Thursday, June 17th, 2010

City Economic Weight

Constantin Gurdgiev is an economist based in Ireland who writes at True Economics. He recently posted a story exploring Dublin’s weight in the Irish economy. It contained the following very interesting graph, which is a mashup of metro % of national population vs. metro % of national GDP:

This graph is a bit difficult to parse. The % population vs. % GDP are the axes, and the size of the circle for each city supposedly represents the ratio of the two values, though they look off to me. The larger the circle, the bigger the city’s economic share relative to its population share. (Full data below)

A few things stand out. One is obviously that Dublin is overwhelmingly dominant in Ireland’s economy. It has almost 40% of Ireland’s population and almost half its GDP. It’s really hard to separate the Dublin economy from the Irish economy, which I believe is the point Gurdgiev was making. A national economy strategy will to some extent be a Dublin economic strategy. That’s an important lens to bring to the discussion.

You also see the same high influence in other primate cities like Seoul, Brussels, Budapest, Lisbon, and to a bit lesser extent Paris and Mexico City.

This chart also shows the incredible overall power of the United States. New York, arguably the ultimate global city, only accounts for 8.5% of the US economy, and 7.8% of its population. That 1.1 ratio means that not only is New York a comparatively small part of the US population, it does not have economic impact that is particularly out-sized relative to that. Only Sydney has a lower ratio in this group of cities.

The general pattern from this data is that in most developed countries you see fairly low multiples of % GDP to % population. That makes some sense as development is more evenly spread in these places. In fact, the ratio is below 1.5 for all developed nation cities except Brussels (4.4), and is below 2.0 in nearly-developed places like South Korea and Hungary. Even mighty Paris is only a 1.3. (I wish London were on this chart). Meanwhile, Shanghai is 7.1, Mumbai 3.3, etc. Clearly in developing nations major cities is where the action is. In this light, 1.1 for New York probably says more about the advanced state of the US economy than it does about New York itself.

I’d love to see a more complete version of this analysis to see if the trends hold up more broadly. In the meantime, here’s the data for the above chart:

6 Comments
Topics: Economic Development

6 Responses to “City Economic Weight”

  1. John Morris says:

    Why isn’t London on the chart?

  2. I don’t know. But clearly this was not meant to be a comprehensive survey.

  3. Alon Levy says:

    The Seoul numbers are wrong. Greater Seoul has 20-25 million people, corresponding to 40-50% of the national population. 25% is just Seoul proper, which is the wrong geography because then you get an overstated GDP. GDP counts all income earned in an area, but only divides by people living in the area. This severely overstates inner-urban GDP numbers. When you include all of Greater Seoul, the GDP multiplier is just more than 1 (take a weighted average of Seoul, Incheon, and Gyeonggi).

  4. Are these figures all on total metro areas so as to incorporate all major commute-sheds? (And does anyone really know how to define that in a globally standardized way?) If not, then a high GDP relative to population may just mean more jobs than housing and a net in-commute.

  5. Jarrett, I don’t know. However, he did put up a second graph with “Dublin city” only, so the version I posted is “Greater Dublin”, which I assume is a metro measure. You’d have to contact the author to get the specifics, however.

  6. Alon Levy says:

    Jarrett, the figures are inconsistent. For example, the table claims that Shanghai is larger than Mumbai, which contradicts every ranking I’ve seen. The population you get from multiplying the table’s Shanghai proportion by China’s population, 25 million, is a gross overestimate by any measure, whereas the population you get for Mumbai, 17 million, is a metro area-wide estimate that’s a few years out of date; the most recent estimates are about 22.

The Urban State of Mind: Meditations on the City is the first Urbanophile e-book, featuring provocative essays on the key issues facing our cities, including innovation, talent attraction and brain drain, global soft power, sustainability, economic development, and localism. Included are 28 carefully curated essays out of nearly 1,200 posts in the first seven years of the Urbanophile, plus 9 original pieces. It's great for anyone who cares about our cities.

About the Urbanophile

about

Aaron M. Renn is an opinion-leading urban analyst, consultant, speaker, and writer on a mission to help America’s cities thrive and find sustainable success in the 21st century.

Full Bio

Contact

Please email before connecting with me on LinkedIn if we don't already know each other.

 

Copyright © 2006-2014 Urbanophile, LLC, All Rights Reserved - Click here for copyright information and disclosures