Redefining Global Cities

Jesus Leal Trujillo and Joseph Parilla

The world’s largest metropolitan areas concentrate the drivers of global prosperity, but there isn’t one way to be a global city—this report defines seven types of global cities, providing a valuable lens through which to understand an evolving global economy.

As societies and economies around the world have urbanized, they have upended the classic notion of a global city. No longer is the global economy driven by a select few major financial centers like New York, London, and Tokyo. Today, members of a vast and complex network of cities participate in international flows of goods, services, people, capital, and ideas, and thus make distinctive contributions to global growth and opportunity. And as the global economy continues to suffer from what the IMF terms “too slow growth for too long,” efforts to understand and enhance cities’ contributions to growth and prosperity become even more important.

Seven types of global cities

In view of these trends and challenges, this report redefines global cities. It introduces a new typology that builds from a first-of-its-kind database of dozens of indicators, standardized across the world’s 123 largest metro economies, to examine what really defines a global city—its economic characteristics, industrial structure, and key competitiveness factors.

The typology reveals that there is no one way to be a global city. Grouped into seven metropolitan clusters, the distinct competitive positions of the world’s largest metro economies become sharper, as do the peers metropolitan areas can look to for common solutions and investments to enhance economic growth.

Developing the typology

To develop the typology, we utilized a series of statistical techniques to group metropolitan economies with their closest peers based on a set of 35 stock variables that measure metropolitan-level economic characteristics, industrial structure, and key competitiveness factors:

  • Tradable Clusters: Tradable industries are a critical driver of prosperity and competitiveness. These industries are typically anchored by globally engaged firms, which have valuable spillovers for local economies. We measure tradable industries using data on greenfield foreign direct investment, which is inextricably bound up with traded industry clusters, and the productivity differential (measured as output per worker) between a metro area’s traded sector and that traded sector nationwide.
  • Innovation: A region’s innovative capacity has implications for its ability to develop and deploy commercial applications, start new businesses, and maintain industrial competitiveness in the face of disruptive technological change. We measure innovation through the scientific impact of research universities, patenting, and venture capital flows.
  • Talent: Human capital—the stock of knowledge, skills, expertise, and capacities embedded in the labor force—is of critical importance to enhancing productivity, raising incomes, and driving economic growth. We measure talent through the share of population with tertiary education.
  • Infrastructure Connectivity: Infrastructure connectivity matters for regional competitiveness because firms rely upon global access, both physically and digitally, to participate in the efficiencies of global value chains. We measure infrastructure connectivity through aviation passenger flows and internet download speeds.

For a full discussion of the methodology, including all indicators used in the analysis, please download the report.

Explore the seven types of global cities

Scroll down to see the unique competitiveness profile and economic growth trajectories for each type of global city.

Data sources

Economic characteristics, including population, GDP, GDP per capita, GDP per worker, the traded sector productivity differential, and educational attainment, were calculated using data from Oxford Economics, Moody’s Analytics, and the U.S. Census Bureau. Industry data was not available for all Chinese metro areas. The source of the greenfield foreign direct investment data is the Financial Times’ fDi Markets database. The source of the university scientific impact data is the Centre for Science and Technology Studies (CWTS) at Leiden University. Patents data was obtained from the OECD’s REGPAT database. The source of the venture capital data is Pitchbook, a private financial research firm. The source of the aviation data is Sabre Aviation Solution’s global demand dataset (GDD). The source of the internet download speed data is Ookla’s “Net Index” (now rebranded as “Speedtest Intelligence”). All data was either provided at a standardized definition of metropolitan areas or was geocoded to a metropolitan area using Google Maps Geocoding API. For a detailed review of data and methods, please see the full report.