GDP of City - Becoming Critical

When it comes to Gross Domestic Product (GDP), most of the politicians, business leaders and economist are obsessed with GDP growth numbers of the countries and as well as per capita GDP. It is very important indicator which shows how the country is doing in terms of economy and stability. It is the best available parameter to measure country’s overall prosperity.

Most of the studies show that, as the per capita GDP goes up, life expectancy, happiness index, education index and standard of living goes up. It gives lot more insights about markets, consumption and expenditures patterns, economic policies and so on. This helps to decide the flow of capital, knowledge and human resources.

All of us will agree that urbanization is happening rapidly than ever before on earth. Before 1st industrial revolution there was around 10% of population used to live in cities and now it is more than 50%. Most of the studies indicate that it will reach 65% in developing countries and 85% in developed countries in next couple of decades.

Cities were always remained the centre of economic growth and power since ancient times and we know that cities like Harappa, Athens, Sparta, Rome, Baghdad, Istanbul, Magadha, Vijaynagara influenced the history in big way. In last century, many mega cities were emerged and new cities are coming up with the speed of urbanization. This leads economies of agglomeration where people and firms shows higher productivity. And we have good reasons to believe that Modern Cities will not be a just place where growth happens, but they will act as engine of growth.

In cities we have more people, more choices, more demand and supply which leads to economic activities. This normally creates hub for producers, suppliers, skilled manpower and knowledge. This also gives rise to better flow of information, education facilities and centre of innovation. Most of economist feels that it is important to measure this economic activities to benefit all stakeholders.

So in modern era, it is becoming more important to measure GDP of a particular City. Most of the countries have frameworks to focus on measuring GDP of the country. But experts believes that there is not enough information available for GDP of the individual cities. And if we start looking into City Level GDP and relative information, this will unfold many opportunities as well as options for better management of cities. As per estimates, if we add GDP of top 10 global metro cities , it is approximately USD 10 Trillion which is more than 10% of World GDP.

 If the local government knows the size of city economy, they will be in better position for planning and to fulfil relative needs of the economy. This needs could be facilities such as supply chain, transportation, medical, water supply and sanitization and this may tackle the issue of over-crowding to some extent establishing economic and social cluster. And possibly there could be healthy competition between cities for better management and to offer better standard of living to their citizens.

Also City GDP will help business leaders to take investment decisions in targeted segment. At the same time if a smaller city has better economic activities, it can attract higher investment and potentially may become larger city with better infrastructure. Citizens can also take advantage of this information to see the potential opportunities in the city along with other parameters such infrastructure and social welfare.

Though GDP data does not tell about well-being and distribution wealth among citizens, but if we look into City GDP, it may potentially unearth some socio-economic information like productivity of certain city due to climatic conditions, or one city is doing better in particular segment linking to education facilities. These kind of studies definitely lead to generate more data sets and uncover diverse understandings.

After current pandemic situation and with travel restrictions, it is becoming more critical to manage these cities in much better way and simultaneously keep running the economies activities. Government Authorities, Organizations, employees, labourers are looking for different ways to increase productivity. So this information could become very beneficial to organization to identify their target segment to generate certain level of business by putting more efforts on those cities, instead of whole country. Also government can create City level policy for to boost certain segment which will contribute more for the region.

Though there are different views on importance of urban cities and rural areas from economic growth perspective, for thousands of year cities remain aspirational places for mankind across the globe and which we have seen by movement of millions of people every year.

Mahendra M Nimkar