Modern economic growth has ensured the supremacy of the Shinra organisation, this natural monopoly has innovated industry, incorporating the derrivation of natural resources from the planet.
I would have to disagree. ShinRa thrived as a weapons manufacturer, but once they monopolised the global market in all things, innovation and progress largely ceased. With no competition and no regulation, they were free to make whatever they wanted and to force the people to accept it. From this, we have the most curious comparison between FFVII's world and our own: the completely different level of technology in its different forms. Greed and laziness, the pursuit of comfort drove the dependency on Mako energy. Technology followed suit. Objects are often primitive, yet functional, but also impractical. Take, for example, the vehicles in the ShinRa advertisement: they are mainly described as 'driver-only big sedans', a grossly impractical arrangement: good for one person and a modicum of luggage, but not for a couple, or a family. The design necessitates bulk purchases, giving ShinRa more money, and further encouraging the slack and inefficient design. Their space programme demonstates this, too. It has no commercial application, so it is thrown by the wayside, much to Cid's disgust... yet it employs some technological 'wonders' which far exceed our own space programme: the suitless environment system, effective escape pods, and arificial gravity (presumably based on 'Gravity' materia) are absolute marvels, but are not widely exploited by ShinRa.
Technological stagnation was the result. A truly unrivalled level of disparity, with swords and shurikenu coming up against lasers and robots.
Your analysis of the mood of Midgar was intersting, Besimudo... rather than a climate of fear, though, I found that the mood of Upper Midgar consisted more of grim acceptance than actual terror. People went about their daily lives, not really enjoying it, but knowing that it would never be chaotic or uncertain, thanks to ShinRa. The AVALANCHE bombings finally made the citizenry question the security of their structured, almost manufactured lives. The slum dwellers, however, seem to be more full of life. AVALANCHE were based in the slums, a place where the daily fight for survival against monsters and pollution had given a strength and creativity to the people. They're able to appreciate the little things more, they're more open and friendly - like the homeless man living in the train, who welcomes Cloud, or Tifa, whose '7th Heaven' provides comfortable surroundings and a 'personal touch' in the form of homemade cocktails. Don Corneo doesn't fit in... he's clearly a denizen of the upper world, one who thrives by exploiting the poor of the slums. The bright lights and shiny fittings in his mansion clearly don't belong to the more earthy slums. His greed enslaves many in the lower world, and ultimately kills them when Corneo sells out to the Turks. The slums are a nasty place and attract many nasty people, but for many it is 'home', a place to cherish and be proud of, as Barret says. Nothing similar could be said of upper Midgar's lifeless greyness.

Wutai, after their loss to ShinRa's forces in the war, was in danger of becoming another mini-Midgar. Godo wallows in apparent self-pity, while his daughter, although rebellious and undisciplined, remains the only one with a desire to move forward. She hates the hollow 'cheesy resort town' simulacrum that Wutai has become; the commercialisation of its culture is as abhorrent to her as her elders' refusal to exercise their only remaining power, that of the Five Transformations. She doesn't want to reamin entrenched in the past, nor does she want to stagnate in ShinRa's present. She wants progress for her home - and as the only city even slightly independant of ShinRa's global monopoly, it is the only place with any real chance of obtaining it (until the end, of course, but that's different).

After ShinRa's downfall, it's possible that the entire world could begin to go the way of 'Yuffie's Wutai': not at the cutting edge of technology, but free to find their own solutions. They could have the resoucefulness of North Corel's surviving miners, but without the enforced Stone Age living conditions.

Don Corneo chose Wutai to make his last stand. It was, in a way, a commercialised facade, perfectly suited to a parasite like him. Yet it also posessed a richness of culture and history, removed from ShinRa's influence, which made it an ideal place for him to hide from his pursuers' gaze.

OK, my actual point, if I'm trying to make one, is not entirely clear... but feel free to interpret what you will from my thoughts.