What is the most dynamic city in the post-recession world?

The surprising answer is Istanbul, according to a new report that shows the developing world is leading the way out of the Great Recession.

Grading each metropolis by the growth of its income* and employment, the Brookings Metropolitan Policy Program found that the world's fastest recovering cities are overwhelmingly in three key areas: China and India, Southeast Asian islands, and Latin America. Only three cities from what economists consider the developed world appeared on the list: Montreal, Austin and Melbourne. There are no European cities in the top 30. There are no African cities outside Egypt in the top 50.

"We were especially interested in the emergence of Latin American capitals, so we took a close look at Lima, Peru [number 5]," said Alan Berube, research director at the Metropolitan Policy Program, who wrote the report with LSE Cities. "It has a big commodities sector that not only sustained it through the recession but also propelled its growth thanks to huge demand out of China and India. Like a lot of other Latin American capital cities, it was also a safe haven for capital during the global economic crisis. That fueled investment and income during the crisis and continues to do so now."

When you look closer at the report, more trends emerge. Port cities with large trade sectors dominate, due to their ability to put products in the hands of the world's healthier economies. China, India and Brazil -- three members of the so-called BRIC group (R is for Russia, which had no cities in the top 30) -- account for 13 out of the 30 cities, and fully half of the list if you count Taipei and Hong Kong.

"What the Chinese cities have in common is substantial direct support from central government, which made Shenzhen [number 2] and Guangzhou [number 7] global manufacturing centers," Berube said. "That propelled massive growth in the 15 years predating the recession."

As for the surprising winner of the Brookings' rankings, Berube was brave enough to admit he didn't have a clear answer for Istanbul's meteoric rise. "Istanbul was affected really badly by the recession, but it had incredibly strong growth in the past year, especially in employment, where the city outstripped everybody else," he said. "After the huge fall-off last year, I'm not sure how stable its number one status is."

As Istanbul's roller coaster proves, dynamism is a sword that cuts both ways. Cities that open themselves to the global marketplace can experience both the highs and lows of an uncertain world economy. Indeed, two of the top ten city performers in the pre-recession era, Dubai and Dublin, are now ranked 149th and 150th out of 150 in the latest survey after suffering twin real estate bubbles half a world apart.

Nobody knows the next bubble until it has burst. But there are candidates. Some economists point to Asian asset inflows. Other point to the Latin American capitals, which might be overly dependent on rising commodity prices in the short and medium run. Lima is plowing much of its capital into massive construction projects, which has to concern students of the worldwide real estate crash.

The key challenge for top emerging cities entering a period of global expansion is to expand to other industries. This helps them stay both dynamic and diversified -- fast-growing and safe-growing. "These cities need to build their higher value sector," Berube said. "Shenzhen is doing this with telecommunications as its lower value manufacturers are already moving to Indonesia and Vietnam as Chinese land gets more expensive. But Chinese cities, and Indian cities too, need to diversify in recognition that these low-value activities are going to flow elsewhere."


*To measure growing income, Brookings used a indicator called Gross Value Added. This measurement differs from the more common GDP, or gross domestic product, because it specifically measures a city's contribution to a final product. GVA does not include the value of taxes and subsidies, which are added back at the national level to calculate GDP.

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