~by: Sudhir Thomas Vadaketh~
Singapore is the most competitive city in Asia and third globally after New York and London, out of 120 of the world’s major cities, according to a new report from the Economist Intelligence Unit (EIU). The research, Hot Spots: Benchmarking Global City Competitiveness, was commissioned by Citi and is available for download here.
Competitiveness is a holistic concept. While economic size and growth are important and necessary, several other factors help determine a city’s competitiveness as well. For the purposes of this research, we define competitiveness as a city’s demonstrated ability to attract capital, businesses, talent and visitors.
To determine competitiveness, we developed a “Global City Competitiveness Index” that measures cities across eight distinct categories of competitiveness: economic strength, human capital, institutional effectiveness, financial maturity, global appeal, physical capital, social and cultural character and environment and natural hazards. (For a full breakdown of the categories, individual indicators, weightings and data sources, see the appendix in the report.)
Before examining the specific takeaways for Singapore, here are some of the report’s main overall findings:
US and European cities are the world’s most competitive today, despite concerns over ageing infrastructure and large budget deficits. While there is much concern in the West about the impact of the financial crisis, which has slowed plans for urban renewal, this has not reduced the ability of US and European cities to attract capital, businesses, talent and tourists.
Asia’s economic rise is reflected in the economic competitiveness of its cities. Asian cities dominate the “economic strength” category of the competitiveness Index—the most highly weighted category.
A “middle tier” of mid-size cities is emerging as a key driver of global growth. Although most firms target a combination of advanced economies and emerging market megacities, the fastest overall growth is found in a middle tier of mid-sized cities with populations of 2m-5m, including Abu Dhabi, Bandung, Dalian, Hangzhou, Hanoi, Pune, Qingdao and Surabaya.
The most significant advantage that developed country cities hold is their ability to develop and attract the world’s top talent. European and American cities dominate the human capital category of the index. “I’ve always believed that talent attracts capital more effectively and consistently than capital attracts talent,” says New York Mayor Michael Bloomberg, who we interviewed for the report.
The research has several takeaways for Singapore:
Efforts to position Singapore as a leading global city are paying off. Singapore performs extremely well on six of the eight categories of competitiveness: economic strength, institutional effectiveness, financial maturity, global appeal, physical capital, and environment and natural hazards
Singapore has managed to combine the economic dynamism of the emerging world—it was one of only six developed cities in the top 20 for “economic strength”—with the livability and “softer” elements of competitiveness that are more the hallmark of some Western developed cities.
Less than 50 years since independence, it is admirable that Singapore can hold its own alongside much older, more established cities such as New York and London, when it comes to attracting capital, businesses, talent and visitors.
Some of the usual suspects hold Singapore back. What can Singapore do in order to move up the ranking? Singapore performs less well in the categories of “social and cultural character” and “human capital”. In terms of some individual indicators, Singapore’s relative position for “freedom of expression and human rights”, “entrepreneurship and risk-taking mindset”, “population growth” and “electoral processes and pluralism” are well below its overall ranking.
These are challenges the city has faced for some time. Addressing them requires not just specific investments, incentives and policies, but broader societal changes in attitudes and mindsets that could yet take some time. By overcoming these challenges, Singapore will be in a better position to leapfrog New York and London to become the world’s most competitive city.
Singapore needs to address social inequalities for long-term stability and success. Indices like this are interesting as much for what they measure as for what they don’t. There is no specific indicator that analyses or measures social inequality in each city.
Many of the highest-ranking cities, including Hong Kong, London, New York and Singapore, have high levels of income inequality that could threaten social stability—and thus hurt different aspects of competitiveness. Singapore’s situation is arguably more precarious because it is a city-state, and hence has no natural hinterland to which people can choose to move.
While Singapore’s remarkable performance in this Index must surely be cheered, its high rank is a poignant reminder that “Singapore the global city” may be increasingly different from “Singapore of the heartlands”. For the city’s long-term stability—which depends on the happiness and well-being of all citizens—there is a need to ensure that Singapore develops not as these two separate socio-economic narratives, but as one, where every Singaporean can tap into and be part of the competitive, global city.
Sudhir Thomas Vadaketh is an editor with the Economist Intelligence Unit. He is the author of Floating on a Malayan Breeze: Travels through Malaysia and Singapore, which will be published later this year by Hong Kong University (HKU) Press.