Ladies and gentlemen welcome to Stockholm - the fastest growing. capital in Europe together with Oslo, just next door.
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1 Ladies and gentlemen welcome to Stockholm - the fastest growing capital in Europe together with Oslo, just next door. Stockholm is the leading city for business in the Nordics, which if it were a country would be the 12th largest economy in the world. I am absolutely delighted to have been given the opportunity to speak here today about Stockholm, urbanization and why cities are changing the world. A fun fact to start with, since we are here at Ericsson Studio in Kista, is that Sweden had most telephones in the world as early as Today we re still world leading if you look at smartphone penetration. And nowhere else do the fixed telephone subscriptions decrease as fast as in Sweden and Finland due to how we adopt to new technologies. One might wonder what smartphones have to do with cities, but I will make the argument that globalization, digitalization and urbanization go hand in hand. In the past decades, these three forces have re-shaped Stockholm as well as the world economy. In today s metropolitan world, global and connected cities outperform their countries. It s true for Stockholm and it is true for a lot of cities throughout the world. 1
2 The implication of digitalization is not that geography becomes less relevant. On the contrary, human meetings and in real life interaction is as crucial as ever to innovation and growth. Digital means of communication enable us to have more and more contacts, which result in a need for more meetings and physical interaction. That s why digitalization is complementary to urbanization. Cities are hubs of competition, collaboration and connectivity. Today, six hundred urban centers in the world account for more than 80 percent of the global Gross Domestic Product. Forty mega regions alone account for 67 percent of global output and 85 percent of all innovations in the world. Dense urban environments drive innovation. Cities that double in size, no matter how big or small they were at first, will see an increase in indicators like patents per capita and incomes for example.you would expect the number of patent to double when the population doubles, but it increases by 115 percent on average. Cities promote more intense and frequent social interaction. This leads productivity and innovation rates to go up. When we meet, things happen! 2
3 A majority of the global population already lives in cities and by 2050, at least seven out of ten citizens in the world will live in a city. Take a country like China a poor rural economy just three decades ago. Today there are 170 cities in China with more than 1 million people. There are plus 400 such cities in the world. By the end of this decade, 60 percent of the Chinese population will live in cities. According to the UN urbanization is key if a country is to move up on the income ladder. If you look at a map of the world there is a strong correlation between urban density and prosperity. China is more urbanized than India for example and that is part of the explanation why China has a higher GDP per capita than India. Last year, according to the International Monetary Fund, two thirds of new economic growth in the world came from emerging economies but out of that growth, almost 90 percent came from urban regions. Urban proximity is now key to economic success. One of the surest ways to raise income in the West is to move labor, capital, technology and ideas to a metropolitan area. This is true also for non-skilled labor. Growing income inequality in the past decades is not so much a story 3
4 about the shifting return on skills as economies have globalized. It has much more to do with urban proximity: a carpenter, cleaner or mechanic earns much more if they live in global cities that spur specialization than if they are stuck in declining regions. For example, an average worker in Boston with a high-school diploma takes home 44 percent more in income than a college graduate in Flint, Michigan. In fact, the difference in average income between successful U.S. cities like San Francisco and Austin and declining ones like Detroit and Cleveland is bigger than it is between the United States and Peru. Two key factors of success are density of skilled labor and density of innovative employers. Stockholm has both and could be described as a brain hub of great importance to Sweden s and the surrounding region s economy. Like other global cities, Stockholm s contribution to the country s GDP is far bigger than what its share of the population would suggest. One of five Swedes lives in Stockholm. However, it generates almost one third of Sweden s combined value added. 4
5 Stockholm s population is also increasing by a faster rate than most other metropolitan regions in Europe. Our economy also grows faster than other Swedish regions. Stockholm is regarded as one of the most innovative regions in the world and ranks high in a number of competitiveness indexes. Sweden has deregulated and opened up new markets over the course of the last 25 years. The business climate has improved steadily and there is a new entrepreneurial spirit. In Pwc s Cities of Opportunity Stockholm punches above its weight and finishes as number seven in the overall ranking. We win two categories, health and security and sustainability/green city. Quality of life is high. However, even if Stockholm could be described as a bright shining sun, it of course has its sunspots. We face challenges when it comes to housing, infrastructure, public transit etc. More international direct flights would also be welcome. The single most common profession in Stockholm today is IT-developer. There are programmers in Stockholm. We are home to one of 5
6 Europe s strongest IT clusters. We are more digitally dependent than most people think. Other important industries in the region are life science, clean tech, automation, infrastructure and creative industries. Stockholm has an interesting and dynamic start up scene with companies like Spotify, Klarna, IZettle, Truecaller, Instabridge, Mojang and King. Most of the startups today are located in the city center and not here in Kista. They are all almost within Bluetooth distance from one another. Again, density matters. We are also one of only eleven cities in the world that have more than ten big global companies headquarters for companies in global business sectors. Stockholm has 11. Ericsson s is of course one of them. But there are also companies like SCA, Electrolux, Atlas Copco and Securitas just to mention a few. The density of global headquarters really differentiates Stockholm from the average 2 million people city. The service sector, the eco system that surrounds global headquarters is well developed. 6
7 One point I would like to make, being here in Stockholm with about 1 million inhabitants in the city and 2,2 in the county, is that a global city, that thrives on the back of urbanization, is necessarily not a mega city nor do they need to aspire to become a 15-million plus-or-so city in order to be a global city that shapes the world economy. Second-tier and thirdtier cities, still with sizeable populations, are equally important. Therefore yes, size matters, but size is far from the only factor that fashions the new economic geography. Stockholm could be described as a little big city. We have the logistics, or we should at least be able to have the effective logistics of a small city even though we are big enough to have the vibe and the critical mass of the big city, an attractive combo. What defines the real character of a global city is rather than size, the way it combines labor, capital and ideas the way it speeds up specialization by connecting the local economy with the bigger economy. Specialization is what global cities are about and for those of us that cherish international trade that is exactly the same factor that Adam Smith identified as the key economic benefit of trade. 7
8 The global city through its inflow and outflow of people, ideas, capital, goods and services is an entity that empowers adaptation in the economic life. It spurs the transplantation of good ideas from or to a wider region. Cities are human eco systems. When humans cluster together in dense settlements 1 plus 1 becomes 3 or even 4. Because cities are more than just a bunch of people living together in a small space, it is basically a bunch of people with a lot of internal and external connections living together in a small space. Cities are agglomerations of connections rather than just agglomeration of people. Smart cities are cities where new connections easily develop. That is, again, why digitalization seems to speed up urbanization. That is also why hyper connected cities like Stockholm will play a larger role economically and politically in the years to come. I hope you will enjoy your stay here! Thanks. 8
9 9
Innovation, entrepreneurism and sustainability spur Stockholm. staying. People are coming from other parts of Sweden, and other countries.
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