NEW YORK, Nov. 11, 2019 /PRNewswire/ -- Digital Realty (NYSE: DLR), a leading global provider of data center, colocation and interconnection solutions, today unveiled new research predicting that by 2029 AI, IoT, blockchain and 5G will drive $721 billion in revenue per year to 60 of the largest cities around the world. Through new jobs, new businesses, new industries, improved public services and more, the following 10 cities (ranked in order) are predicted to be the world's leading digital capitals by 2029:
- New York City
- Los Angeles
- San Francisco
- Hong Kong
Poised to create the greatest impact in the next decade, AI, IoT, 5G and blockchain have data at their core. This comes as no surprise to Digital Realty, considering there are 294 billion emails and 5 billion internet searches1 and 482.6 billion electronic financial transactions2 every day, and that's without touching on the data use we don't see – from shipment tracking to factory automation – and the amount of data we use is only going to grow more rapidly. However, data led technology is just starting out. The business applications of these four technologies alone will create a new explosion in data and the value it brings to people and businesses around the world.
The economic contribution of digital information has previously been termed the data economy: this is the financial and economic value generated by the creation, storage, retrieval and use of highly-detailed business and organizational data at high speeds. The report specifically assesses the current and potential economic value innovative data led technologies will bring to 60 cities around the world in the next decade.
"We wanted to build on previous reports and uncover the role cities will play in the future data economy," says Chris Sharp, CTO of Digital Realty. "It's no surprise that cities like New York, Tokyo and London occupy a lofty position in the report. Not only are they hubs for the highest density of digital commercial activity and digitally-skilled workforces, but also their laser focus on the creation of new digital technologies and applications makes them prime examples of what's possible in the world's data economy."
By 2029: AI Dominates
Among the four leading technologies, AI will account for 46 percent of value growth, increasing in value by $255 billion per year by 2029, and adding an average of $5.13 billion to each city every year.
A further 22 percent of the overall increase is expected from 5G and nearly 21 percent from IoT, while blockchain is expected to account for the final 11 percent. Although the biggest contributor is AI, 5G is expected to grow at the fastest rate over the 2019-2029 period: this is because 5G is an emerging technology and is expected to grow rapidly from a low baseline position.
New York City: Leading the World's Data Economy
New York City is a major powerhouse for the world's data economy. The city is filled with entrepreneurial people who work in the biggest industries such a legal, accounting, and business and it will continue to become a major ecosystem of data excellence. By 2029, New York is expected to have cemented its title as the world's data capital. At that time, the annual contribution of AI, IoT, blockchain and 5G is expected to grow to $46.14 billion, up from $11.15 billion in 2019. While the annual financial contribution of these four specific technologies to the NYC economy is currently the second largest of any city in the world (with only Tokyo experiencing a greater annual contribution), NYC is expected to generate the greatest annual value from the four technologies by 2029.
Annual value (in billions)
Percent of overall city economy
Table 1: NYC – Estimated value of 4 digital technologies: 2019 (US$ billions, 2019 prices)
By 2029, these four technologies in combination are expected to contribute just under 5.5 percent to the overall NYC economy, up from around 1.9 percent in 2019. The greatest share of this growth (nearly 47 percent) is attributable to AI with a further 23 percent coming from 5G.
Today, New York City leads the world in turning data into real value and it will for the next decade, but Shanghai is catching up rapidly, growing faster than any other data economy in the next decade. It is predicted that Shanghai's data economy will grow faster than any other and move eight places up to become the 29th latest data economy by 2029. In the next decade, it will become the global capital for blockchain (generating US$6.12 billion per year) and rank in the top three largest centers for:
- AI: US$17.59 billion per year - in 3rd place after Tokyo (2nd, US$17.73 billion per year) and New York City (1st, US$19.86 billion per year)
- IoT: US$11.38 billion per year) - in 3rd place after Tokyo (2nd, US$11.97 billion per year) and New York City (1st, US$12.85 billion per year)
- 5G (generating US$7.21 billion per year) - surpassing Tokyo (3rd, US$7.02 billion per year) to land in 2nd place after New York City (1st, US$7.92 billion per year)
New York and Shanghai look set to lead because they are abundant in three characteristics that are apparent in the fastest growing data economies including a strong consumer demand for data-led products and services, quality technical universities and well established infrastructure and low latency data connectivity.
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About Digital Realty
Digital Realty supports the data center, colocation and interconnection strategies of customers across the Americas, EMEA and APAC, ranging from cloud and information technology services, communications and social networking to financial services, manufacturing, energy, healthcare and consumer products. To learn more about Digital Realty, please visit digitalrealty.com or follow us on LinkedIn and Twitter.
Research was undertaken by Development Economics, an economic consultancy providing highly robust research, market analysis and advice for private and public sector clients. Clients include Barclays, NFU, RBS and Facebook.
Development Economics' approach to the study involved several key steps.
- First, a desk-based review was undertaken focusing on the evidence regarding the business benefits of digital technology. The review also identified potential sources of the latest available data covering international business and economic datasets.
- Second, Development Economics used economic, demographic and business datasets to identify and benchmark global cities for comparative review.
- Third, a set of potential digital economy indicators was proposed and agreed with Digital Realty. We selected 10 indicators covering the following factors:
- The overall size of the city-level economy
- The activity scale of companies operating in data-intensive business sectors and the rate of adoption of digital technology among other businesses
- The scale of consumer demand for data and digital applications
- R&D: the presence of a leading university or universities in cities
- The quality of telecommunications infrastructure
- Human capital: the proportion of workforce with advanced data skills
- The stability of the local political environment, levels of crime and other metrics of city governance
- Quality of life indicators, such as the quality of health, public education, the efficiency of public transport and environmental indicators
- Support for the data sector such as open data policies
Publicly available datasets, sourced from NGO and governmental groups, were used for each of the ten indicators and fed into a set of recognized models for the weighting of economic impact.
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Safe Harbor Statement
This press release contains forward-looking statements which are based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially, including statements related to the Digital Capitals research and reports, including the methodology, expectations for the digital economy, AI, IoT, 5G and blockchain, and growth in specific cities, including New York City. For a list and description of such risks and uncertainties, see the reports and other filings by the company with the U.S. Securities and Exchange Commission. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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