In may ways, this recent article by Brian Potter about how fast cities can grow, feels intuitive: Small cities tend to grow faster than big cities (on a percentage basis) and, as cities get bigger, their growth rates tend to decline. It is, however, still interesting to see the data behind this intuition:
A city of less than 100,000 might be able to have growth rates of 10-20% or more, and cities of up to 3-400,000 can potentially have growth rates in the neighborhood of 10-15%. Potential growth rates tend to fall as cities grow larger, and cities above 1 million people almost all grow at less than 10% per year, and usually less than 5% per year. The US, the Middle East, Southeast Asia, Africa, and South America all seem to have followed this basic pattern, assuming the data is reliable.
It is also a good reminder just how much of an outlier China is:
Unsurprisingly, since 1950, Chinese cities have mostly exhibited higher growth rates than US cities. Only around 12% of US data points are above a 5% growth rate, whereas for China this is close to 50%. China also has 2.5x the fraction of cities growing above 10% per year, and 3.3x the fraction of cities growing above 15% per year.
And some cities are outliers even within China. The most notable here is Shenzhen, which saw enormous growth after it became China’s first special economic zone in 1980. At a population of around 200,000, Shenzhen was growing at 35% annually, and it was still growing at over 20% annually when its population crossed 2 million.
Just imagine these numbers compounded. Even small variances can result in significantly different outcomes over time:
New York’s growth rate, however, declined less than Los Angeles or Chicago as the city grew larger. At around 3.5 million people, New York was still growing at over 3% per year, compared to less than 1% for LA and Chicago. This may not sound like much, but it's the difference between doubling in size every 23 years vs. every 70 years.
Now here's what I'm wondering after reading the article: Should we be thinking of city size as the single most important factor in determining urban growth? Because my mind immediately went to population densities, zoning controls, and other factors that might constrain or encourage growth.
But the data seems to suggest that, for many cities, this doesn't seem to matter over the long run. It is as simple as saying, "this city has X number of people and so it's more than likely growing at somewhere around Y% per year."
That said, what's up with China? What is it that allows a city of 2 million people to still grow at over 20%? Is it the sheer influx of people migrating from rural to urban areas? Or is it that you need a one-party authoritarian state to really clear the way for growth?
As cities get bigger there does appear to be a natural tendency toward slower growth. Part of this is the low base effect. But the declines are not always consistent and there are meaningful outliers. I am now curious to know what, for the most part, causes these differences.
Last weekend I posted a poll asking readers what they think the “capital of the world” will be in 2050. It was really the 2nd half of a two part poll. The first one asked what people think the capital of the world is today. And the majority of people said New York.
While New York still came out on top in the 2nd poll, the most notable difference is the rise of Chinese cities. Behind New York is Shanghai, Hong Kong and Beijing. And in a way, this order makes sense to me. China would like to see Shanghai on top of Hong Kong, because it’s perceived as being more Chinese (Hong Kong is still too British). But both are still more economically important than Beijing.
Still, my own belief is that China is going to need to go through some structural changes before its cities really have a chance of dethroning New York (or London, depending on your vote in the first poll). And I think it has to do with openness, transparency and freedom. Fred Wilson probably put it best when he said to basically invest in whatever China blocks: