Tokyo Ranks Third in the Global Power City Index 2024

On December 10, the Mori Memorial Foundation's (MMF) Institute for Urban Strategies released its 2024 Global Power City Index (GPCI). Now in its 17th iteration, the index provides a comprehensive evaluation of the world's major cities by analyzing their strengths and challenges across six categories. These include economy, R&D, cultural interaction, livability, environment, and accessibility. This year, the index expanded its evaluation from 30 to 48 cities. Tokyo maintained its position as the third-ranked city globally, following London and New York.

The city earned its ranking through a robust tourism recovery, notable advancements in R&D, and enhanced transportation efficiency. However, economic struggles, including low GDP growth and housing affordability, present significant hurdles.

Cultural Interaction, R&D, and Accessibility

One of the standout aspects of the GPCI 2024 report was Tokyo's surge in cultural exchange. The city jumped to third place, demonstrating a post-pandemic rebound. Hiroo Ichikawa, Professor at Meiji University and Executive Director of the MMF, stated that Tokyo has seen improvements in foreign visitor numbers and tourism destinations.

Inbound tourist numbers reached 10.2 million in 2023. However, Ichikawa explained that the "relative lack of historical sites" compared to cities like Paris or London continues to limit its competitiveness in this area.

*Hiroo Ichikawa, executive director of the Mori Memorial Foundation, speaking at the press conference for the Global Power City Index 2024, December 10, 2024 (©JAPAN Forward by Hidemitsu Kaito).*

Tokyo also demonstrated significant strides in R&D, ranking third in the world for the first time. Significant investments in innovation and technology helped buoy the urban metropolis. The city ranked first globally for patent registrations, with over 70,000 patents filed in 2023.

However, Tokyo's performance in global universities remains somewhat underwhelming, ranking 21st for top institutions.

There were noticeable improvements in accessibility as well, particularly in air travel recovery, where Tokyo moved up to second place in terms of flight departures. Narita and Haneda airports recorded a combined total of 1.5 million international flights in 2023, a 35% increase from the previous year. Enhanced bicycle accessibility and public transport efficiency also contributed to Tokyo's ranking.

Economic Performance

Despite these successes, Tokyo's economic performance remains a point of concern. The city ranks tenth in terms of economic indicators. A weak yen and limited startup activity weigh heavily on economic competitiveness, Ichikawa analyzed. While the city's GDP of $1.7 trillion USD remains impressive, Tokyo's per capita income is notably low, ranking 27th globally.

In the Financial City Index, introduced this year as part of GPCI, Tokyo ranked fifth in Asia but lagged behind London and New York. Moreover, the Financial City Index report highlights the gap Tokyo faces in the global financial sector. Although it remains a leader in financial products, foreign exchange, and financial intermediaries, Tokyo trails behind London in financial derivatives.

Tokyo's stock market also trails cities like San Francisco and London despite signs of gradual improvement. The city's financial competitiveness continues to be strong but underutilized, as large companies and pension funds dominate its financial market. More agile financial services also remain a challenge.

Livability and Environment

In terms of livability, Tokyo remains a solid performer. The city ranks third for cultural exchange, benefitting from a wealth of public services, affordable dining options, and a high quality of life for its residents. However, housing continues to be an issue, with median home prices exceeding 14 times the average annual income. Its work style flexibility also ranked lower than expected, at 39th.

*The Mori Memorial Foundation's presentation and briefing on the Global Power City Index 2024, December 10, 2024 (©JAPAN Forward by Hidemitsu Kaito).*

Tokyo additionally faces environmental challenges. The city ranks 18th in environmental performance, with ongoing concerns about pollution and natural disasters such as earthquakes. Although the city has made strides in environmental sustainability, Ichikawa noted that more work remains to improve air quality, waste management, and green spaces.

Financial Strength

Tokyo's position in the Global Financial Centres Index (GFCI) has historically been lower, but it is steadily climbing, particularly in Asia.

Despite challenges in some areas, Tokyo has maintained its reputation as a global financial center. It ranks seventh globally in financial strength, driven by its financial intermediaries, including major banks and financial institutions. The city excels in foreign exchange markets but has struggled with listed stock markets and startup growth in comparison to competitors.

Regional Hopes?

Interestingly, Osaka placed 35th overall, while Fuk u oka came in 42nd. Professor Ichikawa speculated on the future of Osaka during the Q&A session. "With the upcoming Expo, Osaka may experience a temporary boost," he speculated. "However, its long-term foundation remains uncertain. Though the Expo could catalyze some development, it likely won't match the transformative impact of events like the 2010 Shanghai Expo." MMF Chairman and Economist Heizo Takenaka also expressed similar sentiments.

*Chairman Heizo Takenaka speaking at the Global Power City Index 2024 briefing, December 10, 2024 (©JAPAN Forward by Hidemitsu Kaito).*

Additionally, Ichikawa suggested that dramatic transformations tied to expos now seem less likely. Alongside projects like the Osaka Integrated Resort (IR) and Kansai Airport privatization, the Kansai Expo may revitalize the region to some extent, he said. Other notable efforts, such as subway privatization and tourism growth, also show promise. "However, their lasting effectiveness and Osaka's role within Japan's broader landscape remain to be seen," he stated. "The Expo is just one piece of a larger puzzle."

On Fukuoka, Ichikawa declared that "While Tokyo remains the focal point of Japan, Fukuoka is emerging as the hub of Kyushu. It has established itself as the region's center, bolstered by direct ferries and flights to China and South Korea." This, he said, allows it to operate with a degree of independence. The key challenge, as with Osaka, "Now lies in whether local initiatives can effectively harness this momentum," he concluded.