This article is a compilation of the paper, with the same name, part of the joint-publication monograph “Wise Cities". A New Paradigm for Urban Resilience, Sustainability and Well-being”, published on 11th October 2016 by CIDOB - Barcelona Centre for International Affairs and presented in UN-HABITAT III (October 2016). Author is a Research Associate, EU-Asia Global Business Research Center.
Throughout the history of humankind the whole context of competitiveness in society has been developed as a consequence of a dynamic set of variables. Natural resource management, environmental conditions, industrial policies and economic power have shaped cities and directly influenced modern urban lifestyles. The 20th century has seen the explosion of megalopolises around the globe. Cities have attracted and concentrated a massive number of people, generating new problems of management and creating huge challenges not only for the public sector – in managing limited resources – but also for the private sector by pushing companies to promote continuous adaptation in business to answer the new consumption demands. By 2030 over 70% of the world’s population is likely to be concentrated in cities, having a dramatic impact in our lifestyle. Some countries that are still in the process of urbanisation will face mass migration of their population in the coming years. How to promote inclusive and sustainable competitiveness is one of our greatest challenges.
THE DISRUPTION OF THE 4TH INDUSTRIAL REVOLUTION
These outstanding transformations in our society are happening in parallel to another rising megatrend: the fourth industrial revolution. In the first industrial revolution, water and steam energy were used to replace manpower and mechanize production. The second revolution brought the concept of mass production through the use of electricity. The third revolution was evidenced by the use of information technology and electronic means to automatize the production. The fourth industrial revolution, probably one of the most disruptive, is bringing a new perspective of time and space by combining physical, digital and biological domains.
The emergence of new economies
Against this backdrop, our society is evolving at the pace of rapid technological change in a context shaped by high levels of volatility, uncertainty, complexity and ambiguity, a concept also known as VUCA (1) . This is transforming the economy into a new, unique format with four main dimensions:
The creative economy
The creative economy redefines the economic system based on the use of creativity as added value for the local economy. It also suggests that the promotion and full support of a creative class, as proposed by Richard Florida (2) , may be a factor behind the blooming of prosperous high-tech clusters such as Silicon Valley in California, Austin Technology Cluster in Texas and East London Tech City or Silicon Roundabout, the new paradise for world-class Fintech start-ups. The concept became fashionable in 2001, when John Howkins applied it to 15 different industry sectors from the arts to technology. Nowadays the approach of the creative economy is even wider, including services, cultural goods, toys, games and is one of the main areas for research and development departments. For some researchers, creativity nowadays has the same impact on our lives and in the development of the fourth industrial revolution as steam power and electricity had in the 19th and early 20th centuries.
The sharing economy
As a consequence of the creative economy and the rapid evolution of information and communication technologies, society is evolving a new collective behaviour. Another important milestone to understand the phenomena behind the shift in consumption behaviour was the 2008 global crisis. Not only did a real need to save, reuse and divide resources emerge, it also brought about the questioning of a capitalist system based on the values of consumerism and materialism and an economic system driven by consumer spending. Against this background, the concept of the sharing economy is related to solutions based on peer-to-peer interaction. “The sharing economy is an emerging economic-technological phenomenon that is fuelled by developments in information and communications technology (ICT), growing consumer awareness, proliferation of collaborative web communities as well as social commerce/sharing (3)” . Recently, revolutionary services such as Airbnb and Uber are deeply disrupting our traditional urban services marketplace and bringing a new dimension to the provision and delivery of services. This sharing behaviour that is emerging in our modern society is definitely shaping a new idea of “access over ownership”. This new scheme will affect the whole global production and distribution chain and will promote the rise of new business and innovation models.
The circular economy
The idea behind the circular economy is to take a new approach to production cycles, creating a conscious and sustainable reuse of the resources. The circular economy is characterised by three main principles:
1) The preservation and enhancement of natural capital by managing finite stocks and harmonising renewable resources flow;
2) The optimisation of the resources by circulating products, components and materials;
3) The fostering of system effectiveness by minimising systematic leakage and negative externalities.
In the circular economy approach there is no waste. It largely differs from the traditional concept of the linear economy where the cycle flows from raw materials to transformation to use and finally waste. The application of this concept requires a deep mindset change not only for consumers, but also for manufacturing as it entails the implementation of a new system of production and a new product design process. The same concept can be applied to cities and public management and services, implying a different relationship between citizens and local government.
We can already see the influence of the circular economy in some products: BMW – seating made from recycled fibres in the electric BMW i3; Ford – a hybrid fibre for seating partly using recycled plastic; Jaguar Land Rover – aluminium that is up to 50% recycled for car body parts; Renault – reconditioning old engines to prevent contamination of the local environment when engines are disposed of in landfill.
Denmark hosts many businesses piloting circular economy solutions. In Copenhagen a local bike company called Baisikerli uses no raw materials to produce “new products”: it only uses old abandoned bikes. They are shipped to east Africa to be repaired and sold on the market, helping to foster the local economy. Waste management is another successful case from Denmark where one third of all urban waste produced in the cities is recycled to produce heat and power generation. The Ellen MacArthur Foundation has dedicated a whole website just to promoting and disseminating successful circular economy cases from around the world.
Another important idea of the creative economy is seeding in our modern society is the sense of co-creation. This is one of the main features of the millennial generation.4with co-creation already in their DNA, welcoming open and actively external collaboration from employees, suppliers, customers and even competitors.
Open Data and open application programming interfaces (APIs) are becoming the standard, not only in the private sector, but also in the public spheres. Some cities are now trying to promote sustainable growth by engaging their citizens in a deeper, more responsible and long-term oriented process of co-creation. From the perspective of a Wise City, we can develop this concept even further by having citizens co-create alongside public management, not only suggesting changes or reporting problems, but also by using public open data to develop and deliver new urban services. Following the same footsteps, cities can also boost public projects through modern tools such as crowdfunding, the collective raising of money to promote ventures or projects from a wide number of ordinary people.
Far beyond a mode of subsidising, the idea brings in citizens as active stakeholders by fostering entrepreneurship, with a double return of investment: potential dividends as shareholders and a better quality of life for them and their livelihoods.
With all these new paradigms, the whole concept of urban planning and development needs to be adjusted. Previously, the success of a city development project was a matter of “fighting” for budgets, non-repayable loans or grants from national government or financial support from international organizations. This approach is now almost obsolete. Projects were designed to suit the requirements related to these funds rather than to be economically sustainable or to promote the city’s real competitive advantages. Solutions were ICT-oriented instead of citizen-centred. Problems are rising due to migration and population concentration, and new wise solutions are being deployed to improve people’s well-being. Hence, citizens should be at the core of the new policies, followed by the economic sustainability of any new initiative implemented at the local level.
*For the full article access: http://www.wisecities.barcelona/
by RENATO DE CASTRO
1- Bennet, N. & Lemoine, G. J. “What VUCA really means for you”. Harvard Business Review, 2014.
2- Florida, R. “The Creative Class and Economic Development”. Economic Development Quarterly,28(3), 196-205, 2014. DOI:10.1177/0891242414 541693.
3-Hamari, J., M. Sjöklint and A. Ukkonen. “The sharing economy: Why people participate in collaborative consumption.” Journal of the Association for Information Science & Technology 67(9): 2047-2059, 2016.