Multi-city clusters with GDPs as big as countries are changing the global economy, according to a report by Euromonitor
The year 2007 marked the first time in human history when more than half the world’s population lived in cities. Since then, urbanisation has caused cities to expand and sprawl, and by 2030 60% of the population is expected to be urbanised, according to Euromonitor’s report Megalopolis: How Megaregions Are Changing the Global Economy.
Indeed, in the period from 2005–2018, urban areas accounted for 75% of total disposable income growth in real terms. And in 2018, the 20 megalopolises identified in the report generated 35% of global GDP, or $30tn, showing their relevance in regional and national contexts as the drivers of economic growth, innovation and development.
Often referred to as a megaregion, or ‘supercity’, megalopolises represent more than just simple agglomerations of adjacent urban areas, says the report’s author, Fransua Vytautas Razvadauskas, cities consultant at Euromonitor. “They form an important element of the entire supply chain process, whose goal is to ensure the most efficient movement of goods at each delivery point,” he says.
Today, says the report, some of these multi-city clusters are as large as the world’s major national economies. The 500 mile Boston-Washington corridor ‘Bos-Wash’, is the world’s leading megalopolis, generating a GDP of $4.5tn in 2018. This makes it larger than some of the most advanced nations such as Germany and the UK: in short, it would rank as the world’s fourth largest economy if it were a country, behind only the US, China and Japan. Bos-Wash is a governmental, banking, media, and academic centre, and until recently, the US’s biggest immigration centre (overtaken by Los Angeles in recent years). Likewise Great Lakes and Am-Mun-Par (Amsterdam, Munich, Paris), both have a greater GDP than the UK. And Piedmont Atlantic (PAM), which includes Atlanta, Birmingham and Charlotte, has a greater GDP than Australia.
The importance of regional perspectives over country-level analysis, says the report, means that governments and businesses can be better informed as to where investment should be directed when devising growth strategies.
Megalopolis integration could lead to improvements in transport, housing and business development. Better transport linkages stand to improve supply chain operations, especially benefiting FMCG companies. “The megalopolis framework can be leveraged to institute efficient movement of goods across large regions due to their concentration of consumer spending power and the availability of multiple infrastructure,” says Razvadauskas.
The business benefits from increased cross-city and cross-county collaboration within megalopolises are many and varied, says the report, allowing firms to seek growth and cost-cutting opportunities, reducing the need to take on cross-national or international outsourcing. Organisations across megalopolises should prioritise and explore partnership opportunities and focus on possible comparative advantages in industries, recommends the report.
“Success is heavily dependent on the interaction between public sector freight planners and private sector supply chain managers, whose aim should be to take advantage of potential synergies in the movement of goods in cities within a megalopolis. Companies have actively aligned their distribution centres within the spatial framework of a megalopolis, with Amazon and Whole Foods serving as perfect examples,” explains Razvadauskas.
The world’s two largest economies – the US and China – have been at the forefront of megaregional development policies, and although nearly half of megalopolises are found in North America, China’s megalopolises are the key growth markets, according to the report. These will grow three to four times faster based on GDP compared to most of the other megalopolises during 2018-2030.
China’s plan to create 19 city clusters for national, regional and provincial growth has seen numerous projects aimed at integration within the country’s main megalopolises such as high-speed rail and unified public transport systems. Indeed, China is currently the global leader in high-speed rail infrastructure, with 29,000km of high-speed rail lines.
Avenues for industry
The focus of megalopolises has traditionally revolved around issues of transportation, but China is combining this approach with the use of megalopolises as avenues for strategic distribution of industry and population, in order to further bolster its economic ambitions, it says. And while megalopolises are still predominantly concentrated in advanced economies, it predicts a new breed of emerging-market megalopolises will take centre stage as an abundance of working-age people, government investment and improving infrastructure is set to propel economic growth in developing economies.
One to watch, the report adds, is Chongqing-Chendgu, cultivated to help drive growth in central China. During 2018–2030 it is expected to nearly double its real GDP to $535bn.
Rising Asian giants, including India and Indonesia, are also readying themselves. Mumbai-Pune, highlighted by the Euromonitor report as a megalopolis in waiting, is expected to undergo numerous infrastructure developments including a proposed business district. Its real GDP is predicted to grow by 121% over 2018–2030. Potential megalopolises may also emerge in Africa, it says, although it is still too early to identify these.
What's in a name? The regions and cities in the top 20 megalopolises and their GDP