Today, megacities have turn into synonymous with economic growth. In each developing and developed countries, cities with populations of 10 million or more account for one-third to one-half of their gross domestic product.

Many analysts and policymakers think this trend is here to remain. The rise of huge data analytics and mobile technology should spur development, they assert, transforming metropolises like Shanghai, Nairobi and Mexico City into so-called “smart cities” that may leverage their huge populations to power their economies and change the facility balance on the planet.

As technology researchers, nonetheless, we see a less rosy urban future. That’s because digitization and crowdsourcing will actually undermine the very foundations of the megacity economy, which is often built on some combination of producing, commerce, retail and skilled services.

The exact formula differs from region to region, but all megacities are designed to maximise the productivity of their massive populations. Today, these cities lean heavily on economies of scale, by which increased production brings cost benefits, and on the savings and advantages of co-locating people and firms in neighborhoods and industrial clusters.

But technological advances at the moment are upending these old business models, threatening way forward for megacities as we all know them.

Manufacturing on the fritz

One classic example of a disruptive recent technology is 3-D printing, which enables individuals to “print” all the pieces from ice cream to machine parts.

As this streamlined technique spreads, it’s going to eliminate among the many links in the worldwide production process. By taking out the “middle men,” 3-D printing may ultimately reduce the availability chain to only a designer on one end and a manufacturer on the opposite, significantly reducing the production costs of manufactured goods.

Will 3-D printing put you out of a job next?
Creative Tools, CC BY

That’s good for the profit margins of transnational firms and consumers, but not for factory cities, where much of their transportation and warehousing infrastructure may soon turn into redundant. Jobs in manufacturing, logistics and storage, already threatened across many large sites, may soon be endangered globally.

In short, 3-D printing has transformed the economies of scale that emerged from industrialization into economies of 1 or few. As it spreads, many megacities, particularly Asian manufacturing centers like Dongguan and Tianjin, each in China, can expect to see widespread disruption to their economies and work forces.

Decline of the shopping center

The retail sector is experiencing an analogous transformation. Shopping malls, for instance, which once thrived in megacities, at the moment are affected by the appearance of e-commerce.

The value proposition of shopping malls was all the time that their economies of scale were location-dependent. That is, for malls to be profitable, that they had to be sited near a big consumer base. Densely populated megacities were perfect.

But as stores have moved online, megacities have lost this competitive advantage. While online shopping has not completely replaced brick-and-mortar retail, its ease and convenience have forced many shopping malls to shut worldwide. In the U.S., mall visits declined 50 percent between 2010 and 2013.

Cities in China, where the federal government has sought to construct its national economy on consumption, will likely be hit particularly hard by this phenomenon. China has the world’s largest e-commerce market, and it’s estimated that one-third of the country’s 4,000 shopping malls will shut down inside the subsequent five years.

As mobile technology continues its spread, accessing even probably the most distant populations, this process will speed up globally. Soon enough, retail web sites like Amazon, Alibaba and eBay could have turned every smartphone right into a virtual shopping center, especially if the dream of drone delivery becomes a reality.

The recent work force: Robots, AI and the human cloud

Changes within the business world will even affect cities worldwide.

Thanks to artificial intelligence, or AI, which makes it possible to automate quite a few tasks, each manual and cognitive, lately it’s goodbye, human bank tellers and fund managers, hello robots.

Even in jobs that can not be easily automated, the digitized gig economy is putting people into direct competition with a worldwide supply of freelancers to do tasks each menial and specialized.

There are actually advantages to crowdsourcing. Using each AI and the crowdsourced knowledge of 1000’s of medical specialists across 70 countries, the Human Diagnosis Project has built a worldwide diagnosis platform that’s free to all patients and doctors – a specific boon to individuals with limited access to public health services.

But by taking collaboration virtual, the “human cloud” business model can be making the notion of offices obsolete. In the longer term, medical professionals from various specialties will not have to work near to one another to get the job done. The same holds for other fields.

In a world without office space, traditional business and financial centers like New York and London would feel the pain, as urban planning, zoning and the real estate market struggle to regulate to firms’ and staff’ changing needs.

What would Tokyo be without its office space?
Yodalica, CC BY-SA

Crisis within the making

At some point, all this transformation may find yourself meaning that economies of scale matter much, much less. If that happens, population size – currently the motor of the trendy metropolis – will turn into a liability.

Megacities have long struggled with the downsides of density and rapid urbanization, including communicable disease, critical infrastructure shortages, rising inequality, crime and social instability. As their economic base erodes, such challenges are more likely to grow more pressing.

The damage will differ from city to city, but we imagine that the profound shifts underway in retail, manufacturing and skilled services will impact all the world’s seven major forms of megacities: global giants (Tokyo, New York), Asian anchors (Singapore, Seoul), emerging gateways (Istanbul, São Paulo), factory China (Tianjin, Guangzhou), knowledge capitals (Boston, Stockholm), American middleweights (Phoenix, Miami) and international middleweights (Tel Aviv, Madrid).

Rising unemployment is already making waves in lots of developing world megacities.
Reuters/Str Old

And because 60 percent of worldwide GDP is generated by just 600 cities, struggle in a single city could trigger cascading failures. It’s conceivable that in 10 or 20 years, floundering megacities may cause the subsequent global financial meltdown.

If this forecast seems dire, it’s also predictable: Places, like industries, must adapt with technological change. For megacities, it’s time to begin planning for a disrupted future.

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