From Moscow to São PauloEmerging 7 Cities Report 2014

Hazem GalalGlobal Leader for PwC´s State and Local Government Sector

PwC Russia

From Moscow to São Paulo2

December 2014

Why should cities’ performance be measured?

City rankings potential limitations

Why benchmark?

• To increase and expand awareness of what happens in other cities

• To learn about a city’s strengths and deficiencies• To get information that can be applied in strategic policy advice

for cities

Types of benchmarking studies

• Comprehensive studies• Business-oriented studies• Livability-oriented studies• Sectorial studies

• Availability of consistent datasets across cities• Accuracy of data and quality of data sources• Independence of evaluation• Aims and audience• Subjective methodology, analysis and conclusions• Difficult to understand the relationships between ranks,

scores, data and realities• Aspects of a city such as history, politics, environment etc. are

unique and cannot be captured

PwC Russia

From Moscow to São Paulo3

How do rankings impact on decision-making and who are the decision-makers being influenced by the ranking?

Policy makers

• Policy makers pay attention to rankings as one source of information among others to better understand the city’s performance against the piers

• Based on the city’s current strength and weaknesses various policies can be adopted

• Rankings can be applied as a tool for policies performance measurement

• Rankings can be used to enhance and promote city’s image and reputation

Citizens• Citizens use various rankings to assess the pros and cons of their decision (choosing the university to study or city to move in)

• Rankings can encourage citizens to act by themselves while improving quality of living in their city

Investors and employers

• Companies rely on rankings while making decision on their investment activity in terms of assessing

• City’s business climate (the cost and ease of doing business, services, law and taxation, corporate governance, judicial system, regulation, political stability, property rights)

• Cities’ attractiveness for different types of business operations

• Quality of human resources and workforce risks

• Level of infrastructure development

• Quality and costs of living

• Employers use rankings while assessing the amount of premium payments to expats who is working out of their home country

December 2014

PwC Russia

Cities of Opportunity is based on a balanced approach that examines variables across three main areas

Tools for a changing world

Intellectual capital and

innovation

Technology

readiness

City gateway

Quality of life

Transportation and infrastructure

Health, safety and security

Demographics and livability

Sustainability and the natural environment

Economics

Economic clout

Ease of doing business

Cost

4From Moscow to Sao Pãulo December 2014

PwC Russia

From Moscow to Sao Pãulo5

From Moscow to São Paulo PwC ranking: we compared the E7 cities according to 10 indicators and 59 variables, assigned points and then ranked the cities based on their performance results

Intellectual Capital and Innovation

Technology Readiness

City Gateway

Economic Clout

Ease of Doing Business

CostTransportation and Infrastructure

Health, Safety and Security

Sustainability and the Natural Environment

Demographics and Livability

Financial and Business Services Employment, Attracting FDI …

Cost of Living, Purchasing Power, Total Tax Rate …

Ease of Starting a Business, Operational Risk Climate …

Percent of Population with Higher Education, Intellectual Property Protection …

Internet Access in Schools, Broadband Quality Score…

Hotel Rooms, Number of International Association Meetings, Incoming/ Outgoing Passenger Flows …

Mass Transit Coverage, Housing … Recycled Waste,

Air Pollution, Public Park Space …

Quality of Living, Working Age Population, Traffic Congestion …

Hospitals and Health Employment, Crime …

December 2014

PwC Russia

From Moscow to São Paulo6

The rating covers the largest cities in the E7 group of emerging economiesEach E7 city is an important strategic hub that functions as its country’s national financial and business capital

Moscow

Beijing

Jakarta

Istanbul

Mexico City

São Paulo

Mumbai

December 2014

How Moscow performed in the 2014 E7 Cities rating (main findings)

PwC Russia

Intellectual Capital and Innovation

Technology Readiness

City Gateway Transportation

and Infrastructure

Health, Safety

and Security

Sustainability and the Natural

Environment

Demographics

and Livability

Economic Clout

Ease of Doing Business

Cost Score

Beijing 301

Moscow 292

Mexico City 262

Istanbul 255

São Paulo 222

Mumbai 176

Jakarta 167

Moscow’s overall position in the ratingCompared to its performance last year, Moscow came significantly closer to top-ranked Beijing, narrowing its 14-point gap in 2013 down to only 9 points this year, while also jumping substantially ahead of third place

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Highest rank per indicator

Ranking

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PwC Russia

Changes in Moscow's E7 rankings versus 2013Moscow ranked first in three indicators while showing improvement in another four out of the 10 indicators

9From Moscow to São Paulo

Intellectual Capital and Innovation

Technology Readiness

CostTransportation and Infrastructure

Health, Safety and Security

Sustainability and the Natural Environment

Demographics and Livability

Muscovites’ strong purchasing power enabled the city to rise three places

The city ranks only one point behind the leader in Intellectual Capital and Innovation

This year, Moscow leads in Technology Readiness

Moscow rose from third to second place

Despite Russia’s severe climate, Moscow took the top ranking in Sustainability and the Natural Environment for the second year in a row. For the Public Park Space variable, Moscow not only exceeds its E7 peers, but is comparable to such “green” urban centres as Stockholm and Paris.

Moscow retained the top spot, which it shares with Beijing

Moscow improved its ranking, yet the city still lags behind its peers in certain variables

December 2014

The E7 Cities today: what’s changed year on year

PwC Russia

Libraries with Public Access

Math/Science Skills Attainment

Literacy and Enrolment

Percent of Population with Higher Education

World University Rankings

Innovation Cities Index

Intellectual Property Protection

Entrepreneurial Environment

Score

Beijing 21

Moscow 22

Istanbul 25

Mexico City 29

São Paulo 36

Mumbai 44

Jakarta 45

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Intellectual Capital and InnovationMoscow ranks second, losing out to Beijing by one point

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People and knowledge are critical intellectual assets for any city. The development of a city's overall “intellectual brand” depends on how well it contributes to generating, protecting, reproducing and disseminating knowledge.

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December 2014

PwC Russia

Internet Access in Schools* Broadband Quality Digital Economy Score* Software and Multi-Media Development Design

Score

Moscow 10

Beijing 11

Istanbul 15

Mexico City 16

Mumbai 18

São Paulo 18

Jakarta 22

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Technology ReadinessMoscow came in first this year

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To become technologically mature, a city must address the following three critical issues: improving the quality of its physical infrastructure, encouraging the introduction of technology-based solutions into daily life, and enhancing the digital literacy of the business community and general public.

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*Country-level data

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December 2014

PwC Russia

City GatewayBeijing ranked first in the City Gateway indicator, slightly ahead of the other E7 cities

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This indicator is designed to take the pulse of a city’s social, economic and cultural life, and assess the strength of it connections to the rest of the world. Moscow shows quite steady results across the board in all variables. It ranks second in four variables and third in another two.

Hotel Rooms Number of International Tourists

Number of International Association Meetings

Incoming/Outgoing Passenger Flows

Airport to CBD Access

Top 100 Airports On-Time Flight Arrivals

Score

Beijing 14

Istanbul 18

Moscow 19

Mexico City 31

São Paulo 32

Jakarta 38

Mumbai 42

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December 2014

PwC Russia

Public Transport Systems

Mass Transit Coverage

Cost of Public Transport

Licensed Taxis Volume of Property Transactions

Housing Score

Beijing 11

Moscow 18

Mexico City 20

São Paulo 25

Jakarta 29

Istanbul 30

Mumbai 30

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Transportation and InfrastructureMoscow performs well across most variables

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With a considerably improved ranking in the Licensed Taxis variable, Moscow has moved up to second place overall in the Transportation and Infrastructure indicator, from its third-place showing last year.

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Ranking

1 City’s rank in each variable

December 2014

PwC Russia

Hospital and Health Employment

Health System Performance*

End-of-Life Care* Crime Political Environment Score

Beijing 14

Mexico City 14

Istanbul 19

Moscow 21

São Paulo 21

Mumbai 23

Jakarta 26

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Health, Safety and SecurityBeijing and Mexico City tie for the top ranking, well ahead of the rest of the field

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Changes in how certain variables were measured largely drove the changes in the final ranking for this indicator: Moscow and São Paolo improved their positions while Mumbai was pushed to the bottom. As with last year, Beijing, Mexico City and Istanbul hold the top spots.

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Ranking

*Country-level data

1 City’s rank in each variable

December 2014

PwC Russia

Natural Disaster Risk Thermal Comfort Recycled Waste Air Pollution Public Park Space Score

Moscow 15

Mexico City 16

Beijing 20

Istanbul 20

São Paulo 20

Mumbai 22

Jakarta 24

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Sustainability and the Natural EnvironmentMoscow managed to keep its top ranking, albeit with a much narrower lead ahead of its peers

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Contemporary society is becoming increasingly demanding as regards environmental sustainability, which is why clean, “green” and comfortable cities that pursue eco-friendly policies will consistently enjoy great success.

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December 2014

PwC Russia

Cultural Vibrancy Quality of Living Working Age Population

Traffic Congestion Ease of Commute** Relocation Attractiveness**

Score

Beijing 14

Moscow 14

Istanbul 20

Mexico City 23

São Paulo 24

Jakarta 34

Mumbai 38

Demographics and LivabilityMoscow and Beijing remain in the top ranks

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The top three cities – Moscow, Beijing and Istanbul – are able to offer their residents more favourable living conditions as compared to their E7 peers.

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**Data based on PwC Employee Survey 2013

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December 2014

PwC Russia

Economic CloutThe two top-ranking cities – Beijing and Moscow – enjoy a significant lead over the other five E7 cities

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This indicator measures not only the maturity level of a city’s economy, but also the extent of its global economic “footprint”, how attractive it is for international investors, and how much of an influence it has on current global economic trends.

Number of Global 500 Headquarters

Financial and Business Services Employment

Attracting FDI Productivity Rate of Real GDP Growth

Score

Beijing 10

Moscow 13

Mexico City 20

Mumbai 22

São Paulo 23

Jakarta 24

Istanbul 25

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December 2014

PwC Russia

Ease of Doing BusinessMexico City finishes first for the second year in a row

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Ease of Starting a Business***

Resolving Insolvency***

Employee Regulations***

Ease of Entry: Number of Countries with Visa Waiver*

Number of Foreign Embassies and Consulates

Level of Shareholder Protection***

Operational Risk Climate*

Workforce Management Risk

Score

Mexico City 23

Istanbul 28

Beijing 29

São Paulo 29

Moscow 30

Mumbai 38

Jakarta 43

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This indicator measures business opportunity and business development. Istanbul, Beijing, São Paolo and Moscow have significantly improved their ranking over last year to catch up with Mexico City, the top E7 city for Ease of Doing Business over the past two years.

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*Country-level data***Data based on countries’ most populous city

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December 2014

PwC Russia

Cost Moscow moved up three notches in the league table

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When measuring the Cost variables, we assumed it is not enough for competitive cities to just create an entrepreneur-friendly business environment, but that income levels for residents of such cities should also be high enough to meet a wide range of consumer needs and ensure a decent standard of living.

Total Tax Rate Cost of Business Occupancy

Cost of Living iPhone Index Purchasing Power Score

Istanbul 17

Mexico City 18

Moscow 18

Jakarta 20

Mumbai 20

São Paulo 22

Beijing 25

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December 2014

PwC Russia

From Moscow to Sao Pãulo21

The way forward -What can Moscow learn from and share with  other E7 cities and beyond? The implications

December 2014

What can Moscow be proud of

Where can Moscow learn• High level of literacy and enrollment and

high percentage of population with higher education

• High potential for developing innovations

• Basic infrastructure for information society

• Quality and diversity of public transport

• Public parks and green spaces

• Relatively high quality of living

• Over the last 10 years Moscow performed well in terms of attracting FDI

• Citizens purchasing power

• Employee regulations

• Performance of the universities

• Encouraging entrepreneur-ship

• Attracting international meetings and conferences

• Availability of housing and facilities for expats

• Waste management

• Law enforcement

• Availability of a high quality office space at a reasonable price

• Building and supporting city brand

PwC Russia 22

For more information on this report, please contact our specialists:

Vadim KhrapounPartner

Hazem GalalPartner

Consulting Leader PwC RussiaTel.: +7 (495) 232 5408vadim.khrapoun@ru.pwc.com

PwC Cities and Local Government Sector Global LeaderTel.: +974 4419 2852 (Doha, Qatar)hazem.galal@qa.pwc.com

Ekaterina ShapochkaPartnerGovernment and Public Sector Services LeaderPwC RussiaTel.: +7 (495) 223 5002ekaterina.shapochka@ru.pwc.com

December 2014From Moscow to São Paulo

PwC Russia 23

© 2014 PricewaterhouseCoopers Russia B.V. All rights reserved.

PwC refers to PricewaterhouseCoopers Russia B.V., or, as the context requires, other member firms of PricewaterhouseCoopers International Limited (PwCIL). Each member firm is a separate legal entity.

PwC Russia (www.pwc.ru) provides industry-focused assurance, advisory, tax and legal services. Over 2,600 people work in our offices in Moscow, St Petersburg, Yekaterinburg, Kazan, Novosibirsk, Rostov-on-Don, Krasnodar, Voronezh, Yuzhno-Sakhalinsk and Vladikavkaz share their thinking, experience and solutions to develop fresh perspectives and practical advice for our clients. The global network of PwC firms brings together more than 184,000 people in 157 countries.

PwC is the brand under which member firms of PricewaterhouseCoopers International Limited (PwCIL) operate and provide services.

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