Today, the majority of the world’s population lives in urban areas
By Valerio de Molli, Managing Partner, The European House – Ambrosetti
The urban population surpassed the rural population in 2007 and urbanization processes continue to grow (according to United Nations estimates, on a global level, the urban population will exceed 6 billion by the year 2045, compared with the 3.9 billion in 2014).
But it was not only the size of the population living in cities that grew, but also the average size of urban settlements. Of the 10 residential settlements with 10 million inhabitants or more in 1990 (compared with 3 in 1975), their number rose to 23 in 2015 and it is expected that by 2030 there will be more than 40. Therefore, it would seem clear that the 21st century will be the “century of the cities” and it is precisely urban size that should play a central role in catalyzing development and as a laboratory for identifying the solutions for major global challenges.
On one hand, metropolitan areas offer significant opportunities in terms of economic growth, attracting investment and competitiveness. In fact, large cities are the center of economic activity and global investment, where the majority of innovations and wealth is concentrated, and they represent crucial points of intersection for the flow of people, goods, capital and ideas on a local, national and international level.
The size of metropolitan areas accelerates a number of dynamics required for economic and social development, including:
- demographic growth: the metropolitan population grows on average 1.5 times compared with the average national rate;
- productivity: according to the OECD, when the population of an urban area double, productivity levels rise between 2% and 5%;
- economic growth: urban centers generate about 80% of global GDP and are the primary poles of technological development and innovation;
- employment: metropolitan areas offer the majority of employment opportunities on a national level; in the 22 OECD countries, between 2000 and 2012, 56% of jobs were concentrated in 232 metropolitan areas.
Because of their “critical mass” and role as economic-social drivers, metropolitan areas are also the context in which many of the major challenges of our day and age emerge and in which the solutions for managing them are developed, as well as new models of providing services to the public.
Some of the priority themes connected with urbanization
- Reducing pollution: according to United Nations estimates, metropolitan areas are responsible for 67% of global energy consumption and over 70% of greenhouse gas emissions.
- Adopting a sustainable approach to development, including a reduction in cementification and managing urban sprawl. Among various actions, metropolitan governance could make possible integrated planning of large-scale areas, polycentric development of functions, coordinated organization of services (e.g., water and waste management), a mobility network that minimizes the negative externalities of transport, allocation of new uses for unused areas, dynamic control of land use and more stringent and uniform environmental standards.
- Management of challenges connected with an aging community: 80% of the elderly population resides in the large urban poles and it is estimated that, on a global level, the number of people over 60 will increase from 841 million to over 2 billion by 2050 (22% of the world population, double that in 2006). As a result, local administrations will be called upon to implement policies to make the urban environment more “age-friendly” by taking advantage of the opportunities offered by new technological applications, planning of new business models for services and renewal of urban resources and buildings.
- Promoting a multicultural environment and diversity, and overcoming exclusionary and segregative approaches, including through public housing and the renewal and adaptation of urban spaces.
Regarding this, the third sector—or voluntary sector, which in Europe employs 14 million people and represents 10% of all businesses—and social entrepreneurship can contribute to meeting these challenges and developing planning approaches and solutions oriented towards urban development that is balanced, equitable and inclusive, and which can generate value and increase the resilience of the metropolitan area itself.
The metropolitan context also represents the optimal environment for experimenting with and implementing innovative economic development solutions. In particular, the circular economy, rethinking the “linear” cycle of “supply-production-sales-consumption-waste”, could allow Metropolitan Cities to decouple development from the consumption of finite natural resources, promote the reconstruction of natural resources on which human activity depends and avoid the destruction of value inherent in the current economic model.
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