HP Innovation Journal Issue 12: Summer 2019 | Page 11

1. CITIES AS MARKETS
We know city populations are rapidly increasing, but what
impact will that growth have on long-term economics? We
started this year by looking at socioeconomic data and con-
sulted with leading economists and built on their work, to
understand where disposable incomes were expected to rise
over the coming decades, how that correlated to geographic
locations, and what that could mean to markets and labor
forces of the future.
300 LARGEST METROPOLITAN
AREAS ACCOUNT FOR 70% OF WORLD
TOTAL REAL GDP GROWTH
(2014–2016)
Cities in both developed and emerg-
ing markets are projected to see rapid
growth. Cities in the Asia-Pacific
region are expected to see some of
the sharpest increases in household
income by 2035. 3 Our analysis finds
that for Asian workers, average house-
hold disposable income could more
than triple between 2001 and 2035,
measured in constant 2015 dollars.
LARGE METROPOLITAN AREAS
EXPANDED AT A FASTER PACE THAN
THE GLOBAL ECONOMY
Compound annual growth rate, 2014–2016
3.3%
70
%
300 Largest metro areas
World
2.6%
2.2%
1.9%
1.5%
Real GDP
GDP per capita
1.2%
Employment
F See “Asia is Redrawing the Global Economic Map”
article in this issue to learn more. P.26
What we found was a direct correlation between people
moving to cities and economic growth, rising average
household incomes, and spending. Cities of all sizes, espe-
cially large and megacities — populations of 10 million or
more — are seeing some of the steepest rise in income and
gross domestic product (GDP) growth.
F See “An Urban Boom” article in
this issue to learn more. P.14
What’s driving global urbanization and rising incomes?
Across the globe, the majority of individual incomes come
from job salaries and wages. Growing economies, like those
in urban areas, are creating more jobs and increasing demand
for high-skilled labor. This very close relationship between
labor supply, wages, and individual income drives personal
spending—which accounts for two-thirds of global GDP—
and talent and workforce productivity gains for organizations.
3. Oxford Economics and HP Analysis
9