While some of these changes can be temporary and fleeting, others can be powerful, transformative “megatrends” that shape how society is organized at a fundamental level. One such megatrend that has been in place for decades is the rapid rate of population growth in urban areas — and while it’s been highly influential thus far, we’ve likely only seen the beginning of its formative impact on the global economy.
An Intro to Rapid Urbanisation
Today’s infographic comes to us from iShares by BlackRock, and it highlights the case for rapid urbanisation as being one of the most important overarching trends to watch in markets over the long term. It’s a trend that originated in developed economies in the 21st century, as people transitioned from agricultural work to factory and service jobs.
In these developed economies today, cities are major sources of innovation and wealth creation, and the World Bank estimates that over 80% of global GDP is now generated in cities.
A Global Shift
Over the coming decades, the large-scale role of cities will become even more amplified as rapid urbanisation spills over to the rest of the world. Billions of people — especially in Asia and Africa — will be seeking opportunities in cities over the coming decades. 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.
Nearly 90% of this growth will be in Africa and Asia, with India alone adding 416 million new people to its cities — more than any other country in the world over this timeframe.
The Dawn of the Megacity
People are not only flocking to cities, they are flocking to megacities — urban conglomerations with more than 10 million people. In just 40 years, the total amount of megacities will quadruple, gaining nearly 600 million residents in the process:
With billions of new people living in urban areas – and many of them living in megacities — we will have to rethink how our cities are designed and engineered. And as this happens, the city as we know it will be revolutionised.
The Urban Opportunity
Rapid urbanisation will create both opportunities and challenges for society, and a plethora of investment possibilities in the process. As global cities become more integrated with technology, new business models will emerge as cities become smarter, denser, and more connected. These potential opportunities include:
Smarter cities Cities will embrace technology to improve services and infrastructure, adding tech-driven features like smart lighting or real-time traffic updates. New infrastructure Cities and companies will invest heavily to build next generation infrastructure, such as data centers, green energy, and citywide WiFi. A focus on personal security With higher crime rates in cities than rural areas, governments will employ elevated levels of surveillance on citizens in cities. Increasing connectivity means that every activity is logged and monitored. New services As cities become more connected, non-traditional players — such as cybersecurity experts or cleantech engineers — will be needed as a part of city planning processes. No car ownership A lack of space and the rise of autonomous cars will mean fewer people will own a car, preferring to use ‘summon-able’ services instead. New healthcare systems As population density grows to unprecedented levels, existing healthcare systems will need to be radically overhauled to deal with this influx.
Rapid urbanisation will have a wide-ranging impact on global economics, demographics, and society as a whole. As rapid urbanisation and other megatrends collide and feed off each other, there’s no doubt that even more thematic investment opportunities will be created. on Even while political regimes across these countries have changed over time, they’ve largely followed a few different types of governance. Today, every country can ultimately be classified into just nine broad forms of government systems. This map by Truman Du uses information from Wikipedia to map the government systems that rule the world today.
Countries By Type of Government
It’s important to note that this map charts government systems according to each country’s legal framework. Many countries have constitutions stating their de jure or legally recognized system of government, but their de facto or realized form of governance may be quite different. Here is a list of the stated government system of UN member states and observers as of January 2023: Let’s take a closer look at some of these systems.
Monarchies
Brought back into the spotlight after the death of Queen Elizabeth II of England in September 2022, this form of government has a single ruler. They carry titles from king and queen to sultan or emperor, and their government systems can be further divided into three modern types: constitutional, semi-constitutional, and absolute. A constitutional monarchy sees the monarch act as head of state within the parameters of a constitution, giving them little to no real power. For example, King Charles III is the head of 15 Commonwealth nations including Canada and Australia. However, each has their own head of government. On the other hand, a semi-constitutional monarchy lets the monarch or ruling royal family retain substantial political powers, as is the case in Jordan and Morocco. However, their monarchs still rule the country according to a democratic constitution and in concert with other institutions. Finally, an absolute monarchy is most like the monarchies of old, where the ruler has full power over governance, with modern examples including Saudi Arabia and Vatican City.
Republics
Unlike monarchies, the people hold the power in a republic government system, directly electing representatives to form government. Again, there are multiple types of modern republic governments: presidential, semi-presidential, and parliamentary. The presidential republic could be considered a direct progression from monarchies. This system has a strong and independent chief executive with extensive powers when it comes to domestic affairs and foreign policy. An example of this is the United States, where the President is both the head of state and the head of government. In a semi-presidential republic, the president is the head of state and has some executive powers that are independent of the legislature. However, the prime minister (or chancellor or equivalent title) is the head of government, responsible to the legislature along with the cabinet. Russia is a classic example of this type of government. The last type of republic system is parliamentary. In this system, the president is a figurehead, while the head of government holds real power and is validated by and accountable to the parliament. This type of system can be seen in Germany, Italy, and India and is akin to constitutional monarchies. It’s also important to point out that some parliamentary republic systems operate slightly differently. For example in South Africa, the president is both the head of state and government, but is elected directly by the legislature. This leaves them (and their ministries) potentially subject to parliamentary confidence.
One-Party State
Many of the systems above involve multiple political parties vying to rule and govern their respective countries. In a one-party state, also called a single-party state or single-party system, only one political party has the right to form government. All other political parties are either outlawed or only allowed limited participation in elections. In this system, a country’s head of state and head of government can be executive or ceremonial but political power is constitutionally linked to a single political movement. China is the most well-known example of this government system, with the General Secretary of the Communist Party of China ruling as the de facto leader since 1989.
Provisional
The final form of government is a provisional government formed as an interim or transitional government. In this system, an emergency governmental body is created to manage political transitions after the collapse of a government, or when a new state is formed. Often these evolve into fully constitutionalized systems, but sometimes they hold power for longer than expected. Some examples of countries that are considered provisional include Libya, Burkina Faso, and Chad.
