Cities and their surrounding metro regions are the real economic engines of our time. Bringing together talented, ambitious people and the assets they need to succeed, cities propel the innovation and enterprise that spur long-term prosperity. Economists increasingly argue that clustering, concentration, and density stand alongside land, labor, and capital as key features that shape economic growth.
American cities account for nearly 90 percent of total U.S. economic output, and 85 percent of U.S. jobs. As Harvard’s Michael Porter recently told the Clinton Global Initiative: “There is no one U.S. economy but a collection of local economies.” Across the globe, metros with populations over one million account for more than half of the world’s economic output and nine of every ten innovations, while housing roughly one out of every five people.
Tokyo takes the top spot on our Global Economic Power Index, besting New York and London. With 35 million people and nearly $1.2 trillion in economic output, (as of 2005 the most recent date for which globally comparable data are available), Tokyo is the world’s largest urban economy. The only other regional economy that comes close is greater New York, with $1.1 trillion in economic output (as of 2005, rising to nearly $1.3 trillion today). Both would rank among the world’s top 15 economies, slightly smaller than Canada or Spain, but larger than India, Mexico and South Korea. While New York and London are quintessential financial, knowledge-based and creative economies (taking the two top spots on the Financial Power Index), Tokyo has a substantial base of world-class factories as well as cutting-edge research and development labs—putting it in first place on the Global Innovation Index. The slides below show the world’s 25 most economically powerful cities.
The Global Economic Power Index, developed with my Martin Prosperity Institute colleague Charlotta Mellander, reflects three key three dimensions of economic power—economic, financial, and innovative. Economic Power is measured as economic output or gross regional product. Financial Power is based on the Global Financial Centers Index, which ranks the banking and financial power of cities across the world. Innovation is based on patenting activity.