Not every capital city pays off

A country’s capital typically serves as its economic centre, contributing substantially to the country’s economic output. But this is not the case with all such major cities. Ottowa is as insignificant for Canada’s prosperity as Berlin is for Germany’s.

Poor but sexy, with low living expenses which still include relatively low rent; a multicultural city that is hipper than most other European capitals – indeed, Berlin has much to show for itself. But one thing the German capital isn’t: a leading economy (see chart).

If the 4.4 million inhabitants of the Berlin metropolitan area and the region’s corresponding gross domestic product (GDP) are excluded from the calculation, Germany’s GDP per capita doesn’t drop – it increases. In fact, by around 0.5 per cent (value in 2012).

The only other capital among the G7 countries that shows a similar negative effect on the country’s prosperity is Ottowa, Canada.

In France, the United Kingdom, Japan, Italy and the United States, in contrast, the capital including its metropolitan area has an overall positive influence on the country’s wealth. Without Paris, the French GDP per capita would have been 17 per cent lower in the year 2012. Without Tokyo, Japan’s wealth would decrease by 6 per cent; and without Washington DC, the figure for the Unites States would decrease by 1 per cent.

Ottowa is as insignificant for Canada’s prosperity as Berlin is for Germany’s.

The fact that Ottowa and even Washington are in the same ranks as Berlin lies on the simple fact that the economic pulse of Canada and the United States beats in other places. In the US, for instance, the residents of Seattle, San Francisco, Boston and New York make an above-average contribution to the GDP. In Canada, a similar contribution can especially be seen in the oil-producing region of Alberta, with its key cities of Edmonton and Calgary.