The 'city as centre of gravity' story remains compelling – but it's time to revisit which ones

In the book ‘No Ordinary Disruption’ (2015) McKinsey continues to maintain close to 50% of all GDP growth globally to 2025 could come from 600 specific cities.

Not countries – localised, high-growth urban economies; over two thirds of which are in emerging markets.

But with Goldman and others finally retiring their BRIC-based funds it is clear that today’s investor is looking further afield than the now slowed/emerged economies for exposure to growth.


> De-prioritising BRICs highlights 100 high-growth cities in frontier markets and fragile states

> This list-within-the-list is key to the anatomy of highly resilient, highly scalable urban enterprise

> New instruments to target specific urban hubs bring investing in ‘Leap Cities’ within reach

> The challenge is developing actionable, street-level intelligence and city-scale foresight

consistently since 2011 MGI has placed 443 of these future urban success stories in what are broadly termed ‘emerging markets’. The main source of their economic growth: the rapid expansion of the consumer class in megacities (10M+ people) and, increasingly, ‘middleweights’ (>150k and growing fast). The rate both these types of city are attracting new arrivals is roughly 1.6 times faster than the average for places not on the list.

But regardless of whether some urban middleweights can outperform their host economies, the headwinds that have buffeted the BRICs since MGI first published its cities-led narrative have no doubt cooled interest in these countries.

The city-as-centre-of-economic-gravity story remains highly compelling however – even increasingly relevant as we witness unprecedented levels of migration and displacement around the world.

Progressive portfolios should re-prioritise MGI's list

For funds and multinationals, reprioritising the names of the cities on the list can better align progressive portfolios with widely changed perceptions. And perhaps most interestingly, this might simultaneously present other kinds of opportunity…

For instance, take the emphasis off China (which still occupies a dominant 242 cities on the MGI list, despite now facing a protracted slow-down after its recent currency correction), India (36 listed cities, Modi facing increasing opposition to his FDI drive and economic reforms) and the scattering of listed cities in Brazil and Russia (both in recession, facing long-term fallout from economic scandal and sanctions respectively) –

Where’s left?

100 high-growth middleweights in far less well-known frontier markets and so-called fragile states (give or take, depending on your preferred definitions of ‘frontier’ and ‘fragile’).

100 high-growth cities in frontier markets and fragile states

Often in geopolitically volatile and/or post-conflict areas, historically overlooked by mainstream investors and many corporations it makes a fascinating list-within-the-list.

So why haven’t we seen courageous, specialised ‘Break-Out Frontier Cities’ funds springing up…?

It’s true the new techniques behind instruments that can target cities – or networks of cities – are still early-stage. But there’s a more fundamental problem.

Where is today’s ground-truth evidence to suggest these unsung, far-flung metropolises will be among the global economy’s major sources of growth over the next 10 years?

What are the strategies, business models and technologies on the streets? These are the key to the way people, information and value flowing through cities is changing. These are how we begin to understand and gain exposure.

But we typically just don’t have actionable, city-resolution intelligence or horizon scanning in these middleweights.

What are the strategies, business models and technologies on the streets?

Yet if even 10 cities in frontier markets and fragile states are rewriting the rules of rapid urbanisation, understanding how they defy the limits to growth, whether prosperity reaches the many or the few – and whether their rise is sustainable – would be gold. For funds, for brands, for impact investors alike.

In fact, we would have found the 10 most important, most exciting cities on the planet.

Clearly their stories will not all play out the same way; what works for one will not automatically work in others without careful selection and context-specific adaptations. And such city-level foresight requires a different feat of business intelligence to the macroeconomic indicators that described the BRICS over 14 years ago.

The 10 most important, most exciting cities on the planet

But our species is urban – 54% of us and counting. If specific cities can make the leap from ‘frontier’ or ‘fragile’ to Engine of the Global Economy in the space of a decade, we need to invest in them, learn from them and scale up the enablers of their resilient brand of enterprise elsewhere. Fast.

To understand the successful strategies, which models thrive under which urban conditions, we urgently need to develop a new granularity to our intelligence – right down between the skyscrapers and the slums in the cities we have long overlooked.

Until we do, for many funds and companies in slowing economies looking to play a part in their rise, the potential opportunity in the Leap Cities will remain intriguing but invisible.

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