The Cities of America's Future

Raleigh, North Carolina. (Photo: Doug Kerr)

Writing in Foreign Policy, James Manyika, Jaana Remes, and Javier Orellana of the McKinsey Global Institute argue that cities in general and particularly smaller cities will power the new U.S. economy:

It is America’s large cities, and particularly the broad swath of middleweights, that will be the key to the U.S. recovery and a key contributor to global growth in the next 15 years. Large cities in the United States will contribute more to global growth than the large cities of all other developed countries combined. We expect the collective GDP of these large U.S. cities to rise by almost $5.7 trillion — generating more than 10 percent of global GDP growth — by 2025. While New York and Los Angeles together are expected to grow at a compound annual rate of 2.1 percent between 2010 and 2025, the top 30 middleweights (measured by GDP) are expected to outpace them with a growth rate of 2.6 percent.

While these middleweight cities all owe their economic growth mostly to population growth, their paths to success are widely varied:

Rapidly growing “gazelles” such as Austin, Texas, and Raleigh, North Carolina, have outperformed the U.S. average in both per capita GDP and population growth by building on their high-tech presence and strong collaboration with local universities. Other cities such as Dallas, Texas, and Atlanta, Georgia — which we might call “affordable metropolises” — have outperformed the average national GDP growth because their populations have expanded rapidly (despite per capita GDP growth that was slower than average). These affordable metropolises have managed to offer their citizens a good quality of life at a reasonable price by containing housing costs, for instance. Another set of large, established cities such as Boston, Massachusetts, and Washington, D.C. — “alpha middleweights” — outperform others with significantly above-average per capita GDP and sustain moderate growth by leveraging the strength of their existing economic base.

The authors advise policy-makers to carefully evaluate the strengths, weaknesses, and potential of their cities and “tailor their growth strategy accordingly.”