Global City Rankings Put Human Capital and Quality of Life Ahead of Tax Cuts for Urban Success

A new annual ranking of the world’s 1,000 largest cities by Oxford Economics, the UK-based economic advisory firm, provides a clear verdict on what truly drives urban prosperity: human capital and quality of life. Tax levels, incentives and “business climate” rankings barely register in the analysis, a finding that directly challenges the policy prescriptions of business lobbies that argue for cutting taxes and deregulation to stimulate city economies.

The Global Cities Index 2026 measures economic success through GDP growth, GDP per capita, employment growth, economic stability and diversity. But the report’s deeper analysis reveals that two factors—human capital, largely reflecting educational attainment, and quality of life—are the strongest predictors of which cities thrive.

For London, a city that consistently ranks among the world’s top global cities, the findings reinforce the importance of continued investment in education, public services, green space and cultural amenities. For cities like Portland, Oregon—the subject of the original City Observatory analysis—the index provides data that directly contradicts claims that the city is stuck in a “doom loop” caused by local policy.

Key facts
| Factor | Role in urban economic success (per Oxford Economics) |
|——–|——————————————————–|
| Human capital (education, skills) | Strongest correlation with GDP per capita and economic growth; drives a virtuous cycle of investment and productivity |
| Quality of life (environment, amenities, public services) | Key driver of economic outcomes; attracts and retains skilled workers |
| Tax levels, incentives, business climate | Not a ranking factor; mentioned only seven times in the 155-page report and never as a primary driver |

What the Oxford Economics Index measures

Oxford Economics describes itself as “the world’s leading independent economic advisory firm,” analysing over 200 countries, 100 industrial sectors and 8,000 cities and regions. The Global Cities Index ranks 1,000 cities worldwide on five categories: economics, human capital, quality of life, environment and governance.

The firm’s methodology section makes explicit that education and quality of life are the critical factors in determining economic success. “Cities with strong human capital are well placed to capture growth opportunities,” the report states. “Economic growth and opportunity exist within a virtuous cycle, with those at the top of our rankings typifying this self-reinforcing dynamic.”

The report describes how moving up the value chain attracts and retains skilled workers for higher-productivity, higher-wage sectors. Strong industries then incentivise higher levels of educational and skills attainment, as returns to upskilling labour are higher. The end result is an increase in the stock of human capital, which further incentivises investment, accelerating economic growth.

Quality of life as an economic driver

The Oxford Economics analysis also emphasises the critical role of quality of life as a driver of economic prosperity. The report states that quality of life is “economically valuable in its own right”—residents derive value from living in a place with high environmental quality, amenities and public services. But it also triggers a virtuous circle by attracting and retaining the human capital that drives economic growth.

“The virtuous cycle of growth drives, and is driven, by quality-of-life improvements,” the report notes. “This is because economic growth, particularly productivity-driven economic growth, unlocks increases in living standards.”

For urban planners and policymakers in London and other major UK cities, the message is clear: investment in public realm, parks, transport, cultural institutions and housing quality is not a cost to be minimised but a direct contributor to long-term economic competitiveness. The findings align with City Observatory’s own research showing a strong relationship between per capita income and adult educational attainment across US states.

What does not matter: taxes and business climate

Perhaps the most striking finding for those who follow urban economic debates is what the Oxford Economics index does not include. Tax levels, incentives and “business climate” are not factors in the city rankings and hardly rate a mention in the report’s conclusions and recommendations.

In the 155-page report, the word “taxes” appears just seven times, and “incentives” only three times, typically as footnotes in city profiles rather than as primary or secondary ranking factors. The term “business climate” does not appear at all.

The report’s analysis of Dallas, Texas—the sole US city where tax levels are mentioned—is instructive. Oxford Economics concludes that “the lack of a Texas state income tax… alone is not enough to overcome Dallas’ other liveability challenges.” Dallas’s lowest performance is in the environment rankings, driven by “expansive urban sprawl, along with limited public transit infrastructure,” resulting in “high levels of traffic and poorer air quality compared with most cities in the US.”

Portland’s performance and the “doom loop” debate

The original City Observatory analysis focuses on Portland, Oregon, which ranks 8th among the 50 largest US cities in the index for quality of life and above average in human capital and economic strength. The global perspective provided by the Oxford Economics index casts serious doubt on claims that Portland is stuck in a “doom loop” caused by local taxes and regulations.

City Observatory argues that some in the local business community have engaged in a “campaign of bad-mouthing Portland as a place to live and do business,” which it describes as “foot-shooting on an epic scale.” It notes that short-term economic results are largely due to two bad years by the region’s two biggest employers, Intel and Nike, not a public policy doom loop.

The Oxford Economics data suggests that maintaining quality of life and investing in education are the real keys to long-term prosperity—not cutting taxes for the wealthy and big businesses, as some local business lobbies have argued.

Implications for London and UK urban policy

While the index is global in scope, its findings have direct relevance for London and other UK cities. London’s status as a leading global city is built on its concentration of world-class universities, cultural institutions, public transport network, parks and public realm. The Oxford Economics analysis suggests that preserving and enhancing these assets is not just a matter of civic pride but a core economic strategy.

The report’s dismissal of tax-based competition as a meaningful factor in urban success also challenges the logic of “levelling up” policies that rely on tax incentives to attract businesses to disadvantaged regions. If human capital and quality of life are the true drivers, then investment in education, skills training, public transport, housing quality and green infrastructure should be the priority.

For London planners and policymakers, the index reinforces the case for continued investment in the capital’s public realm, transport upgrades such as Crossrail 2 and the Bakerloo line extension, and housing delivery that prioritises quality and affordability over volume alone. It also supports the case for maintaining London’s cultural and educational institutions as economic anchors.

The Oxford Economics index provides a data-driven rebuttal to the idea that cities can cut their way to prosperity. For urbanists and residents who value public services and quality of life, the message is that these investments are not just desirable—they are economically essential.

Source: City Observatory, “What Global Rankings Say About Successful Cities and Portland’s Performance,” https://cityobservatory.org/what-global-rankings-say-about-successful-cities-and-portlands-performance/

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