A new peak in urban mobility for New York City was achieved in 2014 with 1.7B people having ridden its sprawling subway system. More recently, we saw another notable milestone with the introduction of the “UberChopper,” which offers a $484 sightseeing helicopter ride above Shanghai so that Uber, the disruptive player in transport, can continue to gauge interest in airborne services. It has already experimented with similar operations in the United States, India, Brazil and South Africa. And to think, it was only back in 1801 that the Philadelphia Water Works opened for business, making Philly the first major US city to provide clean drinking water throughout its borders. While it is estimated that about 2.7 billion people in the developing world live in urban areas, we know that 100% of Singapore’s population actually does. So it would seem that some rather important lessons can be learned from that burgeoning city-state.
In fact, Singapore realizes that a lack of readily accessible water is an existential threat—and so is the necessity to innovate. For Singapore, “urban innovation” has resulted in no deterrent to rapid growth. Following this month’s death of Lee Kuan Yew, Singapore’s founding father, The Wall Street Journal published a lengthy essay discussing how a tiny, poor nation with “a total absence of natural resources (not even its own supply of drinking water)” had been transformed into “an astonishing economic success.” The Journal highlighted today’s “well-ordered cityscape of manicured parks, gleaming office towers, high-rise apartment blocks filled with middle-class families and glittering malls swarming with wealthy consumers.”
Lee Kuan Yew was nothing if not pragmatic. While his relentless pursuit of the vision may not be to the liking of many, his accomplishments were remarkable and there are worthwhile learnings from his benevolent dictatorship. He stated that “The task of the leaders must be to provide or create for them a strong framework within which they can learn, work hard, be productive and be rewarded accordingly.” Lee Kuan Yew knew what mattered most.
In speaking of frameworks, we take this opportunity to highlight one of our own framework reports which addresses the question of Environmental Issues & Country Valuations: What Matters? from Cornerstone Capital’s Global Market Strategist, Michael Geraghty. Michael notes that in the past 30 years, the world’s star performers have been the resource-poor newly industrializing economies of East Asia—including Singapore—while many resource-rich economies, such as the oil-rich countries of Mexico and Venezuela, have gone bankrupt.
His conclusion: What matters most to wealth generation is how an economy uses flows of raw materials, rather than the country’s stocks of natural resources. Many resource-rich countries have lower levels of per capita GDP than resource-poor states that efficiently transform raw materials into wealth. The key point is that human capital, creativity and innovation are what drive prosperity. As the world continues to urbanize, with all that means for heightened interconnectedness and complexity, the need for Urban Innovation becomes more and more essential.
Erika Karp is the Founder & Chief Executive Officer of Cornerstone Capital Group.
Michael Geraghty is the Global Markets Strategist at Cornerstone Capital Group. He has over three decades of experience in the financial services industry including working as an investment strategist at UBS and Citi.