Hamish McRae: Megacities can offer a better standard of living to people

It is time to think about cities — the megacities that drive global growth. One reason is that a forecast a few days ago from Euro- monitor predicted that Jakarta, with 35.6 million people, would have passed Tokyo by 2030 to become the world’s largest city. Another is that Oxford Economics predicts that the London conurbation will pull clear of Los Angeles to become the urban area with the third largest gross domestic product (GDP) in the world, after New York and Tokyo, by 2035.

Start with London, since we are here and these are bumpy times. Then let’s think about the way urbanisation is dominating the emerging world. Then the tough question: can megacities flourish in ways that protect the environment?

Go back 40 years and the received wisdom was that London would continue to lose population. It had peaked in 1939 at 8.6 million but had shrunk to around 6.5 million by the early 1990s. This was welcomed by officialdom. There was even a Location of Offices Bureau founded in 1963, whose job it was to push jobs out of London. They ran cute ads on the Tube: “Move out of London — get more out of life.”

Now we are probably around nine million. The most recent official estimate was for 2016 and that was 8,787,892, which may well have been underestimated. If you take the urban agglomeration — London plus its commuter zone in the home counties — it is closer to 15 million. It is this mass of people that generates the GDP and creates the market.

Why is this happening? Why is London still pulling ahead of Paris, the only other global city in Europe?

There is no comprehensive answer, but we can see elements of it. One is that service industries need to cluster. You can manufacture things more or less anywhere, as the world does nowadays. But excellence in services needs clusters of clever people. So, as the balance of output shifts from manufacturing to services, megacities that can offer a wide range of services prosper relative to second-tier cities which can’t, however competent and attractive they may happen to be.

London benefits on this count as the magnet for professional expertise from abroad, for it is host to the largest non-national professional community on earth. An ever more global economy needs a handful of these magnet cities, perhaps as few as one in each time zone. These include New York and London, maybe Singapore, and presumably Mumbai, Shanghai and Tokyo. London has the advantage of being particularly open to foreign talent — leading to the question as to what extent it will retain that quality in the years ahead.

If urbanisation has, until relatively recently, been a feature of the developed world, that is now changing. It is not just a question of Jakarta passing Tokyo, though if that does indeed happen it will be the first time since the Industrial Revolution that the largest city in the world is not in a developed country. London was the first city to have more than five million people, New York 10 million and Tokyo 20 million.

If you take a conurbation of more than 10 million people as a megacity, there are now 33 such cities in the world, according to Euromonitor. Out of these, 26 are in developing countries. By 2030 there will be another 39 megacities, of which 31 will be in the developing world. Indeed, by then the pecking order in terms of size will be Jakarta, Tokyo, Karachi, Manila and Cairo (which will have become Africa’s largest city, with a population of nearly 30 million).

To many this will seem a troubling prospect, but I suggest that we should try not to see the giant cities of the emerging world through Western eyes. They may look chaotic — Cairo certainly does — but they may offer a better standard of living to their citizens than would be available in the rural areas. People flock to cities because they offer opportunity. Infrastructure inevitably takes time to catch up. In the meantime, technology is helping.

Electric bikes and scooters are making cities quieter. Shenzhen in China has been billed as the first quiet megacity, with electric buses as well as scooters. Technology platforms are improving public transport. Cities are becoming better at managing water supplies, sometimes of necessity. Witness Cape Town’s response to the recent severe drought: it cut water usage in half.

Growth creates problems. Jakarta is now number three on TomTom’s global congestion index, behind Mexico City and Bangkok. London is merely 25th. But growth also generates wealth to fix the problems. Fundamentally, it is more efficient to feed, house and look after people in a city than it is in the countryside. If you think of cities as a solution to population pressure rather than a problem created by it, then everything becomes clearer… though perhaps not if you are sitting in a jam on the M25.