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Do Smart Cities have a Future?

March 1, 2017


Cities have been crucial for human development for hundreds of years. They have been hotbeds of innovation and education and they have allowed humans to use vital resources more efficiently and effectively. The smart cities movement emerged as a way to keep cities vital and to use resources even more efficiently and effectively. One of the key trends of the early 21st century has been urbanization — with over half of the world’s population now living in cities. New research, however, shows urbanization may be slowing and city dwellers aging. If these trends continue, the smart cities movement could be a victim. “The urban world is facing a double demographic hit on economic growth,” writes Brookings analyst Jaana Remes (@JaanaRemes). “Between 2000 and 2012, an expanding population drove nearly 60 percent of economic growth in the world’s large cities, but those days of easy urban growth are over. First, global population growth is slowing due to declining fertility rates and an aging population. Second, the pace of rural-to-urban migration is waning in many regions.”[1]


Urban Areas Still Required for Economic Growth


Although the world continued to urbanize during the first decade of the 21st century, Remes points to a study published by the McKinsey Global Institute that found, “Between 2000 and 2015, population declined in 6 percent of the world’s largest cities — most of them in developed economies. In the next decade, we expect 17 percent of large cities across developed regions to see their populations decline.” The study also points out why cities are important for the global economy. It states, “Cities have powered the world economy for centuries. Large cities generate about 75 percent of global GDP today and will generate 86 percent of worldwide GDP growth between 2015 and 2030. Population growth has been the crucial driver of cities’ GDP growth, accounting for 58 percent of it among large cities between 2000 and 2012. Rising per capita income contributed the other 42 percent.”[2] It may appear oxymoronic that urbanization is taking place at the same time the largest cities are losing population; but, these two trends may simply underscore the fact that people want to live in cities where they can experience a better quality of life. Some of the world’s largest cities grew at a faster rate than planners could keep up with. As a result, services declined along with the overall quality of life. At the same time, new cities and vibrant smaller cities continued to grow. We can’t, however, abandon larger cities with declining populations. The study’s authors note:

“For most cities, economic prosperity increasingly will depend on rising productivity and incomes among their citizens. The economic success of cities cannot be measured simply by their overall GDP growth — cities that are able to increase the per capita income and quality of life of their citizens can thrive even when population growth slows or declines. For many cities, this will mean shifting the focus from expansive growth to the well-being of their citizens. In an era of pressure on urban populations, this is the vital ingredient as cities compete with one another to retain and attract citizens.”

Smart cities initiatives are all about improving the quality of life for urban residents. The rub is that these programs aren’t cheap and will only be implemented if cities can afford them. Tyler Edell (@scramplers), a technical marketing manager at Oppkey, writes, “There’s great optimism surrounding the smart city discussion, but that optimism seems to wilt whenever someone asks ‘Who’s going to fund this?'”[3] Cities will only be able to afford smart cities initiatives if they remain economically robust — but poor cities could benefit from these initiatives just as much (or more) as economically-sound cities. That’s why urban economic success is critical for the future and smart cities initiatives are a must. Agnes Sheehan writes, “Perhaps we should be thinking about these things in terms of building Good Cities, rather than Smart Cities. Environments where the health, security and lifestyle of a citizen is enhanced, not just through the existence of … IoT-enabled technologies, but because the city, and community, is then actively using these technologies as a platform and launching pad towards highly customised solutions that account for the specific needs of the citizens.”[4] Good cities are places in which people want to live and work.


Smart Cities Initiatives Required to Make Cities Efficient and Livable


One of the reasons implementing smart cities initiatives are expensive to do correctly is that they must deal with legacy systems. It’s much easier to design smart systems for a new city built from the ground up. It is much more difficult to connect legacy systems that have been in place for decades or centuries. Edell notes, “Current funding for smart city initiatives is only good enough for proof-of-concept trials, which would lead, at best, to a piecemeal approach to smart city construction.” If cities are going to rightfully earn the smart city label, they are going to have to take a holistic approach to implementing initiatives. They might not be able to afford to implement all aspects of this approach simultaneously, but a piecemeal approach without an overriding vision is a recipe for failure and waste. Analysts from Arthur D. Little are optimistic that the smart cities movement will continue to grow. “The 100 largest cities in the world produce 25 per cent of the planet’s wealth,” they write. “To succeed, more and more cities are going ‘smart’ in order to meet their biggest challenges and enrich the quality of their citizens’ lives. This unstoppable trend is driving double-digit growth in a trillion-dollar global market.”[5] They temper their optimism by explaining, “Cities are the lifeblood of the 21st century. … The uncontrolled and exponential growth of metropolises around the world has led to developments that put mega-cities at risk and turn them into places that, at best, can be difficult to live in and, at worst, could severely limit the world’s future social and economic viability.” They define a smart city this way:

“A Smart City uses modern technologies and innovative policies to meet the demands of its citizens. Through the provision of more accurate and readily available data it allows communities and government bodies to make informed decisions. Smart city processes must have a positive impact on the local community in terms of efficiencies, innovation and resource allocation.”

They go on to note that smart cities initiatives will only be successful if the public and private sectors work in partnership. “In many cases, the private sector is already active and offering solutions within or sometimes across verticals. This especially happens in areas where the business case for particular solutions is clear,” they write. “However, in other cases, where the business case is less clear, cities have stepped in to create an environment and an infrastructure where private sector companies can profitably participate.”




Most analysts agree that smart cities initiatives are a good idea — if cities can figure out how to pay for them. The sine qua non for a city to become smart is broadband connectivity. Brookings’ analysts, Adie Tomer (@AdieTomer) and Rob Puentes (@rpuentes), bluntly state, “No industry or household in the world, will reach their future potential without access to broadband, it is the electricity of the 21st century.”[6] Edell cautions, however, that how broadband is made available can have unintended consequences. He notes New York City’s efforts to provide free Wi-Fi kiosks didn’t work out very well. He explains, “A few weeks after the program went live, LinkNYC had to disable web browsing on all of its public tablets, for obvious reasons. If it doesn’t seem obvious to you, let me list some of the ingredients in this debacle: homeless people, substance abuse, free video streaming and a public space. One of my favorite headlines about this misuse of the project is, ‘Wi-Fi kiosks have become living rooms for vagrants.'” There are going to be missteps; which is fine if cities learn from them. The future of cities and the planet depends on urban areas getting smarter about how they use resources and improve peoples’ lives.


[1] Jaana Remes, “Aging and urban divergence,” The Brookings Institution, 23 January 2017.
[2] Jonathan Woetzel, Jaana Remes, Kevin Coles, and Mekala Krishnan, “Urban world: Meeting the demographic challenge in cities,” McKinsey Global Institute, October 2016.
[3] Tyler Edell, “Are smart cities just a utopian fantasy?TechCrunch, 4 November 2016.
[4] Agnes Sheehan, “We need good cities, not just smart cities,” ZDNet, 3 January 2017.
[5] Ralf Baron, Morsi Berguiga, Jaap Kalkman, Adnan Merhaba, Ansgar Schlautmann, Karim Taga, “Big feature: Historic opportunities presented by smart cities,” Robotics & Automation News, 26 January 2017.
[6] Adie Tomer and Rob Puentes, “Here’s the Right Way to Build the Futuristic Cities of Our Dreams,” Wired, 23 April 2014.

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