hazem galal "from moscow to sao pãulo"
TRANSCRIPT
From Moscow to Sao PãuloEmerging 7 Cities of Opportunity Study 2013
Hazem GalalGlobal Leader for PwC´s State and Local Government Sector
Cities have become the economic engine of the modern world, and nowhere is this more true than in the seven leading emerging nations – Russia, Brazil, India, China, Mexico, Turkey and Indonesia.
The E7 Cities of Opportunity report provides a detailed, objective and timely study of the business, economic and cultural hubs of the emerging world – Moscow, São Paulo, Beijing, Mumbai, Mexico City, Istanbul and Jakarta. The report presents extensive quantitative research as well as analytical discussion on the health and well-being of each of these cities.
PwC Russia
Emerging 7 countries and cities
From Moscow to Sao Pãulo
3
December 2013
Moscow
Beijing
Jakarta
Istanbul
Mexico City
São Paulo
Mumbai
Economic growth shifts to emerging countries
Russia should overtake Germany to become the largest European economy before 2020 in purchasing power parity
China will overtake the US as the largest economy by 2017 in purchasing power parity
India should become the third global economic giant by 2050
Source: PwC report “World in 2050 - BRICs and Beyond: Prospects, challenges and opportunities”
PwC Russia 4
We measured the cities against 10 categories and 60 variables
Tools for a changing world
Intellectual capital & innovation
Technology readiness City gateway
• Classroom size
• Libraries with public access
• Math/science skills attainment
• Literacy and enrollment
• Percent of population with higher education
• Research performance of top universities
• Innovation Cities Index
• Intellectual property protection
• Entrepreneurial environment
• Internet access in schools
• Broadband quality score
• Digital economy score
• Software development and multimedia design
• Hotel rooms
• International tourists
• Number of international association meetings
• Aircraft movements
• Incoming/outgoing passenger flows
• Airport to CBD access
Economics
Economic cloutEase of doingbusiness Cost
• Number of Global 500 headquarters
• Financial and business services employment
• Productivity
• Attracting FDI: Number of greenfield projects
• Attracting FDI: Capital investment
• Rate of real GDP growth
• Ease of starting a business
• Resolving insolvency
• Employee regulations
• Ease of entry: Number of countries with visa waiver
• Flexibility of visa travel
• Foreign embassies or consulates
• Level of shareholder protection
• Operational risk climate
• Workforce management risk
• Total tax rate
• Cost of business occupancy
• Cost of rent
• Consumer price index
• Cost of Internet
• iPhone index
Quality of life
Transportation &infrastructure
Health, safety& security
Sustainability& the naturalenvironment
Demographics& livability
• Public transport systems
• Mass transit coverage
• Cost of public transport
• Licensed taxis
• Major construction activity
• Housing
• Hospitals
• Health system performance
• End-of-life care
• Crime
• Political environment
• Natural disaster risk
• Thermal comfort
• Recycled waste
• Air pollution
• Public park space
• Cultural vibrancy
• Quality of living
• Working age population
• Traffic congestion
From Moscow to Sao Pãulo December 2013
E7 Cities of Opportunity today
PwC Russia 6
How the E7 Cities of Opportunity rank
December 2013From Moscow to Sao Pãulo
Intellectual capitaland innovation
Technologyreadiness
Transportationand infrastructure
Health, safetyand security
Sustainabilityand the naturalenvironment
Economicclout
Ease of doingbusiness
Cost Demographicsand livability
Citygateway
Score
Beijing 297
Moscow 283
Mexico City 273
Istanbul 233
São Paulo 223
Mumbai 209
Jakarta 192
32
40
21
13
15
12
47
45
44
33
22
27
36
14
20
19
17
15
13
14
18
26
28
28
16
33
19
23
15
23
28
19
21
20
14
21
25
30
23
21
22
21
27
20
20
15
16
18
1
2
3
4
5
6
7
38
32
27
35
39
17
29
18
10
18
30 27
19 37
19
35
54
23
29
19
23
23
1 Rating position
Highest rank in each indicator
PwC Russia
Intellectual capital and innovationMoscow consistently ranks No. 1 in education
From Moscow to Sao Pãulo
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December 2013
Classroom size
Libraries with public access
Math / Science skills attainment *
Literacy and enrollment *
Percent of population with higher education
Research performance of top universities
Innovation Cities Index
Intellectual property protection *
Entrepreneurial environment *
Score
Moscow 47
Beijing 45
Mexico City 44
São Paulo 36
Istanbul 33
Mumbai 27
Jakarta 22
4
6
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3
7
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7
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If there is one principle on which virtually all economists concur, regardless of disagreements over other aspects of economic policy, it is that education, research, and scientific and technological innovation serve as the basis of economic and social development.
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*Country-level data.
PwC Russia
City gatewayBeijing dominates this indicator with an almost perfect score
From Moscow to Sao Pãulo
8
December 2013
This indicator tries to quantify a city’s international connections and its attraction beyond its own region – its “magnetism”worldwide both economically and culturally
Hotel rooms International tourists Number of International Association Meetings
Aircraft movements Incoming /Outgoing passenger flows
Airport to CBD access
Score
Beijing 40
Moscow 32
Istanbul 29
Mexico City 21
São Paulo 18
Jakarta 18
Mumbai 10
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PwC Russia
Technology readinessBeijing ranks first, with Moscow a very strong second
From Moscow to Sao Pãulo
9
December 2013
Internet access in schools * Broadband quality score Digital economy score * Software development and multi-media design
Score
Beijing 20
Moscow 19
Istanbul 17
Jakarta 15
Mexico City 14
São Paulo 14
Mumbai 13
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Given the speed of “creative destruction” in current technological innovation, the point for emerging economies is not necessarily to be first out of the blocks in technology products, but to adopt the technology best suited to one’s needs.
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*Country-level data.
PwC Russia
Health, safety and security
From Moscow to Sao Pãulo
10
December 2013
This indicator affects emerging cities even more deeply than mature ones because the former also have to contend with a general skepticism – both from outsiders and their own residents – regarding any shortcomings, inadequacies, and lack of capacity in these areas of public policy.
Hospitals Health system performance *
End-of-life care * Crime Political environment
Score
Beijing 27
Mexico City 27
Istanbul 20
Mumbai 20
Moscow 18
São Paulo 16
Jakarta 15
5
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Beijing and Mexico City share the top rank, well ahead of the other E7
*Country-level data.
PwC Russia
Transportation and infrastructureBeijing and Mexico City tie for first place
From Moscow to Sao Pãulo
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December 2013
There is no greater threat to the viability of emerging cities than excessively growing populations overwhelming infrastructural capacity.
Public transport systems
Mass transit coverage Cost of public transport Licensed taxis Major construction activity
Housing Score
Beijing 30
Mexico City 30
Moscow 25
Mumbai 23
Istanbul 22
Jakarta 21
São Paulo 21
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PwC Russia
Sustainability and the natural environmentMoscow No. 1, significantly surpassing its peers
From Moscow to Sao Pãulo
12
December 2013
In fact, Moscow’s achievements in this indicator go much deeper than are apparent. The Russian capital does exceptionally well not only against the emerging cities. It also ranks No. 7 overall in sustainability and the natural environment in the complete rankings of all 27 Cities of Opportunity, tied with Paris and just below Stockholm.
Natural disaster risk Thermal comfort Recycled waste Air pollution Public park space Score
Moscow 28
São Paulo 21
Jakarta 21
Mumbai 20
Beijing 19
Mexico City 19
Istanbul 14
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PwC Russia
Demographics and livabilityBeijing and Moscow tie for No. 1
From Moscow to Sao Pãulo
13
December 2013
Cultural vibrancy Quality of living Working age population Traffic congestion Score
Beijing 23
Moscow 23
São Paulo 19
Mexico City 17
Istanbul 15
Mumbai 13
Jakarta 12
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While the world’s emerging cities are undeniably dynamic economic centres, they’ve also increasingly become difficult places in which to live. Emerging cities cannot continue to grow in, or attract, the numbers of people they have until now without at some point overwhelming their infrastructure and their own citizens.
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PwC Russia
Economic clout
From Moscow to Sao Pãulo
14
December 2013
What is being measured here is not only the aggregate strength of a city’s economy, but the extent of that strength, how far beyond its limits a city’s economic influence reaches, not just regionally or nationally, but globally – a city’s “ability to translate urban strength into a global economic presence.”
Beijing tops the rankings, both for the E7 and globally, with Moscow close behind
Number of Global 500 headquarters
Financial and business services employment
Attracting FDI: Number of greenfield projects
Attracting FDI: Capital investment
Productivity Rate of real GDP growth
Score
Beijing 37
Moscow 33
Mumbai 23
São Paulo 23
Istanbul 19
Mexico City 19
Jakarta 15
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PwC Russia
Ease of doing businessMexico City tops the rankings, way ahead of the field
From Moscow to Sao Pãulo
15
December 2013
Ease of starting a business **
Resolving insolvency **
Employee regulations **
Ease of entry: Number of countries with visa waiver *
Flexibility of visa travel *
Foreign embassies or consulates
Level of shareholder protection **
Operational risk climate *
Workforce management risk
Score
Mexico City 54
São Paulo 39
Beijing 38
Istanbul 35
Moscow 35
Mumbai 32
Jakarta 27
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The fact that Mexico City does so well in these nine variables illustrates its evident and unquestionable success in attracting global financial and human capital.
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*Country-level data.**Based on most populous city.
PwC Russia
CostIstanbul ranks first, just ahead of Mexico City and Mumbai
From Moscow to Sao Pãulo
16
December 2013
There are no surprises in this indicator. If anything, the data confirm most of the media commentary and expert analysis of the past couple of years regarding on-going developments in the economies of the emerging cities and the emerging world as a whole.
Total tax rate Cost of business occupancy
Cost of rent Consumer price index
Cost of internet iPhone index Score
Istanbul 29
Mexico City 28
Mumbai 28
Jakarta 26
Moscow 23
Beijing 18
São Paulo 16
6
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E7 Cities of Opportunityfrom 2013 to 2025
PwC Russia
From Moscow to Sao Pãulo
18
Population
December 2013
Moscow and Mexico City find themselves in the best position to limit the environmental, social and economic burdens of continual population growth. Stable populations, or even incremental growth, allow for more systematic planning and for passing on the benefits of economic expansion to urban residents.
2,998
1,083 1,102892
633123 192
Moscow Beijing MexicoCity
SãoPaolo
IstanbulJakartaMumbai
Average annual growth rate
0.1% 1.4% 0.2% 0.8% 0.7% 0.7% 0.4%
Aggregate population growth, 2013 – 2025* Thousands
* Moscow figures are based on publicly available data and do not include data on some newly attached to the city territories (so called New Moscow)
PwC Russia
From Moscow to Sao Pãulo
19
0
5
10
15
20
December 2013
General employment
This chart illustrates the impact on economic development of ceaseless population growth: the two cities that currently have the largest number of inhabitants, and will continue to have them in 2025, also demonstrate the consequences of very large populations. Beijing will not be able to maintain its current employment-to-population percentage of 61% in the future.
Population vs. employment
Moscow Beijing MexicoCity
SãoPaolo
Istanbul Jakarta Mumbai
58% 58%
61%
58%
47%54%
51%
57%
35%
39%51%
61%
39%
45%
% of employment comparedto total population
Employed in 2013 2025 employment forecast
* Moscow figures are based on publicly available data and do not include data on some newly attached to the city territories (so called New Moscow)
Mil
lion
peop
le
PwC Russia 20
Employment in E7 cities’ group by industry
December 2013From Moscow to Sao Pãulo
0%
5%
10%
15%
20%
25%
2013 2025 forecast
Wh
ole
sale
an
d
reta
il
Min
ing
Bu
sin
ess
se
rvic
es
Ma
nu
fact
urin
g
Pu
blic
se
rvic
es
Tra
nsp
ort
, st
ora
ge
an
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com
mu
nic
atio
ns
Ho
tels
an
d r
est
au
ran
ts
Le
isu
re,
cultu
re a
nd
o
the
r se
rvic
es
Co
nst
ruct
ion
Fin
an
cia
l se
rvic
es
Util
itie
s
Ag
ricu
lture
, fo
rest
ry
an
d f
ish
ing
Wholesale-retail will remain the largest sector in 2025, maintaining its 18% of total employment, while public services will also continue as a significant sector, dropping only 1% from its current level to 14% in 12 years, just below manufacturing.
PwC Russia 21
These numbers are striking!
As opposed to the forecast annual growth of 3-6% among our E7 cities, the average GDP growth of the OECD* group of 34 (wealthy) countries between 2008 and 2012 was 0.62%!
That represents almost a tenth of Mumbai’s GDP growth over the next 12 years and a bit more than a fifth of Moscow’s.
Economic growth from 2013 to 2025 (1/2)
From Moscow to Sao Pãulo
GD
P,
US
$b
n
Average annual growth rate
3.1% 5.9% 4.2% 3.1% 5.0% 5.7% 6.4%
Moscow Beijing MexicoCity
SãoPaolo
IstanbulJakartaMumbai
547
455
310272
339
247
123
379
228189 188 188
126
58
2013 2025 forecast
* Organisation for Economic Co-operation and Development
December 2013
PwC Russia
From Moscow to Sao Pãulo
22
December 2013
GD
P p
er
cap
ita,
US
$ 0
00s,
2013 p
rices
Average annual growth rate
3.0% 4.4% 3.4% 2.9% 4.3% 5.0% 6.0%
Moscow Beijing MexicoCity
SãoPaolo
IstanbulJakartaMumbai
46
24 2530
23 23
9,3
32
1417
21
14 13
4,6
2013 2025 forecast
This GDP per capita chart is even more striking. Mumbai increases its wealth by 100%, Jakarta by 79%, Beijing by almost 70%, Istanbul by 66%, and São Paulo, Mexico City and Moscow by roughly 43-47% each.
Economic growth from 2013 to 2025 (2/2)
Let’s discuss this!
PwC Russia 24
For an in-depth discussion aboutthe E7 Cities of Opportunity, please, contact:
December 2013From Moscow to Sao Pãulo
Vadim KhrapounPartner
Hazem GalalPartner
Markets LeaderPwC Russia
Tel.: +7 (495) 232 [email protected]
PwC's Cities & Local Government Sector Global Leader (Doha, Qatar)Tel: +974 4419 [email protected]
Ekaterina ShapochkaPartner
Government and Public SectorServices LeaderPwC RussiaTel.: +7 (495) 223 [email protected]
www.pwc.ru/en/e7
This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, [insert legal name of the PwC firm], its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.
PwC Russia (www.pwc.ru) provides industry-focused assurance, tax, legal and advisory services. Over 2,400 professionals working in PwC offices in Moscow, St Petersburg, Ekaterinburg, Kazan, Novosibirsk, Krasnodar, Voronezh, Yuzhno- Sakhalinsk and Vladikavkaz share their thinking, experience and solutions to develop fresh perspectives and practical advice for our clients. The global network of PwC firms brings together more than 184,000 people in 157 countries.
* PwC refers to PricewaterhouseCoopers Russia B.V. or, as the context requires, other member firms of PricewaterhouseCoopers International Limited, each of which is a separate legal entity.
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