Cities are the cradle of innovation. For thousands of years, the boldest ideas have emerged in urban areas. The high population density, diverse skills of city dwellers, and extensive social connections all contribute to creativity, which in turn drives economic growth. Today's cities are magnets for hundreds of millions, if not billions, of people. Analysts from The Boston Consulting Group (BCG) note that the issue of innovation in cities is more relevant than ever. After all, innovations are crucial for reducing environmental risks and seeking long-term solutions for sustainable development.
The fourth industrial revolution that the world is currently experiencing is pushing the production of goods to the background, experts assert. The primary product of modern cities has become the creation and transfer of knowledge. Intellectual labor is now the main means of production, and universities, research institutes, and clusters of innovative companies have become the economic centers. Those who earn a living through creative work—scientists, engineers, artists, musicians, and designers—have become the key economic resource. Cities are competing for such professionals.
Creativity is a complex resource, as noted by BCG. It is not as straightforward to manage as production. Firstly, professionals have become highly mobile. Remote work technologies, which gained popularity during the coronavirus pandemic, have enabled people to work from home. Many individuals are no longer tied to an office—a once crucial factor in determining their place of residence. Secondly, creativity is an intangible asset. Attracting and retaining knowledge workers is a delicate process. There is no universal recipe for working with highly skilled professionals. What works in one context may not be as effective in another.
Nevertheless, experts and business leaders are gradually learning to understand how creativity operates and what cities need to do to create and develop a creative economy. For workers in creative industries, one of the key factors determining their place of residence is psychological, says urban studies theorist Richard Florida. “Place of residence is important not only because it provides access to jobs but also because it fundamentally affects our happiness and well-being,” he believes.
A report titled “Cities of Choice,” published by the Global Center for Future Cities at BCG and the Henderson Institute, highlights several indicators crucial for the well-being of city residents. These include a comfortable climate, cosmopolitanism, a vibrant cultural life, the ability to build strong social connections, access to quality education and healthcare, and harmonious urban development.
Urban design often plays a decisive role in creating an environment attractive to the creative class. Parks, squares, and other outdoor spaces must be designed to foster an appealing environment for residents, according to BCG. These spaces can be equipped with free Wi-Fi, art installations, and various cafes, all of which enhance the city’s creative potential.
Leading cities around the world are steadily moving in this direction. London’s Mayor Sadiq Khan plans to transform London into a true park, where 50% of the urban area will be dedicated to green spaces. The Paris administration has long been working towards a car-free city center. The Copenhagen municipality aims to make the city the most bike-friendly in the world.
Another factor influencing a city’s popularity among creative workers is the concept of the smart city. BCG experts point out that this term has become somewhat clichéd, making it difficult for many to grasp its precise meaning. The general definition is as follows: a smart city is one where digital technologies have become part of the information and communication infrastructure.
Digital technologies help create comfortable, energy-efficient, and safe cities. There are numerous examples of their application: intelligent water metering systems, traffic management systems, infrastructure for electric vehicles, and more. The Singapore administration spends vast sums each year on developing a digital twin of the city and implementing city mobility systems based on artificial intelligence, positioning Singapore as the smartest city in the world.
Innovation requires appropriate governance. Large corporations, investors, and startups avoid operating in countries where political decisions are opaque and property rights are violated. One of the most effective incentives for large companies and startups is fiscal support. Tax incentives for companies investing in new technology development are an excellent tool for attracting investors.
Humanity owes its prosperity to cities. And as cities once again become centers of digital innovation, governments must assist city administrations in attracting talent from around the world and building a favorable business environment. These factors will be the cornerstone of long-term prosperity for megacities.
Adaptation: Arslan Akanov