Imagine it is 40 years in the future. Government has been decentralized to the city level. Connections between cities consolidate into mega-corridors, which span national and state borders. This is the time of the mayor, whose political star has risen.

The growth in the number and size of cities means they can innovate and get things done more easily. The competitiveness of cities increasingly determines the wealth of nations. This raises the relevance and power of cities, narrowing the gap with national governments.

Cities emulate each other and adopt best international practice (often better than do nations). They are responsible for urban planning and zoning, housing, water, sanitation and policing. The impact of cities in reducing pollution, recycling, meeting carbon targets and mitigating the effects of global warming is often superior to that of most national governments.

The most successful cities, like the most successful nations, have: stable and solid public finances; low, simple and competitive taxation; simple and transparent business regulation; strong and impartial rule of law; openness to international trade and foreign investment; a welcoming environment for “foreign talent”; good “hard connectivity” such as roads, transit systems, ports, airports; and good “soft connectivity” like education, skills and technology diffusion.

Citizens value transparent, accountable and responsive governance in a geographic space to which they can relate. They increasingly identify with the cities they live in, providing them with a stronger sense of belonging. Economic interdependence and decentralized governance allow for rapid and responsive change. Collaboration between cities and their surrounding sub- regions on policies and best practices also increasingly shapes global issues.

Scenario planning is a structured way of thinking about the future so that strategic action can be taken in the present to encourage the most favourable outcomes. This scenario above –developed with the World Economic Forum’s Strategic Foresight team in collaboration with the Global Agenda Council on the Future of Government – is already part reality.

Three years ago, for the first time in history, over half the world’s population lived in cities. The top 10 cities by population: Tokyo, (34 million), Seoul (24.4 million), Guangzhou (24.2 million), Mexico City (23.4 million), Delhi (23.2 million), Mumbai (22.8 million), New York (22.2 million), Sao Paolo (20.9 million), Manila (19.6 million) and Shanghai (19.4 million) would all fit comfortably into the list top 50 nations by population. There is every reason to think this trend will continue.

The growth of cities was mainly a phenomenon of the West during and after the industrial revolution. But urbanization is now predominantly a non-Western phenomenon. Economic and political power are shifting to cities and megacities outside the West, and to cities in Asia in particular.

Urbanization is also swelling the ranks of the middle classes, again increasingly outside the West. In short, urbanization trends shift economics, and, by association, politics to the cities. A strong implication for this scenario is the impact it will have on the public sector. It will result in the decentralization of government, moving responsibility for policy competence to the municipal level. Another word for that might be fragmentation – the reduction of the authority and fragmentation of central government.

The implications for business are also strong. Increasingly, firms will operate along mega-corridors between cities as part of global supply chains. For multinational companies, cities are already the nodal points which represent value clusters. Companies which operate in the global sphere identify the niches cities offer them and act accordingly. For them, cities, not countries, supply the value chain.

This scenario also sees a widening of the urban-rural divide. Rural and semi-rural areas will lose influence along with revenue – the power of the purse.

Nation states and international cooperation will not disappear. But there is a strong argument for decentralizing power and policy as much as possible to the municipal level. Cities are less bureaucratic and sluggish than higher levels of governance; they are better able to experiment, innovate and diffuse best practice.

If economic and political power flows to city states, what are the implications for national, regional and global governance? Would global collective action still be possible? And what becomes of national and regional political constructs? To what level will decentralization and fragmentation go?

Razeen Sally is Visiting Associate Professor at the Lee Kuan Yew School of Public Policy, National University of Singapore, and Chair of the Global Agenda Council on Competitiveness of the World Economic Forum.

The World Economic Forum’s Strategic Foresight team and the Global Agenda Council on the Future of Government have developed three scenarios of how the world of governance could evolve by 2050: CityStates, e-1984 and Gated Communities.