A new report, Hot Spots: Benchmarking global city competitiveness, was just released by the Economist Intelligence Unit. Hot Spots is the result of a comprehensive study that analyzed the competitiveness of 120 of the world’s major cities. The study evaluated their performance along eight distinct categories, from which it developed an overall Competitiveness Index for each city. The study was commissioned by Citigroup as part of its Citi for Cities initiative.
Hot Spots observes that over half of the world’s population now lives in cities, generating over 80% of global GDP. As a result, companies are planning their global business strategies from a city, rather than from a country perspective. The 120 urban centers ranked in Hot Spots have a combined population of about 750 million and collectively account for almost 30 percent of the global economy. They are fiercely competing with each other to attract business investment and top talent that will enable them to grow their economies, create jobs and improve their overall standard of living and quality of life.
What determines a city’s competitiveness and growth potential? Hot Spots defines competitiveness as a city’s ability to attract capital, business, talents and visitors. Competitiveness, according to the report, “. . . is a holistic concept. While economic size and growth are important and necessary, several other factors determine a city’s overall competitiveness, including its business and regulatory environment, the quality of human capital and indeed the quality of life. These factors not only help a city sustain a high economic growth rate, but also create a stable and harmonious business and social environment.”
The research team assessed each of the 120 cities benchmarked using 31 different indicators. Working with a number of experts, it then grouped these indicators into eight major categories, assigning a weight to each toward the final overall ranking: economic strength (30%), human capital (15%), institutional effectiveness (15%), financial maturity (10%), global appeal (10%), physical capital (10%), environment and natural hazards (5%), and social and cultural character (5%).