ACS Transitional Growth

Hong Kong, China

As one of the world’s leading international financial centres, Hong Kong has a major capitalist service economy characterised by low taxation and free trade. The currency, Hong Kong dollar, is the eighth most traded currency in the world. Hong Kong was once described by Milton Friedman as the world’s greatest experiment in laissez-faire capitalism, but has since instituted a regime of regulations including a minimum wage. It maintains a highly developed capitalist economy, ranked the freest in the world by the Index of Economic Freedom. It is an important centre for international finance and trade, with one of the greatest concentrations of corporate headquarters in the Asia-Pacific region, and is known as one of the Four Asian Tigers for its high growth rates and rapid development. The Hong Kong Stock Exchange is the seventh largest in the world, with a market capitalisation of US$2.3 trillion. Hong Kong raised 22 percent of worldwide initial public offering (IPO) capital, making it the largest centre of IPOs in the world and the easiest place to raise capital. The Hong Kong dollar has been pegged to the U.S. dollar since 1983. The Hong Kong Government has traditionally played a mostly passive role in the economy, with little by way of industrial policy and almost no import or export controls. Market forces and the private sector were allowed to determine practical development.

London, United Kingdom

London generates approximately 20 per cent of the UK’s GDP (or $446 billion); while the economy of the London metropolitan area – the largest in Europe – generates approximately 30 per cent of the UK’s GDP (or an estimated $669 billion). London is one of the pre-eminent financial centres of the world and vies with New York City as the most important location for international finance. London’s largest industry is finance, and its financial exports make it a large contributor to the UK’s balance of payments. Around 325,000 people are employed in financial services in London. London has over 480 overseas banks, more than any other city in the world. Over 85% (3.2 million) of the employed population of greater London works in the services industries. The City of London is home to the Bank of England, London Stock Exchange, and Lloyd’s of London insurance market. Over half of the UK’s top 100 listed companies (the FTSE 100) and over 100 of Europe’s 500 largest companies have their headquarters in central London. Over 70 per cent of the FTSE 100 are within London’s metropolitan area, and 75 per cent of Fortune 500 companies have offices in London.

Milan, Italy

While Rome is Italy’s political capital, Milan is the country’s economic and financial heart. With GDP estimated at €132.5 billion, the province of Milan generates approximately 9% of the national GDP; while the economy of the Lombardy region generates approximately 20% of the Italy’s GDP. The province of Milan is home to about 45% of businesses in the Lombardy region and more than 8 percent of all businesses in Italy, including three Fortune 500 companies. Milan is home to a large number of media and advertising agencies, national newspapers and telecommunication companies, including both the public service broadcaster RAI and private television companies like Mediaset, Telecom Italia Media and Sky Italia. In addition, it has also seen a rapid increase in internet companies with both domestic and international companies such as Altavista, Google, Lycos, Virgilio and Yahoo! establishing their Italian operations in the city. Milan is a major world fashion centre, where the sector can count on 12,000 companies, 800 show rooms, and 6,000 sales outlets (with brands such as Armani, Versace and Valentino), while four weeks a year are dedicated to top shows and other fashion events. The city is also an important manufacturing centre, especially for the automotive industry, with companies such as Alfa Romeo and Pirelli having a significant presence in the city. Other important products made in Milan include chemicals, machinery, pharmaceuticals and plastics.

Moscow, Russia

Moscow has one of the largest municipal economies in Europe and it accounts for approximately 22% of Russian GDP. Moscow is the undisputed financial center of Russia and home to the country’s largest banks and many of its largest companies, such as natural gas giant Gazprom. Moscow accounts for 17% of retail sales in Russia and for 13% of all construction activity in the country. Overall, economic stability has improved in recent years; nonetheless, crime and corruption continue still hinder business development. The Cherkizovskiy marketplace was the largest marketplace in Europe, with a daily turnover of about thirty million dollars and about ten thousand venders from different countries (including China, Turkey, Azerbaijan and India). Primary industries in Moscow include the chemical, metallurgy, food, textile, furniture, energy production, software development and machinery industries. Gazprom, the largest extractor of natural gas in the world and the largest Russian company, has head offices also in Moscow, as well as many other oil, gas and electricity companies. Additionally, some industry is now being transferred out of the city to improve the ecological state of the city. Nevertheless, Moscow remains one of Russia’s major industrial centers.

São Paulo, Brazil

São Paulo is considered the “financial capital of Brazil”, as it is the location for the headquarters of many major corporations and the country’s most renowned banks and financial institutions. São Paulo is Brazil’s highest GDP city and the 10th largest in the world, using Purchasing power parity. According to data of IBGE, its gross domestic product (GDP) is R$ 450 billion, approximately US$220 billion, 12.26% of Brazilian GDP and 36% of all production of goods and services of the State of São Paulo. According to PricewaterhouseCoopers average annual economic growth of the city is 4.2%. São Paulo also has a large “informal” economy. The city of São Paulo collects R$ 90 billion in taxes and the city budget is R$ 15 billion. The city has 1,500 bank branches and 70 shopping malls. The São Paulo Stock Exchange (BM&F Bovespa) is Brazil’s official stock and bond exchange. It is the largest stock exchange in Latin America, trading about R$ 6 billion (US$ 3.5 billion) every day. São Paulo’s economy is going through a deep transformation. Once a city with a h2 industrial character, São Paulo’s economy has followed the global trend of shifting to the tertiary sector of the economy, focusing on services. The city is unique among Brazilian cities for its large number of foreign corporations. 63% of all the international companies with business in Brazil have their head offices in São Paulo. São Paulo has the largest concentration of German businesses worldwide and is the largest Swedish industrial hub alongside Gothenburg. São Paulo ranked second after New York in FDi magazine’s bi-annual ranking of Cities of the Future in the Americas, and was named the Latin American City of the Future, overtaking Santiago de Chile, the first city in the previous ranking. Santiago now ranks second, followed by Rio de Janeiro. The city of São Paulo is home to research and development facilities and attracts companies due to the presence of several regionally renowned universities. Science, technology and innovation is leveraged by the allocation of funds from the state government, mainly carried out by means of the Foundation to Research Support in the State of São Paulo (Fundação de Amparo à Pesquisa do Estado de São Paulo – FAPESP), one of the main agencies promoting scientific and technological research.