MasterCard Worldwide has presented the findings of a groundbreaking research program, the MasterCard Worldwide Centres of Commerce IndexT at a forum organised in collaboration with the City of Johannesburg.
The study is designed to provide insight and knowledge on how leading cities influence the global economy and perform critical functions that connect markets and commerce globally. Johannesburg ranks as the top city in Africa at 47th place within the world's top 50 cities that are the hubs of the new worldwide economy.
The Index, developed by a panel of leading experts in economics, urban development and social science from around the world, ranks the top 50 Centres of Commerce based on six measurement dimensions consisting of over 100 data points. The six measurement dimensions assess the legal and political framework, the economic stability, the ease of doing business, the financial flow, the business centre capabilities, and the knowledge creation and information flow.
The research places London first, followed by New York, Tokyo, Chicago and Hong Kong in the top five. Completing the top 10 are Singapore, Frankfurt, Paris, Seoul and Los Angeles. The full report is available at www.mastercardworldwide.com.
Johannesburg's ranking positions the city as a leader in Africa, offering a strong business climate that supports further development. Johannesburg's highest ranking was in the 'Financial Flow' dimension, where the city was ranked 26th out of the total 50 cities measured.
The city also scored high in the 'Ease of Doing Business' dimension (76.71) where it was ranked 33rd. The 'Economic' and 'Knowledge Creation and Information Flow' dimensions represent opportunities for development, with the city scoring comparatively low with Index ratings of 69.77 and 3.22 respectively.
"A prerequisite for success in today's global marketplace is an in-depth understanding of how cities are connected and how they influence the worldwide economy," said Eddie Grobler, general manager, Africa, MasterCard Worldwide.
"The Worldwide Centres of Commerce program addresses this need by identifying and providing industry-leading insights into the characteristics and commonalities of cities that advance global commerce the most.
Johannesburg, with a ranking in the top 50 centres of commerce, demonstrates its position as a continental hub. As the city with the highest ranking in Africa, Johannesburg's ranking tells an amazing growth story," continued Grobler.
Speaking at the forum, Mike Schussler, senior economist at T-Sec said that there is no doubt that Johannesburg is a world-class city, but it must strive to improve its knowledge base, its network capabilities and its transport infrastructure, if it is to succeed in the broader game of global growth and city wealth.
"We do however know that between now and 2010, continued capital investment is planned by the City of Johannesburg for areas such as business process outsourcing, tourism and its public transport infrastructure," said Schussler.
"These investments, coupled with increased attention from the city on law enforcement and traffic congestion, will enable Johannesburg to improve its position as a world centre of commerce significantly," concluded Schussler.
Councillor Parks Tau, Member of the Mayoral Committee for Finance and Economic Development, City of Johannesburg explained at the forum that the priorities for Johannesburg were encapsulated by its Growth and Development Strategy (GDS), which aims to build a 'world class African city for all' by addressing the goals of shared economic growth, poverty reduction and environmental sustainability.
"One of the important tools we use to meet the needs of our communities is the five-year Integrated Development Plan that consolidates the planning process and provides a framework for the future development of the city," he continued.
"Over the past five years, Johannesburg has increased its capital investment significantly. There has been considerable growth in government-led public investment, to support growth in the City of Johannesburg, along with a concerted effort by the city, in partnership with the private sector, to develop the inner city."
The transformation of cities into global centres of commerce has been fuelled, in part, by rapid urbanisation. In terms of population size and economic activities, many cities today are far larger than a number of sovereign states and more important than ever before. The research report establishes that today, many of these metropolises are "global cities" that perform critical functions connecting markets and commerce worldwide. In essence, they are nodes of connectivity through which global commerce can take place.
"The old paradigm was the sovereign state; this is now the age of the city," said Professor William Lever, Emeritus Professor, Hon. Senior Research Fellow of Urban Studies, University of Glasgow and member of the knowledge panel for the MasterCard Worldwide Centres of Commerce Index.
"The trend of commerce becoming more knowledge-driven and less tangible has actually elevated the role of today's cities, positioning them as the hubs of complex circuits that fuel the globalised economy and provide connections through which true global commerce takes place.
"This research provides valuable insight into the cities that sit at the centre of global commerce as well as the factors that are fuelling commerce in each," concluded Lever.
Highlights from the Index include:
• London: The world's leading Centre of Commerce. With a flexible operating environment for business, strong global financial connections and exceptionally high levels of international trade, travel and conferences, London secures the top spot in the Centres of Commerce Index. The city outperforms New York in four of the six measurement dimensions, and scores significantly higher than other European cities.
• National economic factors and market regulations place New York behind London. Once considered the unchallenged financial capital of the world, New York cedes to London a key dimension measuring financial transactions primarily because bond market regulations in New York affect the volume of listed sales. The less stable US economy and the more volatile US dollar has also impacted New York's score.
• Tokyo's powerhouse economy leads to top ranking in Asia Pacific. Tokyo, the leader in its region, and number three overall, boasts the Nikkei 225 Index, the world's leading rate of patent creation, and an air traffic hub second only to Hong Kong.
• Three one-time "Asian Tigers" make the Top 10. Hong Kong, Singapore and Seoul all rank among the top 10 Centres of Commerce, with Seoul scoring high marks for its higher education system and patent output, while Hong Kong and Singapore boast top rankings for the strength of their business climate and their prominence in the global financial network. Singapore also rates high for government policies that favour international business and trade.
• Hong Kong & Singapore maintain tight economic rivalry. Hong Kong edges out traditional economic competitor Singapore for fifth placing in the Index. Singapore, which ranks sixth in the Index, had an Index value only 0.37 points less than Hong Kong. This was partly because of the smaller number of equity transactions that took place in the Republic as compared to Hong Kong. Hong Kong also scores better in measures related to its business climate.
• Emerging growth engines, China and India, make their mark. China cements its growing regional importance with three cities represented in the Index - Hong Kong #5, Shanghai #32 and Beijing #46. This is the largest representation of cities from one country within the Asia/Pacific, Middle East & Africa (APMEA) grouping. The Indian city of Mumbai shone in the dimension concerning financial transactions, coming in 10th globally.
• Strong business climate makes Johannesburg the African leader. With a flexible operating environment for business, and strong measurements for the dimension of Financial Flow, Johannesburg is the sole city in Africa to be ranked amongst the top 50 Worldwide Centres of Commerce.
• Key nodes of commerce "Down Under". Sydney and Melbourne, two of Australia's most vibrant cities prove that they are not just great places to live but also key Centres of Commerce. Sydney, home to Australia's stock exchange, ranked 14 overall in the Index, while Melbourne ranked 34.
