With 57% of the world’s urban population still unconnected to the internet – some 515 million citizens across the globe – cities left on the wrong side of the digital divide aren’t fulfilling their potential in a competitive global market. By reducing transaction costs and constraints of distance throughout the world, the internet has reduced barriers to market entry and allowed small and medium enterprises to innovate and reach broader market. In fact, a Deloitte report from 2014 quantified the impact of internet penetration on the economy, noting that, in Vietnam, Argentina, Turkey, Taiwan, Hungary, Mexico, Malaysia and Morocco, SMEs with internet access have experienced an average of 11% productivity gains.
Using the metrics prescribed by Ericsson’s Networked Society City Index to measure productivity vis a vis connectivity – where productivity is pertains to GDP (PPP) per capita and connectivity is based on available internet infrastructure, namely mean download speed, mobile internet performance, international bandwidth capacity, percentage of homes with internet connections, fiber penetration and the number of WiFi hospots – we analyze 15 of the world’s biggest cities, following our last connectivity data analysis on affordability and availability.
It is perhaps no surprise that cities with high productivity are often the same ones which have strong infrastructure, with Tokyo, New York and London topping the list for GDP (PPP) per capita. However, despite Paris beating all three of these cities in terms of infrastructure, it lags behind them in terms of productivity – perhaps indicating a sociocultural factor is at play here.
While there’s a generally positive correlation between infrastructure and productivity, some spikes in the second chart are worth noting, namely Cairo, Johannesburg, Tokyo, Jakarta and Los Angeles. The former three can be attributed to huge populations and their contribution to the economy, regardless of internet infrastructure. In Los Angeles, reliance on the lucrative media industry could be the reason why a lesser connectivity infrastructure hasn’t affected the economy. Meanwhile, Mexico City’s productivity does not reflect its infrastructure, perhaps an indicator of a big informal economy and black market.