For one thing, local city economies matter more than national economies. A recent paper by Brigham Young University economist Todd Mitton found that the economic performance of sub-national regions within the 101 countries studied is influenced more by natural factors than by institutions, except when these regions function autonomously. Which is to say, when not dominated by far-away national institutions, everything comes together, natural and institutional, to enable key sub-national regions to excel and outperform the rest of the country. The takeaway is that national economies as a whole fare better when local economies are unleashed and untethered.
What is true for macroeconomic policymakers is true for brand marketers, too. Local is where the action is, cities in particular. Not the least reason is that cities are where people are. Excluding urban “clusters,” which often include small towns, the 2010 Census found that 71.2 percent of the U.S. population lives in 468 “urbanized areas” of 50,000 or more people. But the concentration within cities is even more pronounced – the top 48 urbanized areas account for more than half of the U.S. urban population. It is estimated that 60 million of the additional 100 million people projected by 2043 will live in one of nearly two dozen “megapolitan” areas.
It’s no surprise, then, that cities are also the engines of economic growth. A Brookings Institution analysis of 2009 economic data found that in 47 of 50 states, metro areas accounted for the majority of a state’s economic output. Even more, in 15 states, just one metro area accounted for the bulk of output. Cities produce a disproportionate share of exports. Cities attract the most talented, best educated people (whom Richard Florida famously described as the “creative class”). And cities possess the most valuable assets for future growth.
What’s true for the U.S. is true globally as well, particularly in emerging economies. From 2010 to 2050, the urban population of the developed world is projected to grow 0.6 percent per year. In contrast, the urban population of the developing world is projected to grow 2.4 percent per year, or a total of 2.6 billion people. In 2007, a mere 600 cities (out of 4,000 or so worldwide with populations of 100,000 or more) accounted for 60 percent of global GDP. Between now and 2025, the top 600 cities will account for 65 percent of GDP growth in the global economy. The mix of the top 600 cities will change, with 136 new cities, all from the developing world, 100 of them from China.