The most productive US cities have pulled further ahead of the pack since 1995? | McKinsey Global | Report

• Structural shifts, including the movement from a manufacturing-based to a services-based economy, have also led to a growing geographic dispersion of productivity levels, seen strikinglyacross major US cities (Exhibit 8).

• Over the past several decades, some have seen relatively modest productivity growth, including those in the historical Rust Belt. On the other end of the spectrum, cities with deep knowledge ecosystems have seen extraordinary gains and continue to offer high income possibilities. For example, in San Jose, California, GDP per capita has more than tripled since2000 (see sidebar “What makes some cities more productive than others?”).

• Notably, however, the cost of living also varies by city; housing in particular tends to be more expensive in cities with higherlevels of productivity and income.

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What makes some cities more productive than others?

Cities have long been cradles of innovation and hubs for economic activity in the United States and elsewhere.1 How have some US cities capitalized on their advantages to become more productive than others?