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McKinsey Reports on the Exploding Urban Economy

600 cities will contribute $30 trillion in economic growth by 2025, increasing global consumption for energy and transportation. Photo by Rafael Rigues.

The McKinsey Global Institute, an initiative of management consulting firm McKinsey & Company, last week released, “Urban World: Cities and the rise of the consuming class,” a report detailing the global consumption patterns of the earth’s most economically productive 600 cities. These 600 cities—from Lagos to London—are expected to account for 65 percent of net world economic growth by 2025. Of these, 440 are located in the developing world and will contribute to half of the projected growth.

It is key to provide the necessary urban infrastructure to accommodate these massive shifts in wealth, with 600 million people expected to move from subsistence wages to consumer spending. Some of the marked impacts on cities include a demand for 80 billion cubic meters of potable water, 250 percent more port shipping infrastructure to handle increased imports, and additional office space equivalent in land area to Austria.

The implications for the global transportation network is similarly huge, as the $30 trillion in global economic growth occurring in the top 600 global cities is likely to spur the addition of 700 million more personal automobiles by 2030—adding to the 1 billion cars currently zipping through the world’s road network.

Optimizing time lost due to traffic congestion will become ever more vital, too. According to the Texas Transportation Institute, traffic congestion costs the United States (home to more than 250 million cars) about $101 billion annually in wasted fuel and time. The McKinsey report suggests that to ameliorate the growth in transportation demand, optimizing road efficiencies through policy tools like congestion pricing, increased public transit and light optimization may decrease traffic delays by as much as 30 percent. In an era of already tightly constrained funding for alternative transit, affordable technologies, such as bus rapid transit (BRT), will also become ever more critical.

Click here to view a slideshow of urban clusters that are driving global GDP growth.

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