Investing in creative talent for innovative 'smart cities'

Dr B K Mukhopadhyay

(The author is a Professor of Management and Economics, formerly at IIBM (RBI) Guwahati. He can be contacted at m.bibhas@gmail.com)

Dr. Boidurjo Rick Mukhopadhyay

(The author, international award-winning development and management economist, formerly a Gold Medalist in Economics at Gauhati University)

''If man and machine work side by side, which one will make the decisions?" Smart cities essentially combine data and digital technology aiming to make faster and better decisions to improve the quality of life. Well-rounded, comprehensive, real-time data open up the opportunity to observe, plan, and project events as they unfold while understanding how demand patterns and behavioural changes occur; and, finally to respond speedily with low-risk and lower-cost solutions.

Smart city plans are now part of core discussions when it comes to planning, forecasting, and resource allocation by municipal leaders globally. It is interesting that after almost two decades of awareness and recognition of the concept of smart cities, there is less misunderstanding around the fact that smartness is beyond simply installing digital interfaces in existing infrastructure or streamlining city operations. Once again, the purpose of smart cities is to be able to make better decisions using a wide range of information and improve quality of life and well-being.

By 2050, projections show that 68% of the world's population will live in urban areas while the number of megacities will double. In other words, about 7 of 9.8 billion people are projected to live in urban areas by 2050. For India, studies show that the projection would be 52.84% while it's 80% for China. There are some disagreements between the UN and other researchers in regards to different projected numbers for Africa.

When MDGs (millennium development goals) were quite the buzz alike our SDGs (sustainable development goals) today, Governments in Africa and Asia started a more strategic plan for rapid urbanization to reduce the risk of harming the prospects of hundreds of millions of their citizen. This had a global knock-on effect. More than a decade ago, studies show that Brazil failed in the past to plan for rapid urban growth which exacerbated poverty and also created new environmental problems and long-term costs that could have been avoided.

A) Urbanization and Smart Cities

Some of the benefits of urbanization are a high density of economic activity, shorter trade links, utilization of human capital, and shared infrastructure. Urbanization is not a curse in as much as the same creates huge wealth and opportunities, enables better use of assets and creates new ones. Urbanization – being a continuous and spontaneous process – in most developing countries is bringing about enormous changes in the spatial distribution of people and resources and the use and consumption of land.

However, such a process is strongly linked to development [social, technological and economic], and many countries lack the appropriate policies and frameworks that can leverage it for increased development gains thereby channelising it towards larger sustainable patterns. In a word, these are not harnessed for development and de facto urbanization's challenges often seem to outpace the development gains.

On the other hand, the idea is also to double the number of smart cities, and also 'mega cities' in this period. The concept of a smart city refers to the initiatives that use digital/ICT (information, communication, technology)- based innovation to improve the efficiency of urban services and generate new economic opportunities in cities. The OECD defines smart cities as "initiatives or approaches that effectively leverage digitalization to boost citizen well-being and deliver more efficient, sustainable and inclusive urban services and environments as part of a collaborative, multi-stakeholder process".

Since every city has its specific characteristics in size, built environment, and fiscal resources- these differences affect the capacity of cities to manage smart technologies and attract smart city investment. The variation in physical characteristics may also affect the degree of applicability of specific digital technologies. Many studies on smart cities tend to focus on large cities which makes it difficult to transfer their experience to smaller cities. A study by Frost & Sullivan projects that spending on smart city technology is expected to reach US$327 billion by 2025, up from US$96 billion in 2019.

B) How does a smart city work?

Three layers make this concept work in practice. First - is the choice of selected and interconnected technology base, second – is the customised applications (or simply, apps) that allow translation, organization, and interpreting raw rate for generating alerts, insights, analytics, and determining the right tools for solving problems. Third – is the interdependent use of the above two layers by the public, private, and people on an ongoing and sharing basis. Most apps would be effective when more users sign up to it and start sharing user and usage data during work hours, off-hours, driving, and while using utilities (energy, water, internet) at different times of the data. This data could also be used by healthcare and security systems as much as local councils.

It is important to recognise that a Smart City should be able to attract and retain high-tech and creative talent. As traditional jobs disappear and workplaces go highly digitalized, talent is required to be the catalyst in a process that creates new businesses and new jobs. The megacities of the world are therefore competing for this talent.

A study by McKinsey project the following benefits coming from innovation in smart cities, A) smart-city technologies can make daily commutes faster and less frustrating, B) Cities can be catalysts for better health, C) Smart cities can deliver a cleaner and more sustainable environment, d) Smart cities can create a new type of digital urban commons and enhance social connectedness. Above all, a smart city is not simply a light-switch strategy for job creation, but smart solutions are meant to make local labour markets more efficient and lower the cost of living while improving well-being.

C) Smart cities and toward the future

Economic growth will increasingly come from the strength and diversity of innovative activities instead of factor accumulation as in the past. Recent researches also suggest that such innovative activities are concentrated in high–tech clusters in globally–linked cities. Over time as the share of the rural sector in GDP goes down, urban activities take the lead in the very growth process, ably backed by the service activities - major components of the urban service activities include business and creative industries with high value-added. Globalization and the emergence of the tertiary economy have raised the profile of cities in development, especially as innovation and foreign investment are attracted by the agglomeration economies offered by well managed large cities - e.g. telecommunication, broadcasting, energy, tourism; and major urban infrastructure services – water supply, transportation, and education.

Globalization and urbanization together ? could bring significant challenges as well as opportunities to both developed and developing countries. A study shows that development is likely to be polarized in a limited number of urban regions, which shows and indicates that while the convergence of production and income may happen across countries, divergence is likely to occur within each country as globalization will bring a concentration of activity to a few sites. The emergence of mega-urban regions with the development of world cities and links amongst them is a strong possibility – the formation of transborder regions, the development of international corridors, and the significance of international networking, among others.

Looking at the writings

on the wall

Following Mila Freire, World Bank, it may be located that the main challenges include (a) The need to keep urban planning and management flexible and ready to adapt to new developments on the economic or social front; (b) Getting the best possible technical analysis; (c) Pushing the agenda of excellence; (d) thinking big and long–term; (e) Looking at the big picture – overall competitiveness, labour market, environmental quality, and standing as regards capital and human capital; (f) engaging the private sector; (g) understanding and discussion with community leaders of how much limited–resource local governments can offer; (h) establishing contracts vertically with the central government and horizontally with other municipalities. Equally importantly, policies can also empower local authorities to work more closely with the national government. The importance of developing national urban policies as levers for sustainable development remains beyond any shade of doubt.