overall rank: 3

country: Japan

population: 2,594,729

snapshot: The City at a Glance


Colorful flags are everywhere: in shops, subways, on buses and fluttering gaily in the streets. Printed with rings of cherry blossoms, they shout "Bring the Olympics to Osaka." Mayor Isomura Takafumi is campaigning hard for his city to host the 2008 event. It means heavy capital investment (including $664 million for the main stadium and $2.37 billion for its subway link). But Isomura, 67, is betting that the Olympics will revive Osaka's fortunes. "Some people think we are being foolishly extravagant during Japan's worst recession, but I want to prove the opposite," he says.

Osaka people are lively and optimistic. So perhaps it's no accident the city is hometown to CEOs of such giant conglomerates as Sumitomo and Matsushita. Other enterprising souls set up the myriad smaller businesses that made Osaka the commercial hub of the Kansai region. That was then. Many firms did not survive competition from cheaper Asian manufacturers. In shipping, too, South Korea has overtaken Osaka's lead in the world. The result has been 4.5% unemployment, which is coupled with a burst property bubble and a failing retail sector.

In this gloom, Isomura sees the Olympiad as a catalyst. He reckons the demand for new products and services will help companies innovate and move out of traditional industries. Spectators, too, could bring in as much as $4 billion. More than that, the mayor hopes the Olympic exposure will establish Osaka as a gateway to historic Japan - it is a 30-minute train ride to the ancient capitals of Nara and Kyoto - and fire up its tourism business. Then there is the Universal Studios theme park (the city has a 25% stake) set to open in 2001 - the first outside the United States.

Can Isomura steer Osaka toward a new future? Residents are placing their trust in his economic skills and clean reputation. The onetime economics professor confesses he is far more comfortable in America where he studied. "Here I am expected to toe the line so much," he says. But society is evolving, too, and he is keen to display leadership: "Japanese people are becoming more civic conscious and demands are growing." Community leader Matsura Yoneko can testify to that. The city government is much more transparent these days, she says - thanks in no small measure to groups like hers, which last month won a suit forcing officials to return $830,000 in misused funds to the city.

The spare cash will come in handy. Despite high tax revenues ($45.6 billion last year), Isomura has trouble meeting his budgetary needs - 76.7 % of Osaka's income is diverted to prefectural and central government coffers. With expenditure estimated at $36.5 billion, Isomura has managed by trimming the bureaucracy and setting limits on new infrastructure - and without reducing budgets for welfare, education and environmental works (including garbage disposal and water supply). After all, his slogan for Osaka is: a city that is kind to the people.

- By Suvendrini Kakuchi

Snapshot: The City at a glance
	City	Average	Rank
Overall Score	71	52	3
Population	2,594,729	5,294,948	23
Average Income US$	39,271(b)	8,763	2
State Educational Spending Per Cap/$	477.54	200.22	7
a Ratio of House Price to Income	6.2(c)	24	5
Hospital Beds per 1,000	14.6	6	4
Dust/Suspended Particles(ug/m3)	40	240.73	2
Vehicles per KM City Roads	200*	224.62	21
Criminal Cases per 10,000	316	81	38
TV Sets per 1,000	500+*	241.69	2