How National Governments Can Help Smart Cities Succeed

October 30, 2017
While local governments can and should manage much of the evolution to “smart cities,” national governments have an important role to play as well in accelerating and coordinating their development. Indeed, the long-term success of smart cities will likely depend on whether national governments support their development.

Cities around the world are undergoing two important transformations. First, they are growing. For the first time in history, a majority of the world’s population lives in urban areas. Second, they are beginning to evolve into “smart cities”—cities capable of collecting and analyzing vast quantities of data to automate processes, improve service quality, provide market signal feedback to users, and to make better decisions. While city governments can and should manage much of this transformation, national governments have an important role to play in accelerating and coordinating the development of smart cities. Indeed, the long-term success of smart cities in any particular nation will likely depend on whether the national government supports their development.

Cities of all sizes are beginning to use an array of technologies, including low-cost sensors, wireless communication systems, data-actuated devices, and advanced data analytics to operate more intelligently. Cities can use these technologies to address many key challenges, such as traffic congestion, crime, and pollution, as well as to improve the quality and reduce the costs of a vast array of government services. The emergence of smart cities is a marked departure from the past when most urban systems—roads, transit, waste-removal systems, the electric grid, and buildings—had few, if any, built-in capabilities to measure and act on their performance, particularly in real time. With the development of new technologies to collect, analyze, act on, and share municipal data, urban infrastructure and services no longer need to be static and unresponsive, but can instead adapt to changing needs.

However, cities cannot complete the evolution into smart cities on their own. There are five key challenges limiting smart city development that even the most capable of cities will likely not be able to overcome on their own. These are:

  • Too Much Risk: Cities have little incentive to be early adopters of new smart city technology when that means they bear all of the risk of failure. Instead they have an incentive to wait until others have worked out the challenges. Similarly, while public research and development (R&D) will be critical to the success of smart cities, such as improving cyber security and establishing demonstration projects, a city cannot be expected to take on the costs of R&D in exchange for only a small share of the total benefits it will generate. 
  • Lack of Focus on Smart Infrastructure: Many national governments’ infrastructure funding focuses almost exclusively on enabling cities to build and maintain traditional “concrete and steel” projects. This leaves little opportunity for more capable and innovative cities, which rely on national government funding, to pursue smart infrastructure built around “concrete and chips.” 
  • The Need for Interconnected Smart Cities: If cities can share and compare data with one another, governments can reduce costs, as well as analyze larger pools of data, enabling more accurate and actionable insights. However, cities are not equipped to develop interoperable systems and share data across their jurisdictional boundaries. 
  • Lagging Communities of Practice: Building and operating smart cities will require a significant change from the normal way of managing cities, and local leaders need to be able to easily share their successes and failures and learn from their peers. If every city experimenting with smart city technology would share what they learn, every other city would benefit. But without an initial critical mass of cities capable of developing and sharing these insights, overall learning and action will remain limited.
  • The Need to Ensure Equity: Smart city technologies have great potential to help address the needs of underserved communities, however these technologies can also exacerbate inequalities if applied or adopted unevenly, which simultaneously limits the efficacy of these technologies. Municipal governments can enact policies to help ensure the equitable distribution and application of smart city technologies, but historically efforts to promote equity have been supplemented by national government efforts, suggesting municipal actions alone would be insufficient.

Fortunately, national governments can provide solutions to all these challenges. Cities will rightly make the majority of investments and decisions related to their evolution into smart cities. However national governments have a key role to fill in addressing the problems cities cannot resolve on their own, particularly in the early stages. Importantly, large portions of the role of national governments will be temporary. While national governments should always be involved in supporting innovation, their main goal with smart cities is to enact policies that set in motion significant shifts in how cities operate that will allow this evolution to be self-sustaining. Thus, some of the roles for national governments in smart cities will be temporary—for example, once robust communities of practice arise for smart cities, national governments do not need to heavily encourage their development—while others, such as promoting equity, may be ongoing. National government solutions include:

  • Supporting shared projects in at least four areas: 1) R&D on key technical challenges, such as cyber security; 2) research and demonstration projects that develop and test particular new smart city applications; 3) shared applications and tools that make cities better equipped to work with smart technology and data; and 4) demonstration projects to establish a few comprehensive smart cities to test system-wide applications.
  • Allocating a share of infrastructure investments to specifically target smart infrastructure, such as intelligent transportation systems and smart grid systems. 
  • Developing policies and common standards for smart city technologies that encourage interoperability and data sharing to increase the effectiveness of smart city applications and increase the value proposition for smart technologies.
  • Fostering collaboration and coordination in the smart city ecosystem to facilitate inter-city learning and reduce knowledge-sharing barriers.
  • Ensuring that efforts to support smart cities, such as through pilot programs, infrastructure investment, or support for public-private partnerships, address the needs of underserved communities.
How National Governments Can Help Smart Cities Succeed