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Welcome to today’s What is The Future For Cities podcast and its Research episode; my name is Fanni, and today I will introduce a research paper by summarising it. The episode really is just a short summary of the original paper, and, in case it is interesting enough, I would encourage everyone to check out the whole paper.

Our summary today works with the article titled Smart innovative cities: The impact of smart city policies on urban innovation from 2018 by Andrea Caragliu and Chiara F. Del Bo, published in the Technological Forecasting & Social Change journal. Since we are investigating the future of cities, I thought it would be interesting to see whether smart city initiatives increase the likelihood of innovation in high-tech, ICT and technology with patent application. This article investigates European metropolitan areas and their smart city initiatives with regards to affecting urban innovation.

While it could be easy to conclude that smart city policies have a positive impact on urban economic growth, the picture is not as clear when looking at the micro foundations of this effect. Although there is statistical evidence that this positive effect happens, it is not clear how does this happen. One possibility for smart city policies to positively affect urban economic growth is through fostering urban innovation. Smart city projects are often the result of a strategic intersection between major multinational corporations heavily investing in technologies, and municipal and regional authorities seeking to enhance local performance by means of adapting such technologies to the local needs. While the latter seek to maximise public value creation, cities also resort to private investors both as additional means of financing as well as a way to enact public investment strategies.

The literature on smart cities stresses the need for local context conditions for fully utilising the benefits of large investments in high-tech solutions. Therefore, technologies that are conceived for a vast audience need to be translated with the involvement of local actors to the specific context where they are deployed. Urban innovation in this way seems at first glance to be a potentially relevant channel of smart city policy impact, and this paper sheds light on its extent. The authors investigated 309 European metropolitan areas with smart city features to understand the effects of policies on urban innovation. The connection is evaluated through the number of patents submitted in those areas that include technologically narrow classes for high-tech, ICT, and specific smart city technologies.

The very existence of cities has been justified in term of the role they play in facilitating the production, diffusion and accumulation of knowledge. They are the place where the easier face-to-face contacts allow consumers and firms to lower transaction costs in knowledge exchange. However, there needs to be a better established link between smart cities and urban innovation. Theoretically, the key concept that links smart cities with innovation is the notion of agglomeration economies. Because of density and concentration, cities lower production and consumption costs, thus present potentially attractive locations for consumers and producers. Smart city policies can act as facilitators for economic effects.

Smart city projects at least partially translate into more business opportunities for local companies joining public procurement. This is expected to thicken local markets thus contributing to the city’s performance. Such policies do tend to make cities more efficient, thus innovation processes are also expected to be fostered mainly through  a general improvement of local knowledge production and the positive fallout from the generation of local solutions for international smart city projects.

So what is a smart city policy? According to the authors, there are many different ways to characterise it. As smart cities have many different definitions, smart city policies also have various approaches. In the EU, many policies are related to policy goals set by the EU towards energy sustainability within the Horizon 2020 targets, or sustainable cities. Many concentrate on urban mobility, others focus on government, environment, energy, among others. Common features could be the focus on participative processes, integrated approaches to urban planning across municipal offices and a focus on ICT, although not always seen explicitly as policy tools. However, there is no easy process to identify all of the policies and it is also challenging to establish their impacts on urban innovation.

Most previous works leave the transmission mechanism between policies and growth in a black box simply assuming that policies with a smart flavour will automatically enhance urban economic performance. The need to translate international solutions which were created by multinational companies located far away to the local contexts could potentially engender several positive feedbacks among local ICT firms and thus stimulating local innovation which represents one of the most direct impacts of adopting such policies. This paper tries to understand this link with statistical methods.

To investigate the proper policies, the authors established that smart city policies have these main features: they are based on existing strengths and typically focus on a subset of core areas of intervention, coordination takes place between different policy departments, stakeholders are involved in the design and implementation of the policies, investment in ICTs is typically matched by physical and institutional changes, and the scale of interventions are relatively small so that small-scale integrated projects are more likely to succeed. It is important to note that ICT plays a major but not exclusive role due to its capability to monitor the built environment and its performance. Therefore, it is reasonable to assume that patenting activities for such technologies should reflect the increasing use of ICTs.

Based on the research, it seems that there is a positive role of intangible features in human and social capital in increasing the likelihood that cities engage in smart city policies. The infrastructure and e-government with natural resources provide instead a more blurred picture. Taken together, these two suggest that context conditions within the urban areas still crucially matter in driving cities towards engaging in challenging policy programs. Interestingly, density seems to be insignificantly associated with the probability to adopt smart city policies.

Further results suggest that cities that do enact smart city policies tend to deliver a significantly higher innovation output. There also could be a possible technological spill over across technological fields which implies that investing in smart city policies may trigger innovative processes well beyond the relatively limited scope of the technologies directly involved in those policies. Even more so, some of the patent applications stimulated by adopting smart city policies may not be limited to the technological classes that is directly related to such policies, but rather indirectly induced by the need to translate general technologies into the local needs.

Smart city policies seem to foster urban economic performance by investigating their impact through urban innovation This was established through the researched patent activity, especially in high-tech classes. The results also suggest that smart city policies indeed stimulate innovation that increases a city’s stock of knowledge, one of the main recognised drivers of economic growth. Cities that engage in smart city policy above the EU average tend to innovate more.

Moreover, the fact that investing in smart city policies does not translate simply to the narrowly defined class of smart city patents but seems to impact high-tech patents the most suggests that there might be a spillover effect in place. While smart city policies tend to be focused on a narrow set of projects and areas of intervention, mostly related to ICT applications, the positive effect on innovative activity trickles down to other more broadly defined technological classes. These results can be seen as a first step in clarifying the channels through which investing in policy initiatives based on the smart city model can have a positive impact on urban performance, defined in terms of economic growth, quality of life, sustainability, and overall well-being.

As the most important things, I would like to highlight 3 aspects:

1. Smart city policies seem to have a positive effect on urban innovation and economic growth.
2. There is a spillover effect from the narrow requirements of smart city policies and technologies to other areas as well increasing the urban knowledge stocks.
3. Investing in smart city policy based on the smart city model can have a positive impact on urban performance, defined in terms of economic growth, quality of life, sustainability and overall well-being.

Additionally, it would be great to talk about the following questions:

1. What is the smart city model the policies can be based upon? The authors also highlighted the need for the models to be localised, but then what is this smart city model the policies could use as a base?
2. Why is urban innovation only measured in technological patent creation? Understandably it is easier to count, however, smartness could be more than technological patents, right?
3. What could you innovative in your urban area? Is there something you think could be smarter, thus innovating your urban area?

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