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Why the Most Livable Cities Aren't the Most Startup-Friendly

Why the Most Livable Cities Aren't the Most Startup-Friendly

Posted by PanamericanWorld on August 24, 2015

A city's quality of life doesn't always measure up to its suitability for startups and entrepreneurial activity.

What makes a location attractive to live in? There are many factors to consider, according to the Economist Intelligence Unit (EIU), which just released its 2015 Global Livability Ranking report. The study assessed 140 cities across the globe, considering five categories: stability, health care, culture and environment, education, and infrastructure.

Of the top 20, Honolulu was the only U.S. city to make the list, coming in at No. 19. (Washington, D.C., ranked at No. 31, with Chicago at No. 33.) 

Canada and Australia reigned supreme. The top five cities were Melbourne, Vienna, Vancouver, Toronto, Adelaide, and Calgary (respectively). It's worth noting that just two of these -- Vancouver and Toronto -- were considered to be among the best places to start a business, according to Compass's 2015 Global Startup Ecosystem Ranking.

Going further down the list, however, U.S. cities fared better. Chicago, for one, was ranked as the seventh-best startup ecosystem in Compass's report. With as many as 104 companies on this year's Inc. 5000 listChicago also boasts the second-largest number of fast-growing companies in the U.S. New York City takes the top spot.

Overall, the EIU study found that stability in the world has dipped over the past five years, largely because of civil unrest and violence in places like the U.S. and France (where the January 2015 Charlie Hebdo attacks lowered Paris's overall score). Cities like Kiev and Damascus, for similar reasons, are at the bottom of the heap.

What's more, areas that you might associate with major business opportunities, such as San Francisco (No. 49) or New York City (No. 55), have become "victims of their own success," says the EIU's global economist, Joseph Lake.

"Oftentimes, global business centers don't rank as high as you might expect. A lot of things that are attractive can make a city less livable over time," he explains, noting that such areas have a tendency to overstretch their infrastructure. And as startups create more jobs, and drive more talent to their ecosystems, population density increases, which can then lead to higher crime rates.

Still, while midsize cities tend to have the highest livability scores, Lake notes that any center in the top 20 percent is a pretty good place to live. 

A few of the lower-ranking cities, however, also experienced a surge in quality of life, which bucked the downward trend. Nairobi, Kenya, was among the top 10 "most improved" centers on the list, climbing to No. 120 and upping its rating by a factor of 1.5 over the past five years.

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