The megacity will define economic growth in the coming years. Citing Monterrey and Guadalajara, Mexico, as examples, these emerging centers of business and commerce are positioned to grow quickly and possibly outpace traditional capitals of commerce. They also have the potential to learn from the mistakes of traditional big cities and engineer smart, long-term, sustainable growth.

 

Urbanization is developing at such a rate that nearly half (47 percent) of GDP growth will come from 443 growth economy cities between 2010 and 2025, as Mercer's People First report notes. These cities are also on a trajectory to amass 1 billion new consumers and, between now and 2030, will significantly change the way people live and work.

Fill 1 Created with Sketch.
As bright minds flock to metro areas, the emerging global megacity will be a top driver of economic growth over the next decade.
Fill 1 Created with Sketch.

 

 

How urbanization changes local economies

 

While widespread adoption of the internet and interconnected technologies was predicted to enable people to live and work anywhere, it's actually had the opposite effect. Instead, more people have been drawn into cities for work. Innovative workers are seeking one another to collaborate in developing new industries in today's rapidly evolving global economy. They want an environment in which they can be more productive and more creative with like-minded peers.

 

As all these bright minds flock to growing metropolitan areas, cities have become the crucible of collaboration. Take Guadalajara, for instance. The city's technology industry traces its roots back to the 1960s, when high-tech foreign companies looking for cheap labor moved manufacturing operations there. These companies included Kodak, Motorola, IBM, Hewlett-Packard and Siemens. Yet, when many of those operations moved to Asia in the early 2000s, the city still found a way to persevere as a hub for technology. As Andrew Selee from the Smithsonian Institution notes, "Guadalajara reinvented itself as a major center for research and development, programming, design and other high-skilled tech occupations, building on the foundation that had been laid years earlier."1

 

Guadalajara's highly trained engineers "inverted the model," designing components in Mexico and having them manufactured in Asia, as one engineer told Selee. Today, many Silicon Valley–based tech companies maintain research, development and programming facilities in Guadalajara, and the city — now known for its engineering talent and creativity — is home to a wide range of technology startups.

How cities can prepare and respond

 

Rapid growth in jobs and economic opportunities is positive yet challenging for cities such as Guadalajara, also known as "Mexico's Silicon Valley." The city's population has grown to include more than 8 million people and is now the second biggest metropolitan area in Mexico, just behind Mexico City.2 The population is expected to expand even more (over 15%) in the next decade. It is also the third largest economy in Mexico, with a GDP of $81 billion.3

 

Comparatively, Monterrey has a population of 5 million and is the third largest metropolitan area in Mexico.2 Monterrey's population is also expected to increase over 16% in the next decade. Its GDP is valued at $123 billion — making it the highest GDP per capita city in Mexico and the second highest in Latin America.3 Both Guadalajara and Monterrey will continue to grow and expand, as will their workforces, so it will be vital to understand what today's and tomorrow's employees want.

 

New residents don't just bring creativity and an interest in collaborating with other like-minded individuals; they also bring needs for healthcare, education, recreation, infrastructure and security. In order to keep bright individuals in the city, contributing to the growing economy, an emerging megacity must be able to provide the environment and services those individuals and their families want for a satisfying life.

 

While business leaders often assume that a good salary will motivate people to move to a city and stay there, human and social factors are actually more important for the workers making those decisions. To attract and keep people, a city must create an environment for them to thrive across multiple dimensions, focusing on what matters most to them.

 

Most cities, despite their rapid economic growth, are not doing a great job meeting the needs of the people who live there, which creates tension between what people value and what a city is able to deliver. Mercer found a 30+ point gap between workers' quality-of-life expectations and how a city is meeting them. To reverse that trend, city leaders must understand their importance for future economic growth and adopt a new outlook that includes these three components:

 

  1. Focus on people first. As technology continues to enable people to work smarter and make faster decisions, jobs will continue to change. Technology, automation and digitization will make work more efficient, but unique human capabilities will propel growing cities. If the people needed to operate and manage artificial intelligence don't want to live in a city, all the automation won't matter. Cities — as well as employers — must focus on the value of human qualities and skills and how to help those humans find satisfaction.

     

  2. Understand what people want. More than a good job and a good salary, people want a high quality of life. That includes the ability to feel safe and access good schools for their children, quality healthcare, recreation, clean air and water, and other lifestyle factors. Companies may be able to attract top employees, but cities must focus on providing the environment and lifestyle that will keep those employees.

     

  3. Prioritize partnerships. Most cities have big challenges to overcome to provide the quality of life that people want. No single entity can solve systemic problems, so public-private partnerships are crucial to address macro issues and gaps, such as in infrastructure, as well as safety and housing, and overcome challenges before they become exacerbated. Public-private partnerships are essential for cities, businesses and people to succeed.

     

    Increased urbanization and the blossom of new megacities will send waves throughout the global economy in the years to come. But to foster positive growth and innovation, successful megacities must acknowledge and act upon the wants and needs of those skilled workers who will call these cities home.

 

Sources:

 

1. Selee, Andrew. "How Guadalajara Reinvented Itself as a Technology Hub," The Smithsonian Institution. 12 Jun. 2018, https://www.smithsonianmag.com/innovation/how-guadalajara-reinvented-itself-technology-hub-180969314/#kc531GtO4OwhOKDi.99.
2. "World Urbanization Prospects 2018," United Nations, https://population.un.org/wup/DataQuery/.
3. Berube, Alan; Trujillo, Jesus L.; Ran, Tao; Parilla, Joseph. "Global Metro Monitor report," Brookings, 22 Jan. 2015, https://www.brookings.edu/research/global-metro-monitor/.

Andre Maxnuk
Andre Maxnuk
CEO Mexico and Latin America Zone Leader, Mercer
Speak with a Consultant

   

*Required Fields