ECONOMICS UNIQUENESS

LIVABLE HISTORIC CITY CORES AND ENABLING ENVIRONMENT ■ 3
Furthermore, 41 percent rated competing for talent globally as one of their most
pressing employment concerns. Resolving this paradox in a manner that provides
increased employment opportunities across a range of skill levels and socioeconomic
groups will require a multifaceted approach that will vary depending
on many factors, such as a country’s level of development and resource endowments.
However, it is very clear that this challenge will have to be resolved in cities
and that the bulk of the jobs will have to come from the private sector.
More than 50 percent of the world’s people already live in cities, and they
account for 70 percent of world gross domestic product. Furthermore, nearly
2 billion new urban residents are expected in the next 20 years, as people “vote
with their feet” in search of opportunity. Most of these people will have to fi nd
jobs in the private sector, which is the engine of growth and employment accounting
for about 90 percent of employment in developing countries.
Th e cities that will be most successful at meeting the jobs and growth aspirations
of their inhabitants, while alleviating poverty and working toward social
inclusion, will be those that employ all of their resources to promote a healthy
environment for investment and talent. Among the resources these cities need to
harness is their built cultural heritage.
Recent Trends in Foreign Direct Investment
Th e last two decades saw an explosion in the scale of worldwide foreign direct
investment (FDI), with the annual fl ow growing from US$208 billion in 1990 to a
peak of US$1,771 billion in 2008. Th e fi nancial crisis caused a sharp fall in fl ows
to a level of US$1,114 billion in 2009, having bottomed out in the latter half of
2009 before recovering modestly in 2010. Th e World Investment Report (UNC-
TAD 2011) anticipates a recovery in fl ows back toward the 2008 level by 2012, but
cautions that prospects are still “fraught with risks and uncertainties, including
the fragility of the global economic recovery.”
Despite the recent short-term decline, FDI will continue to play a critical role
in economic development. For cities in developing countries, this will be even
more important given three factors:
• An increasing proportion of FDI is going to developing countries; 2010 was
the fi rst year ever that FDI fl ows to developing and transitional economies
accounted for more than half the global total (UNCTAD 2011), and there is
every sign that the importance of FDI there will continue to grow.
• Investment and trade in services in general, and in the creative industries
in particular, are of growing importance in the world economy relative to
manufacturing and extractive industries (UNCTAD 2004), and this has been
refl ected in global FDI fl ows.