Our cities are plugged into the global economy – and are shaped by events in urban places across the planet. Cities, especially in the developing world, are growing fast. In 2008 over 50% of the world’s population will live in cities, and one in three of these people will live in slums – overcrowded and without basic sanitation. Dealing with rising pressure on the environment and increasing numbers of migrants are a few examples of the challenges this wave of urbanisation may pose.

There are several important trends in urbanisation patterns and the role of cities in the global economy. The global economy is becoming more interlinked and interdependent, and this is happening between cities too. Cities from New York to Shanghai are becoming increasingly interlinked – with flows of goods, services, people and ideas between cities increasing and diversifying. Increasing levels of global integration also mean that cities are more exposed to competition – for example, cities are increasingly in competition for mobile investment and skilled workers.

There is a general trend of increasing globalisation. Around the world, cities are growing faster than ever. The total world population living in urban areas has doubled since 1950. 19th Century London’s population grew sevenfold between 1800 and 1910. Today, cities like Dhaka and Lagos are 40 times bigger than 50 years ago.

This wave of urbanisation is creating some spectacular new cityscapes. The world now has several megacities with over 10m people – New York (16.6m people in 2000), Mumbai (18m), Cairo (10.5m), Buenos Aires (12.6m). Greater London’s population that year was just 7.64m.

Tokyo is the world’s only ‘hypercity’ – with 26.4m people – but it will soon be joined by Greater Mumbai, Mexico City and others. At the top of the hierarchy, entirely new city forms are emerging – ‘mega-city regions’ such as the Hong Kong / Pearl River Delta system.

However, megacities are – by definition – exceptional. More than half the world’s urban population live in cities of less than 500,000 people (roughly the size of Sheffield). These smaller cities should grow faster than any other type.

The developing world will take a major share of urban population growth – particularly in sub-Saharan Africa and South/East Asia. By 2030, the UN predicts the ‘South’ will host 80% of the world’s population, often in overcrowded, chaotic slum neighbourhoods.

The global urban order: city size vs. urban economy

Source: Davis 2006. Population rank from Thomas Brinkhoff (http://www.citypopulation.de/). GDP rank from Pumain (2002). Estimates from disaggregating regional GDP.

The implications of all this are profound. In the past, as cities grew so did their economies: urbanisation meant growth and progress. In some cities, this relationship is now breaking down (see table). At one extreme, cities like Shanghai and Dubai display a kind of ‘hyper-urbanisation’ – where they experience very rapid population and economic growth. China’s urban population is projected to double between 2003 and 2020; Chinese cities’ share of GDP is predicted to rise from 54-85%.

Dubai is constructing the world’s tallest building and the world’s biggest shopping mall. The city-state is also developing several clusters from scratch including a financial centre with its own commercial laws, regulators and courts.

At the other extreme, cities like Kinshasa and Mogadishu are seeing ‘chaotic urbanisation’, urban growth with civic and economic collapse. In between these two extremes, most cities outside the West are exhibiting a mixed pattern of urbanisation – with wealth and poverty, rich and poor, gated communities and ‘urban holes’ side by side.

These global trends and developments have several implications for UK cities. First, in a global context UK cities have many advantages – not least strong infrastructure, institutions and public services. Cities offer economies of scale for consumers and producers: they make markets work better. Over time, high-value clusters – like the City of London – have become deeply embedded in the urban fabric. Despite boardroom warnings of relocation, they will not easily leave. Offshoring is not inevitable either. In other words, cities’ ‘stickiness’ will help them and the UK prosper in an open world.

Second, cities will become more and more interlinked into flows of goods, services, people and ideas. There will be continued competition for mobile investment – see London and New York’s ‘business war’ last year. But there will also be win-wins, as firms build workflows across urban centres. Silicon Valley’s continued success rests on ‘brain circulation’ between California and South-East Asia. Could a UK Science City do the same?

Third, bigger cities and city-regions need to develop new forms of collaborative governance. London is already the test-bed for urban governance in the UK: City leaders should watch and learn how the rest of the world manages its cities – especially in places where strong leadership is helping local economies diversify and grow.

Fourth, UK cities will be shaped by other cities’ problems: notably conflict and climate change. Cities in the developing world – marked by poverty and inequality – are becoming key sites of religious and ideological conflict. UK cities’ security cordons will tighten in response. But at the same time, global conflicts are increasing the numbers of migrants to the UK, particularly to London and our biggest cities.

Globally, cities produce 80% of CO2 emissions. At best, cities are highly resource-efficient. But many cities in China, India and South America are following paths of ‘dirty growth’. The European drive to reduce CO2 emissions will encourage UK cities to tackle emissions and promote ‘green growth’.

But as long as politicians in Westminster find it difficult to commit to costly green policies, cities and local leaders should take the lead. Ken Livingstone’s Low-Emission Zone in London, Bradford’s recent win as the UK’s most sustainable city, and campaigns like ‘Manchester is my planet’ will take centre stage in 2008 – as cities move to the front in the fight against climate change.