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Global economic growth over the next decade will be driven largely by growing cities in emerging economies, according to a fascinating new report from the McKinsey Global Institute , titled Urban world: Cities and the rise of the consuming class . Of the 600 cities that the report cites as the most important drivers of the global economy, 440 are in emerging economies. And while McKinsey Global projects the "City 600" will account for 65% of global growth by 2025--rising some $30 trillion over that span--the 440 cities in emerging economies will account for nearly half of all global growth on their own. Also, the report projects that we will see 1 billion new consumers from these 440 cities. McKinsey Global calls this development "the most significant shift in the earth’s economic center of gravity in history." From the report: The incomes of these new consuming classes are rising even faster than the number of individuals in the consuming classes. This means that many products and services are hitting take-off points at which their consumption rises swiftly and steeply. By 2025, urban consumers are likely to inject around $20 trillion a year in additional spending into the world economy. Catering to the burgeoning urban consumer classes will also require a boom in the construction of buildings and infrastructure. We estimate that cities will need annual physical capital investment to more than double from nearly $10 trillion today to more than $20 trillion by 2025, the lion’s share of which will be in the emerging world. This huge sum of consumption and investment could inject more than $30 trillion of annual spending into the world economy by 2025—a powerful and welcome boost to global economic growth. But there will be challenges, too. Rapidly urbanizing emerging economies and their increasingly wealthy consumers are already driving strong demand for the world’s natural and capital resources. The global investment rate and resource prices have jumped and could rise further. Cities can be part of the solution to such stresses, as concentrated population centers can be more productive in their resource use than areas that are more sparsely populated. But if cities fail to invest in a way that keeps abreast of the rising needs of their growing populations, they may lock in inefficient, costly practices that will become constraints to sustained growth later on. How countries and cities meet this rising urban demand therefore matters a great deal. Beyond the direct impact of the investment, their choices will have broad effects on global demand for resources, capital investment, and labor market outcomes. Read the full report here . You can also explore the City 600 and the economic of cities globally with a new interactive map from the McKinsey Global Institute. Click here .

Zurich has supplanted Tokyo as the most expensive city in the world, according to the Economist Intelligence Unit . The struggles in the EU seem to have pushed already pricey Swiss cities Zurich and Geneva into the top three most expensive cities, as the Swiss Franc keeps getting more and more valuable. From the EIU's Worldwide Cost of Living 2012 report: Both Japan and Switzerland have seen strong currency movements over the last few years which have made them relatively more expensive. This has become especially true of Switzerland in the last year, where investors looking for a haven currency outside the beleaguered Eurozone have invested heavily in the Swiss Franc, prompting an unprecedented move by the Swiss government to peg the Swiss Franc to the Euro to keep the currency competitive. Although Switzerland has long featured in, or around, the world’s most expensive cities, the strong swing in currency headwinds is responsible for Zurich’s current elevated position. In local terms the opposite has been true, with relatively cheaper imports and a stable economy keeping local price inflation low. This mirrors a similar situation in Japan over recent years which resulted in Tokyo and Osaka traditionally holding the unenviable title of being the world’s most expensive cities. Local inflation in mature markets always has far less influence on the relative cost of living than the currency movements of the countries in question. This also explains the recent presence of Australian cities like Sydney and Melbourne in the ten most expensive locations as last year saw the Australian dollar pass parity with the US dollar from holding half that value a decade ago. New Yorkers with empty pockets may be surprised to learn that their city isn't near the top of the list. In fact, no American city cracks the top ten this year. Here are the ten most expensive cities: Read the EIU's release here .

The Brookings Institution 's Global MetroMonitor for 2011 paints a picture of shifting strength from cities in the developed nations to Asia and South America. Not that the metro areas of the US and Western Europe are not still vital drivers of the global economy, but the growth was elsewhere in between 2010 and 2011. Note where much of the blue is on this map: The map is a helpful supplement to the report (click here to access the interactive map). As it shows, most of the strongest performing metro areas--90%, in fact--are outside of the US and Western Europe, while almost all of the weakest are in Japan, the US, and Western Europe. Alan Berube , director of research for the Brookings Metropolitan Policy Program and one of the authors of the report, notes some of the key takeaways from the Global MetroMonitor in this video: Read the full report here .

We woke up this morning to find out that Monocle has named Helsinki the winning city in its most liveable city index for 2011 . Being in Helsinki at the moment, this made perfect sense. As Finland spent the latter half of the 21st Century working to make the transition from a rural nation with an economy driven by timber and manufacturing to a more dynamic economy that placed value in innovation and design, Helsinki grew to become an important urban center. Today, Helsinki is a vibrant, highly efficient city. And Monocle's index ranking reflects the cultural wealth of the place, but it is also a result of the growth of small businesses, many that fall within the city's core design-driven creative economy. In an interview with Monocle, Helsinki's mayor, Jussi Pajunen , talks about how his country is building and growing at a time when others are cutting back. Take a listen, here . Also, take a look at Monocle's short video about Helsinki and why it was picked as the most liveable city. Click here .

For many Americans, deciding whether to buy a house or to rent is one of the most significant economic decisions they will make. For that reason, the buy versus rent debate provides an excellent case study for Econ teachers and students. David Leonhardt has spent a lot of ink on the subject for the New York Times over the last several years--he calls it a "near-annual habit". He writes an update about the rent-vs-buy dilemma in today's Times, and the most basic way to look at the numbers suggests that if one is planning on living in a home for five years or more, buying makes sense. But then one has to consider the specific market. Leonhardt: Within this basic framework, the numbers — specifically, something called rent ratios — are the next place to turn. A rent ratio is the sale price of a house divided by the annual cost of renting an equivalent house. When the ratio is below 15, most people should lean toward buying. To see why, look at the Atlanta area, where the average ratio is now about 13. Combined with today’s low interest rates, that ratio means that the typical monthly mortgage payment is several hundred dollars lower than the rent on an equivalent house. Over time, this difference helps make up for the other costs of owning, like closing costs and borrowing costs. And, yes, a mortgage costs money, despite the tax deduction. Only if home prices in Atlanta fall further and don’t recover for years would most buyers today have reason for regret. The other areas where the average ratio is below 15, according to Moody’s Analytics, include Los Angeles, Miami, Minneapolis, St. Louis, Las Vegas, Cleveland, Detroit, Phoenix, Pittsburgh and Tampa, Fla. Read Rent or Buy, a Matter of Lifestyle here . And take a look at the this multimedia tool at the New York Times website. It allows you to enter specific home costs and rental costs to determine which option is better: Click here to use the multimedia tool .

At the New York Times Economix blog, Harvard economist Edward Glaeser looks at Seattle as an interesting case study for how cities can grow in population, influence, and prosperity. Seattle's success, Glaeser writes, was "hardly foreordained." But it has escaped the fate of cities like St. Louis and Detroit. And Glaeser points to population density generally, and the density of en educated population specifically, as key factors: Dense, smart cities like Seattle succeed by attracting smart people who educate and employ one another. A person’s earnings rise by more than 7 percent as the share of people in his or her metropolitan area with a college degree increases by 10 percent, holding that person’s own level of education constant. Educated neighbors are particularly valuable in dense cities, where contact is more common. Skilled people have often chosen to come to already educated cities, and the share of Seattle adults with college degrees has risen to 56 percent from an already high 47 percent in 2000. Today, Seattle is one of the wealthier and most productive metropolitan areas in the United States. Per-capita personal income is 25 percent above the United States average. Per-capita productivity is 37 percent above the metropolitan average in the United States. That productivity explains why Seattle has grown so robustly over the last decade. Read How Seattle Transformed Itself here .

Harvard economist Edward Glaeser has a new book out, Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier and Happier . In the book, he challenges some of our conventional wisdom about cities. Or at least it challenges the political and media narratives about cities Healthier? Greener? Glaeser made the case for cities on The Daily Show . Note how he argues that cities are the "economic heartland America" (at 4:15): The Daily Show With Jon Stewart Mon - Thurs 11p / 10c Edward Glaeser www.thedailyshow.com Daily Show Full Episodes Political Humor & Satire Blog The Daily Show on Facebook Hat tip to Greg Mankiw .

Richard Florida has been advising cities on how to appeal to the most innovative companies and employees for several years now. And his books, especially The Rise of the Creative Class , have sparked some interesting public debates on just what urban centers need to do to become innovation centers. Nearly a year ago we highlighted Florida's extensive article in The Atlantic in which he pushed the notion that the global economic crisis would "reshape" cities. He is still pushing this idea, and in a recent interview with Big Think , he discussed how a "new class of thinkers," is set to emerge: Watch the full interview here .