Innovation: an essential factor for long-term economic growth in cities
First introduced in 2015 by World Economic Forum founder and CEO Klaus Schwab, the term “Fourth Industrial Revolution” refers to extremely fast changes in technology, AI (Artificial Intelligence), robotics, IoT (Internet of Things) and the intertwining of physical, digital and biological world. It is a transformation which humankind has never experienced before.
The world is witnessing a technological revolution that completely changes everyone’s way of living and working. From watching movies, listening to music, buying products or ordering a taxi: all of this can be done remotely. Artificial intelligence is widely present: from drones, self-driving cars to all the possible software one can imagine.
According to Forbes magazine, innovation is vital for companies because it allows them to penetrate markets quicker, create original concepts, and grow more easily.
In the future, technology and communication costs will further drop, logistics and global supply chains will become more effective, and the cost of trade will diminish, all of which will then drive the economic growth even more.
All in all, innovation has become essential. But this does not relate exclusively for the business world, but also for cities.
The combination of innovation and talent in cities creates higher productivity and greater long-term economic growth. Consequently, cities that combine these two characteristics are also more resilient in the face of economic and financial crises. Although large cities are bigger drivers of creativity and innovation, the smaller ones can also provide excellent conditions for it, meaning that innovation is generally successful when both local conditions and resources are taken into account.
Overall, city innovations are associated with products, processes, marketing and organisational contexts, all of which are significant in urban areas.
According to European Commission, some concrete ways in which cities encourage innovation are:
- Entrepreneurial innovation oriented to support small businesses in the creation of new jobs
- Social innovation highly focused on meeting social needs by enhancing social interactions and integrating ideas, knowledge and vision of civil society with urban development
- Innovation in work systems: including teleworking, high mobility of entrepreneurs, co-working spaces, open office areas and other alternative ways to generate income
- Culture-led innovation, typically stemming from the creative knowledge of the arts and cultural domains and inspiring many city-relevant sectors and areas, including cultural tourism, consumer electronics and urban regeneration
With the aim of encouraging innovation developments in the cities throughout the European Union, European Commission annually rewards the city which is best able to demonstrate its ability to harness innovation with the goal of improving the lives of its citizens. The iCapital Award 2021 – European Capital of Innovation was won by the German city Dortmund.
For this occasion, mayor of Dortmund Thomas Westphal stated: “The award is a result of great teamwork in Dortmund as a City of Neighbours. Many committed partners from the fields of science, business, urban society and administration have built up a sustainable innovation ecosystem. A breeding ground for start-ups and companies, for research and development, for education and culture. But also for the implementation of good ideas, social projects, and creative solutions in our neighbourhoods. We are very pleased that these efforts have now been recognized at a European level. It is a success that will spur us on to continue on this path. We are very proud to be the first German city to have won this award!”
On the global level, Innovation Cities™ Index 2021 has named Tokyo as the world’s most innovative city in the last year. The extensive research is being conducted every year on more than 500 cities. 162 indicators have been taken into account: from technology application, digital capability all to the pandemics performance.
Tokyo is followed by Boston, New York, Sydney, Singapore, Dallas, Seoul, Houston and Chicago.
Paris took the 10th place. Other best European cities are London (11th place), Stockholm (16th place), Vienna (22nd place), Amsterdam (24nd place) and Oslo (25th place).
The top 50 also includes Berlin, Moscow, Munich, Madrid and Helsinki.
All in all, European cities make 22% of the most innovative cities in the world when talking about the TOP50 ranking.
To conclude with, an innovative economy is the centre of everyone’s vitality and quality of life. Innovation not only changes what we do, but also who we are. It affects our identity and all the other things associated with it. The list is endless because it is bound only by our imagination.