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Given the prominence of cities in Latin America’s economy, fulfilling their economic potential is a key to sustaining growth in the region as a whole, according to new research by McKinsey’s Latin America office and the McKinsey Global Institute (MGI).

China’s top ten cities, for instance, contribute around 20 percent of the nation’s GDP.

Such a concentration of urban economic activity in the largest cities makes Latin America comparable to the United States and Western Europe in this respect but not to many other emerging regions. The 10 largest alone generate half of that output. The region’s 198 large ones-defined as having populations of 200,000 or more-together contribute more than 60 percent of GDP. Our analysis covers entire metropolitan areas, which we name by their core cities. See the MGI reports Preparing for China’s urban billion (February 2009) and India’s urban awakening: Building inclusive cities, sustaining economic growth (April 2010), available free of charge online at /mgi.Ĭities are critical to Latin America’s overall economy. In contrast, McKinsey Global Institute (MGI) research finds that urbanization will continue to be a major source of growth in China and India, which are both at earlier stages in their urbanization. The shift from country to town has contributed much to Latin America’s growth, as economies of scale have raised the productivity of expanding cities and reduced the cost of delivering their basic services. The region is more urban than any other in developing markets, with 80 percent of its population living in cities, compared with about 50 percent in China. But to lengthen today’s strides toward recovery into a sustained period of rising prosperity, it must take full advantage of its cities’ economic potential. Latin America is a bright spot in the postrecession global economy, with growth rebounding strongly in much of the region.