Source: McKinsey

The world is in the throes of a sweeping population shift from the countryside to the city. Underpinning this transformation are the economies of scale that make concentrated urban centers more productive. This productivity improvement from urbanization has already delivered substantial economic growth and radically reduced poverty in countries such as China. The growth of cities has the potential for further growth and poverty reduction across many emerging markets.

However, we are now seeing cases where the growth rates of some large cities have begun to slow. In addition, the increased complexity of large size can overwhelm the ability to manage. When this happens, cities can become disastrous mixtures of slums and gridlock, raising the question of whether there is a maximum size for a workable city. The view of the McKinsey Global Institute (MGI) is that there is, in theory, no limit set by technology or infrastructure to how big or how fast cities can grow — but only if business and government leaders are able to manage the increased complexity that comes with bigger city size.