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The World's Fastest-Growing Cities


By Joel KotkinOctober 07 2010

Appearing in: 
Forbes.com

The evolution of cities is a protean process--and never more so than now. With over 50% of people living in metropolitan areas there have never been so many rapidly rising urban areas--or so many declining ones.

Our list of the cities of the future does not focus on established global centers like New York, London, Paris, Hong Kong or Tokyo , which have dominated urban rankings for a generation. We have also passed over cities that have achieved prominence in the past 20 years such as Seoul, Shanghai, Singapore, Beijing, Delhi, Sydney, Toronto, Houston and Dallas-Fort Worth.

Nor does our list include the massive, largely dysfunctional megacities--Mumbai, Mexico City, Dhaka, Bangladesh--that are among planet's most populous today. Bigger often does not mean better.

Instead, our list focuses on emerging powerhouses like Chongqing, China, (population: 9 million), which Christina Larson in Foreign Policy recently described as "the biggest city you never heard of."

Chongqing sits in the world's most important new region for important cities: interior China. These interior Chinese cities, notes architect Adam Mayer, offer a healthy alternative to coastal megacities such as Shanghai, Hong Kong, Shenzen and Guangzhou, which suffer from congestion, high prices and increasingly wide class disparities. China's bold urban diversification strategy hinges both on forging new transportation links and nurturing businesses in these interior cities. For example, in Chengdu, capital of the Sichuan province, new plane, road and rail connections are tying the city to both coastal China and the rest of the world. And the city is abuzz with new construction, including an increasing concentration of high-tech firms such as Dell and Cisco.

India, although not by plan, also is experiencing a boom in once relatively obscure cities. Its rising urban centers include Bangalore (home of Infosys and Wipro), Ahmedabad (whose per-capita incomes are twice that of the rest of India) and Chennai (which has created 100,000 jobs this year). Many of India's key industries--auto manufacturing, software and entertainment--are establishing themselves in these cities.

The growth of India and China also creates opportunity for other emerging players, particularly in Southeast Asia by creating markets for goods and services as well as investment capital. Potential hot spots include places like Hanoi, Vietnam, which is attracting greater interest from Japanese, American and European multi-national firms upset with China's often bullying trade practices and rising costs. Malaysia's capital Kuala Lumpur--with its rising financial sector--also displays considerable promise.

Africa also boasts many huge, rapidly growing cities, but it's hard to identify many of these places--like Lagos, Nigeria, Luanda, Angola or Kinshasa, the Democratic Republic of the Congo--as bright prospects. One exception may well be Cape Town, the beautiful South African coastal city that shone so well during the recent World Cup.

Latin America, too, has a plethora of huge and growing cities, but it's hard to nominate the likes of Mexico City or Sao Paulo as likely hot spots for future sustainable growth.

The best economic prospects in this region lie in more modestly sized cities like Santiago, the capital of resource-rich Chile, and even Campinas, Brazil, a growing smaller city--with 3 million residents--that lies outside the congested Sao Paolo region. This shift to smaller-scaled cities, as Michigan State's Zachary Neal points out, has been conditioned by massive improvements in telecommunications and transportation infrastructure throughout the urban world. Today, he asserts, it is the ability to network long-distance--not girth--that makes the critical difference.

This is clear in the Middle East, where the emerging stars tend to be smaller cities. Tel Aviv, whose total metropolitan area is no larger than 3 million, has emerged as a major center for technology as well as one of the world's premier diamond centers. The other leading candidates in the region hail from the United Arab Emirates, notably oil-rich Abu Dhabi and perhaps its now weakened neighbor, Dubai.

In North America the best urban prospects--Raleigh-Durham, N.C.; Austin, Texas; Salt Lake City; and Calgary, Canada--are far smaller than homegrown giants New York, Chicago and Los Angeles. Generally business-friendly and relatively affordable, these cities will attract many talented millennials as they start forming families in large numbers later in this decade.

Europe's urban problem lies with stagnant or slow-growing population levels, and in the south at least, very weak economies. The only rapidly growing big city lies on the region's periphery: Istanbul, which straddles the border between Europe and Asia and faces many of the problems common to developing-country mega-cities.

Overall, the populations of Europe's cities are growing at barely 1%, the lowest rate of any continent. With low birthrates and growing opposition to immigration, it seems unlikely that any European city will emerge as a bigger global player in 20 years than today.

Other leading cities all over the world may also be in the early stages of fading from predominance. In the United States, according to analysis by the California Lutheran University forecast, Los Angeles and Chicago, America's second and third cities, respectively, have fallen behind not only fast-comers like Houston and Dallas-Fort Worth, but even historically dominant New York in such key indicators as job generation and population growth.

Similarly Berlin, once seemingly poised to thrive in the post-Cold War future, has chronic high unemployment and a weak private sector, compared with Germany's generally smaller, less unruly successful cities. The Osaka-Kobe-Kyoto area in Japan may also be set to fade a bit, due largely to the overwhelming predominance of Tokyo and the general demographic and economic decline of Dai Nippon.

Of course, none of this is set in stone. But this list provides an educated peek into which cities are best positioned to prosper and grow in our emerging era of cities.

Chengdu, China

The development of interior China, long on the back burner of national priorities, has reached the country's western-most large city. Chengdu is abuzz with new construction, including an increasing concentration of high-tech companies, including Dell and Cisco. New plane, road and rail connections are tying the city to both coastal China and the rest of the world. With a metropolitan population of 6 million, economic factors--including lower costs--may prove critical to the capital of the Sichuan province. The business-friendly city still has a way to grow to catch up to the GDP per capita of Shanghai.

Chongqing, China

Chongqing enjoys rapidly improving transportation links with its neighbors to the west and the coastal megacities. Foreign companies like Ford, Microsoft, Hewlett Packard and Singapore-based Neptune Orient Lines are flocking to the city. The Business Times of Singapore reports that since 1998, Chongqing's GDP has quadrupled from $21 billion to $86 billion. Last year alone, Chongqing's GDP expanded at almost twice the rate of China as a whole. The population, according to United Nations projections, should grow from 9 million to 11 million by 2025.

Chongqing, China

Chongqing enjoys rapidly improving transportation links with its neighbors to the west and the coastal megacities. Foreign companies like Ford, Microsoft, Hewlett Packard and Singapore-based Neptune Orient Lines are flocking to the city. The Business Times of Singapore reports that since 1998, Chongqing's GDP has quadrupled from $21 billion to $86 billion. Last year alone, Chongqing's GDP expanded at almost twice the rate of China as a whole. The population, according to United Nations projections, should grow from 9 million to 11 million by 2025.

Ahmedabad, India

This is the largest metropolitan region in Gujarat, perhaps the most market-oriented and business-friendly of Indian states. Gujarat's policies helped lure away the new Tata Nano plant from West Bengal (Kolkata) to Sanand, one of Gurajat's exurbs. One Indian academic, Sedha Menon, compares the state--which has developed infrastructure more quickly than its domestic rivals--with Singapore and parts of Malaysia. Per-capita incomes in Gujarat are more than twice the national average. India's seventh-largest city has a population of roughly 5.7 million and is expected, according to the U.N., to grow to over 7.6 million by 2025.

Santiago, Chile

Santiago boasts a diversified economic base: mining, textile production, leather technologies and food processing. Its favorable investment climate has enticed many multinational companies; there are few restrictions on foreign investment, and transparency is extensive. Recent surveys have ranked Chile and Santiago as leading locations in Latin America in terms of competitiveness. The 2010-2011 Global Competitiveness Report ranked Chile the highest in terms of competitiveness (based on institutions, infrastructure, macroeconomic environment, education, market efficiency, financial market development, et. al).

Raleigh Durham, North Carolina

Even in hard times this low-density, wide-ranging urban area has repeatedly performed well on Forbes' list of the best cities for jobs. The area is a magnet for technology firms fleeing the more expensive, congested and highly regulated northeast corridor. One big problem obstructing the region's ascendancy has been air connections. But Delta recently announced a large-scale expansion of flights there from around the country. Population growth will likely be lead by educated millennials seeking affordable housing and employment opportunities. Today the region has 1.7 million residents; the State of North Carolina projects it will grow to 2.4 million by 2025.

Tel Aviv, Israel

This urban region of roughly 3 million may boast the most vibrant economy of any along the Mediterranean. Tel Aviv and its surrounding environs control the vast majority of Israel's high-tech exports, making it what may well be the closest thing to a Silicon Valley outside East Asia or California. It also boasts a household income that is nearly 50% above the national average for Israel. But perhaps its greatest asset is its free-wheeling lifestyle: Tel Aviv combines an Israeli entrepreneurial culture with the attributes of a thriving seacoast town.

Kuala Lumpur, Malaysia

Kuala Lumpur's prospects lie in a development strategy focused on improving its air service, road and trade infrastructure, much as occurred in previous decades in Singapore. The urban area's population has grown to over 5.8 million, and demographer Wendell Cox projects a population of roughly 8.2 million by 2025. KL has emerged as a global Islamic financing hub and maintains close ties with the Arabian Gulf's finance sector. Educational and health care institutions also bolster the city's growth. Forbes lists Kuala Lumpur as one of Asia's future financial centers.

Suzhou, China

As in the U.S., some of the fastest-growing cities in China are located close to the bigger cities. Suzhou, only 75 miles from Shanghai, seems well positioned to benefit from spillover growth from the megacity. Known as the Venice of China, with many attractive canals and vast international tourism potential, its beauty and history could help secure its aspiration to become "the world's office." Some reports suggests Suzhou may already be the most affluent city in China; demographer Wendell Cox estimates that per-capita income is more than three times that of interior cities like Chengdu.

Hanoi, Vietnam

Chinese, Japanese, American, Singaporean, European and Indian companies identify this fast-growing city as ripe for industrial and infrastructure growth. The population of the region has doubled since the end of the Vietnam War to almost 3 million, and the U.N. projects a population of 4.5 million by 2025. Along with Ho Chi Minh City (formerly Saigon), Hanoi is expected be one of the fastest-growing GDPs in the world. Hanoi's GDP growth rate for the first nine months of 2010 was estimated at 10.6%, almost twice that for the same period of last year.

Chennai, India

Formerly known as Madras, this metropolitan area of 7.5 million, up from 4.7 million 20 years ago, is projected by the U.N. to approach 10 million by 2025. Located on India's east Asian coast, the city has so far this year created over 100,000 jobs--more than any other Indian city outside of the much larger Delhi and Mumbai. Chennai's metropolitan area is taking full advantage of India's soaring industrial sector, particularly the booming automobile sector. Electronics, led by Dell, Nokia, Motorola, Samsung, Siemens, Sony and Foxconn, are also booming. Chennai is home to India's second-largest entertainment industry, behind Mumbai.

Austin, Texas

Austonites tend to be smug--but they have good reason. The central Texas city ranked as the No. 1 large urban area for jobs in our last Forbes survey. Along with Raleigh-Durham, Austin is an emerging challenger for high-tech supremacy with Silicon Valley. The current area's population is 1.7 million and is expected to grow rapidly in the coming decades. Austin owes much both to its public sector institutions (the state government and the main Campus of the University of Texas) and its expanding ranks of private companies--including foreign ones--swarming into the city's surrounding suburban belt.

Abu Dhabi, United Arab Emirates

Oil rich Abu Dhabi is among the world's wealthiest countries in terms of per-capita GDP, which exceeds $68,000. However, the non-oil sector is likely to grow to about 45% of the GDP in coming years. To do so, the government has started to invest its oil revenues in construction, tourism and the electricity and water industry. Abu Dhabi is also helping to keep its neighbor Dubai afloat. If Dubai, with its world class infrastructure, can make a comeback, a global city separated by 80 miles of desert Arabian Gulf coastline could arise.

Campinas, Brazil

Campinas, located around 50 miles north of São Paulo, the country's dominant industrial center, has attracted many technology companies, including IBM, Dell, Compaq, Samsung and Texas. The city also boasts a major research and university center. Firms engaged in high-tech activities--following a global pattern--tend to cluster in relatively pleasant, affordable and efficient places. Campinas could prove a big Brazilian beneficiary of this trend.

Melbourne, Australia

Australia has resources galore and relatively few people. But which of its cities is poised to benefit most from the nation's expanding trade with China and India? Sydney's costs have been shooting up--particularly for housing, but Melbourne's political class seems about to open up new land for suburban development to restore some of the area's affordability for younger Australians. Demographer Bernard Salt has predicted that Melbourne's population will exceed Sydney's in less than 20 years. Melbourne also boasts Australia's most walkable and pleasant urban cores , a pleasant San Francisco-like climate and a European ambiance.

Bangalore, India

Many big players in tech and services--Goldman Sachs, Cisco, HP as well as India-based giants like Tata--have located operations in Bangalore. But the city also boasts home-grown tech giants Infosys and Wipro, which each have over 60,000 employees worldwide. Since 1985 Bangalore's population has more than doubled to over 7 million and is projected by the U.N. to reach 9.5 million by 2025. In the future, maintaining Bangalore's advantage over smaller, less congested cities could prove a challenge.

Salt Lake City, Utah

Once seen as a Mormon enclave, the greater Salt Lake urban area--with roughly 1 million people --has every sign of emerging as a major world player with a wider appeal. The church still plays a critical role, in part by financing a massive redevelopment of the city's now rather dowdy city core. The area's population has doubled since the early 1970s and will grow another 100,000 by 2025 to well over 1.1 million. New companies are flocking to this business-friendly region, particularly from self-imploding California. Increasing national and global connections through Delta's hub will tie this once isolated city closer with the wider world economy.

Nanjing, China

The one-time Imperial and Republican (Nationalist) capital sits only 150 miles from Shanghai. The relative affordability of Nanjing has drawn huge construction projects to the city, which is also the capital of Jiangsi Province. The city is developing a transport hub, and huge commercial construction projects abound in the downtown area. A majority of employment is in the fast-growing service sector. The metropolitan economy grew 50% just between 2006 and 2008, and future rapid growth is likely.

Cape Town, South Africa

The second-largest city in South Africa behind Johannesburg, Cape Town made the most of the recent World Cup. The region of some 3 million boasts fast-growing communications, finance and insurance sectors. Cape Town is looking to intellectual capital, transportation assets, business costs, technology, innovation and ease of doing business as its primary assets. In 2009 Empowerdex rated Cape Town as the top-performing municipality in South Africa for service delivery. About 97% of the operational budget went to infrastructure development, ensuring that households can enjoy adequate sanitation and water access.

Calgary, Canada

You don't have to buy the notion of a climate-change-driven northern ascendancy to see a bright future for Alberta's premier city. Calgary is positioned well on the fringe of Canada's largest energy belt and enjoys lower taxes and less stringent regulations than its Canadian rivals. Calgary has been hit by a slowdown in energy business, but over time demand from China, India and a slowly recovering world economy should boost this critical sector. The region is expected to be back to its familiar place on top among Canadian urban economies by next year.

The World's Diminishing Cities: Chicago, Ill.

Great cities don't only rise, some decline. Even with Barack Obama in the White House, Chicago is struggling with persistent job losses that, since 2000, are exceeded only by Detroit among the nation's top 10 largest U.S. regions. The Windy City's deficit as a percentage of spending--a remarkable 16.3 %--is now higher than Los Angeles and twice that of New York. Moreover, crime remains stubbornly high, and the widely hyped condo boom has left a legacy of uncompleted buildings, foreclosures and vacancies.

The World's Diminishing Cities: Berlin, Germany

By all rights, Berlin should be a European boomtown: The capital of united Germany, a natural crossroads to the east and Europe's bohemian hot spot. But it remains, as its mayor, Klaus Wowereit, famously remarked, "poor but sexy." Berlin suffers unemployment far higher than the national average, and its gross added-value per inhabitant amounted to just over half that created by residents in the northern city of Hamburg, which has about half as many people. One-quarter of the workforce earns less than 900 euros a month, and one out of every three children lives in poverty.

The World's Diminishing Cities: Osaka-Kobe-Kyoto, Japan

Few places possess a more glorious urban pedigree than Japan's Kansai region. But the shift of manufacturing to China and other countries has undermined the economy of Osaka, traditionally the industrial heart of Japan. As Japan shrinks both economically and demographically, Tokyo, the world's largest city, looms ever larger while Osaka's role is, as one demographer put it, "fading away." Tokyo's population, now over 30 million, has grown to be double that of the Osaka region, and continues to outpace it. Most critical: It is to Tokyo, not Osaka, that Japan's diminishing reserves of educated young people--and industries dependent on their talent--are headed.

This article originally appeared at Forbes.com.

Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

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