Characteristics of Resilient Cities
What makes a city economically resilient? An analysis of data from the past five years found that cities that outperform their countries during economic downturns have a consistent set of traits in common. Regardless of their location or size, these cities all have relatively diversified economies, strong service sectors, educated populations, high shares of foreign citizens, and robust transport infrastructure. And they have defied the odds by attracting investment under adverse circumstances: Their FDI as a percentage of GDP was twice as high on average as that of nonresilient cities. Data analysis and input from WTCA members illustrate what’s working to help cities survive fluctuations in the economy and foster growth.
According to global business leaders polled, the most significant factors for building city resiliency are: diversified economy (42 percent), incentives and local support to attract FDI (18 percent), a skilled workforce (16 percent), availability of trade services and support for small businesses (11 percent), developed physical and digital infrastructure (8 percent), and others (5 percent).
Resilient Cities Have Diversified Economies
A city’s resilience increases as its economy diversifies. Among cities that faced national economic slowdowns over the past five years, the 25 percent most diversified on average slowed down 11 percent less than their respective countries, while those in the bottom 25 percent slowed down 4 percent more.
Resilient Cities Have Strong Service Sectors
In resilient cities, services’ share of their GDP grew at double the pace of nonresilient cities on average, and they had a higher share of services overall. During the same period, the share of industrials (such as manufacturing, mining, and utilities) in their GDP shrunk by 8 percent—more than 50 percent faster than in nonresilient cities.
Resilient Cities Have Educated and Global Labor Forces
A city’s resilience has much to do with the education of its working population. The number of people with college-level or more advanced education was 8.6 percent higher in resilient than in nonresilient cities.
On average, foreign citizens made up 11.6 percent of resilient cities’ populations, more than a full quarter higher than those of nonresilient cities.
Mariette Mulaire of WTC Winnipeg put it simply and directly: “Immigration is what keeps our economy going..... We count on immigration. No immigration, no growth.”
Resilient Cities Facilitate Movement
The most resilient cities are the most connected ones. Over the past five years, the annual number of airport passengers grew by 44 percent in resilient cities, double the pace of nonresilient cities.
The number of public-transit passengers grew by 4.7 percent in resilient cities over the past five years, compared with just 0.4 percent in nonresilient cities.
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Smart City Moscow
Moscow’s investments in infrastructure have proved essential to its long-term strength and resilience, and the city is employing “smart” technologies for more efficient urban development. As major companies move to Moscow, the city is using tax revenue to build intelligent traffic control systems and improve the roads and metro, according to Aleksei Savrasov of WTC Moscow. The local government has invested in a Smart City Lab with 100 manufacturers and training programs, to integrate city services more efficiently through innovation in transport and mobility, smart buildings, public utilities, and public security. Last year Moscow created a smart technology district where it will test, assess, and deploy new technologies to make the city more efficient and better able to adapt to change.
Resilient Cities are FDI Magnets
In the past five years, resilient cities attracted FDI at twice the rate of nonresilient cities as a share of GDP.
“Where there’s uncertainty, the perceived risk is higher, and those that are risk-averse may question moving into emerging markets,” pointed out Jane Reindorf from WTC Accra. “When we think of Africa and development, we need FDI, and as part of that need companies that have innovative technologies to come and set up manufacturing plants, and partner with local companies to expand the local markets.”