by Adam Hitchcock
Global cities in developed economies have many attributes that contribute to their success, but human capital will be the most critical element for economic growth going forward. Civic leaders in global cities, specifically government officials and business executives, should prioritize developing and attracting skilled human capital to achieve continued economic growth.
The importance of human capital to global cities is not a new concept. In fact, the need for human capital is widely accepted and discussed in any report on global cities. However, this paper argues that human capital should be at the top of the agenda, with other civic policies deliberately supporting the creation of human capital.
The prioritization of human capital for existing global cities in developed economies requires a new approach as we rapidly shift to a knowledge economy where these cities are less focused on the production of physical goods and increasingly produce the ideas and information that shape the world. Global cities in developed economies must focus on enhancing human capital to achieve continued economic growth in the knowledge economy. These cities are well-positioned to thrive as the global economy shifts to a model where ideas and information are most important and the highest value.
Global cities in developed economies are different from their emerging market counterparts. They are less focused on the actual production of physical goods and instead place greater emphasis on their most important asset: their talented workforce. While human capital has always been important, changes in the global economy mean that people are by far the most critical ingredient for economic growth in the future. For that reason, any strategy for economic growth must focus on human capital. Specifically, all civic decisions must be driven by the priority of developing and attracting skilled human capital.
Strong human capital in turn spurs economic growth, which is critical because it allows a global city to maintain its position in the world. A vibrant economy supports all other aspects of a global city by growing the tax base and supporting institutions. Well-paid workers support other businesses and institutions as consumers, which leads to more jobs.
Global cities are key participants in the global economy. Current global cities in developed economies face challenges to economic growth. It is imperative that these cities be able to grow over an extended period of time, even if their home countries face economic headwinds because of demographics and slowing productivity. The only way to do this is by developing and attracting global talent.