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Economies
World's Most Economically Powerful Cities
Joshua Zumbrun 07.15.08, 12:00 PM ET






What's the world's most economically powerful city?

If you picked New York or Tokyo, you'd be wrong.

But when Forbes.com set out to measure the world's most powerful cities, the lack of useful data was surprising.

For sovereign nations, it's easy to find measures of almost every variable imaginable--gross domestic product (GDP), inflation, money flows and other metrics. After all, the United Nations, the World Bank and the International Monetary Fund all deal with governments at the national level. But for corporations, cities and their economies matter most, since picking the right city will be the key to prosperity in the future.

Corporations, and even individuals, have to weigh the size of a city's economy compared to how it will be in the future and consider the potential growth in the intervening years. For that matter, they have to judge whether it's worth it to settle for a city that has high growth prospects but turns out to be a lousy place to live.

In Pictures: World's Most Economically Powerful Cities

To create our ranking of economic power, we looked at all of these factors to see who's strong across the board.

While Tokyo and New York are far and away the largest economies of today and tomorrow, they are growing much slower than many. Thus it's fast-growing London that tops our list, according to data from MasterCard (nyse: MA - news - people ).

Growth and quality are as important as size in our rankings, so smaller but briskly growing economies like Seoul, South Korea, and Hong Kong also make the list. North America, with relatively lower growth areas, still boasts a number of cities in the current power list, including New York, Chicago, Los Angeles and Toronto, the latter of which squeezes past Madrid, Spain; Philadelphia and Mexico City, Mexico. To see the entire list of the top 10 economically powerful cities, click here.

Pinning down the data to compare cities isn't as easy as it sounds, but luckily, several corporations have done detailed studies of the economies of global cities.

The auditing giant PricewaterhouseCoopers has compiled estimates of the GDP (as measured by purchasing power parity) of the largest urban economies and how fast those economies are growing from 2005 to 2020.

MasterCard has created an annual "centers of commerce" index, which ranks cities on a host of factors, including legal and political framework, economic stability, the ease of doing business, the financial flow, convenience as a business center, information flow and livability.

UBS (nyse: UBS - news - people ) publishes an estimate of living expenses and earnings in the world's largest cities. This report also includes estimates of how much the earnings of the average worker can actually purchase in the city.

The overarching lesson: Keep looking east. The world's fastest-growing economies, such as Shanghai, China; Beijing, Jakarta, Indonesia; and Mumbai, India, are growing at twice the pace of the Western world.

Cities with enormous populations like Sao Paolo, Brazil, and Mexico City also have economies projected to grow by more than 4% annually. They won't be the size of Tokyo or New York anytime soon, but with business-friendly policies, their economic power can be expected to continue climbing.

In Pictures: World's Most Economically Powerful Cities

GDP and Oil Inventory On Tap

Rising Middle Class


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Companies: MA | UBS

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