What opportunities will the massive urbanization of the 21st century bring?

The rapid growth rate of the population in urban areas will have a broad impact on the global economy, leading to new opportunities emerging in the markets in the short, medium and long term.

Since the beginning of the last century, when agricultural work began a transition towards the industrial and services sector, we witnessed a process of expansion of the urban surface parallel to the demographic increase. For example, in the United States, the urban population was 40% in the United States in the year 1900 and now it is 82%, while in Japan it has gone from 12% to 91% and in Western Europe, from 41% to 80%.

Within developed economies, cities are important sources of innovation and the creation of wealth. In fact, the World Bank estimates that more than 80% of world GDP is generated in cities. The phenomenon will experience a great increase in the coming years, since it is expected that between 2018 and 2050, the global urban population will increase from 55% to 68%, adding another 2.5 billion people to cities around the world.

The countries that will mostly see their population grow between 2018 and 2050 are India (416 million people), China (255 million people) and Nigeria (189 million people). 90% of this growth will occur in Africa and Asia. On the other hand, in only 40 years the total number of megacities will quadruple, earning close to 600 million residents in the process.

As the following infographic shows, urbanization will create challenges and opportunities for society, fostering the emergence of new business models. One of them is constituted by intelligent technology to improve services and infrastructure, using Big Data to monitor traffic or pollution in real time or saving costs and energy thanks to intelligent lighting.

Personal security is a business that will grow thanks to home automation systems, the push of the Internet of Things and the rise of hyper-connectivity linked to wearables and gadgets of all kinds. New professions will also be demanded as experts in cybersecurity or engineers of green technologies for urban planning. The autonomous car industry or health systems will also be sectors of massive growth in the urban centers of the future.

Infographics | iShares