Keywords

1 Introduction

What are the features of a city that lie at the intersection of citizen welfare, environmental sustainability, and technological advancement? This chapter describes both the need for and the pillars of smart cities in a general context, in reference to some examples from various regions of the world. First, the chapter discusses in detail the pillars of a smart city. Relatedly, it offers the resulting benefits of a smart city in various dimensions. Moving into practice, the chapter outlines the features of governance required to establish the development of smart cities. Expectedly, the chapter then delves into the challenges of smart cities, as the transition depends on the initial level of development that the city has been characterized with. As part of smoothing challenges, data play an immense role in informing policies that in turn foster the features of smart cities. This chapter contributes to a growing literature on smart cities and further motivates the need for smart cities as a solution to the problems created by urbanization.

2 Growing Worldwide Urbanization and Its Challenges

With rapidly increasing urbanization, new ways of living and policies are racing to catch this train of modernization and meet the changing demands of growing populations. Urbanization leads to a set of challenges that span all city areas. First, the orientation toward maximization of production has led to the exhaustion of natural resources. Firms and businesses are motivated by competition and profits, which in turn leads to focusing on revenues as opposed to environmentally friendly production. The challenge here is that the government’s role is needed to further foster environmental taxation on firms and on polluters. Second, mass production through industrialization has exacerbated pollution levels of air and water, further harming the environment and in turn increasing the number of diseases. This is also driven by the massive competition and focus on profit maximization. Third, from a social perspective, urbanization has contributed to higher crime levels due to indirectly incentivizing disorder, chaos, stemming from a greedy mentality of production and possession. Fourth, urbanization has contributed to very high levels of pollution. This in turn motivates the usage of environmental taxes, which are a powerful way to curb down these dismal practices because the problem is that firms are not interested in internalizing environmental costs unless they face a tax on their profits. Of course, ideally, by introducing a value system, firms would be more interested in taking care of environmental sustainability, but that would be a long-term goal. By imposing the “polluter pays” principle on polluting firms or businesses or even individuals, governments can force the private sector to internalize the cost of harming the environment. Morocco and Tunisia have already introduced these taxes, but the extent of their true impact is unclear. Moreover, all the countries of North Africa continue to implement fossil fuel subsidies, a policy once aimed at protecting low- and middle-class citizens, which, given that high-income households are more likely to own cars, effectively amount to an upper-class license to pollute. As a result of these harmful impacts of urbanization, the health of individuals is put at stake, where water pollution, air pollution, and natural resource exhaustion in turn contribute to more diseases and lower life expectancy in the longer term and deteriorate the quality of life in both the short and the longer term. One other dimension could be increasing inequality, and this is reasoned by the fact that rich people focus on production while imposing a negative externality through harming the environment for everyone else and exhausting the resources of future generations.

For example, in the MENA region, an above-average population growth rate of 1.56% per year (vs. 1.1% globally) and a high speed of urbanization leads to the high importance of smart city solutions. While in 1960, less than 40% of the MENA population was living in cities, in 2020, this rose to above 60% and is expected to significantly increase further (World Bank, 2022).

Addressing the challenges of high population growth and urbanization, urban agglomerations need to be designed intelligently, enabling sustainable living in “smart cities.”

3 Benefits of Smart Cities

This section sheds light on the multifold benefits, on numerous levels, of smart cities. First, let us define a smart city, although there is no one universal definition. A broad definition of a smart city is the use of information and communications technology (ICT) in governance and daily life in a city. In fact, the first use of the phrase “smart city” dates back to 1990 and has been associated with globalization, technology, and creativity. It can also be defined as an instrumented, interconnected, and intelligent city (Harrison et al., 2010). A third definition of smart cities involves outlining their characteristics, including but not limited to economy, governance, environment, people, and mobility. Each definition includes elements of technical structure, application domain, system integration, and data processing. It is important to distinguish between the following three overlapping but different terms to characterize a modern city: a digital city that is based on technology, an intelligent city that depends on artificial intelligence, and a smart city that focuses on the user-friendly adaptation of technological solutions. All definitions of smart cities point to the intersection between knowledge and technology to enhance sustainable development, thus making smart cities resilient and inclusive to all “users” or citizenst, as well as adaptable to shocks.

The concept of a smart city was first implemented in the United States at the time of President Barack Obama. Numerous initiatives followed, including the Digital Agenda initiative in Europe, i-Japan strategy in Japan in 2015, and Intelligent Nation 2015 plan in Singapore (Yin et al., 2015).

There are multiple benefits for smart cities, offering solutions for urbanization-caused challenges and new approaches for optimal policy making. These benefits become visible when shining light on the varieties of application domains of smart cities. First, smart cities make government work more efficient. It enhances e-governance, including services such as e-taxation and online documentation of public documents. It also boosts the role of the government in emergency response, transparency, and public safety (Yin et al., 2015). Relatedly, smart cities focus on users, i.e., citizens, to ease their lifestyle, including public transportation that reduces traffic, ample high-quality education and health services, and enhances social cohesion by boosting well-being (Yin et al., 2015). Third, smart cities are designed to make businesses more prosperous by diversifying efficient and need-based production in various sectors starting with agriculture and injecting innovation into entrepreneurship, marketing, and management. Fourth, smart cities enhance environmental protection. Smart cities are ideally based on renewable energy sources and sustainable water supply, reducing all types of pollution (Yin et al., 2015). Relatedly, to achieve environmental sustainability, smart cities implement resilient infrastructure, including the industrial structure and sewage system, necessary for the long-term prosperity of the city.

For example, in the MENA region, a new city called “The Line” is envisioned to grasp all mentioned benefits through its smartly planned infrastructure and even going beyond. As a new city, it is possible to design it on a line that is planned to optimize transportation inefficiencies, minimizing the time needed for personal mobility and business logistics. Another example is Abu Dhabi’s Masdar City, which is often seen as a frontrunner for smart city development, reaching interconnectedness and minimal environmental pollution through large greenfield investments (Ringel, 2021). This top-down government-steered transition to smart cities is typical for the smart city approach in the MENA region (with dedicated initiatives of high prominence in Casablanca, Algiers, Cairo, Kuwait, Doha, Dubai, Abu Dhabi, and many more). Top-down steering can be highly effective for efficient, homogeneous interconnected infrastructure based on a smart electricity grid and allows for precise long-term planning—although this is dependent on the management ability to coordinate the implementation, as described in Sects. 4.3 and 4.4.

While the multitude of benefits of smart cities are attracting governors worldwide, transitioning into a smart city requires dedicated policy initiatives. The following section outlines necessary pillars and governmental curtail investments to realize the benefits of a smart city.

4 Transition Pillars and Governance Required

This section describes the features and transition pillars of smart cities as a response to the growing worldwide urbanization and the nature of governance required for this transition into intelligent and interconnected cities. There is no set consensus on what makes up a smart city, besides the general idea of their sustainability and resilience. Azevedo Guedes et al. (2018) developed a four-step approach to understand what the drivers boosting the intelligence of cities are. First, bibliographic research allows them to identify key literature on smart cities. Second, they scan the literature for core drivers that increase the intelligence of cities. Third, they survey experts to understand the importance of drivers and list them by priority. Finally, they quantitatively summarize the collected data. The results show 20 factors that increase the intelligence of cities, 15 of which are related to city governance and 5 to technology. To begin with the governance drivers, urban planning that enhances the cleanliness and sustainability of the environment and thus contributes to well-being bolsters the intelligence of a city. It is also essential for the government to invest in proper management of the city’s infrastructure, including sewage system and sanitation. Curing problems is essential for developing smart cities, but another impact-driven approach is the prevention of risks by building urbanization strategies that minimize the impacts of disasters. Furthermore, to establish the feature of sustainability, it is fundamental for governments to incorporate in their public policies the effective management of resources to bolster the well-being of citizens. As part of environmental sustainability and the enhancement of the well-being of the people, smart urban mobility through clean individual and group modes of transport is needed. This extends to efficiently transporting and managing goods in smart supply chains, storage, and sustainable packaging. The well-being of people also includes the essential availability of a high-quality healthcare system. As part of enhancing the lifestyles of citizens, public safety measures should be put in place not only to reduce but also to prevent violence and crime. This is part of a general list of regulations that enforce order and guidance in the city. That in turn is also part of the complex process of public policy construction. A complementary approach to regulation is self-regulation, which in a way promotes the city to be self-sufficient in enforcing discipline through a rooted value system that naturally motivates citizens to adopt ethical standards to guide their lifestyles. A smart city by default implies innovation and creativity for the development of business and culture. On the business front, deepening networks of stakeholders and partnerships enable, in turn, a surge in innovation through greater interconnectivity of ideas. As new solutions arise, they require funding, so cooperation between public and private partnerships bridges the gaps between ideas and their feasibility. In addition to the relationship between the public and private sectors, it is useful to also understand all other forms of relationships that affect the city (Azevedo Guedes et al., 2018).

In terms of technology, which is a major skeleton of smart cities, indeed involves the usage of information and communications technologies (ICT). One other technological component includes smart energy management grids and smart buildings that reduce energy spending through natural components such as natural lighting and temperature as opposed to nonrenewable resources. Moreover, smart logistical applications can be developed that allow the usage of tools such as radio frequency identification and electronic routing of goods. Relatedly, the use of technology alone is not sufficient; rather, it is also important to integrate it into the production process and labor markets (Azevedo Guedes et al., 2018).

The complementarity of all these factors combined to offer a long but smooth process of the transition of cities to smart cities. As an example, national programs such as Qatar’s TASMU Program provide a policy framework to enable investments into a smooth transition process, including 114 digital use cases across the five priority sectors of transport, logistics, environment, health care, and sports.

5 Challenges of Smart Cities

This section flips the coin to look at the challenges to building smart cities, which this section aims to outline. Like all other aspects of our modern technology-dependent lives, smart cities are prone to downsides by design and implementation challenges. First, technology dependence leads to an increase in the need for materials to manufacture access devices as well as infrastructure and electricity to run the interconnected infrastructure. For example, interruptions in the supply chains of rare metals and semiconductors have obstructed the rapid expansion of smart infrastructure, while electricity cuts remain a risk to the real-time usage of the capabilities of smart cities. Second, the magnitude of data collected increases privacy risks for individuals as a consequence of the sensors necessary to gather data. In a similar fashion, interconnectedness leads to information technology (IT) security risks for companies, which need to increase their cybersecurity spending to protect sensitive company data and technology-enabled operation flows. For a deeper picture of privacy and security challenges, see Braun et al. (2018).

Beyond these problems inherent to technology and data-driven life in smart cities, implementation challenges slow down the transition to an interconnected, sustainable urban life. Silva et al. (2018) remark that inclusiveness through the easy usability of smart city infrastructure is particularly difficult to reach in cities with fast-growing and diverse populations of citizens and firms.

In the context of the MENA region, congestion, scarcity of resources, and waste management demand intelligently designed cities. By first laying a foundation with aspirations (e.g., “The line” in Saudi Arabia or Tunis and Cairo’s mostly conceptual stage in the smart city transition), citizens, businesses, and investors are pooled toward jointly designing smart city life. The second stage curtails the convergence of a city toward the outlined vision through a dedicated plan and investment efforts. GCC countries have pushed their “signature cities” into the convergence phase with successful implementations and large-scale investments. Finally, the transformation phase encompasses network-enabled utilities, security services integrations, and smart transport available to all inhabitants (Yahia & Shokeir, 2020). Ideally, a transformation aligned to the needs of all stakeholders is thus reached: business, citizen, and nature. There are risks and challenges in all stages: aligning on a vision might be difficult with diverse and changing populations in cities across the MENA region. Successful convergence is dependent on significant governmental coordination and stable ground for investments, which cannot (yet) fully be found across the MENA region. In addition, Ringel (2021) finds that poor management is seen as the biggest barrier to successful convergence to smart cities. Lastly, the transformation is dependent on the continuous availability of sustainable energy, i.e., the ability to harness MENA’s abundant solar energy capacity.

6 Smart Data Collection

Finally, given the great need for data-driven policy, this section suggests the type of smart data collection that meets the standards of research and governance in smart cities. There are existing data technologies, including cloud computing, “big data,” data visualization, and “internet of things,” among other technologies that have facilitated the transmission of information across parts of the world. The motivation for this big data revolution lies in the ability to measure indicators for better predictions and informed decision-making. Decision-making can span a variety of areas, including but not limited to business, policy, and research. Big data also has its own managerial challenges; the right people should be hired for each process of assembling mass data, analyzing and finding patterns in the data, and making the most informative decisions about the data (McAfee & Brynjolfsson, 2012). The “internet of things,” through remote sensing, eases access to managing infrastructures of a city in real time, such as water supply, roads, and transport networks, from a distance (Kopetz, 2011). Data visualization, elaborated on by Yuan et al. (2012), acts as a bridge between information and analysis through proper illustration of the data and data patterns. Moreover, mobile computing facilitates the access of data by users at any time from any place, boosting the interconnectivity and delivery of real-time data.

In fact, Rong et al. (2014) approach the development of smart cities as being data-oriented. They summarize it into layers of data acquisition, representing data sources, data transmission, data visualization and storage that incorporates data cleaning and maintenance, and data processing. The last layer consists of a support service layer, where the stored and visualized data are used as common platforms for user access.

According to Ringel’s (2021) survey of key stakeholders of smart cities in MENA, the acceptance of smart city infrastructure is generally higher than in comparable settings in Europe. Integration with global corporations and citizens’ willingness to share data for the sake of modernization reduce the barriers to a fast transition to smart cities. This implies a high potential of smart data collection and data-driven decision-making in MENA cities.

Despite the tremendous burst of the data world, we can still go “smarter” about it. The area of emotional intelligence data through biological indicators is still underdeveloped. To maximize unbiased data collection and what “is” rather than what “might be”, and in order to objectively estimate the most policy-relevant variables, new ways are yet to be developed to grasp emotional data on attitudes and preferences, for example.

7 Conclusion

Smart cities are growing worldwide, offering a wide range of solutions to problems created by urbanization while accelerating the worldwide boom of fast information and data-driven governance. While there are common benefits of smart cities everywhere, the implementation of smart cities differs widely depending on the country and existing urban structure. The development of smart cities should be extremely tailored to the needs of every city. To harness a proper socioeconomic model for the city, the combined efforts of researchers, policy makers, and the government are greatly needed. The first step is to conduct a needs assessment for the city. This step could be achieved with the help of expert researchers and urban planners. Second, the needs should then be communicated to policy makers that can then design policies that match the needs. Third, these recommendations must be transferred to the government to ensure the implementation of policies that align with the findings of researchers and policy makers. In addition, the government should design environmentally friendly policies. For example, environmental fiscal reform, including environmental taxation, has immense positive impacts on developing a smart city. Relatedly, it also has implications on long-term poverty alleviation, through direct measures such as palliating environmental burdens such as water and air pollution that affect the lives of the poor, as well as indirectly by freeing up public finance space to invest in anti-poverty programs (OECD, 2005).

Further research is still needed on how to make the concept of smart cities very specific in terms of implementation, depending on the city’s level of development, needs assessment and evaluation, which leads to impact-driven smart strategies. Many challenges remain, starting from the lack of simplicity to identify what each city needs in the first place. In addition, political bureaucracy remains a burden. Nonetheless, despite all the challenges and the long process, in the longer term, smart cities can have significant positive implications on the standards of living of people and their mobility.