Bright Lights, Big Cities: How Today’s Cities Shape Tomorrow’s Countries

BRIGHT LIGHTS, BIG CITIES

How Today’s Cities Shape

Tomorrow’s Countries

Canback & Company at

Tufts University

March 2015

THEMES

The Global Economy: Past, Present, Future

Importance of Cities

Our World, Our Work

WORLD ECONOMY OVER 2000 YEARS1 AD – 2014 AD

Population GDP per capitaUSD

Today’s

discussion

1 2014Year

8B

01 2014Year

8k

0

JOURNEY TO THE (SOCIOECONOMIC) CENTER OF

THE EARTH

The embedded video has been deleted in this version. Click here to reach the YouTube version

204

91

45

203420141994

GLOBAL ECONOMIC GROWTHTrillions of constant 2005 PPP$

3.6

4.1

Growth per annum, %

2014

49

51

1994

34

66

91

4563

2034

Affluent

countries

Non-affluent

countries

204

37

2.3

5.6

2.4

5.5

COUNTRY-CLASS ECONOMIC GROWTHTrillions of constant 2005 PPP$, % by class

5

4

26

6

33

47

1994

22

6

20

31

Africa

North America

2034

Asia

5

59

South America

16

6

15

2014

Europe

CONTINENTAL ECONOMIC GROWTHTrillions of constant 2005 PPP$, % by continent

2.5

3.1

2.04.4

5.5

2.0

2.8

3.5

4.6

5.3

25

55

1994

45

23

53

Rural24 20

16

Other urban

Major cities59

91

2014

204

2034

253.9

2.8

4.5

4.0

4.03.0

URBAN/RURAL ECONOMIC GROWTHTrillions of constant 2005 PPP$, % by category

200

100

0

40

60

20

80

120

140

160

180

220

Mil

lio

ns

of

Ho

useh

old

s

Household Income (log scale)

1,000,000100,00010,0001,000100

1994

2014

2034

GLOBAL HOUSEHOLD INCOME DISTRIBUTIONConstant 2005 PPP$

THEMES

The Global Economy: Past, Present, Future

Importance of Cities

Our World, Our Work

MAJOR CITY GDPCurrent PPP$ 2014

Most Affluent

CONSUMER AFFLUENCE BY CITYCurrent USD, 2014

Least Affluent

Munich 50,800

Hartford 50,800

Mannheim-

Ludwigshafen53,800

New York 54,300

Washington 55,800

Boston 56,300

Abu Dhabi 56,300

San Jose 61,300

San Francisco 62,200

Stamford 75,900

800

700

400

300

Hargeysa

Mogadishu

1,200

Mbuji-Mayi 1,200

Bukavu 1,200

Monrovia 1,200

Bangui

Kisangani

Kananga

Tshikapa

1,300N’Djamena

1,200

7.1

7.2

7.4

7.4

7.4

7.6

7.9

8.4

9.5

Abuja

Yinchuan

Sharjah

Al-Raqqa

Liuyang

Ouagadougou

Xiamen

Batam

Doha

Samut Prakan 10.9

Baoji 11.2

Baku 11.2

Dushanbe 11.2

Fuling 11.5

Wanzhou 11.5

Chongqing 11.5

Ulaanbaatar 11.7

Harare 12.2

Bulawayo 12.2

Makhachkala 12.5

TOP GROWING CITIESGrowth per annum, %, 2004-2014

Population Income

BRIGHT LIGHTS IN GINZA, TOKYO

-

1

2

3

4

5

6

200 2,000 20,000

INCOME RATIOS FOR CITIES VS.

SURROUNDING AREAS2014

Bogota

Lagos 1.9

Berlin

2.4

Boston

3.3

1.3

1.3

1.6

Mumbai

Shanghai

City /

surr

oundin

g a

reas

Incom

e r

atio

Income level, PPP$

Bra

nd

ed

go

od

s

co

nsu

min

g c

lass

SOCIOECONOMIC LEVEL DEFINITIONAMAI classification

AB Upper class 5

C+ Upper middle class 7

C Middle class 7

D+ Lower middle 14

D Lower class 17

E Marginalized class 50

Share of world’s

households, 2014

E

34

30

Vancouver

13

19

D

D+

C

C+

AB

6

39

31

19

Cairo Guangzhou

23

20

28

14

11

Kathmandu

37%

20%

38%

6.6

-1.6

-0.8

CITY SOCIOECONOMIC COMPOSITION% by class; growth per annum, 2004-2014

2.4

-0.7

-3.5

-2.1

8.3

-7.9

11.7

6.6

-10.8

0.0

27.7

-3.9

22.4

16.7

0.8

8.2

16.211.110.1

7.8

10.8

WORLD-CLASS CITIES2014, Indexed to New York

Size of economy

GDP per capita

Share affluent people

Economic sphere

Top 12 in The World

New York 100

Tokyo 73

London 69

Paris 61

Los Angeles 61

Washington 60

Philadelphia 55

Chicago 51

Osaka 51

San Francisco 50

Hong Kong 50

Boston 50

Other Noteworthy

Moscow 32

Guangzhou 31

Sao Paulo 19

Sydney 18

Cairo 11

Kisangani (last) 1

THEMES

The Global Economy: Past, Present, Future

Importance of Cities

Our World, Our Work

WHAT WE DO

Analyze markets

Live markets

3 STORIES

Ho Chi Minh City

Sao Paulo

Nairobi

Core offices

Satellite offices

Country projects

Consultants’ work travel

10

Milk consumption

McDonald’s restaurants

Personal computers

Internet users

Mobile phone subscribers

Oil consumption

Television sets

Electricity consumption

Bank deposits

Tobacco consumption

Insurance premiums

ATM machines

Airline passengers

EXPLANATORY POWER OF INCOME

DISTRIBUTION DATADemand variance explained by income

above a category-specific threshold

VIET NAM ROUTE-TO-MARKET

VIET NAM PRICE POINTS

VIET NAM TRADE

Co

nsu

mp

tio

n p

er

cap

ita

Income per capita

0

5

10

15

20

25

30

35

40

1,000 10,000 100,000

Da Nang

Haiphong

Can Tho

Ho Chi Minh City

Bien Hoa

Hanoi

VIET NAM ON THE REFRESHMENT BEVERAGE

S-CURVE

Price

Choices

Portfolio

Packages

Channel

SAO PAULO CONSUMER INTERVIEWS

SAO PAULO PREMIUMIZATION

0

50

100

150

0 50 100 150 200

Per

cap

ita c

on

su

mp

tio

n

Minutes of work required to buy product

Sao Paulo

Work Effort Mainstream

Consumption per ABC+

Class ConsumerPremium

2

0

1

2

2

3

7

7

9

Guatemala City

Guayaquil

Bogota

Quito

Lima

Santo Domingo

Monterrey

Sao Paulo

MexicoCity

Rio de Janeiro 17

Buenos Aires 26

SAO PAULO AFFORDABILITY

SAO PAULO RELAXATION

NAIROBI FOCUS GROUP

NAIROBI MODERN TRADE

NAIROBI TRADITIONAL TRADE

BELLY OF KENYAN CLOTHING MARKET% by type, 2014

Pri

ce

In

de

x 6

14

8

18

31

5

3

5

90-50

90-120

120-150

200+

50-90

150-200

Local

Imports

Second hand

CONCLUDING OBSERVATIONS

Markets are analyzable through an economics

lens: Use affordability hypothesis

Cities are central to our understanding of

opportunities: Today’s city is tomorrow’s

country

Combine quantitative analytics with

experiencing the realities on the ground

Enjoy the world

Canback & Company ● 210 Broadway #303 ● Cambridge MA 02139 ● www.canback.com ● +1-617-399-1300 ● info@canback.com