connections?

GK: Yes, that’s what we need to have. We need fast trains from point to point, but then on the end points we need a good con-nection to the metro or other feeder lines.

KB: It’s a very dense rail net-work in Germany, of course. Berlin has very attractive rail connections. In 1-1/2 hours you can be in Hamburg. You cannot go faster than that by car. There

is no plane service anymore between Hamburg and Berlin. You don’t need it.

Can such connections ever be established in the US?

KB: Well, the US is larger and the distances are longer. But still there are routes where you can get to your destination within two or three hours, and that is attractive.

If President Obama said to you, “Here is the money. We want high-speed rail in America,” could you build it?

KB: Yes. Technologically it’s no problem. There are a lot of projects which we have long discussed, in Florida for exam-ple. California is now looking at high-speed lines.

Between San Francisco and Los Angeles, or San Diego?

KB: Exactly. From our experi-ence in Germany we would clearly say that good high-speed connections between these metropolises would ease the situation on the roads signifi-cantly. They would also increase accessibility to new areas and attract new passengers.

How did the demand for high-speed trains weather the financial crisis?

KB: The first order we got for the ZEFIRO [Bombardier’s new high-speed, high-capacity,

ecologically sensitive train] was from China, and China is invest-ing a lot in long-distance rail transport and high-speed lines. There are other projects we have been discussing for quite some time in other parts of the world, especially Europe. Now after the financial crisis, these projects are coming up again and we think that there will be quite a big demand in the next few years.

How did Bombardier, a Cana-dian company, the rail part of it, come to be headquartered in Berlin?

KB: The focus of the business of Bombardier, at least 10 years ago, was Europe. Three-quarters of the business was in Western Europe. That was the big market and also the center of technol-ogy and innovation. The CEO of Bombardier Transportation was a Canadian at that time. He had the headquarters in Montreal and the European headquarters in Berlin, and he said it makes more sense to focus the activities where we have our main busi-ness, and so our headquarters moved to Berlin.

And there’s a tremendous his-tory in Europe and in Germany in particular using rail.

KB: The German railway system goes back 175 years, and we have a lot of factories in that range. We have just celebrated 100 years of work at the fac-

To attract people to live in cities, you need to have clean air, and you need green areas and recreation opportunities. A city must be alive, not just during the workday, but day and night. And you need mobility to get where you need to be quickly.Klaus Baur


tory in Hennigsdorf, one of our important factories, but we have quite a lot of factories in other cities in Europe. Thanks to this early start of railways we today benefit from a dense network, built in times when space for lines was not critical. Nowadays building new lines is much more difficult. Most space is blocked by buildings, roads, et cetera.

About Berlin specifically, it seems to be brimming with energy and optimism. What explains Berlin’s vitality?

GK: It’s a melting pot of differ-ent systems, different cultures. After the wall came down there was tremendous development. I have been living in Berlin since ’65. I knew the Berlin with the wall, I know the Berlin without the wall, and now I see this mixture of ideas, of people com-ing from west and east, north and south. And then you have special industries. Berlin is a center of creativity, with more than 100,000 employed in IT, film, and a lot of media. There are the museums and theaters. We have a lot of very creative high schools.

KB: And universities and special high-tech institutes.

GK: So you have the creative heads, and the students and the young people, and in the end, you have more opportunities than you have in other cities. Berlin has a special liberty, cre-ativity and sensibility.

You mean a special liberty of being a big cosmopolitan city like New York, Paris or London, with people coming from all over?

GK: You should come for the Carnival of Culture. People have been coming to this for 15 years to celebrate diversity in Berlin. Or take Christopher Street Day. We regularly have hundreds of thousands of people for Christmas shopping and for lots of cultural events. Each day we have up to 1,600 different events in Berlin.

KB: You can also see the energy in our architecture.

GK: It’s this mixture of the old, traditional and the new. After the war we had the communist style in the East and the Western style. Now one of our special-ties is that diversity which we are melting into a special Berlin style.

KB: What I also think is attrac-tive in Berlin is it’s a green city, you have a lot of water for swimming or sailing, right in the city. It’s very attractive for tourists. There are very good museums, and after visiting the museums or opera houses or theaters you can sit by the river and relax. You can get around easily by bicycle. It has a lot of attractions for people of all ages.

Dr. Baur, you had mentioned your collaboration with the German Aerospace Center as being an ideal blending of industry and science. How did that work?

KB: Aerodynamics is a very important aspect of high-speed train design, and the Aerospace Research Center has a lot of knowledge in this field. We are working with them to test our designs. Also, noise control is a very important part of this. They are a big help.

Does the government help you with R&D financing?

KB: Yes, for the development of basic technology, but it has to be co-financed by industry.

Is government funding needed for intercity rail transportation to fully develop?

KB: For the investment of new infrastructure we need government funding. We have discussed the PPP [public-private partnership] model in Germany, but it has not worked very well in rail. It’s not very easy to get the money for rail transportation.

Why?

KB: Probably the investment time-frame is too long. You don’t make fast money.

GK: Our experience in this area hadn’t been good. We have only a few successful

A good city transport system cannot be paid for solely by the citizens. … Local government must make keeping prices low a priority. If you don’t subsidize the tickets and they are too expensive, people say “No, I’ll take my car.”Guenther Krug

PPP projects. The situation now is that many politicians say “no, stop, this is not a good model for saving money or creating infrastructure”.

KB: It’s not for long-term invest-ment, where you don’t get the fast payback.

Many cities today are seeing tremendous immigration. What is Berlin doing to help absorb people from around the world?

GK: This is a big challenge for the city’s political leaders, who must work to integrate hundreds of thousands of people coming from other countries. On the one hand it’s a very big plus—198 languages are spoken in Berlin. On the other hand, it is a huge task for politicians to organize education, equal opportunity, and integration to help under-stand and live with different cultures and traditions.

It is a big challenge to form a multi-cultural society. As we say, we give a lot but we also ask for a lot from immigrants. Giving and taking, that’s the process political leaders have to organize.

What are the opportunities Berlin offers and how can they be managed?

KB: Let me start with the coop-eration of east and west, north and south, broadening the city’s knowledge base. This is a big

opportunity for Berlin. You have a lot of East Europeans here, for instance, and people from Western Europe. This is one of the unique aspects of Berlin.

Cooperation with our neighbors in Poland, and others in middle and Eastern Europe, is very important to us, both in business and in creative, cultural affairs.

GK: Poland is not very far from Berlin, so it’s easy to travel back and forth.

The border is very open, and there is a lot of border crossing.

We see China making great strides, while we in the West seem to have lost our ability to get things done. Can the West stay on track to make progress?

KB: That’s a philosophical question.

GK: It’s difficult to give a short answer. My experience in the Communist system is, of course, that it was a very closed system. And the wall came down because this closed system was not fast and efficient enough, and it broke down, and we didn’t see that until the very last moment. None of the Western politicians saw it coming either. Quite the opposite. Two years before Mr. Honecker [East German leader Erich Honecker] was in Bonn and he was welcomed as a leader of a second German state.

Perhaps I can give you an answer as a participant in the recently held Forum for the Future of Democracy in Strasbourg where we organize cooperation between the 47 European states, not only the members of the EU but also Russia and all the former states of the Soviet Union. We see that you can only develop democracy step-by-step. It’s very difficult. Sometimes it is not yet visible but it is already on the minds of the people and in the discussion.

When the wall came down were you taken totally by surprise?

GK: On that night, definitely.

Dr. Baur, what is your favorite city in the world and why?

KB: That’s difficult to tell. There are a lot of cities where I’d like to live. I come from Stuttgart, so I like Stuttgart. I lived in Paris, which I liked very much. I have traveled the United States with much pleasure. And I like to live in the city center of Berlin. So I have many favorites in the world.

Guenther, do you like it here?

GK: I have been living here in Berlin more than now 40 years, therefore, I can say I am a Berliner.

www.pwc.com/cities

www.pwc.com



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23

23

16

26

16

23

16

10

26

16

16

26

16

4

4

10

10

10

5

6

1

4

23

Crime

24

20

23

17

22

12

16

19

6

15

21

25

10

13

4

5

18

14

9

8

1

2

11

7

3

26

Hospitals

26

24

20

22

20

25

15

20

23

15

20

7

22

15

12

11

8

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3

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3

5

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1

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Political environment

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25

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13

26

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9

17

12

14

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End-of-life care2 Score

113

112

107

104

104

103

98

97

93

91

90

89

86

85

79

66

58

42

41

37

37

30

25

25

21

18

24

22

15

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15

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25

15

26

18

15

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10

16

1

6

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3

15

Health systemperformance1

16

13

11

8

7

Stockholm

Toronto

Chicago

San Francisco

Sydney

Houston

Berlin

Singapore

New York

Tokyo

London

Los Angeles

Abu Dhabi

Paris

Madrid

Hong Kong

Seoul

Johannesburg

Mexico City

Beijing

Shanghai

Santiago

Istanbul

Mumbai

São Paulo

Moscow

21

20

19

18

17

15

14

12

10

9

7

5

4

4

2

1

23

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Health, safety and security: Taking the pulse of city life — and death

Cities divide neatly here between those enjoying long-term stability and relative affluence and those still striving to either get ahead or establish a new, resilient fabric of life for themselves. Top cities Stockholm, Toronto, Chicago and San Francisco perform very well across a range of measures; lower ones are similarly consistent—though in the inverse direction—across the variables. Correlation analyses (see page 16) show a strong positive relationship between cities with robust scores in health, safety and security and other good traits like intellectual capital and innovation and demographics and livability (87% and 84%, respectively)— essentially showing “healthy cities” also tend to have good quality of life and productive energy.

To gauge the relative health, safety and security of a city, we measured personal risks, including crime, as well as the physical safety and number of hospitals a city offers to residents and visitors. Quality and availability of healthcare at various stages of life also are factored in.

Based on national data, Tokyo tops the list of health system performance when life expectancy is compared with the cost of healthcare per person. However, Japan pales next to the UK’s access to caregivers and pal-liatives when end-of-life care is measured by a wide range of variables (not factoring in a society’s traditional family care for the elderly and dying). It is worth noting that delivery of healthcare through national plans add a vari-able into the subtext of this equation.


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1. Measurement of a country’s health system performance made by comparing healthy life expectancy with healthcare expenditures per capita in that country, adjusted for average years of education (years of education is strongly associated with the health of populations in both developed and developing countries).

2. The end-of-life care variable measures the provision of care for its citizens at the end of their lives using data across four areas, including basic healthcare environment, availability, cost and quality of care.


Sustainability: A reordering reflects policy, action and the challenges of comparison

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Air pollution

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Recycled waste

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City carbon footprint Score

86

83

81

78

71

71

69

67

61

58

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52

52

49

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17

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3

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Renewable energy consumption

16

13

12

9

6

Berlin

Sydney

Stockholm

Johannesburg

Mumbai

Toronto

San Francisco

São Paulo

Santiago

Madrid

Istanbul

Paris

Seoul

Shanghai

London

Singapore

New York

Beijing

Hong Kong

Los Angeles

Tokyo

Mexico City

Chicago

Houston

Moscow

Abu Dhabi

22

20

19

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17

16

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12

10

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1

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Measuring, and judging, sustainable devel-opment is a complicated process, requiring continual reassessment. This year, we refined our data and analysis regarding sustainability by eliminating one variable (green cities) from last year’s study, transferring another (green space as a percent of city area) to a different indicator discussion (lifestyle assets), adding renewable energy consump-tion and further clarifying our definitions by changing the air quality variable to air pollu-tion so it is clear what we are measuring.

Some surprises emerged, although the very top rankings have changed relatively little, with cities known for their active environmental policies performing best.

Berlin is first this year, as compared with third-place Frankfurt (which Germany’s capi-tal replaced) last year. Sydney ranks second this year, as it did in 2009. Stockholm now is ranked third, although it ranked first last year. It is only in fourth place that we see the first of several noteworthy shifts.

Johannesburg now ranks fourth, having moved up six places from last year, and does extremely well in three out of the four variables. Moreover, Mumbai now is tied with Toronto for fifth, having moved up an astounding 15 slots from last year, when it was second from the bottom (and Toronto


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Better cities, better lives Planning for sustainability takes the first, big step toward results

Half of the world’s population currently lives in cities, a propor-tion that will rise to 70% in less than 40 years.1 As cities now account for roughly 60% to 80% of global greenhouse gas emis-sions,2 their combined action is critical to the world’s response to climate change. That explains why so many cities have mobi-lized to take the lead, not only in reducing the effects of climate change but in creating genuinely sustainable patterns of economic growth and human development.

Cities possess a defining characteristic—density. Urbanization plays the profound ecological function of concen-trating populations in extremely restricted geographical areas. Consequently, when cities decide to undertake widespread, long-term planning initiatives, they do so on behalf of enormous numbers.

And as the planet’s urbanization increases, so does the responsi-bility of policymakers in cities.

Mayors, councilors and urban authorities worldwide have recognized the need to channel the demographic force of their fellow citizens into a transforma-tive redefinition of sustainable development.3

Transnational organizations such as the C40 group, ICLEI and the World Mayors Council on Climate Change are creating a critical mass around joint sustainability efforts.4 Although no two cities are identical, climate change has forced common challenges on most cities: decreasing green-house emissions, advancing renewable energy use, enhancing green spaces, modernizing and expanding mass transit systems, improving air and water quality, and reducing waste.

What binds all cities together is a common need to abandon older models of growth based mostly on industrial output without regard to the quality of daily life. And here it is important to stress the central point that often is lost in discuss-ing sustainable development: namely, that even if climate change were not an issue, virtu-ally all the other factors defining viable growth remain so.5

Water and energy consumption, resource extraction, polluted air and contaminated water, traffic congestion, mounting waste from increasing (and increasingly affluent) populations: All of these issues would exist even without climate change. Models of devel-opment based on the Industrial

Solar panels on Marina Barrage building in Singapore.

Revolution are growing obsolete today. Cities throughout the world are not merely looking for a different framework of growth. They are planning for it and preparing its blueprints.

What follows is a representative sampling of the plans that have been assembled in some of the 26 cities in this year’s study so as to present an overview of the current issues and difficulties faced by cities and the solutions they are developing.

As might be expected, many mature economies—from Sydney and Singapore to Berlin, Toronto and San Francisco—have issued comprehensive and ambitious plans for sustainable growth. Nor will it surprise anyone that

cities in the developing world—Istanbul, São Paulo, Mumbai, Beijing—face infrastructural and, especially, resource constraints that cities like Stockholm or Chicago need not worry about. Still, we were impressed with the commitment precisely of those cities in emerging economies to move forward with plans for sustainable growth despite the daunting challenges they face in providing their citizens with the most basic services, such as electricity or potable water. Clearly, the mayors and council-ors of these cities understand the linkage between fundamental development and sustainable growth: Providing potable water today does not guarantee that the wells will not run dry tomorrow.

Johannesburg illustrates how progress can be made in a city that is not only part of the developing world but faces deep-ly rooted social and economic challenges.6 Joburg 2030, Johan-nesburg’s plan, is fundamentally different in purpose from, say, New York City’s proposal. Johan-nesburg struggles with enormous barriers to normal growth such as high crime, poor public health (including an HIV/AIDS crisis) and inadequate infrastructure. As a result, its plan points to two fundamental criteria for sustain-able development: increased economic growth and improved quality of life.7

Specific strategies cover crime, labor skills and investment in telecommunications, utilities and transport.8 Transportation planning is being determined by the pragmatic assumption of an economically dynamic city in which higher incomes will result in both more private cars and greater reliance on public trans-port, which, in turn, will require

more planning, and building, of transportation infrastructure.

Mexico City’s mayor, Marcelo Ebrard, has not only made cli-mate change a priority but has issued a far-reaching, 15-year Green Plan (Plan Verde). He was named chair of the World Mayors Council on Climate Change in 2009 and awarded the Council’s World Mayor Prize in 2010 for his outstanding leadership on climate and other issues.9 It may not be coincidental that Mayor Ebrard produced Mexico City’s environmental blueprint. He is a graduate of the École Nationale d’Administration, the famous training ground of French govern-ment and business leaders, in which planning is considered the foundation of all policymaking.

The Green Plan has received international recognition. The Clinton Global Initiative pledged $200 million to help Mexico City meet its greenhouse gas emission targets, while Metrobus, the city’s bus rapid transit system, was

honored by Harvard’s Kennedy School of Government with an environmental prize.10 Mean-while, the city’s environmental conditions are improving. While ozone levels were above national standards more than 92% of the year in 1990, the duration of ozone-laden days now has fallen to approximately 50%, and other pollutants also are declining.11

Abu Dhabi is located in one of the harshest environments on the planet.12 Moreover, it is the capi-tal of the United Arab Emirates, the country with the second high-est per capita carbon emissions in the world. Its explosive growth as a business and financial center has led to predictable problems, from traffic congestion to waste recycling. All indications are that rapid population growth will continue in the next two decades.

The city’s answer is Plan Abu Dhabi 2030, which integrates economic, social and cultural criteria into all development deci-sions. Abu Dhabi clearly expects

that its second-mover advantage will allow it to learn from the experiences of others and develop a comprehensive growth plan to avoid their mistakes. While Plan 2030 is still in its inception, the hope is that it will be a prototype for comparably growing cities.

Since 2000, Shanghai has issued continuous three-year environmental plans focused on reducing air and river pollution, improving waste treatment and fostering greener construction, among other actions.13 Over the last 10 years, it also has de-creased its dependence on coal, cutting the proportion of coal used as a primary energy source to 51.3% in 2007 from 65% in 2000.14 Last, in order to relieve traffic congestion, Shanghai was the first city in China to imple-ment a monthly auction system for a fixed number of licenses to own and operate private vehicles. This policy has been in place since 1986.


Finally, New York City’s PlaNYC 2030, a comprehensive planning and development strat-egy created in 2007 under Mayor Michael Bloomberg to meet the city’s projected increase in popu-lation by 2030, integrates many aspects of sustainable growth. But what makes PlaNYC 2030 a robust statement of intentions is its requirement of annual, legally mandated progress reports, making it a forceful instrument of urban sustainability policy in a mature city.

The plan includes 127 initiatives in areas such as energy, hous-ing, open space, climate change, transportation and water, with specific targets for each, includ-ing monitoring and evaluation requirements. The entire plan itself is required by law to be revised every four years.

Accomplishments already have been realized. In 2009, the city required buildings of a certain size to perform lighting upgrades and benchmark their energy

use, among other regulations, in order to lower emissions (80% of which come from the city’s building stock). Another success concerned brownfields. Last year, New York became the first city in the nation to create a municipally run program to accelerate site cleanup, create jobs and reclaim industrial spaces.

However, some of the city’s initiatives have failed because of political resistance at higher lev-els of government. For instance, legislation requiring taxis to meet more stringent emissions standards than those set by the federal government was rejected in federal court after being challenged by the taxi industry. The US Supreme Court recently declined to hear the city’s appeal. San Francisco managed to pass a similar bill only because it had the industry’s support from the start. And congestion pricing stalled in the New York State legislature over what was seen as an elitist tax to enter the heart of the city (see pages 34-35).

1. See the United Nations Population Database, 2009. For the calculation regarding 2050, see Kamal-Chaoui, Lamia and Alexis Robert (eds.), Competitive Cities and Climate Change, OECD Regional Development Working Papers N° 2, 2009, OECD publishing, p. 22, © OECD.

2. Competitive Cities, p. 9.

3. Ibid., p. 78.

4. Municipalities also have come together on national and regional levels, such as the

Nottingham Declaration group in Great Britain and the EU’s EUCO2 80/50 Project and Covenant of Mayors.

5. One consequence of climate change that is particularly pernicious for cities, however, is rising sea levels. Access to the sea is part and parcel of the history of human trade and cultural exchange, and most of the world’s great cities are located in coastal areas (or, like Paris or Beijing, in riparian zones not far from major seacoasts). Indeed, the first global review of urban settlements found that 58% of Europe’s largest cities (metropolitan areas of more than 5 million) and 80% of the largest cities in North America were located in Low Elevation Coastal Zones (LECZ), less than 10 meters above sea level. Australia was even more threatened by rising sea levels, as 100% of its urban areas of at least half a million people lay in LECZs. See Table 5 in Gordon McGrana-han, Deborah Balk and Bridget Anderson, “The rising tide: assessing the risks of climate change and human settlements in low elevation coastal zones,” Environment and Urbanization, Vol. 19, No. 1, April 2007, p. 30, International Institute for Environment and Development.

6. See http://www.joburg-archive.co.za/2002/2030-shortversion.pdf.

7. Ibid.

8. http://www.joburg-archive.co.za/2002/2030-strategy.pdf.

9. http://www.worldmayorscouncil.org/.

10. http://www.mexicocityexperience.com/green_living/.

11. http://www.citymayors.com/environment/mexico-green-plan.html.

12. To name an obvious difficulty, its desert ter-rain contains few natural freshwater resources.

13. http://www.echinacities.com/shanghai/city-in-pulse/shanghai-invests-3-of-annual-gdp-to-promote-environmental.html.

14. http://www.unep.org/pdf/SHANGHAI_REPORT_FullReport.pdf.

Politics being the art of the possible, however, temporary failure doesn’t preclude ultimate success. That is why environ-mental sustainability—which, because of the required changes in lifestyle, quickly becomes social transformation—demands planning to ensure that everyone understands why they are being asked to change their lives and shoulder additional financial burdens. The good news is that from Johannesburg to New York City, the mayors who have produced the most dynamic and effective sustainability plans have done so through maximum engagement with their fellow citizens so that, in the end, when change is achieved, it proves to be permanent.

was fourth from the top). In fact, Mumbai now ranks first in renewable energy consumption.

More generally, three significant patterns occur in this year’s study. First, four cities from the developing world—São Paulo and Santiago joining Johannesburg and Mumbai—now are in the top 10 (as opposed to only one last year). Second, three major Western cities (Paris, London and New York) have fallen out of the top 10, partly because of the change in variables this year.

Finally, with the singular exception of San Francisco, which remains in the forefront of urban sustainability, the four largest cities in the US fall to the bottom 10 of this ranking (with Chicago and Houston squeezed in between Mexico City and Moscow). Unfortu-nately, American cities, to a real degree, are victims of gridlock on the national level when it comes to environmental policy. Nonethe-less, they must, sooner or later, confront the issue of sustainability more effectively if they are to maintain their global pre-eminence in perception and fact.


Shanghai joined more than 100 other Chinese cities to promote “no car day,” permitting only taxis downtown and en-couraging residents to take mass transit, bike or walk to fight pollution.

Interview

How far is China from the dream of powering its cities with green energy?

Currently, China still relies on coal-fired power generation, and renewables excluding hydro account for only 1-2% of the total energy mix. It’s projected that wind power will account for 11% of China’s total power capacity by 2020, rising to 20% by 2030. This is still relatively low compared to a country like Denmark. I believe that wider usage of renewable energy will be the trend in future. But it will largely depend on the national plan for power production and consumption, and on how much effort goes into the development of renewable technology.

A worker walks between wind energy generators at a Goldwind factory in Urumqi, China.

Which Chinese cities will drive this trend towards using renew-able energy?

Megacities like Beijing and Shanghai should take the lead in applying new, green tech-nologies. That’s partly because they suffer the most from the consequences of environmental pollution, and partly because they’re more financially capable. Industry-intensive cities like these are also more likely to act because their demand for power is high, which incentivizes them to take action.

What needs to happen to make the vision of green-powered cit-ies a reality?

First, the government needs to provide stronger support for

Lighting the world’s cities with green power... is the mission of Kerry Zhou and China’s Goldwind Technologies

Goldwind Science & Technology Co. is a Xinjiang-based trail-blazer in the world of renewable energy. Founded in 1998, it has become a leading manufacturer of wind turbines, with opera-tions in Europe, Asia, Australia and the Americas. In addition to designing cutting-edge turbines, Goldwind does everything from operating wind farms to developing smart-grid solutions that can make cities more energy efficient. Kerry Zhou, Goldwind’s director of strategy and planning, speaks here about the challenges of powering cities with green energy, and about how to make this environmental dream an economic reality.


green power—for example, by giving mandatory access to the grid and higher subsidies, so the green power sector can grow quicker while lowering its cost to a level that’s comparable to that of conventional power. Second, companies need to fur-ther improve their technologies to meet the requirements and standards of grid companies, and also to make them more environmentally friendly and easily adaptable to the market. It’s important, too, that green power should include natural gas, although it’s not a renew-able energy. Beijing has been investing heavily in natural gas in-bound transport to replace coal as the primary source of energy for power generation.

How similar are the energy policy challenges facing govern-ments in China and the US?

Both governments support the growth of green power genera-tion and consumption. China’s government may be more force-ful in taking specific actions—for example, setting quotas for the use of renewables and requiring mandatory access to the grid. In contrast, the US government could only offer some pref-erential taxes to incentivize companies. Also, China has a national grid network—with wind power sitting at the end

Megacities like Beijing and Shanghai should take the lead in applying new, green technologies. That’s partly because they suffer the most from the consequences of environmental pollution, and partly because they’re more financially capable.

of it—to allocate power trans-mission, while the US only has regional grid networks. Another difference involves land owner-ship. In the US, land is privately owned and each state has its own land-use policies, making it difficult to launch major cross-state power transmission lines. In China, the government is in a very strong position and can do nearly anything it wishes. China does face bottleneck issues due to regional segmentation: for example, the grid in Inner Mon-golia is independent and not linked with any other network. But this can be resolved in the next two years through active coordination between different government bureaus. Politically, it’s much harder in the US, where the rising power of the Republicans is not a blessing for the wind-power sector.

Do any practices work particularly well in China or the U.S. that other nations should also adopt to stimulate renewable energy?

China’s renewable quota alloca-tion and mandatory access to the grid are good practices as references for other nations.

What other countries are leading the way?

Denmark, Germany and Spain are doing better than most countries.

How important is creative collaboration between gov-ernments, companies and universities if we’re to achieve this goal of powering cities with green energy?

Certainly, the ideal is for businesses, universities and governments to collaborate more effectively. In China, universities often have good ideas and academic achieve-ments, but don’t have much opportunity to commercialize them. Some projects will have to wait for government support. To the best of my knowledge, there aren’t many people doing these things, so the government can make a real difference by playing a decisive role. China’s government is also encouraging companies to engage in indig-enous innovation.

Is there a danger that prolonged global economic problems will make wind and other renewables less attractive than cheaper forms of energy like oil or coal?

This view has certainly applied to the U.S. The American wind-power market shrank by over 40% in 2010 from the previous year, and it’s not expected to recover over the next two years to the level of development it had reached in 2009. But while the financial crisis has dealt a


In 2009, the wind-power sector expanded over 100%… There are now nearly 300,000 people working along the value chain of wind power, a sector that barely existed in China five years ago.

severe blow to America’s wind-power industry, the opposite is true in China. In the future, as China undergoes a structural transformation and moves toward becoming a low-carbon economy, it will need to find new jobs for workers from conventional industries. In my view, the wind-power sector can absorb many laid-off work-ers from these conventional industries, while also reducing emissions of CO2 and meeting the nation’s rising demand for energy. So, I’m very positive for the next 30 years.

You’ve said before that the potential of the wind-power industry is much larger than anyone can imagine. How fast is the sector growing in China?

China’s wind-power industry experienced explosive growth over the past two years, thanks largely to a government stimu-lus package and huge energy demand from the real estate and construction sectors. In 2009, the wind-power sector expanded over 100%, and the growth rate for this year will be more moder-ate and stabilized due to a large single-year volume that reached over 13 gigawatts in 2009. There are now nearly 300,000 people working along the value chain of wind power, a sector that barely existed in China five years ago.

We’re currently seeing histori-cally low prices for natural gas, which many view as the best transitional fuel for the next few decades. Will cheap natural gas make it harder globally for the wind industry to compete?

It depends which country you’re talking about. In the US, it’s true that the low price of natural gas has dampened the growth prospects of renewable energy. But in China, natural gas is still a scarce commodity and is not widely available. As China’s urbanization and industrial-ization process gathers pace, demand for energy will continue to rise in the coming decade. By and large, China and the US are at different stages of economic development and face a very different set of challenges and issues.

What sources of energy do you see powering the world’s big cit-ies in 20 or 30 years? And what will determine how countries change their mix of energy sources such as coal, nuclear, wind, solar or geothermal?

It largely depends on the natural resources that exist in each country. Those that are rich in coal are more likely to have a coal-based energy mix. In Rus-sia, for instance, natural gas will play a key role. But it will be

coal and natural gas that domi-nate in Brazil; coal in China; coal and hydropower in the US. Over the next 20 to 30 years, each country’s natural endow-ment of resources will continue to determine that nation’s energy mix. Renewable energy will play a bigger role in future, but it won’t significantly alter the overall picture. The extent to which renewables could alter that picture will largely depend on government policies. In China, the government target is to increase the proportion of renewables to 15% of the energy mix by 2020, but this could even reach 20% if China resolves its challenges more effectively.

Do you expect urban trans-portation to change radically around the world, with the rise of renewable power and electric cars?

The US is expected to take the lead in riding this wave. Cities like Los Angeles, San Francisco and New York are actively pursu-ing opportunities in offshore wind farms, electric cars and renewable application technolo-gies. We’re seeing many venture capitalists getting actively involved in these new business areas. Some European countries are also getting very active in R&D. But past experience would suggest that these new


technologies are more likely to be commercialised first in the US market. In China, big cities like Beijing and Shanghai will be the leaders. I would not be surprised to see advancement in renewable energy applications in these cities.

Will smaller cities see techno-logical advances too?

Yes, we’re already seeing the emergence in smaller cities of many new utility projects such as independent, intelligent mini-grids in local communities. In fact, Goldwind is currently exploring the idea of using our own wind mini-grid to power our offices and factories.

Chinese cities like Chongqing are working hard to develop intelligent grids and integrated power management. How criti-cal is this kind of technology?

Smart grids are an important vehicle in making renewable energy competitive. They play a vital role in enhancing renew-able energy’s acceptability and its access to the grid. Goldwind itself is actively involved in intelligent energy solutions that make it possible to access the grid more effectively.

How else is Goldwind driving this trend towards harnessing more green power in China?

Another good example would be the 50MW wind farm plant

at Guanting Reservoir, which used 33 Goldwind turbines to generate green power for the Olympics in 2008.

Goldwind bills itself as a turn-key provider of wind services and also as a wind farm owner around the world, not just a manufacturer. Why adopt this strategy?

We’ve closely followed the rules of industrial develop-ment in drafting our corporate strategy. At an earlier stage of development, demand for power-generating equip-ment is normally high. As the market matures and moves into a period where growth is slower, equipment manufactur-ing will no longer be in high demand. So, we should start preparing ourselves by expand-ing our value-added services. Instead of only manufacturing, we’ll provide manufacturing plus wind farm services plus grid-access solutions for our clients. Currently, we have a wind farm services company that provides turnkey services to our customers for everything they need for building a wind farm plant. We also have a wind power investment company that’s endeavoring to become an independent power producer in many provinces around the country.

Goldwind is globalizing rapidly, setting up wind farms, manu-facturing and other ventures everywhere from the US to Cuba, Germany to Central Europe, Africa to Australia. How do you select the best places to invest?

We’re trying to have a balanced business portfolio. The American and European markets are very important to us, and continue to be our focus. At the same time, we’re also actively exploring the emerging markets of Eastern Europe, Africa, the Middle East, Southeast Asia and Central Asia. Whenever possible, we will leverage our rich experience in China to achieve growth in these other markets.

What makes you choose to get involved in a power project in a place like Pipestone, Minnesota where you’ve installed wind-driven turbines and own a stake in the project?

We need to have an operational track record in the US market. That’s why we participated in this investment. Minnesota is a natural choice for us, and we’ve now been there for a year.

Why did Goldwind choose Beijing for its headquarters?

Our global headquarters is in Beijing, but the company has also been based in Urumqi in Xinjiang Autonomous Region. That’s where we got started,

In China, the government target is to increase the proportion of renewables to 15% of the energy mix by 2020, but this could even reach 20% if China resolves its challenges more effectively.

and we still have a strong com-mitment to that area. We chose Beijing for our global headquar-ters mainly because of its central location to access our domestic operations, as well as our quick and easy access to the world-wide marketplace. Meanwhile, we enjoy all the benefits from a megacity like Beijing as the capital of China.

What makes Beijing an attrac-tive place to work for you?

There are lots of key factors in choosing Beijing. It’s China’s political capital, it has an advanced economy, and it’s part of the Pan Bohai Economic Growth Sphere and city clusters. It has a deep pool of talent and a strong R&D capability. Its influence radiates out to neigh-boring Chinese provinces and cities, and it also has influence at a global level.

Why choose Chicago as the headquarters for Goldwind USA?

America’s Midwestern states attach relatively more impor-tance to the development of the wind-farm industry. Geographi-cally, these states are closer to our customers. They also receive

more support from state govern-ments, and they have stronger research capabilities than other parts of the country. The reason we chose Chicago in particular is mainly due to the scale of its economy, its strong industrial capability, excellent universities and R&D as well as convenient transportation.

Which is your favorite city in the world?

I like San Francisco the most. It’s a beautiful natural setting, it’s not very big and it has a great climate. It’s a city, but it also gives you easy access to the countryside and the ocean.

At its headquarters, Goldwind offers employees everything from soccer games to climbing walls to music lessons. Cultur-ally, would the company be at home in Silicon Valley?

In fact, there are lots of differ-ences. Companies in Silicon Valley are mainly technology-driven, with few having practical experiences. Goldwind is, by and large, an industrial enterprise, although people here dress casu-ally at work, engage in many recreational activities, and talk in an open and democratic way.

This unique corporate culture derives from the experiences of our company’s founders, most of whom studied or worked in Germany and Denmark. They carefully kept and nurtured the culture they encountered there, making it the backbone of our corporate culture today. I don’t think we should compare ourselves with Silicon Valley companies: there are still areas where we need to develop our culture further—for example, encouraging more innovations among our staff.

What challenges lie ahead for Goldwind?

Goldwind has to work hard to improve its technology further, reduce its costs, increase its competitiveness and contribute to the development of green power in cities around the world. We have a social duty to promote sustainability and economic growth by using the Earth’s resources responsibly. That’s why, when the company was founded, we made a com-mitment to help safeguard these natural resources for generations to come, “preserving white clouds and blue skies for the future.”

Cities like Los Angeles, San Francisco and New York are actively pursuing opportunities in offshore wind farms, electric cars and other technologies. We’re seeing many venture capitalists getting actively involved in these new business areas.

www.pwc.com/cities

www.pwc.com



London, Paris and New York finished on top again this year, exactly the same as last year—a telling result since all three cities are the financial centers of countries that have been much more affected by the global finan-cial crisis than other developed economies or even several developing ones. The lesson that emerges is that economic strength, having been “earned over time,” cannot be dissipated by one financial crisis, no matter how deep or debilitating.

Indeed, the top 10 cities this year all are long-established urban centers of political or commercial consequence (or both) rooted in hundreds or even thousands of years of history. Paris’ record as an administrative capital goes back a millennium, while that of Beijing—which has climbed this year to the ninth rank—can be traced back 2,000 years.

Economic clout has a great deal to do with staying power, which, consequently, is what “economic stability” undoubtedly comes down to in the end. This is not to say that cities do not rise and fall: Over recent centuries, plenty of European cities (from Venice and Genoa to Amsterdam and Vienna to Manchester and Glasgow) have proved that economic power is as difficult to main-tain as it is to achieve. Still, longevity allows a city to build the economic institutions, and networks, that will enrich it and, therefore, extend its financial weight and credibility way beyond its borders.

Accordingly, with the exception of Abu Dhabi (best known for its pearl trade prior to its dis-covery of oil in 1958), every city in our report goes back at least to the turn of the 20th century as a significant urban presence. Even some of the cities in the lower half of our ranking—from Mexico City to Mumbai and Istanbul to Moscow—know what it means to have once been imperial centers, which is to say that they know what it takes to lead.

As a result, Moscow does relatively well in the number of Global 500 headquarters and its attraction of FDI. Mumbai, too, contains as many Global 500 headquarters as Moscow (or Houston or Madrid) and even manages to outpace New York in both categories of FDI. Both Moscow and Mumbai, however, have currency issues (inflation, in particular) and relatively undeveloped financial and business sectors.

22

24

15

19

11

20

15

25

26

11

13

11

11

6

19

21

19

19

6

13

3

6

3

11

3

23

Number of Global500 headquarters

26

24

13

25

16

21

7

15

4

12

23

20

22

19

9

17

6

1

11

3

2

5

14

8

10

18

Financial and business services employment

19

20

17

15

6

16

18

0

21

11

9

1

0

12

0

10

7

13

0

14

2

4

8

5

3

22

Domestic market capitalization1

16

14

12

9

6

London

Paris

New York

Hong Kong

Madrid

Singapore

Toronto

Shanghai

Beijing

Tokyo

Sydney

Stockholm

Chicago

San Francisco

Berlin

Houston

Seoul

Moscow

Mumbai

Los Angeles

São Paulo

Abu Dhabi

Istanbul

Johannesburg

Mexico City

Santiago

21

20

19

18

18

15

14

12

10

9

7

5

4

3

2

1

22

23

24

25

26

Economic clout: Reaching the high ground carries its own momentum but no guarantees

In the end, the most interesting aspects of this year’s results might be the prospective trends they signal. Three factors are unusually suggestive of future developments. First, although the top four cities were European or North American last year, only the top three were this year. Hong Kong replaced Toronto in the fourth spot and, even more important in this year of currency crises, came in first in a measure of its infla-tion rate. Moreover, all five Asian cities con-tinue to sit within the top 10 spots in this indicator.

In regard to currencies, the apparent currency strength on which so many European cities depended last year surely will have been

tested this year, following the euro’s serial crises. This is especially the case for Madrid—ranked fifth this year, aided also by its strong financial services workforce—which might see its advantages slip because of the continuing turmoil in the European Union (EU).

Finally, appearances notwithstanding, the top three cities in this category prove that economic clout and cultural influence are not two sides of the same coin. Quite the opposite, a city’s cultural influence only really becomes dominant when it is backed by economic power. It is a lesson learned by Berlin, Mumbai and Istanbul—three cities lauded during the last few years for their cultural vibrancy.


18

9

25

6

26

24

6

6

16

12

12

24

24

6

24

9

6

15

24

9

1

12

18

15

15

24

Level of shareholder protection2

11

24

26

20

17

24

11

11

7

15

15

17

19

12

21

8

3

1

13

5

18

2

5

7

24

25

Inflation3 Score

170

166

163

149

144

140

139

119

114

114

107

103

101

101

100

100

89

88

88

84

80

71

68

67

66

65

Strength of currency(SDRs per currency unit)

26

25

10

25

15

17

10

10

3

16

11

22

22

25

22

1

5

4

22

13

12

14

7

6

2

22

Attracting FDI: Number of greenfield projects

25

21

22

18

24

9

26

23

19

15

10

4

2

8

1

12

20

18

5

14

13

11

6

7

3

16

Attracting FDI:Capital investment

23

19

21

16

25

8

26

24

18

15

10

2

1

12

4

11

22

17

3

9

20

14

6

7

5

13

16

14

12

9

6

21

20

19

18

18

15

14

12

10

9

7

5

4

3

2

1

22

23

24

25

26


High

Low

Medium


1. Total number of issued shares of domestic companies multiplied by their respective prices at a given time. This figure reflects the comprehensive value of the market at that time in millions of USD. Cities with no stock exchange receive a score of 0. The remaining cities are ranked and assigned a score from 22 (reflecting the reduced number of cities in the ranking) to 1.

2. The level of shareholder protection index is the average of “transparency of transactions,” “liability for self-dealing” and “shareholders’ ability to sue officers and directors for misconduct.”

3. Ranking according to how far a country deviates from a +2% inflation rate, with inflation that is closer to +2% being favored over inflation or deflation that is further from this rate. A +2% inflation rate is used as the benchmark because it is widely regarded as a target or healthy inflation rate by large international banks. A country’s inflation rate is based on a projection of how much its Consumer Price Index, which measures the rise in prices of goods and services, is expected to rise during the course of 2010. US cities were further differentiated using regional data.

Interview

What do you see as critical to the well-being of a city, such as New York?

Cities expand or contract on the basis of their economies first. That’s often what has led to the formation of cities. New York did not just happen by acci-dent. New York is a remarkable city for all kinds of historical reasons. It is certainly the center of this country’s media, it is the center of this country’s financial world, it is the center of this country’s world of theater, and it is one of the most wonderful combinations of people.

What makes New York City great is that it welcomes talent. It rewards talent, it celebrates

As one of the most prominent property developers in the US, Mortimer Zuckerman honed a sharp focus on what makes cities founder or prosper. Zuckerman co-founded Boston Properties in that city, then broadened to real estate ventures in New York and other cities. He also owns U.S. News & World Report and the New York Daily News and served as an associate professor at Harvard Business School. Here, he shares his views on politics, immigration, public employee obligations and the media— and offers special praise for the meritocracy that defines New York.

talent, it nurtures talent, it encourages talent and, there-fore, it attracts talent. This city is not about buildings. It is the closest thing to a meritocracy, in my judgment, that exists in this country. And people of extraor-dinary talent get attracted to it because talent likes to be with talent, and it spreads through everything.

The first project I did in this city is the building we’re sitting in [599 Lexington Avenue]. I was always intrigued by New York. I actually had an apartment here even though my company was started in Boston, which is why it’s, strikingly enough, called Boston Properties. We were

Mortimer Zuckerman

Mortimer Zuckerman gauges …the present and future of cities from his perspective as a real estate developer, publisher and former professor

offered the chance to develop this site. And all I did was walk around the block, and I had pre-viously checked on what other buildings were going to be built at the same time in this Mid-town area. I went into Citicorp Center, went up to the 35th floor and did the transaction in 15 minutes.

What year was it?

It was 1984. I called my partner, who grew up in New York City, and I said, “Ed, we’re going to build a high-rise building in New York,” and he said, “How can we do that? There’s so many talented people there. Why do we think we’ll be able to do it?” I said, “Ed, just come down and


spend a couple of days here, meet the people you’ll have to work with.” I’ll never forget it— he met with the people who handled every aspect of the construction, and he said, “These are the most talented people in construction that I’ve ever encountered.”

It makes sense because there are so many high-rise buildings here. But still, he said the sophistication and the talent of those people just knocked him out. And he was transformed by that and wanted to work on the building here because he just enjoyed working with people with that kind of talent. So it is in every level, I don’t care what it is—you get a level of remark-able, remarkable talent. And that, to me, is the most interest-ing part of the city.

So talent begets talent?

Absolutely. And attracts talent. And this city rewards talent and it recognizes talent and it’s a very open city in terms of—when I say a meritocracy, it is easy for people of talent to really rise in this city. The cul-tural qualities of this city really look out for talent, look out for people with new ideas, so of course it attracts those people. That to me is the core of the City of New York. That’s what

What makes New York City great is that it welcomes talent. It rewards talentit celebrates talent…The city is the closest thing to a meritocracy that exists in this country. …New York is not about buildings, it’s about talent.

I said at the gathering at the Partnership for New York City after 9-11. I said, yes, we lost some buildings—terribly—we lost a horrific number of people, but the city, whatever else you think about it, is not about buildings, it’s about talent.

What might New York do differently to be a better city in the future?

New York suffers from every-thing that every other city and state suffers from. There are many things that can only be done by government, and we have the most ridiculous and corrupt government at all levels. The state government is just a fiasco beyond imagination. And that was why the Daily News was the only major newspaper to endorse Mike Bloomberg the first time he ran, because I knew he is very talented and a great manager, and had the ability to incorporate a lot of good ideas and to find good people to hire.

You see it with [Rudolph] Giuliani, who in his own way was a much tougher manager, which we had to have, and Bloomberg, who was a much better manager than most people. [Ed] Koch was also a very, very good manager, a very talented guy. And we have benefited from that. But we

have a dysfunctional city council, we have a situation now where like every other city and state, we are held terribly hostage by the public service unions.

An editorial in The Wall Street Journal on May 21, 2010, said that the American public feels like it’s drowning in red ink, that while city government was developed to serve citizens—today the citizenry is working for the government. Can you elaborate on that?

The problem now is that the people who pay the pensions and the healthcare benefits for the public service workers, never mind their salaries—that’s the public. Look at the gap between the overall total compensation of public service workers and those in the private sector.

We now have a new privileged elite and they’re called the public service workers. They work fewer hours, they have longer vacations, they have bigger pensions and their aver-age income—total, including benefits—is probably 30-40 percent above the average incomes of the private sector workers. That’s not sustain-able and how we deal with that is going to be the issue. The Obama administration, by


We have now a new privileged elite and they’re called the public service workers. They work fewer hours, they have longer vacations, they have bigger pensions and their aver-age income—total, including benefits—is probably 30-40 percent above the average of the private sector workers. That’s not sustainable.

giving the public service workers unbelievable amounts of support without asking for anything in return, did the wrong thing.

What can the public sector learn from the private sector?

The private sector is also vulner-able to this. When times were good, everybody was willing to go along. And then when things turned down, which they certainly have, how do you get out of these obligations? How do you manage these obligations? How do you fund these obligations? [former California Governor Arnold] Schwarzenegger wrote an op ed piece in The Wall Street Journal. He said California is now paying $6 billion a year for retirement benefits and it’s going up by 15 percent a year. It’s unsustainable.

The [New York] governor-elect, Andrew Cuomo, said the same thing during the campaign. We have costs that are unsustain-able. There’s no money for any of this. And we could break the whole system by providing whatever the public sector wants and put all the money into the union contracts and retirement benefits, but that’s crazy.

Is this essentially an American problem?

I don’t know. It certainly has been true in Europe but it certainly is an American problem almost everywhere.

I’ll briefly read from an editorial you wrote in the Wall Street Journal. “We must create programs that create…jobs, and there are three ways to do it. They shouldn’t be entitle-ment programs but regeneration programs, government spend-ing on infrastructure, etc. We should enhance technology, the strongest American area, and we should look at our attitude toward immigration.” What specifically should cities do to generate jobs?

I’ve thought about this quite a lot. There are different kinds of jobs. One of the things that has to be done is the process of gaining city approvals of all kinds has to be streamlined, and you’ve got to take it out of the bureaucratic swamp. Two, cities have got to manage their real estate tax rates, there have to be programs to create incentives for people to build. You don’t have to give them the incentives for-ever, but you have to give it to them for the first few years for these buildings to get going.

Third, cities have to under-stand what their strengths are. Not every city has the same

strengths. But where they have strengths, they must nurture them.

Fourth, public transportation is absolutely critical for almost every city.

In this city it’s buses and subways; in most cities it’s just buses, but whichever, you’ve really got to pay attention to that. It’s not a casual thing. I’ll add to that public education.

You mentioned technology.

Without question. We are mov-ing into an entirely different era. In this country we’ve lost 5.6 million manufacturing jobs in the first decade of this century and they’re going to go away. We have a comparative advan-tage in terms of technology and people who understand technol-ogy, and we’ve got to nurture that. We can’t ignore the past, but we’ve got to pay attention to the future.

You see problems at all levels. The federal government’s a disaster, the state government’s a disaster, with rare exceptions the city governments and local governments are disastrous, and I don’t know how you change that. We are susceptible to elections that are based on how much money candidates can raise rather than how good they are.


The third area you mentioned is in a sense the most compli-cated—immigration. In the US we may have some challenges…

Challenges? There is something called an H-1B visa. In the year 2000, we had 195,000 H-1B visas; in the year 2001, after the dot.com bubble burst, a group of people who worked on this new technology called the Web managed to get the federal government to reduce—because of unemployment there—the number of H-1B visas from 195,000 to 65,000. We still are at 65,000 because whatever the process is, intellectual power or technical power, call it what you will, is more important than financial power. We are sending these people out of the country—these are people who we educate here—we send them to other countries and companies that compete with us. This is insane.

One of the great strengths of America is its ability to integrate immigrants. We’ve done it for our entire history. To now take the most talented people who have come from countries like Canada and Australia, there are offices all around the world trying to attract these people, and we’re sending them away. It’s insane. And it’s done for the crassest of political reasons. Fifty percent of the graduate degrees in the hard sciences go to these

foreign students, and we send them away.

Is the balance of political power correct? Who controls the city, Albany or New York? In terms of a city’s success, how does politics come into play?

That’s the way our politics works. We still have represen-tative government. Certainly at the state level we have to understand what is it that draws people to New York. And our representatives in Washing-ton cannot allow the financial industry to be hammered for short-term political gains when it is the core, the absolute core, of the economies of this city and this state. But, you know, politics gets played in the worst kinds of ways. I don’t know how you deal with it.

The British have a more effective way of integrating the executive and the legislative branches so that they actually make a deci-sion and get something done. Here, the executive branch may make a decision but then you have God knows how many local political issues that mix it up. We can’t afford it any longer. We just can’t.

You said that government help is needed in certain industries and key areas of city affairs.

There are some things that only governments can do. If you’re

talking about a subway system, basic transportation, that can only be done by the govern-ment. The same thing is true of education. Now, if you can find a way to privatize it, good luck, but so far that is beyond the scope of the private world. Not entirely.

My recommendation—if you want to do something about the economy, you have to have a national infrastructure bank, which Felix Rohaytn has recom-mended in a book. It should not be done on the basis of political patronage. It should be done on the basis of rational planning. And they should be large-scale projects, and we should toll them so that the users pay for them, because nobody wants to charge taxes.

Does Northern Europe or China, for example, do this better than us in terms of planning?

Certainly China on one level has a much more strategic view of what its interests are, but on the other hand, they don’t have any opposition. The govern-ment makes a decision and they implement it. When China was in trouble they put in a massive infrastructure program, and took the economy out of the doldrums when exports col-lapsed. We haven’t been able to do anything that makes sense.

The stimulus program that [the US] had was a joke. It wasn’t large enough, it was misdirected. It didn’t create job multipliers, it just basically patronized the public service unions.


The stimulus program that we had was a joke. It wasn’t large enough, it was misdirected. It didn’t create job multipliers, it just basically patronized the public service unions primarily because of the constituency of Obama. Now it’s way too late. We’re not going to be able to do very much about it.

John Jacob Astor famously said, “Buy on the fringes and wait.” With the great expansion of cities, are there still fringes today?

Of course there are. There are always fringes. And the fringes may go up, not out. Look, there are many cities that do not want to have high-rise buildings. If that’s the case and there’s pres-sure, it goes out horizontally. It’s either going to go vertically or horizontally, and there are opportunities in both.

There are certain projects you do not just to make money. Can you elaborate?

That’s right. For example, there was a competition to build this 103-story building that is going to basically replace what was there prior to the World Trade Center, and that’s going to be a landmark building. And for me to have had the opportunity to be a part of that, it’s not an eco-nomic judgment. I can afford to do something for aesthetic rea-sons and public service reasons and that was my approach.

How do you balance the profit motive with working for the public good?

This has been the approach that I’ve always taken. I have been in a position to take a longer-term view than most people in terms of business. There’s a quality, not just a quantity to what you do. So, for example, we have always hired great architects, including Ed Barnes—we did three buildings with Ed Barnes, and it makes a difference. It cost more, but to my mind it’s an affordable cost. I don’t need short-term profits, I want long-term values. With that approach we can really be sensitive to the aesthetic and construction qual-ity of what we do. Everything we do is for the longer term.

And that was a decision, a business and personal decision you made?

From day one. And, frankly, in my judgment, it’s worked better than any other alternative in purely business terms.

From your experience as a professor, what about the link between city business and the universities? What can cities do to create a synergy, to get everybody collaborating in a creative way?

It’s political leadership. Bloom-berg can do it here because he didn’t come up through the political system. He came in

with a more idealistic view of what could be done and, frankly, he could afford to devote him-self to this. It wasn’t dependent on financial contributions. You need that kind of leadership, and somehow or other we’ve got to value it enough to support it. The biggest problem we have now in leadership is that people feel that public office would denigrate rather than enhance them. I’ve never felt that way.

So you considered it?

Oh yes.

It was reported in the press that the mayor advised you against it—that after your career it would be a letdown. Do you think he was jealous and wanted you out of the political arena?

No, that had absolutely nothing to do with it. My decision was for personal reasons. But I think it’s a wonderful thing, and I have been a public policy junkie since I was a teen.

Speaking from your vantage point as an owner of media properties, how would you describe the importance of reliable information to a community?

You know what the answer to that question is. It’s critical. Media shapes the public dia-logue. Now, there are going to be people in the media who are

New York is to my mind the best example of how American business can work because it is a meritocracy. There are many cities where you have a tribal…configuration, and if you’re not part of one tribe…you face all kinds of opposition.

going to go for short-term gains, and I hope I don’t do that. Not that you have to ignore the values that you want to trans-mit, whether on the editorial page or in the quality of your journalism. It’s really critical for the quality of the public dialogue to have quality media.

Many of the great newspapers have been owned by families—the Sulzbergers, the Binghams, or the Chandlers. As those families give up control and corporations take over will it mean the end of public-spirited journalism in big cities?

No, I don’t think it’s the end of it at all. I’m not sure corpora-tions can really do a good job in running a multifaceted media company, and we’ve seen that. Look what happened to the Tri-bune Company. It got in trouble because it was overleveraged.

You said in the Guardian in November that you invested $150 million in presses for the Daily News.

Actually it was more than that.

Clearly, you don’t think newsprint is a dead medium?

I don’t think it is. But I’m not saying it was entirely an economic decision.

You own this newspaper, you’re proud of it, you want to do a good job for the city?

Absolutely.

You’re from Montreal, and you’ve been doing business in Boston and now New York. What are the differences? How does New York stack up?

Major league difference. New York is to my mind the best example of how American business can work because it is a meritocracy. There are many cities where you have a tribal, shall we say, configuration, and if you’re not a part of one tribe or you are part of another tribe, you face all kinds of opposition. The United States, in general, is more of a meritocracy than any other country. Where the United States suffers is not from its private sector but from its public sector.

New York is an open city, and the United States is an open country, it’s an immigrant coun-try. That’s why the US attracted so many people.

Is New York the center of the world today, like ancient Rome once was?

To the extent any city is, I would say it is New York. No city is the center of the world, how-ever. But to the extent that you

have a global center, if it’s not 100 percent it’s 50 percent, the number one city in terms of its reach around the world is still New York.

What is your favorite to visit for pleasure?

I love London and I love Rome. Those are the two cities that I like the best— London because it’s a civilized city and Rome because the Italians are the warmest, most open, most life enhancing people you could want to spend time with. Whereas Paris, where I was a student, is the most cynical city that I’ve ever been in, and the most selfish city I’ve ever been in, and the most self-righteous and condescending city and, therefore, I don’t like Paris, however beautiful it is.

What city do you live in, and what is the one thing you would do to improve it?

I live in Manhattan. And if there’s one thing I could do to improve it—which is difficult— I would improve New York City’s education system at all levels. The entire public education system really needs it. And the resistance to that, of course, comes from teachers. That’s the sad fact of it.

www.pwc.com/cities

www.pwc.com



26

26

15

14

22

18

19

17

21

11

16

11

7

3

6

26

2

9

5

4

13

1

23

8

13

20

Ease of hiring1

20

20

11

21

17

26

26

26

26

5

16

18

3

1

6

12

8

13

4

15

10

2

15

8

10

26

Rigidity of hours2

19

21

15

16

21

26

26

26

26

6

11

14

6

8

11

19

11

2

13

12

4

19

1

7

4

26

Ease of firing3Ease of starting a business

23

25

15

24

26

22

22

22

22

12

8

7

10

16

13

11

2

14

22

9

4

1

6

5

4

22

16

13

12

8

6

Hong Kong

Singapore

New York

London

Toronto

Sydney

Los Angeles

Chicago

San Francisco

Houston

Stockholm

Tokyo

Santiago

Berlin

Paris

Seoul

Abu Dhabi

Madrid

Mexico City

Istanbul

Johannesburg

Beijing

São Paulo

Mumbai

Moscow

Shanghai

21

20

19

18

17

15

14

12

10

9

7

5

4

3

2

1

22

23

24

25

26

Ease of doing business: The open city trumps geography and culture


High

Low

Medium


Among the most significant changes in this year’s research is the addition of three variables to this indicator: ease of starting a business, operational risk climate, and workforce management risk. These changes, however, have not appreciably altered the general terrain of the world’s business-friendly landscape.

The leaders—Hong Kong, Singapore, New York and London—just played musical chairs in the four top spots. It would be a mistake, however, to see this jockeying for the top positions by the same players as a case of advantages accruing to already advantaged cities.

There is another, more valuable, les-son to be drawn here; namely, it is not geography, a specific cultural profile or historical experience that matters in the end when it comes to business investment. What does matter, as the variables in this category indicate, is a combination of flexible labor policies, openness to the rest of the world, and the ease of starting and maintaining an enterprise (which embraces the stability of a city’s fiscal and regulatory environment).

American cities continue to lead the rankings this year in degree of employer flexibility to create work schedules and ease of firing. Indeed, were it not for the severe visa

1. The ease of hiring index measures whether fixed term contracts are prohibited for permanent tasks, the maximum cumulative duration of fixed term contracts and the ratio of the minimum wage for a trainee or first time employee to the average value added per worker. An economy is assigned a score of 1 if fixed term contracts are prohibited for permanent tasks and a score of 0 if they can be used for any task. A score of 1 is assigned if the maximum cumula-

tive duration of fixed term contracts is less than 3 years; 0.5 if it is 3 years or more but less than 5 years; and 0 if fixed term contracts can last 5 years or more. Finally, a score of 1 is assigned if the ratio of the minimum wage to the average value added per worker is 0.75 or more; 0.67 for a ratio of 0.50 or more but less than 0.75; 0.33 for a ratio of 0.25 or more but less than 0.50; and 0 for a ratio of less than 0.25. Averaging the scores and scaling the result to 100 give a final index. Higher values indicate more rigid regulation.


25

26

23

12

11

9

9

9

9

20

16

22

19

13

24

10

18

15

17

21

3

14

3

4

3

9

Ease of entry:Number of countries with visa waiver4

26

4

25

15

13

11

11

11

11

23

19

24

21

16

23

4

20

18

15

13

4

17

5

6

4

11

Flexibility of visa travel5

Score

191

188

178

166

163

162

159

156

154

152

143

140

138

121

119

119

117

102

97

90

87

76

74

61

60

54

Operational risk climate

24

26

13

24

22

18

18

18

18

25

12

19

20

22

9

10

12

8

3

7

5

7

2

1

5

18

Workforcemanagement risk

18

24

24

26

18

21

20

18

15

22

19

9

13

14

10

12

11

3

2

5

8

6

4

1

7

25

10

16

25

11

12

8

5

7

4

19

23

14

22

26

17

13

18

15

9

1

25

7

2

20

4

21

Foreign embassies or consulates

16

13

12

8

6

Hong Kong

Singapore

New York

London

Toronto

Sydney

Los Angeles

Chicago

San Francisco

Houston

Stockholm

Tokyo

Santiago

Berlin

Paris

Seoul

Abu Dhabi

Madrid

Mexico City

Istanbul

Johannesburg

Beijing

São Paulo

Mumbai

Moscow

Shanghai

21

20

19

18

17

15

14

12

10

9

7

5

4

3

2

1

22

23

24

25

26

requirements of the United States, they would arguably dominate this category. As it is, the five American cities here are all in the top 10.

The relative improvement of the continental European cities is a notable change from last year. Paris fell to the bottom five of last year’s rankings but finishes in the middle this year. Berlin is just above Paris this year, although Frankfurt was just below the French capital last year, three places from the bot-tom. Stockholm continues to prove its global competitiveness by placing in the top half of the rankings.

Toronto, however, is the city that continues to impress, ranking fifth this year in a larger

field, up one place from last year. It also is among the top three in the new variables, including first in workforce management risk. If it improved its standings in hiring and firing, as well as visa requirements and flexibility (which are national restrictions), Toronto would be among the easiest cities in the world in which to do business.

Sydney also rises conspicuously in this year’s rankings, moving up five places from last year’s report to just barely behind Toronto. Sydney also comes in first in the new cat-egory of ease of starting a business and ranks high in both ease of hiring and firing. Again, however, Australia’s visa policies impair Sydney’s abilities to compete at the very

highest level in ease of doing business—which, in this case, is particularly noticeable given that Sydney should be a prime competi-tor in Asia to Hong Kong and Singapore.

What is most striking in the end about the top cities in this ranking is how important open access to the world is to achieving the very top spot. Indeed, it is ironic that Hong Kong (about which there was some fear regarding its business environment after its return to Chinese sovereignty) now ranks second in ease of entry, as it did last year, and first in flexibility of visa travel—up from third last year.

2. The rigidity of hours index has five components: (i) whether night work is unrestricted; (ii) whether weekend work is unrestricted; (iii) whether the workweek can consist of 5.5 days; (iv) whether the workweek can extend to 50 hours or more (including overtime) for 2 months a year to respond to a seasonal increase in production; and (v) whether paid annual vacation is 21 working days or fewer. For each of these questions, if the answer is no, the economy is assigned a score of 1; otherwise, a score of 0 is assigned. Averag-ing the scores and scaling the result to 100 give a final index. Higher values indicate more rigid regulation.

3. The ease of firing index has eight components: (i) whether redun-dancy is disallowed as a basis for terminating workers; (ii) whether the employer needs to notify a third party (such as a government

agency) to terminate one redundant worker; (iii) whether the employer needs to notify a third party to terminate a group of 25 redundant workers; (iv) whether the employer needs approval from a third party to terminate one redundant worker; (v) whether the employer needs approval from a third party to terminate a group of 25 redundant workers; (vi) whether the law requires the employer to reassign or retrain a worker before making the worker redundant; (vii) whether priority rules apply for redundancies; and (viii) whether priority rules apply for reemployment. For the first question, an answer of yes for workers of any income level gives a score of 10 and means that the rest of the questions do not apply. An answer of yes to question (iv) gives a score of 2. For every other question, if the answer is yes, a score of 1 is assigned; otherwise, a score of

0 is given. Questions (i) and (iv), as the most restrictive regulations, have greater weight in the construction of the index. Averaging the scores and scaling the result to 100 give a final index. Higher values indicate more rigid regulation.

4. Count of visa exemption only includes tourist and business visits.

5. Ibid.


Cost: Post-recession, the rich get cheaper

Two things truly are remarkable about the five lowest cost cities in this year’s rankings. First, none is from a developing country. Second, they are all in North America. Last year, by contrast, Johannesburg was ranked first in this indicator, and Santiago tied for fourth. This year, Johannesburg and Santiago are tied for eighth, which make them the only non-Western cities in the top 10. Last year, there were five non-Western cities—including Seoul, Dubai and Mexico City—among the top 10 rankings.

As was the case last year, however, this indi-cator confirms the potential of smaller cities,

or cities that are not among the long- established global financial capitals, to com-pete in attracting investment. The four top cities in this ranking—led by Houston by a significant margin, followed by Los Angeles, Chicago, and San Francisco—are surprisingly affordable places to do business. The issue now for these cost-competitive cities is to maintain their advantages.

This year’s rankings also challenge the traditional perspective on the cost- competitiveness of mature cities. Eight of the top 10 cities come from the developed world (with Stockholm jumping five places from last

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19

17

10

25

23

19

12

14

4

15

3

8

26

5

8

13

1

11

6

2

9

20

21

Cost of living

25

24

23

19

20

26

10

6

16

23

13

7

15

12

18

2

9

14

5

17

4

3

11

8

1

21

Purchasing power1

19

15

13

17

14

11

22

24

8

12

26

23

6

25

20

9

21

2

16

7

5

5

10

1

3

18

Total tax rate

23

22

16

26

20

24

3

10

25

13

8

16

14

19

11

2

12

21

4

17

6

7

9

5

1

18

Business trip index2 Score

116

101

99

96

94

91

87

86

86

79

77

70

64

62

60

59

58

57

51

46

45

41

39

37

30

29

25

24

22

13

20

16

26

23

11

17

9

14

12

1

2

19

10

6

8

3

15

18

5

7

4

21

Cost of business occupancy

16

13

11

8

6

Houston

Los Angeles

Chicago

San Francisco

Toronto

Berlin

Sydney

Johannesburg

Santiago

Stockholm

New York

Abu Dhabi

Singapore

Madrid

Hong Kong

London

Mexico City

Seoul

Paris

Istanbul

Tokyo

Shanghai

Beijing

Moscow

São Paulo

Mumbai

21

20

19

19

17

15

14

12

10

9

7

5

4

3

2

1

22

23

24

25

26


High

Low

Medium


1. Domestic purchasing power is measured by an index of net hourly pay (where New York = 100), including rent prices. Net hourly income is divided by the cost of the entire basket of commodities including rent. The basket of goods relates to 122 commodities.

2. Weighted index of the cost of a business trip to a city, including measures such as taxi cab rates, lunch prices, and quality of entertainment and infrastructure. The business travel index comprises the following five categories: stability, healthcare, culture and environment, infrastructure and cost.


year to reach the 10th rank this year). The notion, therefore, that North America, Europe and Australia are doomed to be perennially uncompetitive on costs might have to be re-examined—as PwC’s 2011 annual CEO Survey recently showed. Chief executives now rank the US and Germany among the top five countries for sourcing along with China, India and Brazil, competing favorably on a combination of cost, quality and innovation (see www.pwc.com/ceosurvey).

Nonetheless, the developing world maintains considerable benefits. Johannesburg remains first in cost of business occupancy and contin-ues to do very well in cost of living and total

tax rate. What most affected its ranking this year was the transfer of the business trip index to this indicator. Moreover, Mexico City ranks first (that is, most affordable) in cost of living (coming up from second last year), while Abu Dhabi has the lowest tax rate (as Dubai had last year). The problem for every city in the developing world is to translate these and other advantages to benefits for their citizens. One key measure, however, points to a relative lack of success on that count.

Sydney ranks first in its citizens’ purchasing power, followed by Houston and Los Angeles. Counterintuitively, perhaps, for those who have lived or visited there, San Francisco and

New York tie for fourth. At the very bottom of the rankings comes Mumbai, followed (in ascending order) by Mexico City, Beijing, Shanghai and Istanbul.

Of course, as we noted last year, purchasing power is greatly enhanced by high salaries, which are concentrated in the major cities of the advanced economies. Also, the 122 Western goods and services that compose the basket of goods measured by this variable might skew the results to the disadvantage of the cities of the developing world. Still, the rankings show that good salaries are not so much an impediment to as a confirmation of a city’s overall competitiveness.

Once again, this year’s study confirms—even more so than last year’s—that Western lifestyles are decidedly expensive in the East (and South); they also are unavoidable given the realities of transnational business. Last year, five out of seven cities with a competitive advantage in costs were from the mature economies; this year, 10 out of 12 are.

Each city’s relative cost was calculated based on cost of busi-ness occupancy and cost of living as compared with purchasing power. Costs of business occu-pancy feed directly into operating costs. The cost of living affects the wages needed to attract the best workforce. Purchasing power serves here as a proxy for produc-tivity, or, broadly, the production of goods and services.

We determined each city’s aver-age costs by creating a factor of costs of living and business occupancy weighted in inverse proportion to purchasing power. The resulting ranking gauges general levels according to basic economic theory; that is, a city in a rich country with high purchas-ing power should be more costly on a relative scale. Divergences from what might be expected determine competitiveness.

Confirming the pattern: Western lifestyles are (usually) cheaper in the West

HOUSTON

SAN FRANCISCO

LOS ANGELES

CHICAGO

SYDNEY

BERLIN

NEW YORK

JOHANNESBURG

TORONTO

STOCKHOLM

SANTIAGO

MADRID

ABU DHABI

MEXICO CITY

LONDON

PARIS

TOKYO

SHANGHAI

SEOUL

SÃO PAULO

SINGAPORE

ISTANBUL

BEIJING

MOSCOW

HONG KONG

MUMBAI

Competitive disadvantage

-2.5

-2.5

-4

-6

-8

-10

-10.5

-11

-11

-11.5

-12

-12.5

-13

-14

Competitive advantage

+22.5

+18

+17

+15

+12

+11.5

+10.5

+8.5

+8

+4

+2

+1.5Balanced

Interview

What are you doing to reestablish Berlin as a world capital in business and finance?

First of all, even before the Wall came down 20 years ago, for the 45 years before that we were not a business center anymore. After the Second World War, Berlin’s business time was over. Siemens was founded in Berlin; Deutsche Bank was founded in Berlin. All of those companies moved immediately. And they never came back with their headquar-ters. So when, 20 years ago, the Wall came down and 12 years ago the German government moved to Berlin, we were in a very special situation. The eco-nomic environment was down. Production had lost 100,000

Energy, art and good quality of life make Berlin today a magnet for creative people. But the city also faces a chal-lenge in turning itself back into a business center after a traumatic history of war, division and dislocation. René Gurka, managing director of Berlin Partner, a civic organi-zation devoted to the economic development and marketing of Berlin, is busy tackling that challenge. Gurka himself brings global perspective to the job after spending six years helping German businesses put down roots in San Francisco and Atlanta.

people in the nineties, because all of the factories were heavily subsidized during the Cold War.

The ones in the Western sector?

Yes. And the ones in the Eastern had lost their markets, because after the monetary union their products were too expensive. So after the Wall came down, the money in the West went, and the other companies were closed because you could not sell their product.

Part of the problem being Berlin and its image?

Yes. … So what happened afterwards? Of course, there were hopes in the nineties, right after the wall came down, that

René Gurka of Berlin Partner.

René Gurka calls Berlin… “the place to be” for media, life sciences, transportation and services as the once-divided city reestablishes itself as a business center.

Berlin quickly would become a big business center again. … Wrong…

What did the city do to change the situation?

They realized they had ten lost years and began to develop a very clear strategy. They sat down in 2001 and said, okay, we’re down to nothing, we have a very bad income situation, so let’s see what is left.

They said, first, we have a great creative scene in Berlin. We have artists, we have galleries, we have little IT companies, and so on. Then they looked around and saw there is a biotechnology scene, and there’s the Charite


University Clinic, the third biggest university clinic in the world. It’s a huge university hospital. And they realized, life sciences are big in Berlin. Let’s concentrate on that.

The next thought was, what’s left of industry? They saw that traffic, railway and energy is our most common industry. And then they thought of the service industry, because they realized, we’re the capital of the country, and lots of ministries will come here. There is a lot of admin-istrative work to do. So the service industry will probably do well. That way, the city defined four clusters and chose to work in them and not get distracted. Ever since, we have been working in those four clusters.

Now after many years, we see that most of our new companies are being formed in them. Most of the companies coming to Berlin from the outside—for example, foreign direct invest-ment—are coming out of the four sectors we targeted. The biggest growth rates in the remaining industries are coming from those sectors.

After almost 10 years of this new cluster strategy, in the last five years we saw an increase of over 10 percent in new jobs, which is amazing. Boom cities like Atlanta and cities in Asia had

We think it’s very easy if you’re an international company to locate a business in Berlin. We have an international environment. We have international schools. All the embassies are here. More and more, we’re trying to be an alternative location to London for foreign companies coming to Europe.

figures like that. But, we’re in Germany! There’s not that much change all the time. We are not a total immigrant country where there is a constant change and rise of cities.

Who are these new people? Are they Germans coming into Berlin?

That is a very interesting ques-tion, because surprisingly or not, those people are non-Berliners.

Non-Berliners, but Germans?

They are Germans, but also foreigners. We have a quite high number of foreigners living in Berlin now. I think it’s about 14 percent.

These are all highly skilled jobs you’re talking about.

Yes, exactly. Out of the bad 1990s that we had, we still have a high unemployment rate around 14 percent. We’re creat-ing jobs, everything is going well now. But many people taking the new jobs are from outside of Berlin. They are from the areas like Brandenburg. More and more people are willing to drive every day from Branden-burg into Berlin. And then we have a lot of young people living here—all the 18-to-38-year-old Germans that want to be in Berlin because Berlin is hip, Berlin is cool, it’s the capital.

So you’re getting all these people who are attracted to Berlin.

And the interest is much higher than the availability of open jobs here.

Summing up, 10 years ago the Chamber of Commerce had big ideas for the future of Berlin but didn’t have a direction. Is that where Berlin Partner comes in?

Berlin Partner is a unique organization. We were founded five years ago. We came from different agencies—a traditional economic development agency, a traditional foreign trade agency and a city marketing association. We were founded as a public-private partnership between the industrial and business com-munity of Berlin and the public sector, because the public sector said, let’s try to find a way to work out economic develop-ment for the city together. They founded Berlin Partner with 50 percent of the financing from public money, and 50 percent from private partners. And it’s still the same today.

We have three main objectives. First is investment promotion. We’re trying to attract more businesses to Berlin. Second, we’re assisting Berlin companies with their foreign trade activities. All over the world, we’re doing trade shows and


The mindset is different here. We are a little bit Stockholm, we’re a little bit San Francisco, we’re a little bit Manhattan. Now, 20 years after the fall of the Wall, we are realizing we are not like other cities. We don’t even want to be like another city. We want to be Berlin.

supporting them with big teams. And third, we’re doing city marketing, other than tourism. For tourism, we have our own company—“visit Berlin”. Overall, we are 130 people now working in those four target clusters, and we’re very successful in attract-ing new companies. The foreign direct investment rate in Berlin is one of the three highest in Germany. Hamburg, Frankfurt, and Berlin lead in attracting foreign businesses.

How does that stack up within the EU, for instance?

Germany overall is the high-est, behind the UK But actually, we’re trying to get a piece of the UK cake. Because we in Berlin now think it’s very easy, if you’re an international company or have an English-speaking management team, to locate a business in Berlin because most people speak English. We have a very international environment now. We have a lot of interna-tional schools. All the embassies are here. More and more, we’re trying to be an alternative location to London for foreign companies coming to Europe.

If you’re comparing costs, you would not believe how cheap Berlin is in comparison to London, Paris, New York and all the other cities. But on the other hand, of course, you get value

for your money here. It’s not just cheap. You get value. Of course, that attracts the creative class, because they need an environ-ment where it’s cheap to live. And for the last 20 years, it was very cheap to be an artist in Berlin. If you look around in Berlin, you will find dozens and dozens of American artists. There’s a huge community of artists working out of Berlin from all over the world.

Is the great history of art and culture in Berlin a draw?

I don’t think that necessarily the younger people coming here are thinking about the history. They’re thinking about the “now” and saying it’s the cool-est city. Time had a story titled “Berlin: Europe’s New Capital of Cool.” And Conde Nast Traveler said, “welcome to the most eco-hip capital on earth: Berlin.” The mindset is different here. We are a little bit Stockholm, we’re a little bit San Francisco, we’re a little bit Manhattan. Now, 20 years after the fall of the Wall, we are realizing we are not like other cities. We don’t even want to be like another city. We want to be Berlin. It’s actually our campaign. That’s why our campaign is called “Be Berlin.” For us it’s a description of the mindset.

Now we have the highest rate of new companies being founded in Germany. All this comes together now. And it took 10 years. I would always say about Berlin that it was a very ill patient. After the Wall came down –Berlin went into intensive care. It hit us here very hard because Industry broke down. Nearly the complete East industry went down because the products were too expensive. They were so much cheaper anywhere else. And in the West, the money was gone. Now, the patient actually has healed. Berlin is out of the hospital, but we’re still in rehab. And it’ll take time, but the patient is getting better and better every day.

But in a sense, the crisis was also an opportunity. It’s great to start from nothing. You can’t do that in London, New York, or Paris. Has that helped you?

Absolutely. And consider, 50 percent of the people in Berlin have been exchanged in the last 20 years. Fifty percent of the 3.5 million Berliners are new Berlin-ers, either by birth or having moved here.

Where did all the old Berliners go?

They moved away when Berlin was doing very badly in the Nineties. When they couldn’t find a job here, they just left.


In the vision for rebuilding Berlin, was there ever any thought that people would not want to come here because of the drama and trauma it has gone through?

It’s the other way around. There are so many people that are eager to find out, what is it with Berlin? What has Berlin done? I wanted to see it. I lived in the US for six years before return-ing. I was in San Francisco and I had no reason to leave. I had the Golden Gate and the fog every day. I don’t mind that.

But when they asked me if I wanted to become the head of the economic development agency in Berlin, I didn’t hesi-tate. I said, that’s a cool thing to do. I want to be part of it. And I must say, the boom—call it a mini-Berlin boom—has been going on for so many years that I don’t think it’s going to dampen too soon. The last six years have been boom years. Every year is better and better. The patient is healing quickly, but I think there’s still a long way to go.

For example, the tourist figures. They went from 14 million-a-year 10 years ago to now 20 million this year. We have more hotel beds than Manhattan. We have 110,000 now, and New York City has about 80,000.

There must be a tremendous curiosity among people world-wide who want to see Berlin.

It’s interesting because it changes every year. This year, it was the Italians. Last year, it was South Americans. A lot from Spain. And then Americans. It’s amazing to have the Americans; I think they’re the third biggest visitor group, which is surprising

because traditionally you would never expect to find so many Americans elsewhere in the world. For so long many Ameri-cans didn’t travel that much overseas.

What cities do you see Berlin competing with?

Of course, we think a lot about London and Paris, and maybe Copenhagen. But we also real-ize we’re completely different. Within Germany, we look at Hamburg, because Hamburg is close by and it’s a well-run city. But when we start comparing Berlin to other cities, we realize that they do not lack 50 years of history. We here in Berlin have a gap of 50 years where nothing happened. When we consider our own rebuilding, we see that London is the business center of the UK, Paris is the business center of France. And Berlin is not the business center of Germany. And I am not too sure that we ever will be again. We will be different.

What is your vision of what that will be?

From an economic development perspective, we want enough growth and enough jobs created so that the three-and-a-half million people living here have a good and easy life, and can find enough work to finance their life. On the other hand, I don’t think that Berlin is a city like Atlanta that will add half-a-million people each year, even though we would have enough room. Germany, or the German population, is not growing. The German population will probably in the next 20 years fall dramatically, in contrast to the US, for example. We are still not an immigrant country, even though some people think so.

On the other hand, I am convinced that we will not be very successful in relocating companies from within Germany. Siemens is not going to come back. Deutsche Bank is not going to come back. But we have a chance for international companies. A very good example is Pfizer, which moved its head-quarters—after 40 years near Frankfurt—to Berlin two years ago, with almost 850 employees. I think we have a very good chance to get international headquarters to Berlin. And, secondly, when I view us as a mini-Silicon Valley, I think we have the chance to create big, stock companies that will make it into the index in the next 10-15 years, because all the potential is in Berlin.

We have so much more talent and so many more new ideas in Berlin, compared to Munich, Hamburg, and all the other cities. I’m convinced it will happen in Berlin. We will create new companies, probably in the high-tech sector. They will be green-economy companies. They will be IT companies. They will be in electronics. Maybe med-tech companies, biotech companies. Life sciences are a big topic for all of us, and will always be.

How is the collaboration between government, business, and universities?

In the last ten years, the indus-trial and the science sector started cooperating, but we’re still not on the level of Harvard or Stanford, or others that have been doing it for 20, 30, 40 years. On the other hand, the collaboration between industry and the Senate and the science world is good. As you can see


here with Berlin Partner, we are the best example for a working partnership between the Senate and industry.

We have 28 science partners that pay us to do science marketing and science projects and so on. They have an interest in working together with us. But still, we are not even close to ideas that happen at Stanford University. I know the licensing department in Stanford very well. They have five patents or spinoffs a day. We’re lucky if we have five a month. But we’re getting there. It’s a little bit different system in Germany. A professor usually does not have a lot of incentives to start a company. Usually they like their job, and they don’t see any sense in having five start-up companies.

What explains the fact that Ber-lin has seen such a great influx of people with skills?

I think the biggest reason is space, and all types of space. There is space for people to be creative. There’s enough space to come with different reli-gions, different ideas, different sexuality. Everything is possible in Berlin, and everybody finds his little niche of whatever he’s looking for. And of course, if you have culture, culture always needs subculture. You have a huge subculture scene in the

galleries, in the music scene. Besides Detroit or Chicago, we are one of the techno capitals of the world. That created a lot of clubs. Empty buildings. If you look around, it’s amazing to see how many empty buildings have been used for different things in the last 20 years, before they were torn down. It’s the art and the space for the arts.

People came here because of the space you have in this city. Go in front of the Reichstag, our Parliament, and stand there for a second and look around. There is a huge park, there is a huge lawn. I think space is one of the biggest assets that we have and will have for many, many years to come.

I don’t only mean physical space, by a building not being built, but space for everybody. We just closed down an airport, because we need to concentrate the air traffic to one hub. We are build-ing a new airport in Schönefeld south east of the city. So, what should we do with Tempelhof—bold history, great building, huge open space? Why not open this space to the public and give it back to the people? And that’s what we did. It’s a park now, the airstrip is open. You can stand in the middle of that old airport, and that’s when you have an imagination of space.

Tempelhof is the airstrip that was used in the Berlin airlift. You closed that down?

Yes that’s Tempelhof. And we’ll open a new airport in Schöne-feld. Tegel will be closed as well, when Schönefeld goes into operation, Tempelhof is already closed. We had three independent airports with no connectivity for flights. So, the smartest way is to close all of them and build a new one to establish a hub there, and that’s what’s being done.

Will it have rail connectivity?

Everything. State-of-the-art, most modern airport in Europe for round about 28 million passengers.

Will Schönefeld handle local as well as overseas flights?

Absolutely. International, of course. The long-haul flights will be added that we don’t have.

Right now, on Lufthansa, you can fly on a Boeing 747 between Frankfurt and Berlin. You’ve got to be kidding me, flying that huge plane from Frankfurt to Berlin?

It seems that’s where a train should take you.

The airport is one of the biggest business projects because we need those long-haul flights.

After the Wall came down, Berlin went into intensive care. It hit us here very hard because everything just broke down. Industry broke down. … Now, the patient actually has healed. Berlin is out of the hospital, but we’re still in rehab. And it’ll take time, but the patient is getting better and better every day.


We need those international connections, because the Indian, Chinese, and all the other com-panies do not want to fly into another city. We all hate it— to have connecting flights. So that is something that we need.

Coming back to the space idea—it is one of the biggest advantages here. When I was in San Francisco I had a small apartment, Haight-Ashbury, super district. But a very small apartment with no view, because I’m earning a normal wage, I was not one of the rich people in San Francisco. Now I have a penthouse overlooking Berlin for the same amount of money. And that is only possible in a city like Berlin. But that’s changing a little bit, apartments are getting more expensive.

Is Berlin significantly less expensive than other places to live in Germany?

Yes. In the last five years, the apartments are getting more expensive. But as long as there’s so much space and new apart-ments being built, even that will, at some point, top off a little bit. But, you will only need one third of the money to buy a double- or a triple-size apartment here compared to New York .

What struggles is the city confronting in achieving a productive cohesion between immigrants and native Germans—getting them inte-grated into the work force, getting them to feel like Ger-mans rather than guest workers.

There has been an intensive discussion about that, especially initiated by our ex-finance sena-tor, Thilo Sarrazin. He wrote a book on the more or less parallel worlds happening in Germany, meaning the immigrants are living in their own world, the Germans are living in their own world, the visitors are living in their own world, and how can we connect the dots between those worlds? It’s complicated.

In a sense, Berlin has a differ-ent historic twist on the social cohesion issue than other places in the world?

I would say that the people living in Berlin today are trying to live a new lifestyle. We’re trying to connect the dots here, and we’re willing to put a lot of work into making that happen. Nobody’s going to close his eyes and say, it’s not my problem. It’s a different kind of people living here now. They would always say, ‘no, we need to solve that problem.’ And so, with all the

problems that mankind is chal-lenged with, we have a lot of those challenges that we want to solve here in Berlin. And maybe Berlin can become a model city for solving many problems that the Western world is facing.

What is your favorite city to visit?

San Diego, 74 degrees, sunny. They have the greatest market-ing a city can have. It is 74 degrees, sunny. That’s all. That’s their slogan. I like it. … I like many, many cities. Home is where I live. San Francisco was my home. I lived in Atlanta for a while, that was my home. I’ve lived in big cities, small cities. Right now, Berlin is my home. And I’m happy here. Of course, Berlin has one special attraction. It’s two cities in one. We have everything twice. We have even three opera houses. We have two zoos. We have so many theaters and concert halls. It’s great. I just love it. And you can still see history here. I think that’s an important thing.

Yes, it is.

We did make mistakes after the Wall came down to just blast everything away instead of keeping some of it. Today, we would do it differently. We

We here in Berlin have a gap of 50 years where nothing happened. When we consider our own rebuilding, we see that London is the business center of the UK, Paris is the business center of France. And Berlin is not the business center of Germany. And I am not too sure that we ever will be again. We will be different.

would probably keep part of the Wall. But when the Wall came down, people wanted it gone. They shouted. They destroyed everything they could. It would be nice to have some of that history. But on the other hand, people of my age are still talk-ing about East and West, just like you as a visitor. I work in the West, I live in the East, in Friedrichshain. And I wanted to live in the East. When I came to Berlin to take over this job, this was a typical West job.

When I came here I had a driver, a very nice man. That first day he drove me around, and then that night he asks where he should take me home. I tell him, and he says: “Friedrichshain? I haven’t been there for 15 years.” I say, 15 years? The Wall came down, you never went? “No, why should I?” And that is

something that Berlin will have for—I hope—many generations, but at least this generation will always realize it was two cities.

Of course, that’s a general German problem even after 20 years. If you talk to Berliners, they still tell you, I’m going to Western Germany over the weekend. Where are you going? I’m going to Hannover. It still exists—maybe it’s coming back a little bit because it’s a joke. But that division is a very special thing about Berlin. And I think we do not realize the actual huge signal that Berlin even nowadays gives out. Last week I was in a meeting here with the ambassador of South Korea and the ambassador of North Korea. What do you think goes through their minds, sitting in a city like Berlin, that was a separated city? They are in the same meet-

ing as opponents at the table looking at each other. They must say to themselves, ‘Hey, what are we doing? Why aren’t we trying to solve the problem the way Germany did.’

But they didn’t break out in a lovefest during the meeting?

No, not at all. They were very, very chilly.

Final thoughts?

Quentin Tarantino came and lived for six months when Inglorious Basterds was being filmed in Berlin. A guy like that comes to town, and he says, it’s so cool, I’ll stay here. The brain drain is a big issue today—smart people going away. But Berlin, surprisingly, is a city where smart people are coming back.

www.pwc.com/cities

www.pwc.com



What defines socioeconomic well-be-ing—that happy state where people are satis-fied and productive, businesses are busy and making money? On the personal side, various studies offer differing keys to happiness: not smoking, being educated, exercising, enjoy-ing good health, living in warm climates, living on islands and, of course, having more money. The list goes on. Perhaps most per-suasively, it might be argued, people are most satisfied when they like what they have at the moment, not what they might have in the future. But the restless energy and pursuit of progress that builds great cities takes a bit of a different twist.

In gauging demographics and livability, Cities of Opportunity considers a potpourri of ingredients: the size of a city’s working age population and speed of its workers’ commutes, housing stock, quality of living and life satisfaction, heat and humidity, and the risk of natural disaster.

We find top-tier cities that balance healthy demographics and livability are some-times a bit off the beaten path of the world’s “alpha” cities. Stockholm moves from ninth to first this year, while Sydney and Toronto again finish toward the top, taking second and third, respectively. These are joined by a kindred city spirit in San Francisco, which is new to the study. A history of city planning and action also seems to characterize those cities that do well here. Chicago, Paris, Singapore, Berlin, each in its own way, have shown a commitment to planning and finish in the top half.

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8

3

21

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17

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4

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6

1

18

2

17

9

13

7

26

24

Natural disaster risk

16

13

11

8

6

Stockholm

Sydney

Toronto

San Francisco

Los Angeles

Madrid

Berlin

Chicago

Houston

Paris

Singapore

Abu Dhabi

Hong Kong

New York

São Paulo

Mexico City

London

Seoul

Tokyo

Beijing

Santiago

Istanbul

Johannesburg

Mumbai

Shanghai

Moscow

22

20

19

19

19

15

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12

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10

7

5

4

3

3

1

22

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Demographics and livability: The key to happiness unlocks a Pandora’s Box of questions

If anything, housing offers one of the best keys to socioeconomic happiness in our study. Tracking the interrelated movement of all variables in Cities of Opportunity shows that available, affordable, good quality hous-ing correlates very closely with other traits perceived to be positive such as good end-of-life care, healthy entrepreneurial and political environments, and a robust digital economy. (See discussion of indicator correlations on page 16 and customizable heat maps for the 66 variables on www.pwc.com/cities.)

While our data do not show which comes first, the chicken or the egg, housing or good economy, it does show that they tend to occur concurrently. The weather can be good or bad, the commute a pleasure or a pain, the city predicted to fall into the sea, but good housing seems a prerequisite if a city is to achieve healthy socioeconomic balance. At the end of the day, it appears, happiness is where the home is in terms of holistic urban well-being.

And, paradoxically, despite all the attention paid to the daily weather forecasts, thermal comfort has a weakly negative correlation with the traits often associated with a vibrant society like robust housing, entrepreneurism and digital economy. For instance, São Paulo, our most temperate city, still faces challenges in terms of building its economy and quality of life, but frigid Stockholm and Toronto are among our strongest cities.


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22

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10

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7

5

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10

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Housing

5

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7

9

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3

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11

26

23

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8

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3

20

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22

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4

1

7

Thermal comfort1 Score

137

134

133

131

124

124

122

116

116

116

113

110

107

97

92

90

83

83

81

78

76

74

71

49

49

47

Commute time2

22

11

19

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21

26

8

24

13

9

25

16

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10

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Life satisfaction3

25

25

25

25

17

14

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25

11

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14

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15

6

9

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6

3

1

3

8

4

26

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25

15

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21

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23

15

8

20

12

5

3

13

11

22

7

10

2

5

1

6

9

26

Quality of living

14

10

23

13

8

3

15

6

20

22

26

24

11

5

18

2

25

7

21

12

17

16

9

4

1

19

Working age population

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6

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26


High

Low

Medium


1. Measure of the average deviation from optimal room temperature (72 degrees Fahrenheit). January and July heat indices were calculated for each city using an online tool that integrates average temperature and average morning relative humidity during each month. A final thermal comfort score was derived by first taking the difference between a city’s heat index for each month and optimal room temperature and then averaging the absolute values of these differences.

2. Average commute time for workers commuting into or within the city.

3. Based on an international survey of country populations in response to the question, “All things considered, how satisfied are you with your life as a whole these days?”


Everyone who has ever lived, or worked, in a major metropolitan area knows the psychic costs of traffic congestion. Unfortunately, there are substantial economic and social consequences as well.

These were quantified several years ago by the Partnership for New York City.1 It found that congestion in the greater New York City region added approxi-mately $1.9 billion to the costs of doing business, led to $4.6 billion in unrealized business revenue, and cost some $5 billion to $6.5 billion in lost time and productiv-ity, as well as an estimated $2 billion in wasted fuel and other vehicle operating costs. In total, the increasing problem of traffic congestion costs the New York City regional economy more than $13 billion a year, resulting in the loss of as many as 52,000 jobs annually.

And, obviously, these negative effects are in addition to the environmental damage caused by uncontrolled traffic congestion. Clearly, decreased congestion fun-damentally improves most aspects of urban life. The problem lies in getting from here to there—from plainly unsustainable levels of urban gridlock to more viable patterns of urban transport, not only of human beings but of the goods and services that keep a city functioning.

Many factors will constitute a final mix of policies to that end, from HOV lanes in the high-ways leading to city centers, to enhanced mass transit, to urban densification, to energy policy, to technological developments

Are we there yet?On the slow lane to congestion management

in the design of automobiles themselves (electric cars and hybrids, most obviously). One policy that has increasingly attracted municipal authorities and planners throughout the world is congestion pricing since it tackles the problem directly—that is, through economics and the price mechanism.

Singapore led the world in congestion pricing in 1975. In 1998, electronic pricing was extended to all roads leading into the central business dis-trict, as well as to expressways and heavily used arterial roads. The new system has helped to tweak road-usage patterns. Peak traffic has eased and spread into off-peak hours, while average speeds for major thoroughfares have remained constant despite increased traffic volumes over the years.

It is important to note, however, that Singapore decided 20 years ago to reinforce congestion pric-ing with policies that severely limited car ownership—includ-ing the requirement that anyone wishing to buy a new car in Singapore must bid on and win a “certificate of entitlement” through a monthly auction. The costs of these certificates have become so high that it almost is prohibitive for many residents to own a car in Singapore. As a result, per capita car ownership stands at about 122 per 1,000 (as opposed to 780 per 1,000 in the US, for example).

Europe’s experience also is generally positive. Stockholm introduced a congestion fee in 2007 for cars entering and leav-ing the inner city during business hours. Three years later, traffic had declined by approximately 20%, and traffic jams in and

Pricing policies make a small dent in the pileup of inner city traffic problems as Stockholm eases the pain, London regains some and Singapore takes a slightly different turn.


around the center had decreased by 30%. (A recent “commuter pain” study showed that Stock-holm’s citizens suffer the least grief of any commuters in 20 major cities of the world.)2

In London, authorities introduced a congestion charge in 2003 and extended it between 2007 and 2010, although in January 2011, the “western extension” area was removed from the charging scheme. In the central congestion charging zone, according to the latest traffic monitoring report, there continues to be a 16% decrease in all vehicles entering the zone when compared with pre-charging traffic levels.3

As streets and roads are tradition-ally considered a public good, congestion charges represent new

costs to users. A critical factor in introducing them, therefore, is not only governmental resolve—as elections are a risk to officials wanting to implement such policies—but freedom of action. Mayor Michael Bloomberg’s approach to traffic congestion in New York, to give an obvious example, was not even put to a vote in the state assembly. (In Sweden, by contrast, the national government was allied with city authorities in moving Stockholm’s plan forward.)

In any case, congestion manage-ment requires regional solutions. In fact, it demands input from every level of government, includ-ing national leadership—which is the common lesson to be learned from both Singapore and Stockholm.

Cars entering London’s congestion charging zone.

1. Growth or Gridlock? The Economic Case for Traffic Relief and Transit Improvement for a Greater New York, Partnership for New York City, December 2006.

2. IBM Global Commuter Pain Study Reveals Traffic Crisis in Key International Cities, IBM, June 2010.

3. Central London Congestion Charging Sixth Annual Impacts Monitoring Report, 2008. http://www.tfl.gov.uk/assets/downloads/sixth-annual-impacts-monitoring-report-2008-07.pdf.


26

22

16

19

20

21

24

14

13

18

11

10

23

6

12

3

7

9

15

17

8

5

1

4

2

25

Cultural vibrancy1

16

13

11

8

7

New York

Paris

London

Toronto

Sydney

San Francisco

Tokyo

Los Angeles

Hong Kong

Moscow

Chicago

Houston

Singapore

Berlin

Shanghai

Madrid

Beijing

Istanbul

Stockholm

Mexico City

São Paulo

Seoul

Johannesburg

Mumbai

Santiago

Abu Dhabi

21

20

19

18

17

16

14

12

10

9

7

5

4

3

2

1

22

23

24

25

26

Lifestyle assets: Following your urban bliss, from green to neon to basic black

The greatest changes in this section this year have to do with the definition of the indicator itself, which now tries to capture more of a city’s actual character and its real cultural gravity in the wider world. We also have added and deleted some variables and changed the definition of a very important one. In so doing, we have sought to further clarify, and enrich, the information conveyed.

First, for the changes: We deleted top global fashion capitals and top 100 restaurants and moved the business trip index to the cost indi-cator. We also have moved green space as a percent of city area from sustainability to here because, increasingly, a green quality of life is seen as an aesthetic and cultural good, as well as an environmental one.

Most important of all, we have tried to quantify a city’s actual cultural impact with the new variable, cultural vibrancy, which represents a much more robust aggregation of data.

We have added two new measures to our former entertainment variable to gauge cultural vibrancy: the number of museums (with an online presence) within each city and that city’s “zeitgeist.” The former is a concrete, and self-evident, gauge of a city’s specific cultural identity; the latter speaks to current cultural influence and linkages that can’t be captured by the number of a city’s museums or the quality of its restaurants. Finally, because of the increasing significance of sport in the modern world—not to men-tion the importance of one or more teams to a city’s self-definition—we have made sport and leisure activities an independent variable, freeing it from its previous incorporation in entertainment.

Now for the rankings: It is in this category, yet again, that a great city proves to be more than the sum of its parts, more than just an array of steel, concrete and madding crowds.

Great cities remain so, in large part, because they are the ongoing laboratories of human interaction and of the art and culture produced by this enduring exchange. For sev-eral years, New York, Paris and London have unsurprisingly ranked at or near the very top. This year, however, because of our changes, Hong Kong drops to ninth from third last year. It is joined by Tokyo as the only other Asian city among the top 10, as Singapore also has dropped seven places this year.

Asian cities lead in other variables, however. Beijing is ranked first in hotel rooms, while Hong Kong remains at the very top in the impact of its skyline. Still, while nine cities are tied for first in sport and leisure activities, none of them are Asian.

Stockholm, true to its reputation for environ-mental leadership, scores highest in green space. Moscow scores second. Russia’s capital mostly does well in lifestyle assets and just makes the top 10.

Finally, it is telling that, whereas Frankfurt scored fourth from the bottom in our 2010 report, Berlin scores in the middle of the pack this year, at the very top of the second half of the rankings—and fourth in cultural vibrancy. Berlin is generally recognized as having become one of the liveliest cities in Europe since German unification (see inter-views with René Gurka and Rem Koolhaas, on pages 64 and 24, respectively) and a magnet for younger people especially. São Paulo also makes it into the top 10 in cultural vibrancy as the global media buzz intensifies around its fashion, nightlife and energy. There is something to be said for “zeitgeist,” after all.


26

26

26

26

26

12

26

12

6

26

26

17

17

6

17

2

12

17

12

12

6

17

2

12

6

26

Sport and leisure activities

23

22

13

12

11

24

8

16

18

9

19

10

15

21

17

26

20

8

5

14

6

1

3

2

4

25

Hotel rooms

25

9

19

15

12

24

13

26

16

22

17

21

2

23

6

18

8

1

10

14

20

5

11

3

4

7

Skyline impact

25

23

20

9

14

12

18

22

17

4

1

24

13

19

16

15

21

7

11

5

10

6

8

2

3

26

International tourists Score

147

125

123

111

105

104

103

102

97

95

94

94

90

88

86

84

83

72

68

65

65

56

43

30

24

21

Green space as a percent of city area

22

23

17

24

21

10

13

7

25

15

20

8

18

11

16

19

4

26

12

3

6

9

5

1

2

14

16

13

11

8

7

New York

Paris

London

Toronto

Sydney

San Francisco

Tokyo

Los Angeles

Hong Kong

Moscow

Chicago

Houston

Singapore

Berlin

Shanghai

Madrid

Beijing

Istanbul

Stockholm

Mexico City

São Paulo

Seoul

Johannesburg

Mumbai

Santiago

Abu Dhabi

21

20

19

18

17

16

14

12

10

9

7

5

4

3

2

1

22

23

24

25

26


High

Low

Medium


1. Weighted combination of city rankings based on: the quality and variety of restaurants, theatrical and musical performances, and cinemas within each city; which cities recently have defined the “zeitgeist,” or the spirit of the times; and the number of museums with online presence within each city. The “zeitgeist” rankings take into account cultural, social and economic considerations.


Past perfect?Cities walk a fine line between welcoming progress and preserving historic structures and ways of life

During a recent month, an unscientific sampling of the morning newspapers in New York uncovered stories on saving the traditional hanoks of Seoul, courtyard communities similar to the hutongs of China; preserving the ruins of ancient Babylon; relo-cating the planned glass-and-steel Gazprom tower in St. Petersburg to maintain harmony in the city’s historic heart; protecting one of the few idyllic ponds left in New York City’s Bronx from nearby development; and restoring a longer stretch of Manhattan’s High Line, an obsolete, raised freight

line recently transformed into a park through community support.

Perhaps most telling is a small town drama unfolding in the heart of Brooklyn, until 1898 a city of its own. Long known in America as a place that welcomes a good fight, downtown Brooklyn residents, businesses and preser-vationists are battling over a plan to create a historic district amid 20 or so commercial buildings dating from the turn of the 20th century.1

Opponents argue the buildings being saved are nothing special. “It looks like downtown Detroit,” one resident commented. Busi-nesses fear development and commerce will dry up with historic designation. Property owners worry landmark status will bring costly maintenance requirements. Preservationists, on the other side, argue distin-guished architecture deserves to be protected.

Preservation is taking off worldwide: Twelve percent of the world’s surface now is preserved, and a vast amount of new area awaits heritage certifica-tion, according to a study done by AMO, the research arm of the Of-fice of Metropolitan Architecture (OMA), for last summer’s Venice Biennale at which Rem Koolhaas was awarded the Golden Lion for lifetime achievement.2 While Europe accounted for the bulk of preservation a century ago, the pendulum now is swinging the other way, according to the

research. Certification of today’s planned heritage sites will even out the spread of preservation across the continents. (Cities of Opportunity considered measuring and comparing urban preserva-tion efforts, but it quickly became apparent that differences among cultures and economic conditions would make city comparisons un-wieldy, inaccurate or impossible.)

OMA*AMO’s work also shows the time interval is shrinking between construction of a building and its historic designation. And, ironically, heritage status attracts waves of tourists who, in turn, jeopardize the integrity of what was just preserved.

What’s going on here? The past is hot in the present. And why do we care so much about it? In the simplest of senses, progress clearly demands change. It’s the mantra of modern business, “change is good” and heart of homey wisdom, “You can’t make an omelette without breaking some eggs.”

But perhaps a better question should be asked to explain the immediacy of preservation today: What is authentic? And why do we care about that? The hunger for the real often lies at the center of preservation debates if the surface is scratched deeply enough. In the age of virtual life, authenticity offers a natural antidote to imper-sonal personal communications; consumer goods that are the stuff of dreams (even with obsolescene-In its heyday in the mid-20th century, the High Line hauled goods above Manhattan’s

industrial heart directly into factories and warehouses, avoiding congestion in the streets below.


1. Joseph De Avila, The Wall Street Journal, December 15, 2010, “Save Brooklyn? Fuhgeddaboutit”.

2. CRONOCAOS, OMA*AMO, Venice Biennale 2010 exhibit. From the introduction: “OMA and AMO has been obsessed, from the beginning, with the past. Our initial idea for this exhibition was to focus on 26 projects that have not been presented before as a body of work concerned with time and history. … We show the documentary debris of these efforts. But 2010 is the perfect intersection of two tendencies that will have so-far untheorized implications for architecture: the ambition of the global taskforce of ‘preservation’ to rescue larger and larger territories of the planet, and the— corresponding?—global rage to eliminate the evidence of the postwar period of architecture as a social project. In the second room, we show the wrenching simultaneity of preservation and destruction that is destroying in any sense of a linear evolution of time. The two rooms together document our period of acute CRONOCAOS.”

3. See World Heritage papers 27, Managing Historic Cities, September, 2010, for a compila-tion of essays by van Oers and others on urban preservation, http://whc.unesco.org.

guaranteed); throwaway culture that makes “15 minutes of fame” seem like an eternity; political correctness and hyperbole that drown out the simple and direct; and preoccupation with process that eclipses the focus on actual results. (Not that all believe pres-ervation, per se, assures authen-ticity. Some contend the zeal to preserve not only risks exceeding the value of what we’re saving but creates a middle-of-the road limbo; more faux than old or new, quashing imagination and innova-tion along the way.)

According to Ron van Oers, head of UNESCO’s World Heritage Cities Programme3, careful choreography is required to make the delicate balance of interests work at a time when the entire approach to preserva-tion demands rethinking. Van Oers is optimistic. He currently is drafting new UNESCO guidelines that seek to make conservation a natural strategy for sustainable

development. He envisions a more organic and collaborative model than the modernist era of engineering neighborhoods in and out of existence based on distant ideas rather than on local needs; of developers bankrolling change at the expense of commu-nities; of architects manufacturing instant landmarks; or of preserva-tionists fighting to protect historic structures without equal care for surrounding ways of life.

“Society has become so complex with so many stakeholders, each having their particular view and settled values, that the traditional, purely techni-cal way of doing preservation is not cutting it anymore,” van Oers explains. “The discussion is pretty similar all over the world,” from the hutongs of Shanghai, to the favelas of São Paulo, to 19th century neighborhoods in lower Manhattan, to Paris, Rome, Liver-pool and Manchester.

“What we have seen in the last decades of the 20th century was that redevelopment destroyed not only social networks but also took away the particular identity and feeling, the atmosphere that a place had for perhaps centuries. Now planners, decision makers and conservationists are trying to identify those elements that should be retained so that either building stock can be renewed or careful surgical interventions in the built environment can maintain the sense of place and identity.”

Van Oers draws an analogy to selective forestry where timber is preserved to provide a continuing habitat. “Instead of clearcutting and razing to build something completely new and then put people back in, in a sort of numbers game, the aim now also is to maintain social networks when preserving urban heritage sites. No matter what forces created a heritage, local

“Redevelopment destroyed not only social networks but also took away the particular identity...a place had for centuries” van Oers says.

After the trains stopped in 1980 and before it became a park in 2009, the High Line welcomed weeds, refuse and rust. Demolition appeared the next step.

communities are its living custodi-ans; they embody it. Community participation ultimately makes the difference between preservation’s success and failure. Heritage conservation has to be matched to serve local needs, not only preservation itself.

“Otherwise expenses will fall on city authorities … Social networks take care of each other. Uprooted

Joel Sternfeld, Fallen Billboard, November 2000 Courtesy of the artist and Luhring Augustine, New York.


Today, community support has restored the High Line as a popular park crowded with local residents and tourists who stroll above the now trendy neighborhood near the Hudson River.


communities and families provide automatically more problems for city authorities whether it’s in health or productivity or eco-nomic cost.”

Koolhaas interjects other considerations, citing “ambi-guities and contradictions”: “How can the preserved “stay alive and yet evolve?” How can political correctness be stopped from allowing “the past to become the only plan for the future?”

Ultimately, Koolhaas writes in CRONOCAOS at the Venice Biennale, “The world needs a new system mediating between preservation and development … We have never theorized a way to keep not only the physical substance but, as in a time machine, also the life that came with it … Pre-emptive mediocrity has become our dominant expres-sion of respect for history… It has become impossible to date large sections of urban production; a low-grade unintended ‘timeless-ness’ is our contribution to the march of civilization.”

In his current restoration for the four buildings that make up The Hermitage, Koolhaas approaches preservation with as little inter-vention as possible, allowing the past to speak for itself. “We want to create a greater complexity but maybe also greater transparency regarding what happened there … This is where the tsars lived; it’s also where the Russian Revolution broke out. So let’s see whether we

can make the experience of this building reveal more about the period.” (See full interview with Rem Koolhaas as well as video at www.pwc.com/cities.)

All in all, urban preserva-tion seems to be navigating its way between a rock and a hard place on a number of nettlesome issues: Maintain the old, sometimes without discern-ing prudently between gems and junk. Stay away from projects that challenge imagination, aesthetics and functionality. Settle somewhere in the middle for plasticized paeans to the past; cityscapes congealed like mummified kings, neither fully alive nor fully dead. And justify investing energy and resources in historic preservation when budgets are challenged in the present, sometimes in providing adequate water, decent housing and healthcare.

However, 400 years later, the debate between two notable city thinkers, Descartes and Spinoza, over which deserves pride of place, mind or body, still appears to be playing out as developers,

planners, city officials and neigh-borhoods try to define the right approach to preservation. Which comes first, people or structures; mind or body?4 Each side has strong points.

Resolving the issues—like deter-mining whether the devil or angel lies in the details—will depend on the energy, tenacity and humanity applied to the problems. Mean-time, the promise of the city continues to inspire dreams and plans. And the energy and intel-ligence to build the future comes from the people who put down the roots that build a heritage worth saving.

“The world needs a new system mediating between preservation and development,” Koolhaas writes. “We have never theorized a way to keep not only the physical substance, but, as in a time machine, also the life that came with it.”

4. After moving to Golden Age Amsterdam in 1629 to get away from the distractions of Paris, Rene Descartes, champion of the life of the mind, wrote: “Amidst this great mass of busy people who are more concerned with their own affairs than curious about those of others, I have been able to lead a life as solitary and withdrawn as if I were in the most remote desert, while lacking none of the comforts found in the most populous cities.” [The Philosophical Writings of Descartes, Cambridge University Press, 1985]. Benedictus Spinoza would be born in Amsterdam three years after Descartes’ arrival. Spinoza was soon to be excommunicated from the city’s Jewish community for his freethinking ideas that included naturalistic views on God and a belief that bodily emotions and rational behavior were causally intertwined. This differed from Descartes, “Cogito, ergo sum or “I think, therefore I am.” One way or the other, the debate continues today.

Please see www.pwc.com/cities for videocasts of our discussion with Rem Koolhaas and a full- length transcript.

Interview

Since Adam Smith wrote The Wealth of Nations, we’ve seen extraordinary advances industri-ally and scientifically. How do you think the wealth of cities will be generated in the future?

This is a fascinating question. I think the urban system might be regarded as a kind of spring-board for value creation. It used to be a node for trade, once upon a time; before that, it was a node for defense. The next generation down the road for cities might be that they become innovation springboards—as Boston is in the US and more recently, Skolkovo in Russia— cities of innovation. However, very few cities today are like

that, because of the congestion, air pollution, and so on.

Do you see the physical quality of life in a city related to the quality of intellectual capital?

Absolutely. That’s why this might be the way we progress: from cities of hardware to cities of mindware. But that is the quality dimension. This year’s Monocle rankings of the most livable cities in the world were Munich at number one; number two, Copenhagen; and number three, Zurich. All small cities with easy access. You can bike around, and it’s easy to build relationships in such cities.

In last year’s Cities of Opportunity, some of the top, most livable cities were Stockholm, Toronto, Sydney, Chicago, and Frankfurt, all of which also did very well economically, so there’s an interesting conjunction there. Do you think the model of the functional city of the future, which smart people will want to live in and help build, will be more like Copenhagen, Stockholm, or Toronto?

Yes, if there is a good airport.

Why is that?

Because you have a growing migration of brains in correla-tion to network relationships.

Leif Edvinsson charts … a course “from cities of hardware to cities of mindware”

As a professor at Lund University and Hong Kong Polytechnic University as well as the first Chief Knowledge Officer at the insurer Skandia, Leif Edvinsson pioneered understanding of the dynamics of intellectual capital in modern companies and communities—work that led the British Brain Trust to name him “brain of the year.” Here, Edvinsson discusses intellectual capital in various contexts, the successes and challenges of particular cities and the “neural planning” that can help cities prepare for a knowledge-centered economy where value is created by intan-gibles and networks of minds rather than machines.

Leif Edvinsson in the rotunda of the Stockholm Public Library, a city landmark known for Gunnar Asplund’s design and the nation’s first open shelf library.


Some studies show, for example, that it’s easier to get in and out of European cities than Asian cities. So, good airports close by are becoming essential. MIT found that a city needs a good university and a good airport.

Is this for people moving in and out of different companies and universities, or does it include more general migration?

It might be that, down the road, we will have more knowledge nomads: people who, for example, work at CERN in Geneva for, say, three years. They might bring their families or, if not, commute from where they live. Which means the commuting possibilities become very important, and temporary migration becomes a kind of norm. I worked, for example, for two years in New York, com-muting on a weekly basis, with my family in Stockholm.

How was that?

It was before the age of September 11th. It was very easy to get to the airport. Nowadays you spend as much time at the airport as on board.

Canada, and Toronto, has some special programs. They really try to find skilled people from around the world who have some particular intellectual capacity or skills.

If you’re connecting my brain with your brain, and we’re connected to other brains, we can more than triple our revenues and value creation. We can afford to have more people living from our value creation. The problem lies in the political leadership not seeing that vision—the need for a system of migration of brain power into society, and its renewal over time.

It’s a part of the Commonwealth tradition. Australia did the same. They started a very special brain import 20 years ago.

Do you think that will catch on worldwide?

It’s a political issue. One needs courage, as a societal and political leader.

How do you envision the intel-ligent city of the future? What will it look like? What will its government, thinkers, business and social leaders be doing in areas like intellectual capital, and related areas, to assure continuing socioeconomic well-being?

I think there are at least three dimensions to this question, which is a very good and chal-lenging one. The long-term, visionary perspective is that the future city, 25 years down the road, will be like a brain, where urban planning becomes brain or neural planning for the city. And we will be looking at how to nourish the synapses between brains by creating special mind zones instead of shopping centers. So, as the shopping center will be replaced by mind zones, the second dimension will require upgrading the skill of urban planners to the levels of neuroscience.

The third dimension is a focus on drawing the maps of urban value creation, to determine where value creation takes place in cities. It used to be the harbor. It used to be the industrial areas. It used to be the offices. In the city of the future, it will probably be the networks, which will not be captured in traditional statis-tics. So you need to develop the social and city intelligence to create maps to see where value creation is taking place.

And how does one create such a map?

It will probably build on some of the thinking in the pentahe-lix of PwC, the sustainable city development approach where you have a number of stakehold-ers and interaction among the stakeholders, and you also have another way of thinking of value creation. This networking evolu-tion is also amplified by the social media, and well described in the recent book “Connected” by Nicholas Christakis and James Fowler. Traditional eco-nomics is about input/output, but the knowledge economy is about input/impact. You have to measure impact, and impact is measured best as a kind of opportunity cost.


Shenzhen’s experience confirms that you have to prototype [a knowledge zone] because that reduces the risk level for urban planners: you run a little prototype, which might fail or be successful, and then gradually scale up the successful part. Shenzhen had about 30,000 people in 1979 and over nine million today, as well as a number of major universities.

To get back to mind zones, how would you describe them? What are they?

A mind zone is a kind of open space, an arena or Ba, as [Professor] Nonaka in Japan calls it, where the traditional square is replaced with a kind of quality-of-life meeting space. The closest illustration we have today is the knowledge café. But in Toronto, as well as here in Scandinavia, because of the cli-mate during the winter, we need a kind of built-in meeting space, but still open. A kind of open innovation system, where people go in—you don’t know who you’ll meet, but you’ll probably enjoy being there. It’s like going to the Starbucks of tomorrow.

And how do you see a planner’s skills combining withneuroscience?

We know today, for example, from of a discovery made during the nineties in Italy by Professor Giacomo Rizzolatti that when you sit next to a person in a Starbucks, your neurons jump from your brain to the other one. This is called “mirroring neurons.” It used to be called a “meeting of minds.” But now you can actually measure this with technical devices, which means you can visualize it.

Like a physical attraction, but intellectual….

Yes, an intellectual attraction. And then, if it can be measured, you can actually amplify it, or reduce it, or block it.

When you say “reduce,” “block,” or “amplify,” do you mean creating an environment that’s more conducive to intellectual communication?

Yes. But then comes the next question? How do you get paid for that? In other words, the deeper meaning of intellectual capital.

And how do you recognize people for constructive think-ing, and reward them for it, for behaviors that actually build economic and social well-being? It seems that in many large organizations, “fitting in” is rewarded, while people who have different or creative ideas are feared or marginalized.

Yes; that is why, for example, we prototyped a kind of approach in which you are scored for the way you work—which you do already at PwC. There are four aspects to the scoring. The first relates to work performance, doing a good job. The second asks, are you helping your colleagues do a good job? This is much more challenging because one is now rewarding and giving

bonuses to collective value creation. The third asks, are you upgrading your skills during the year, which is actually about your renewal capability and how it is nourished. And the fourth one wants to know if you are building a good brand and image for your enterprise. These four very simple aspects repre-sent a way of “reading” human capital. But then, what you see if you look at modern enterprises like Google and others, what really makes the value creation come through, is learning to work with relational capital, the network, and surrounding structural capital.

So value creation actually occurs when you connect the external network with internal brain power. That’s where you have the multiplier function. And that’s why a city can be regarded as a multiplier function. If you are importing brain power to Malaysia, for example, you can put it in the jungle but you can also put it into the Multimedia Super Corridor. In the Multime-dia Super Corridor, you connect to both the people of Malaysia as well as on a global scale. And then you have collective intel-ligence amplifying your thinking as well as your value creation. This is precisely what the finan-cial sector is about today. It’s the network in derivatives.


Do you think there will be a day when the intangible factors that human beings contribute to a business or a city will actually be measured and rewarded, to motivate people?

It’s already taking place. This is the beauty of this global movement of intellectual capi-tal, because you already have regulations policies in some nations promoting this. You have policies in Austria requir-ing all universities to make such reports, to highlight precisely what we’re talking about. And then you have the Japanese development. Research from the US shows that leadership is about the capacity to think 15 years down the road. In Japan, they are rewarding this way of thinking. So, if you’re rewarding 15-year thinking, it’s not about yesterday: it’s about tomorrow, about the thoughts of tomorrow.

Thinking that way seems to demand more openness of us as human beings, less tightness and jealousy.

Yes. That’s why we need to shape cities—and offices—more openly, not as closed fortresses. That’s why Starbucks as well as Googleplex as a campus is probably generating much more money and value than tradi-tional offices. Just imagine if a city had the same kind of archi-

tectural and urban-planning skill at its disposal as the skill of the interior designers of Starbucks.

It seems as if people feel comfortable in that communal environment with the energy of others.

The neurons. The mirroring neurons. That’s why the English word for computer means a kind of algorithm machine. The French is “ordinateur,” or “ordinator.” The Chinese word for “computer” is “mind machine”—“dian nao,” electric brain.

What needs to be done to properly balance resources in cities, to pay attention to social infrastructure, education and healthcare, as well as roads and airports, energy and water?

What you see is a shift in invest-ment flows. Federal Reserve statistics show that investment in intangibles in the US has sur-passed investment in tangibles for the last 25-30 years. But no one knows, really, how to leverage this. Therefore, we’re still guiding and navigating the economy based on the tangibles, not the intangibles. That’s why we had the financial crisis, actually.

That’s why we have to start thinking about the city as a cell—a stem cell, with tremen-dous potential. But also one

that you can kill by not giving it energy, by not cultivating relationships. That’s why rela-tional capital is so important for the nourishment and growth of intellectual capital.

And what specifically, tangibly, is relational capital?

It’s endless. It’s a multiplier func-tion. Paul Romer called it the law of increasing rate of return. But traditional investment calculations are based on the opposite. The law of diminishing marginal utility divides every-thing into ever smaller pieces, which is why you amortize cars and houses and computers. Actually, though, the value of a computer increases if you load it with software.

It seems that the world we’re living in now is a doorway to another one. What’s occurring is almost a Darwinian natural selection in which the fittest will be those who understand that, and change.

It’s already happening. You saw that with the establish-ment of the Multimedia Super Corridor in Malaysia 15 years ago, where they tore down the oil palms and replaced them with the Corridor as a campus, which attracted the brains and transformed the nation from a developing country into a developed society. And you see that at MIT and Harvard Square,

We have to start thinking about the city as a cell—a stem cell, with tremendous potential. But also one that you can kill by not giving it energy, by not cultivating relationships. That’s why relational capital is so important for the nour-ishment and growth of intellectual capital.

and in places like Silicon Valley and Googleplex. It’s already happening.

What are the critical ingre-dients—the particular collaborations, capacities, resource priorities—that a city should synchronize and focus on in order to generate not only greater intellectual capital, but real socioeconomic progress?

It starts with relational capi-tal, and moves from relational capital to cultural capital—like soil for growing a young tree. And that leads to the notion of social capital as a kind of collec-tive value creation, which will probably lead to traditional cur-rencies such as the dollar being replaced by network capital, like the old bonds of a guild society. If you’ve noticed, China has proposed replacing the dollar as the chief global reserve currency with SDRs, the IMF’s Special Drawing Rights created over 40 years ago. But SDRs are bonds of mutual trust, which is relational capital.

What recommendations would you give to city governments and city policy makers, or to businesses or universities operat-ing in cities? What should they be doing, or thinking about, to help move us in this direction?

Three steps. Number one is, start asking some good questions about the social intelligence of

a city. Observe the signals. The second is, draw a new type of urban map, one based not on houses and streets and flow of water, but flow of knowledge—which will probably lead to urban planning that focuses on the in-between spaces….

What’s an in-between space?

What’s in between buildings. What’s in between floors. What’s in between people. It’s like an old inverted photo—a negative— where you more or less see the non-tangible dimension.

Finally, the third step is to build and visualize the city as a mind or a brain. Consequently, you need to have neuroscientists come and work in urban-plan-ning units.

Has that occurred anywhere?

A little bit, in a city called Solna, here in Sweden, where PwC ran a sustainable city develop-ment project two years ago. And the discussions were very much about developing a new type of city plan for the in-between spaces. But the most tangible example of what I’m talking about so far is the city of Helsingborg, which has inau-gurated a project called H+, “H” for Helsingborg. One of the three architectural firms finally chosen by the city to work on the project, White arkitekter AB, in whose team I partici-

pated, actually calls its proposal “Mindzone”—which is about developing an urban mind zone, as I described it above, instead of a shopping center.

Do you think this is possible?

Oh, yes. Actually, it’s very simple. It starts with thinking differently. Like Starbucks, which is the product of very simple thinking. The coffee shop as such is a Turkish innovation that is about 1,000 years old. It was imported by, among others, Vienna—the Vienna coffee houses—which were then transformed into the coffee shops of Throgmorton Street in London, where the London stock exchange started, in a coffee shop.

In a sense, it is like taking the coffee out of the coffee shop, but people still coming because it’s nice to sit with intelligent people.

Exactly. It’s the intellectual rela-tionship instead of the physical one, as you said. But you need to have the intellectual appeal.

Do you think part of that is self-selection—peer selection—in which you feel safe because you can speak to these people, trust them?

Well, both. But if it’s too much of the same, you don’t get the nuances or the good, new harmonies. You need some

To attract people to live in cities, you need to have clean air, and you need green areas and recreation opportunities. A city must be alive, not just during the workday, but day and night. And you need mobility to get where you need to be quickly.Klaus Baur


differences. You need diversity, actually, to be nourished into something else. Otherwise, you have inbreeding.

Regarding diversity, we often work today in cross-cultural, global teams, which can be chal-lenging. What do you see as the pluses and minuses of working in teams that intermingle so many cultures, so many ways of working and communicating? Do you think these challenges are just temporary and will go away?

I hope they won’t go away. On the contrary, I hope they will increase. MIT Sloan Management Review had a very good article1 on collective intelligence a few issues back. It’s actually about combining brains. But the addi-tional dimension that you need is age diversity, not only cultural diversity. That’s what we learned when I formed my Future Teams many years back: we need to combine people from different parts of the world but also from different age groups. I used to call this 3G—three generations.

Take a piece of paper and pen, and write “age” on one axis and “creativity” or “entrepre-neurship” on the other. The correlation, actually, between

these two is that it comes out like a U-curve, which means that you have a lot of people with high creativity at a young age, which then decreases onto the age of 42, and then goes up again.

It goes up again at an older age?

Creativity goes up again. It’s very simple risk aversion. People in the age group around 40 have so much fear of losing their jobs, losing their careers, losing anything, so they don’t really renew. They just surf. That is the cultural dimension of age diver-sity, on several levels.

We touched on this briefly when talking about Toronto and migration, but what do you think cities should be focusing on today to attract, to keep and develop, the kinds of professionals who will continue to build a healthy city? What should cities be doing and thinking about to create, as you say, the right “urban context” for knowledge workers?

I think this is research that [Professor] Richard Florida and his team have been looking into, and you can probably find some good research-based responses in his work. But in my view, it is about supporting people coming and going. That’s why I some-times say that the knowledge

city of tomorrow has to be like a very good knowledge port, a knowledge harbor. A knowledge “harbor” has more of a connota-tion of keeping whatever comes into it. A knowledge “port” connotes more of checking into a city in the Midwest or Mideast or wherever, staying there for a period, and then flying out, like CERN in Geneva. A “knowledge port” becomes a kind of architec-tural structure to support the migration and flow of brains in and out.

It seems that the rise of intel-lectual capital as a key engine in economic growth, globaliza-tion, urbanization, and the tremendous speed and univer-sal connectedness we have, are generating mental strains and confusion over conflicting messages: quality of life on one hand, and the need to succeed on the other. Do you believe we’re working too hard today, and that mass burnout is a threat to creative thinking?

It definitely is, actually. The Karolinska Institute has a very good stress-research team, which has shown that if you get severe stress illness, you develop genetic faults that might be inherited by the next generation. So there are very severe conse-quences when you do not create the right context for intellectu-als, for brain workers.

Traditional economics is about input/output, but the knowledge economy is about input/impact. You have to measure impact, and impact is measured best as a kind of opportunity cost.

1 MIT Sloan Management Review, “The Collective Intelligence Genome”, By Thomas W. Malone, Robert Laubacher and Chrysanthos Dellarocas, April 1, 2010

That being established, how do we make it better? How do we strike a balance in work life? In life?

It is related to the fact that we are moving from an indus-trial economy—which we left, actually, 30 years ago—into a knowledge economy. We don’t have a taxonomy for it yet, but all the statistics show that, while we have left the industrial economy, our organizational system is still modeled along the lines of industrial society. Our accounting system, for example, is still based on the old Catholic accounting system born in 1494. These metrics are not made for and do not honor the investments in intangibles and knowledge.

Yet we’re living in times of continual change.

Three hundred years ago, the most important jobs were actu-ally those of the navigators. Today, we have replaced them with financial quants—which is not a good thing because it’s actually reducing the collec-tive wealth. Therefore, we need to develop a whole new job description and career for the intellectual economy.

We came out with a book in October [2010] in which we have looked into 40 nations during 14 years and their

intellectual-capital indicators.2 The top ones are Scandinavian: the small nations. But it’s very interesting because if you think about the situation 300 years ago, if you were sitting in Europe, realizing that you had no capability to support your family, you emigrated to the US, to the Americas. That was the Promised Land. But where is the Promised Land today?

While there may be no “Prom-ised Land” today, people still migrate. If you are migrating to a city for work, or for education, either as a poor peasant or, say, an engineer or creative artist, what’s different now from the time 100 years ago when people emigrated from a town like Karlshamn, from which a great number of Swedes came to America?

The difference is that you can cover huge distances in a very short time. For example, I was in Thailand last week, and now I’m back in Sweden, and next week I’ll be in the south of France.

So you cover a lot of vast distances by communications means and tools. And that will probably increase over time. But then somehow we are also going to be more connected, like you and I are right now by

the old phone system. Skyping is coming, and we don’t know what’s around the corner with other developments.

There are many urban contexts, as you’d say, geographically and socioeconomically. Looking at cities in different parts of the world, and at how they should be building long-term intellec-tual assets and nurturing knowledge workers, what do you think a mature city in the US or the EU should be doing? Or is that too obvious a question?

It’s probably the most complex one. One of the most appealing cases I know of is Shenzhen, which is, as you know, the formerly little city north of Hong Kong that was selected by Deng Xiaoping in 1979 as the pro-totype for transforming China from communist to capitalist. Its experience confirms that you have to prototype because that reduces the risk level for urban planners: you run a little prototype, which might fail or be successful, and then gradually scale up the success-ful part. Shenzhen had about 30,000 people in 1979 and over nine million today, as well as a number of major universities. Now it’s being integrated with Hong Kong into an innovation zone. So the recommendation is probably to prototype a knowl-

If you’re rewarding 15-year thinking, it’s not about yesterday: it’s about tomorrow, about the thoughts of tomorrow.

2“National Intellectual Capital–A Comparison of 40 Countries,” Carol Yeh-Yun Lin, Leif Edvinsson, Springer, ISBN 978-1-4419-7376-45


edge zone or innovation zone or urban-enterprise zone.

In order to concentrate resources intellectually and physically in one place?

To concentrate for migration, which is a paradox. You concen-trate to have the flow, and to have the blow—but a controlled blow up or explosion. That highlights the importance of ease or convenience of getting in and out of a city. That’s why Deng Xiaoping was extremely smart when he selected the little fishing village of Shenzhen—the same size as Karlshamn, by the way. But Karlshamn is still 30,000, while Shenzhen is now more than nine million.

What do you think older, indus-trial cities such as Detroit might do to revitalize themselves? In Sweden, Malmö and Luleå, for instance, are both doing fairly well after difficult times. Why do you think the Swedish cities are doing well, and is this another area where Sweden is doing things right in our time? And if so, why?

The heart of it is to have the courage for renewal. Gothen-burg has been very good. They have renewed their harbor. Malmö has also been fairly good in renewing its harbor, but it has lost social capital because it didn’t balance its immigration. It just opened its

doors to a lot of people without seeking an immigration of brain power, as Canada does, for example.

What you need is urban plan-ning that moves from tangibles to intangibles. In Japan, they started to do that on a national level 25-30 years ago, when they began working on what is now called “softnomics,” or soft economics. They formed a research center, the Softnomics Center, with the big players, the big financial institutions, and the big industrial companies, as they were all quarreling with each other about the future. But a unanimous outlook developed by mapping the future potential of Japan.

You just came back from China yesterday. Were you there dis-cussing these things?

Yes, I discussed a subject called “societal innovation.” Not “social innovation” but “societal innovation.” Shenzhen is a kind of illustration. Finland is also a very interesting illustration of this with its Committee for the Future. The Committee for the Future was shaped more than 10 years ago to create a kind of standing committee across political parties in Parliament and government to draw the map for the future of Finland. They meet twice a week for two hours, or four hours a week of

dialogue, of learning about the future as political mapping.

How much of the talk actually finds its way into action and results?

A lot. It took Finland out of the crisis after the collapse of the Soviet Union, put it on top of school rankings, and created a huge empire called Nokia. Recently, they formed what was originally called “Innovation University” and is now officially Aalto University, which is a kind of combined Harvard, MIT, and school of art. [Aalto University is formally made up of the School of Economics, the School of Art and Design, and the School of Science and Technology.] So it’s art, technology, and economics. This year, we held the world’s first training camp for societal innovation there in the first week of July, with the former director of the Committee for the Future, Markku Mark-kula and the Aalto Innovation Unviversity3.

What were some of the things you did at that training camp?

We—100 people from different parts of the world and differ-ent age groups, so it was very diverse—had eight days to do rapid prototyping on three themes: education, elderly services, and urban planning related to societal innovation.

3 See http://acsi.aalto.fi/acsi+2010+homepage/.

Starbucks as well as Googleplex as a campus is probably generating much more money and value than traditional offices. Just imagine if a city had the same kind of architec-tural and urban-planning skill at its disposal as the skill of the interior designers of Starbucks.


To get back to China, it was told to us last year in Cities of Opportunity during our inter-views that Swedes and Chinese are very much alike in their directness, in how they get down to business. Did you find that?

Well, yes. This is one of the differences between China and Japan. Chinese are very action-oriented and Japanese are much more contemplative. That’s why, if you see what I’m trying to convey to you now, the cities of tomorrow are going to be much more intangible with knowl-edge harbors, like Shenzhen. In China, they have a national plan coming up for a national innovation strategy. Intellectual capital is one of the key areas because they are also going to spend huge amounts of money on research and development.

I sit on the board of the Center for Molecular Medicine at Karo-linska Institute. We are starting a little subsidiary in Tianjin, China because if you do medical research over there, you achieve an upgrade in speed, which has a health impact. You might reduce the medical research cycle by 30 percent by doing it in China.

Do you find the upgrade in speed produces a compa-rable upgrade in quality and innovation?

Oh, yes. Just look at BYD today, for example. It already has an installation kit for transforming your car into a hybrid. If you have a GM car, you can actually transform it for some $12,000 into a hybrid by BYD.

The last family of cities we should mention comprises the teeming emerging cities in Asia, Africa, and Latin America. It seems as if there’s a tremendous tension between the hope and the challenge. What would you do to build intellectual capital in Mumbai, Johannesburg, and other cities in the developing world?

Brain import, localize structural capital, and commercialize it into markets that are both near and far away. For example, today, China is buying a lot of land in Africa as well as leasing land in Mexico for food produc-tion. That will have an impact on the trade of food between Africa and China, and will also upgrade the quality of food production in Africa.

In “Economic Possibilities for our Grandchildren,” written in 1930, Keynes envisioned that, 100 years later, the economic chal-lenges of sustaining life would be solved and our new challenge would be to become creative, to use our time constructively for ourselves and others. Do you think that, through advancing wisdom and intelligent use of science and technology, we can ever graduate to that? Where life is no longer a battle for survival?

To some extent, I think the intellectual-capital nations are there already. If you take ordi-nary Swedes, they work perhaps 30 years of their lifetime—which is about 85 years. In other words, they already spend close to 65 percent of their lifetime on something else other than going to a job. So, perhaps, we are witnessing this creative, quality-of-life existence already.

Do you think, however, that the risk in the social democratic cultures of northern Europe is that the benefits of that social model cannot continue? Will Swedes be able to continue to have the same sort of good life in the future?

Basically, yes. Because the research of Paul Romer and Brian Arthur has highlighted and established the law of

The long-term, visionary perspective is that the future city, 25 years down the road, will be like a brain, where urban planning becomes brain or neural planning. And we will be looking at how to nourish the synapses between brains by creating special mind zones instead of shopping centers.

increasing returns (or marginal utility). If you’re connecting my brain with your brain, and we’re connected to some other brains, we can more than triple our revenues and value creation. Consequently, we can afford to have more people living from our value creation. The problem lies in the political leadership not seeing that kind of vision with the need for a system of migration of brain power into society, and its renewal over time.

If Detroit continues to live off the car industry, it is not going to survive. Like the old mill cities on the East Coast of the US such as Bridgeport. They are dead cities. They are ruins of the old industrial heritage, so we are probably going to see some kind of new value creation, but without the jobs left over from the industrial heritage—which emerged as a kind of social contract at the time slavery was abandoned. We now need societal innovations for the transition.

Paul Romer says that we need to learn to work with the rule-mak-ing of the future. And this is the

real core function of the city and its leaders. How do we make rules? How do we “re-rule” from being Detroit to becoming, say, the new Stockholm?

When you say “rule-making,” do you mean governance?

Yes. But governance has a con-notation of maintenance for me, as in preserving a body, whether individual or corporate. The critical sustainability factor seems to be in the renewal capa-bility or re-ruling.

Your valediction when you close your e-mails is, “Happy Futures.” Here in America, Roy Rogers, a singing cowboy, had a mid-20th century TV show at the end of which he rode off into the sunset singing, “Happy trails to you, until we meet again.” It strikes me that the sentiment in both is similar, the hope for a happy future. Don’t you think that if we’re happy and productive in the present, we raise the prob-ability of a happier future?

You are very right, but we are born with the notion of enjoy-ment or fulfillment being in the future. Otherwise, we wouldn’t survive. Furthermore, according

to Japanese research, the pres-ent is only between 10 and 14 seconds. Therefore, you are very quickly into the future. But some people try to govern themselves to be in the present, thereby losing the future.

One last question: What is your favorite city in the world, and why?

I have three of them: Stockholm, Singapore, and Sydney. Because they are water cities. They’re close to the water, open, and very innovative, and they have a fairly good climate. When I was running my Future Center at Skandia, it was located on a peninsula. And then I learned that our bodies are roughly 80 percent water when we are born. It is about the harmony, yin-yian, between the internal and external water. And that has an impact on the way you think.

Thank you.

I bid you farewell with a Happy Future.

Thank you. Happy Future to you.

www.pwc.com/cities

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Air pollutionMeasurement of the quality of a city’s air based on the degree of pollution from sources such as vehicles and power plants.

Aircraft movementsCount of air traffic movements at each of the major airports servicing a city, including civil international and domestic passenger, cargo and non-revenue flights but excluding military flights.

Airport to CBD accessMeasure of the ease of using public transit to travel between a city’s central business district and the international terminal of its busiest airport in terms of international passenger traffic. Cities are separated into categories according to whether a direct rail link exists between the city center and the air-port—if so, the number of transfers required, and if not, whether there is a public express bus route to the airport. Cities with direct rail links are preferred to those with express bus services. Cities with rail links with fewer transfers are ranked higher than those with more. Cities are ranked against other cities in the same category according to the cost of a single one-way, adult weekday trip and the length of the trip, with each factor weighted equally.

Attracting FDI: Capital investmentTotal value of greenfield (new job-creating) capital investment activities in USD in a city that are funded by foreign direct investment. Data cover the period from January 2003 through May 2010.

Attracting FDI: Number of greenfield projectsNumber of greenfield (new job-creating) projects in a city that are funded by foreign direct investment. Data cover the period from January 2003 through May 2010.

Broadband quality scoreMeasurement of the quality of a broadband connection in a given country. The Broadband Quality Study is an index that is calculated based on the normalized values of three key

Key to the variables

performance parameter categories: download throughput, upload throughput and latency. A formula weights each category according to the quality requirements of a set of popu-lar current and probable future broadband applications.

Business trip indexWeighted index of the cost of a business trip to a city, including measures such as taxi cab rates, lunch prices, and quality of entertain-ment and infrastructure. The business travel index comprises the following five categories: stability, healthcare, culture and environment, infrastructure and cost.

City carbon footprintAnnual amount of CO2 emissions in metric tons divided by the city population. Supple-mental national reports on data and policies on greenhouse gas emissions were used when city-level data were not available.

Classroom sizeNumber of students enrolled in public primary education programs divided by the number of classes in these programs. Primary education programs usually begin at ages five to seven and last four to six years. Primary education is counted as the equivalent of kindergarten through grade 5 in the US education system wherever possible.

Commute timeAssessment of the average commute time for workers commuting into or within a city across all modes of transport, measured in minutes.

Cost of business occupancyAnnual gross rent divided by square feet of Class A office space. Gross rent includes lease rates, property taxes, maintenance and man-agement costs.

Cost of livingMeasure of the comparative cost of more than 200 items in each city. Counted items include housing, transport, food, clothing, household goods and entertainment.

Cost of public transportCost of the longest mass transit rail trip within a city’s boundaries. The cost of a bus trip is used in the cities where there are no rail systems.

CrimeAmount of reported crimes in a city such as petty and property crimes, violent crimes and street crimes.

Cultural vibrancyWeighted combination of city rankings based on: the quality and variety of restaurants, theatrical and musical performances, and cinemas within each city; which cities recently have defined the “zeitgeist,” or the spirit of the times; and the number of muse-ums with online presence within each city. The “zeitgeist” rankings take into account cultural, social and economic considerations.

Digital economy score*Assessment of the quality of a country’s information and communications technol-ogy (ICT) infrastructure and the ability of its consumers, businesses and governments to use ICT to their benefit.

Domestic market capitalizationTotal number of issued shares of domestic companies listed at a city’s stock exchange(s) multiplied by their respective prices at a given time. This figure reflects the comprehensive value of the market at that time in millions of USD.

Ease of entry: Number of countries with visa waiver*Number of nationalities able to enter the country for a tourist or business visit without a visa. Excludes those nationalities for whom only those with biometric, diplomatic or official passports may enter without a visa.

Ease of firingRanking based on notification and approval requirements for termination of a redundant worker or a group of redundant workers, obligation to reassign or retrain, and priority rules for redundancy and re-employment.


Ease of hiringRanking based on restrictions and regulations employers must follow when taking on new staff.

Ease of starting a businessAssessment of the bureaucratic and legal hurdles an entrepreneur must overcome to incorporate and register a new firm. Accounts for the number of procedures required to register a firm; the amount of time in days required to register a firm; the cost (as a per-centage of per capita income) of official fees and fees for legally mandated legal or profes-sional services; and the minimum amount of capital (as a percentage of per capita income) that an entrepreneur must deposit in a bank or with a notary before registration and up to three months following incorporation.

End-of-life care*Ranking of countries according to their provi-sion of end-of-life care. The Quality of Death Index scores countries across four categories: Basic End-of-Life Healthcare Environment; Availability of End-of-Life Care; Cost of End-of-Life Care; and Quality of End-of-Life Care. These indicator categories are composed of 27 variables, including quantitative, qualita-tive and “status” (whether or not something is the case) data. The indicator data are aggregated, normalized, and weighted to create the total index score.

Entrepreneurial environment*Measurement of the entrepreneurial attitudes, entrepreneurial activity and entrepreneurial aspirations in a country. The Global Entre-preneurship Index integrates 31 variables, including quantitative and qualitative mea-sures and individual-level data.

Financial and business services employmentProportion of employees working in busi-nesses located within a city in the financial and business services sectors to the total employed workforce in the city. Where indus-try data were disaggregated, the equivalents of “finance and insurance” and “real estate and rental and leasing” were included in financial services; and the equivalents of “professional and technical services” and “management of companies and enterprises” were included in business services.

Flexibility of visa travel*Ranking based on the number of visa waivers available for tourist or business visits and the length of time for which the visa waiver is granted. Ranking is based on the number of those countries that can stay for at least 90 days, excluding those countries whose residents can enter only without a visa if they have a biometric, diplomatic or official passport.

Foreign embassies or consulatesNumber of countries that are represented by a consulate or embassy in each city.

Green space as a percent of city areaProportion of a city’s land area designated as recreational and green spaces to the total land area. Excludes undeveloped rugged terrain or wilderness that is either not easily accessible or not conducive to use as public open space.

Health system performance*Measurement of a country’s health system performance made by comparing healthy life expectancy with healthcare expenditures per capita in that country, adjusted for average years of education (years of education is strongly associated with the health of popu-lations in both developed and developing countries). Methodology adapted from the 2001 report “Comparative efficiency of national health systems: cross-national econometric analysis”.

HospitalsRatio of all hospitals within each city accessible to international visitors to every 100,000 members of the total population.

Hotel roomsCount of all hotel rooms within each city.

HousingMeasure of availability, diversity, cost and quality of housing, household appliances and furniture, as well as household maintenance and repair.

Incoming/Outgoing passenger flowsTotal number of incoming and outgoing pas-sengers, including originating, terminating, transfer and transit passengers in each of the major airports servicing a city. Transfer and transit passengers are counted twice. Transit

passengers are defined as air travelers coming from different ports of departure who stay at the airport for brief periods, usually one hour, with the intention of proceeding to their first port of destination (includes sea, air and other transport hubs).

InflationRanking according to how far a country devi-ates from a +2% inflation rate, with inflation that is closer to +2% being favored over infla-tion or deflation that is further from this rate. A +2% inflation rate is used as the bench-mark because it is widely regarded as a target or healthy inflation rate by large international banks. A country’s inflation rate is based on a projection of how much its Consumer Price Index, which measures the rise in prices of goods and services, is expected to rise during the course of 2010.

Intellectual property protection*Leading business executives’ responses to the question in the World Economic Forum’s Executive Opinion Survey 2010 that asks, “How would you rate intellectual property protection, including anti-counterfeiting measures, in your country? (1=very weak; 7=very strong).” The survey covers a random sample of large and small companies in the agricultural, manufacturing, non-manufactur-ing, and service sectors.

International touristsAnnual international tourist arrivals for 100 cities collected by Euromonitor International. Euromonitor’s figures include travelers who pass through a city, as well as actual visitors to the city.

Internet access in schools*Leading business executives’ responses to the question in the World Economic Forum’s Executive Opinion Survey 2010 that asks, “How would you rate the level of access to the Internet in schools in your country? (1=very limited; 7=extensive).” The survey covers a random sample of large and small companies in the agriculture, manufacturing, non-manufacturing, and service sectors.

Level of shareholder protectionMeasurement of the strength of minority shareholder protection against misuse of cor-porate assets by directors for their personal


gain. The Strength of the Investor Protection Index is the average of indices that measure “transparency of transactions,” “liability for self-dealing” and “shareholders’ ability to sue officers and directors for misconduct.”

Libraries with public accessNumber of libraries within each city that are open to the public divided by the total population and then multiplied by 100,000.

Licensed taxisNumber of officially licensed taxis in each city divided by the total population and then multiplied by 1,000.

Life satisfaction*Average score in robust international surveys of country populations in response to the question, “All things considered, how satisfied are you with your life as a whole these days?” The (Un)Happy Planet Index 2.0 predomi-nantly drew its data from the 2006 Gallup World Poll, with the 2000 and 2005 World Values Surveys being used to fill in values for countries excluded from the Gallup survey. Responses are scored on a numeric scale from 0 to 10, where 0 is dissatisfied and 10 is satisfied.

Literacy and enrollment*Measurement of a country’s ability to generate, adopt and diffuse knowledge. The World Bank’s Knowledge Index is derived by averaging a country’s normal-ized performance scores on variables in three categories—education and human resources, the innovation system, and information and communications technology. The variables that compose education and human resources are adult literacy rate, secondary education enrollment and tertiary education enrollment.

Mass transit coverageRatio of kilometers of mass transit track to every 100 square kilometers of the developed and developable portions of a city’s land area. A city’s developable land area is derived by subtracting green space and governmentally protected natural areas from total land area.

Math/Science skills attainment*Top performers’ combined mean scores on the math and science components of an Organisation for Economic Co-operation and

Development (OECD) assessment of 15 year-olds’ academic preparedness. Top performers are defined as those students who achieved in the top two proficiency levels (Level 5 and Level 6) on the math and science portions of the test. Comparable examinations are used wherever possible to place cities not included in the OECD assessment.

Miles of mass transit trackTotal miles of metro, tram and light rail track within a city divided by the total population and then multiplied by 100,000. Includes monorail and commuter rail that run within a city if they operate as metros in the city.

Natural disaster riskRisk of natural disasters occurring in or near a city. Counted hazards include hurricanes, droughts, earthquakes, floods, landslides and volcanic eruptions.

Number of Global 500 headquartersNumber of Global 500 headquarters located in each city.

Operational risk climate*Quantitative assessment of the risks to busi-ness profitability in each of the countries. Assessment accounts for present conditions and expectations for the coming two years. The operational risk model considers 10 separate risk criteria: security, political stability, government effectiveness, legal and regulatory environment, macroeconomic risks, foreign trade and payment issues, labor markets, financial risks, tax policy, stan-dard of local infrastructure. The model uses 66 variables, of which about one-third are quantitative.

Percent of gross domestic expenditure on R&D*Total gross domestic expenditure on research and development in 2007 as a percentage of the gross domestic product.

Percent of population with higher education Number of people who have completed at least a university-level education divided by the total population. A university-level educa-tion is set equivalent to a Bachelor’s degree or higher from a US undergraduate institution.

Political environmentMeasure of a nation’s relationship with foreign countries, internal stability, law enforcement, limitations on personal freedom and media censorship.

Purchasing powerMeasure of the comparative relationship between prices and earnings calculated by dividing net hourly income by the cost of a basket of 122 goods and services, including rent.

Quality of livingScore based on more than 30 factors across five categories: socio-political stability, healthcare, culture and natural environ-ment, education and infrastructure. Each city receives a rating of either acceptable, tolerable, uncomfortable, undesirable or intolerable for each variable. For qualitative indicators, ratings are awarded based on the Economic Intelligence Unit analysts’ and in-city contributors’ judgments. For quantitative indicators, ratings are calculated based on cities’ relative performances on a number of external data points.

Recycled wastePercentage of municipal solid waste diverted from the waste stream to be recycled.

Renewable energy consumption*Percentage of total energy consumption in a nation that comes from renewable sources. Renewable energy sources include geother-mal, solar thermal, solar voltaics, hydro, wind, and combustible renewable sources and waste (composed of solid biomass, liquid bio-mass, biogas, industrial waste and municipal waste). Non-renewable sources include coal and peat, crude oil, petroleum products, gas and nuclear.

Research performance of top universitiesSum of the scaled scores of a city’s universi-ties that are included in the rankings of top performing research universities in the world. Scaled scores are based on the number of articles published, number of citations to published work and the quantity of highly cited papers. The scoring accounts for social sciences papers but not humanities papers.


The rankings favor large universities, universi-ties with medical schools, and universities that focus predominantly on the “hard sciences” rather than social sciences and humanities.

Rigidity of hoursRanking based on the flexibility in scheduling of nonstandard work hours and annual paid leave for a business.

Skyline impactMeasure of the visual impact of completed high-rise buildings on their skylines, account-ing for the height and the breadth of a skyline. Cities are given scores based on the number of buildings located within them that are above 90 meters tall, with taller buildings receiving more points than smaller ones.

Skyscraper construction activityCount of skyscraper construction projects in each city under way as of September 26, 2010. A skyscraper is defined as any building 12 stories or greater in height.

Software and multimedia development and designCombined score for each city in fDi magazine’s Best Cities for Software Development and Best Cities for Multi-Media Design Centres indices. Both indices weight a city’s performance 70% based on the quality of the location and 30% based on the cost of the location. The software design index is based on an assessment of 120 quality competitiveness indicators. These indicators include availability and track record in ICT, availability of specialized-skills professionals such as scientists and engineers, access to

venture capital, R&D capabilities, software exports, quality of ICT infrastructure and specialization in software development. The multimedia design centre rankings are based on an assessment of 120 quality competi-tiveness indicators, including the size of the location’s leisure and entertainment sector, its specialization and track record, information technology infrastructure, quality of life and skills availability.

Sport and leisure activitiesThe quality and variety of sport and leisure activities within each city.

Strength of currency (SDRs per cur-rency unit)*Currency value of the Special Drawing Right, or the SDR per currency unit. The currency value is determined by summing the values of a basket of major currencies (USD, euro, Japanese yen and pound sterling) in USD based on market exchange rates and the amount that can be bought by a given currency unit.

Thermal comfortMeasure of the average deviation from optimal room temperature (72 degrees Fahrenheit) in a city. January and July heat indices were calculated for each city using an online tool that integrates average tempera-ture and average morning relative humidity during each month. A final thermal comfort score was derived by first taking the differ-ence between a city’s heat index for each month and optimal room temperature and then averaging the absolute values of these differences.

Total tax rateTotal amount of taxes and any mandatory contributions required by local, state and national law payable by a business as a per-cent of its profit. Does not include employer contributions to healthcare coverage.

Traffic congestionMeasure of traffic congestion and congestion policies for each city scored on the level of congestion as well as the modernity, reliabil-ity and efficiency of public transport.

Workforce management riskRanking based on staffing risk in each city associated with recruitment, employment, restructuring, retirement and retrenchment. Risk was assessed based on 25 factors grouped into five indicator areas: demo-graphic risks associated with labor supply, the economy and the society; risks related to governmental policies that help or hinder the management of people; education risk factors associated with finding qualified profession-als in a given city; talent development risk factors related to the quality and availability of recruiting and training resources; and risks associated with employment practices. A lower score indicates a lower degree of over-all staffing risk.

Working age populationProportion of a city’s population aged 15-64 to the total population of the city.

*Country level data.

1

17

16

13

19

22

24

15

23

20

25

14

21

9

10

18

5

8

11

6

1

7

12

3

4

2

26

Researchperformance oftop universities

24

21

26

25

16

22

11

14

18

19

13

15

17

7

8

23

12

10

6

9

3

4

1

5

2

20

Percent ofpopulation withhigher education

16

23

12

15

12

22

19

12

12

17

18

24

14

26

25

7

21

21

4

2

6

3

1

13

5

12

Math/scienceskills attainment

25

21

18

16

11

19

26

12

17

24

20

4

13

5

9

22

8

1

23

7

10

6

14

3

2

15

Libraries withpublic access

20

25

19

17

22

9

14

21

13

12

18

6

24

5

7

26

3

3

23

16

8

11

4

1

10

15

Classroom size1 Score

205

186

174

174

172

169

168

168

168

166

162

149

130

120

119

118

107

83

77

77

74

68

58

51

41

38

Literacy andenrollment2

25

24

22

23

22

17

26

22

22

16

15

13

14

8

9

12

3

3

6

7

11

10

5

1

4

22

Percent of grossdomestic expenditureon R&D

26

14

23

15

23

25

16

23

23

13

18

24

10

17

6

9

12

12

2

1

4

8

7

5

3

23

Intellectualproperty protection

26

22

16

24

16

17

21

16

16

20

23

9

10

25

19

1

8

8

4

18

6

3

11

5

2

16

Entrepreneurialenvironment

26

20

25

18

25

13

20

25

25

16

10

14

9

16

17

2

8

8

3

13

13

1

5

4

8

25

Stockholm

Toronto

New York

San Francisco

Paris

Los Angeles

Tokyo

Sydney

Houston

Chicago

London

Berlin

Seoul

Madrid

Singapore

Hong Kong

Moscow

Shanghai

Beijing

Mexico City

Abu Dhabi

Santiago

São Paulo

Johannesburg

Mumbai

Istanbul


2

25

16

25

25

20

20

25

25

14

15

17

12

1

13

4

18

4

11

5

10

6

9

7

2

8

26

Digital economyscore1

23

24

16

12

20

17

15

11

26

25

10

18

22

6

21

5

19

13

4

2

14

1

8

9

3

7

Software and multi-media developmentand design2

21

26

21

22

13

16

15

17

24

12

10

19

23

18

7

11

7

9

14

8

5

2

4

3

1

25

Broadband qualityscore

21

23

21

21

25

24

21

21

10

16

22

9

5

11

15

13

15

7

6

8

3

12

2

4

1

26

Internet accessin schools

Score

90

89

84

83

80

78

77

76

74

74

68

59

58

51

48

47

47

45

40

29

28

28

24

21

18

13

New York

Seoul

Stockholm

San Francisco

Chicago

Singapore

Hong Kong

Los Angeles

Houston

Tokyo

London

Toronto

Paris

Moscow

Berlin

Shanghai

Sydney

Beijing

Madrid

Istanbul

Santiago

São Paulo

Abu Dhabi

Mexico City

Mumbai

Johannesburg


3

24

11

8

19

17

15

12

23

26

22

18

6

2

14

9

20

10

25

5

3

4

21

16

13

2

7

Licensed taxis

19

21

23

18

12

16

15

13

9

24

7

26

17

11

20

10

25

2

4

14

3

8

6

5

2

22

Miles of masstransit track

23

25

22

16

21

24

10

12

14

4

20

9

17

19

15

8

7

2

13

18

11

1

6

5

3

26

Aircraft movements

18

18

24

18

18

18

18

9

2

26

2

24

9

12

21

26

24

21

9

9

21

12

4

9

4

12

Traffic congestion4 Score

168

159

158

156

154

152

149

149

145

134

134

133

129

128

127

127

126

113

104

99

93

92

82

80

80

55

23

22

16

17

24

26

15

14

8

4

21

10

13

19

9

12

6

3

11

20

18

2

1

7

5

25

Incoming/Outgoingpassenger flows

10

8

12

17

11

2

24

23

26

4

25

1

21

15

3

13

5

19

20

14

18

22

6

16

9

8

Cost of publictransport2

3

12

6

8

21

16

18

20

25

9

6

17

11

16

26

13

6

24

24

3

10

8

20

16

3

24

Skyscraperconstruction activity5

22

22

22

24

15

18

22

12

14

16

26

24

17

12

8

13

8

6

9

5

4

3

3

3

25

10

Airport to CBDaccess3

26

20

23

17

13

14

15

19

10

25

8

12

21

9

16

11

22

2

4

7

3

5

18

6

2

24

Mass transitcoverage1

Paris

Chicago

New York

San Francisco

Madrid

Tokyo

London

Hong Kong

Seoul

Mexico City

Stockholm

Beijing

Sydney

Moscow

Shanghai

Toronto

Singapore

Berlin

Abu Dhabi

Istanbul

Los Angeles

Houston

Santiago

Mumbai

São Paulo

Johannesburg


4

26

26

22

22

22

22

24

22

22

13

10

13

22

7

5

22

10

22

7

3

5

13

1

10

2

24

Housing

5

24

19

25

17

10

7

9

16

13

3

16

11

26

23

12

8

14

3

20

18

22

21

4

1

7

Thermal comfort1

25

13

8

3

21

24

20

13

20

17

24

4

13

17

5

17

6

1

18

2

17

9

13

7

26

24

Natural disaster risk Score

137

134

133

131

124

124

122

116

116

116

113

110

107

97

92

90

83

83

81

78

76

74

71

49

49

47

Commute time2

22

11

19

20

21

26

8

24

13

9

25

16

3

15

18

2

17

6

14

23

12

5

1

10

4

7

Life satisfaction3

25

25

25

25

17

14

25

25

11

11

14

14

25

17

18

15

6

9

8

6

3

1

3

8

4

26

24

25

15

16

18

21

19

17

23

15

8

20

12

5

3

13

11

22

7

10

2

5

1

6

9

26

Quality of living

14

10

23

13

8

3

15

6

20

22

26

24

11

5

18

2

25

7

21

12

17

16

9

4

1

19

Working agepopulation

Stockholm

Sydney

Toronto

San Francisco

Los Angeles

Madrid

Berlin

Chicago

Houston

Paris

Singapore

Abu Dhabi

Hong Kong

New York

São Paulo

Mexico City

London

Seoul

Tokyo

Beijing

Santiago

Istanbul

Johannesburg

Mumbai

Shanghai

Moscow


5

22

24

15

19

11

20

15

25

26

11

13

11

11

6

19

21

19

19

6

13

3

6

3

11

3

23

Number of Global500 headquarters

26

24

13

25

16

21

7

15

4

12

23

20

22

19

9

17

6

1

11

3

2

5

14

8

10

18

Financial andbusiness servicesemployment

19

20

17

15

6

16

18

0

21

11

9

1

0

12

0

10

7

13

0

14

2

4

8

5

3

22

Domestic marketcapitalization1

18

9

25

6

26

24

6

6

16

12

12

24

24

6

24

9

6

15

24

9

1

12

18

15

15

24

Level of shareholderprotection2

11

24

26

20

17

24

11

11

7

15

15

17

19

12

21

8

3

1

13

5

18

2

5

7

24

25

Inflation3 Score

170

166

163

149

144

140

139

119

114

114

107

103

101

101

100

100

89

88

88

84

80

71

68

67

66

65

Strength of currency(SDRs percurrency unit)

26

25

10

25

15

17

10

10

3

16

11

22

22

25

22

1

5

4

22

13

12

14

7

6

2

22

Attracting FDI:Number ofgreenfield projects

25

21

22

18

24

9

26

23

19

15

10

4

2

8

1

12

20

18

5

14

13

11

6

7

3

16

Attracting FDI:Capital investment

23

19

21

16

25

8

26

24

18

15

10

2

1

12

4

11

22

17

3

9

20

14

6

7

5

13

London

Paris

New York

Hong Kong

Madrid

Singapore

Toronto

Shanghai

Beijing

Tokyo

Sydney

Stockholm

Chicago

San Francisco

Berlin

Houston

Seoul

Moscow

Mumbai

Los Angeles

São Paulo

Abu Dhabi

Istanbul

Johannesburg

Mexico City

Santiago

Economic clout

6

24

16

22

19

17

10

25

23

19

12

14

4

15

3

8

26

5

8

13

1

11

6

2

9

20

21

Cost of living

25

24

23

19

20

26

10

6

16

23

13

7

15

12

18

2

9

14

5

17

4

3

11

8

1

21

Purchasing power1

19

15

13

17

14

11

22

24

8

12

26

23

6

25

20

9

21

2

16

7

5

5

10

1

3

18

Total tax rate

23

22

16

26

20

24

3

10

25

13

8

16

14

19

11

2

12

21

4

17

6

7

9

5

1

18

Business trip index2 Score

116

101

99

96

94

91

87

86

86

79

77

70

64

62

60

59

58

57

51

46

45

41

39

37

30

29

25

24

22

13

20

16

26

23

11

17

9

14

12

1

2

19

10

6

8

3

15

18

5

7

4

21

Cost of businessoccupancy

Houston

Los Angeles

Chicago

San Francisco

Toronto

Berlin

Sydney

Johannesburg

Santiago

Stockholm

New York

Abu Dhabi

Singapore

Madrid

Hong Kong

London

Mexico City

Seoul

Paris

Istanbul

Tokyo

Shanghai

Beijing

Moscow

São Paulo

Mumbai

Cost

7

26

22

16

19

20

21

24

14

13

18

11

10

23

6

12

3

7

9

15

17

8

5

1

4

2

25

Cultural vibrancy1

26

26

26

26

26

12

26

12

6

26

26

17

17

6

17

2

12

17

12

12

6

17

2

12

6

26

Sport andleisure activities

23

22

13

12

11

24

8

16

18

9

19

10

15

21

17

26

20

8

5

14

6

1

3

2

4

25

Hotel rooms

25

9

19

15

12

24

13

26

16

22

17

21

2

23

6

18

8

1

10

14

20

5

11

3

4

7

Skyline impact

25

23

20

9

14

12

18

22

17

4

1

24

13

19

16

15

21

7

11

5

10

6

8

2

3

26

International tourists Score

147

125

123

111

105

104

103

102

97

95

94

94

90

88

86

84

83

72

68

65

65

56

43

30

24

21

Green spaceas a percent ofcity area

22

23

17

24

21

10

13

7

25

15

20

8

18

11

16

19

4

26

12

3

6

9

5

1

2

14

New York

Paris

London

Toronto

Sydney

San Francisco

Tokyo

Los Angeles

Hong Kong

Moscow

Chicago

Houston

Singapore

Berlin

Shanghai

Madrid

Beijing

Istanbul

Stockholm

Mexico City

São Paulo

Seoul

Johannesburg

Mumbai

Santiago

Abu Dhabi

Lifestyle assets

8

23

23

23

23

23

16

26

16

23

16

10

26

16

16

26

16

4

4

10

10

10

5

6

1

4

23

Crime

24

20

23

17

22

12

16

19

6

15

21

25

10

13

4

5

18

14

9

8

1

2

11

7

3

26

Hospitals

26

24

20

22

20

25

15

20

23

15

20

7

22

15

12

11

8

11

3

4

11

3

5

6

1

20

Political environment

16

23

23

25

23

24

15

23

13

26

23

9

17

12

14

10

11

6

5

5

3

8

1

3

7

23

End-of-life care2 Score

113

112

107

104

104

103

98

97

93

91

90

89

86

85

79

66

58

42

41

37

37

30

25

25

21

18

24

22

15

17

15

21

25

15

26

18

15

19

20

23

10

16

1

6

10

10

5

7

2

4

3

15

Health systemperformance1

Stockholm

Toronto

Chicago

San Francisco

Sydney

Houston

Berlin

Singapore

New York

Tokyo

London

Los Angeles

Abu Dhabi

Paris

Madrid

Hong Kong

Seoul

Johannesburg

Mexico City

Beijing

Shanghai

Santiago

Istanbul

Mumbai

São Paulo

Moscow


9

26

26

15

14

22

18

19

17

21

11

16

11

7

3

6

26

2

9

5

4

13

1

23

8

13

20

Ease of hiring1

20

20

11

21

17

26

26

26

26

5

16

18

3

1

6

12

8

13

4

15

10

2

15

8

10

26

Rigidity of hours2

19

21

15

16

21

26

26

26

26

6

11

14

6

8

11

19

11

2

13

12

4

19

1

7

4

26

Ease of firing3

25

26

23

12

11

9

9

9

9

20

16

22

19

13

24

10

18

15

17

21

3

14

3

4

3

9

Ease of entry:Number of countrieswith visa waiver4

26

4

25

15

13

11

11

11

11

23

19

24

21

16

23

4

20

18

15

13

4

17

5

6

4

11

Flexibility ofvisa travel5

Score

191

188

178

166

163

162

159

156

154

152

143

140

138

121

119

119

117

102

97

90

87

76

74

61

60

54

Ease of startinga business

23

25

15

24

26

22

22

22

22

12

8

7

10

16

13

11

2

14

22

9

4

1

6

5

4

22

Operationalrisk climate

24

26

13

24

22

18

18

18

18

25

12

19

20

22

9

10

12

8

3

7

5

7

2

1

5

18

Workforcemanagement risk

18

24

24

26

18

21

20

18

15

22

19

9

13

14

10

12

11

3

2

5

8

6

4

1

7

25

10

16

25

11

12

8

5

7

4

19

23

14

22

26

17

13

18

15

9

1

25

7

2

20

4

21

Foreign embassiesor consulates

Hong Kong

Singapore

New York

London

Toronto

Sydney

Los Angeles

Chicago

San Francisco

Houston

Stockholm

Tokyo

Santiago

Berlin

Paris

Seoul

Abu Dhabi

Madrid

Mexico City

Istanbul

Johannesburg

Beijing

São Paulo

Mumbai

Moscow

Shanghai


10

24

24

24

6

26

24

13

6

24

24

16

13

9

16

24

10

6

6

9

16

1

13

9

6

24

26

Air pollution

23

17

8

20

24

25

4

9

5

2

7

26

21

13

16

14

18

23

16

6

4

11

10

19

1

13

Recycled waste

24

26

23

19

7

8

25

22

16

12

16

10

3

17

11

13

2

14

9

18

21

6

4

5

1

20

City carbon footprint Score

86

83

81

78

71

71

69

67

61

58

57

57

56

54

52

52

49

47

47

46

45

43

42

35

33

28

15

16

23

26

14

12

25

24

13

19

18

7

21

6

1

12

21

4

12

5

17

12

12

3

2

22

Renewable energyconsumption

Berlin

Sydney

Stockholm

Johannesburg

Mumbai

Toronto

San Francisco

São Paulo

Santiago

Madrid

Istanbul

Paris

Seoul

Shanghai

London

Singapore

New York

Beijing

Hong Kong

Los Angeles

Tokyo

Mexico City

Chicago

Houston

Moscow

Abu Dhabi

Sustainability

11

174

186

205

168

162

166

172

119

118

168

169

149

168

120

130

77

74

83

77

107

68

38

58

51

41

174

Intellectual capitaland innovation

90

59

84

47

68

80

58

78

77

74

76

48

74

40

89

45

24

47

21

51

28

29

28

13

18

83

Technologyreadiness

158

127

134

129

149

159

168

126

149

92

93

113

152

154

145

133

104

127

134

128

82

99

80

55

80

156

Transportationand infrastructure

97

133

137

134

83

116

116

113

107

116

124

122

81

124

83

78

110

49

90

47

76

74

92

71

49

131

Demographicsand livability

163

139

103

107

170

101

166

140

149

100

84

100

114

144

89

114

71

119

66

88

65

68

80

67

88

101

Economic clout Score

1226

1195

1172

1147

1126

1122

1120

1117

1067

1061

1050

1043

1016

1013

967

882

729

705

697

692

664

658

598

595

593

492

Cost

77

94

79

87

59

99

51

64

60

116

101

91

45

62

57

39

70

41

58

37

86

46

30

86

29

96

Lifestyle assets

147

111

68

105

123

94

125

90

97

94

102

88

103

84

56

83

21

86

65

95

24

72

65

43

30

104

Health, safetyand security

93

112

113

104

90

107

85

97

66

103

89

98

91

79

58

37

86

37

41

18

30

25

21

42

25

104

Ease of doingbusiness

178

163

143

162

166

156

119

188

191

152

159

121

140

102

119

76

117

54

97

60

138

90

74

87

61

154

Sustainability

49

71

81

83

52

42

57

52

47

35

46

86

45

58

56

47

28

54

43

33

61

57

67

78

71

69

New York

Toronto

San Francisco

Stockholm

Sydney

London

Chicago

Paris

Singapore

Hong Kong

Houston

Los Angeles

Berlin

Tokyo

Madrid

Seoul

Beijing

Abu Dhabi

Shanghai

Mexico City

Moscow

Santiago

Istanbul

São Paulo

Johannesburg

Mumbai

Overall rank summary

12

HOUSTON

SAN FRANCISCO

LOS ANGELES

CHICAGO

SYDNEY

BERLIN

NEW YORK

JOHANNESBURG

TORONTO

STOCKHOLM

SANTIAGO

MADRID

ABU DHABI

MEXICO CITY

LONDON

PARIS

TOKYO

SHANGHAI

SEOUL

SÃO PAULO

SINGAPORE

ISTANBUL

BEIJING

MOSCOW

HONG KONG

MUMBAI

Competitive disadvantage

-2.5

-2.5

-4

-6

-8

-10

-10.5

-11

-11

-11.5

-12

-12.5

-13

-14

Competitive advantage

+22.5

+18

+17

+15

+12

+11.5

+10.5

+8.5

+8

+4

+2

+1.5

Cost competitiveness

13

Average correlation

Grand total






Lifestyle assets

Economic clout


Cost

Sustainability

Ave

rag

e c

orr

ela

tio

n

Gra

nd

to

tal

Inte

llect

ual c

apita

l and

inno

vatio

n

Hea

lth, s

afet

y an

d s

ecu

rity

Eas

e o

f d

oin

g b

usin

ess

Tec

hno

log

y re

adin

ess

Dem

ogra

phi

cs a

nd li

vab

ility

Life

styl

e as

sets

Eco

nom

ic c

lout

Tra

nsp

ort

atio

n an

d in

fras

truc

ture

Co

st

Sus

tain

abili

ty

Strong positive correlation

Weak positive correlation

Weak negative correlation

Strong negative correlation-100%

100%

0%

55% 74% 70% 67% 61% 60% 57% 53% 50% 48% 43% 27%

27% 32% 36% 30% 6% 5% 38% 9% 15% 3% 24%

43% 56% 55% 68% 62% 35% 67% 11% -5% -6% 24%

48% 65% 60% 46% 37% 63% 30% 62% 68% -6% 3%

50% 67% 54% 47% 47% 52% 27% 76% 68% -5% 15%

53% 71% 63% 46% 51% 63% 28% 76% 62% 11% 9%

57% 76% 69% 84% 67% 43% 28% 27% 30% 67% 38%

60% 81% 81% 65% 69% 43% 63% 52% 63% 35% 5%

61% 83% 69% 78% 69% 67% 51% 47% 37% 62% 6%

67% 91% 87% 78% 65% 84% 46% 47% 46% 68% 30%

70% 94% 87% 69% 81% 69% 63% 54% 60% 55% 36%

74% 94%100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

91% 83% 81% 76% 71% 67% 65% 56% 32%

Cities of Opportunity 2011 heatmap