Potential of Emerging-Market Cities

Extracted 25FEB2013 from https://www.mckinseyquarterly.com/Strategy/Globalization/Unlocking_the_potent...

A massive wave of urbanization is propelling growth across the emerging world. This urbanization wave is shifting the world’s economic balance toward the east and south at unprecedented speed and scale. It will create an over-four-billion-strong global “consumer class” by 2025, up from around one billion in 1990. And nearly two billion will be in emerging-market cities. These cities will inject nearly $25 trillion into the global economy through a combination of consumption and investment in physical capital...

Take Foshan, Porto Alegre, and Surat—cities that are unlikely to be high on the priority lists of global executives, though each has more than four million inhabitants, fast growth, and a vibrant base of consumers. Indeed, each of these cities will contribute more to global growth than Madrid, Milan, or Zurich...

Combining income and demographic data—in particular, the numbers of households with young children—we found that cities in Africa offer great potential. More than half of the top ten cities enjoying rapid growth in the number of children who live in households with incomes from $7,500 to $20,000 (on a purchasing-power-parity basis) are in Africa...

Product adoption rates often are tied to local preferences that can vary across different cities within the same country—preferences that marketers may miss when they follow the time-honored approach of plotting adoption curves that trace purchases by levels of household income and by product types within categories...

Leaders who give their strategies an urban dimension could find themselves positioned to allocate investments more effectively and to seize more readily the many opportunities at hand.