UN-Habitat Launches the City Prosperity Index

UN-Habitat Launches the City Prosperity Index

By Cecilia Martinez, New York Office Director, UN-Habitat

The current and future economic health of cities was a primary focus of the September 2012 World Urban Forum in Naples, Italy. Recent research by UN-Habitat, however, suggests that development actors need to explore a more inclusive approach to prosperity and development. The organization’s data and conclusions are presented in a new report, “State of the World’s Cities 2012/2013: Prosperity of Cities.”

According to the report, policymakers worldwide need to take a broader, more robust approach to development — one that looks beyond the narrow focus on economic growth that has dominated the poorly balanced policy agendas of recent decades and includes other vital dimensions, such as quality of life, adequate infrastructure, equity, and environmental sustainability.

The report presents findings from more than 50 cities, individual scientists and institutions (including the European Commission’s Directorate-General for Regional Policy), and other partner organizations around the world. The report suggests that cities need to improve their ability to respond to modern challenges, optimize resources, and harness their potential.

To measure cities’ progress toward prosperity, UN-Habitat introduces a new tool — the City Prosperity Index (CPI) — together with a conceptual matrix, the Wheel of Prosperity, to help decisionmakers design clear policy interventions. The CPI is unique for two reasons: it focuses on individual cities rather than countries, and it measures prosperity across five dimensions of prosperity — productivity, infrastructure, quality of life, equity, and environmental sustainability — rather than focusing solely on the business environment of the local economy.

UN-Habitat has adopted an incremental approach to the development of the CPI. Two of the dimensions, productivity and quality of life, correspond to components of the Human Development Index and have been used to compute the City Human Development Index. The three other dimensions — infrastructure, environmental sustainability, and equity — consist of key indicators that have been selected to allow disaggregation of the different dimensions of prosperity, identifying policy intervention areas in the process.

The resulting CPI values can be grouped into six distinct brackets; cities in these brackets have prosperity factors ranging from “very solid” to “very weak.” In general, classifying cities by CPI value results in regional brackets, with various cities in the developed world populating the top two brackets (defined as a CPI of 0.900 or higher) and most African cities confined to the bottom two brackets (defined as a CPI of 0.600 or below). Asian and Latin American cities make up most of the third and fourth brackets, which have CPI values of 0.700–0.799 and 0.600–0.699, respectively).

To better select policy interventions for cities within a given bracket, the Wheel of Prosperity will help integrate the various connections and interdependencies among the five dimensions of prosperity; identify well-targeted interventions in a single dimension of prosperity that can have multiplier effects in the other dimensions; and ensure that shared, balanced development is a crucial feature of prosperity.