Why looking at cities from an innovation governance perspective?

As central axes of contemporary social organisation, cities are particularly important for socio-economic development. Governing them will become ever more a matter of innovation, but are they prepared for it?

Innovation governance and policy making

Since the publication of “The Wealth of Nations” by Adam Smith, economic theory, along with other sciences, has been focusing on the successes of the State. However, since the first appearance of that manuscript in 1776, much has changed. Profound reform processes in the forms of State and governance have occurred, like the emergence of Public Governance as a new state management model based on concepts such as transparency, accountability and results, justified as an effective strategy to make the economy more dynamic, competitive, and innovative, freeing it from the burden of bureaucracy and the slowness of public governments. This phenomenon brings a pre-conceived idea – much opposed by authors such as Mariana Mazzucato – that entrepreneurship is the innovative force par excellence, while the State is a paralysing force, necessary to provide the essentials but unable to be inventive, However, from the perspective of innovation governance, it can be said that the State may develop ecosystems favourable to innovation, both directly, like when it grants fiscal incentives for research and development, or indirectly, when it promotes urban policies that encourage the setting-up of innovative companies. Countries and regions worldwide have different performances concerning their capacities to innovate and promote innovation. Portugal is an example of a country that has been standing out for its innovation-inducing policies. According to the 2020 European Innovation Scoreboard, the last one before the pandemic, Portugal occupied a prominent position and was considered a strong innovator in the EU,  in an evaluation based on indicators such as Non-R&D innovation expenditures, Public-private co-publications, Private co-funding of public R&D expenditures, PCT patent applications, and Trademark applications, among others

It is trite to say, yet important to remind, that innovation is a necessary condition for the growth and development of nations. Traditionally, the main instruments of innovation policymaking, as illustrated by Edler et al.,[1] are defined as the set of programmed actions to increase the quantity and efficiency of innovative activities within a territory and/or society. These actions fundamentally aim to solve challenges in the public decision-making processes, stimulate research and technology development, and improve or catalyse the growth of innovative ecosystems. Instruments of innovation policies have different characteristics. Fiscal incentives for research and development, for example, have a sound capacity to generate innovation, by acting on the supply side. Public procurement policies, on the other hand, end up encouraging the demand, by influencing those who consume innovation. And regulation is

considered one of the best legal instruments, since regulatory frameworks can decisively impact innovation in companies, cities and economies, as Porter and Linde taught in his consecrated hypothesis, built in the 90s. Furthermore, it can actually increase the demand for innovation in the long term, despite the perception that regulation tends to inhibit it.[1] Choosing the right mix of instruments to foster innovation within a region, country, or community is a big challenge. Considering that the world population is increasingly concentrated in cities, urban centres may play a leading role in showcasing how to develop cohesive and effective innovation policies and governance models.

Cities as innovators

The gentrification from rural to urban areas has contributed to the exponential growth of the importance of cities as centres for society’s development. Data from the United Nations’ “2018 Revision of World Urbanization Prospects” show that by 2050 two-thirds of the planet’s population will live in cities. People will increasingly establish domiciles, personal, professional, social, and legal relationships, create bonds and carry out activities in cities. As a result, the State may lose the grip over the understanding of which are the most effective regulatory choices to make. In other words, the densification of cities may increasingly require efforts by municipal governments towards providing urgent responses to problems of different natures, notably violence, employability, education, and housing deficit, among others. As central axes of contemporary social organisation, cities are more than ever structures of particular importance for socio-economic development. While some of the world’s biggest cities, such as Tokyo, may experience a population reduction, others, like New Delhi, could almost triple in population by 2100 as predicted by Hoornweg & Pope. Thus, innovating becomes more than just a synonym of efficiency and success in municipal management, it becomes a necessity. Governing cities is, and will be ever more, a matter. of innovation. This is demonstrated by the following evolving scenarios: (i) cities are looking for new solutions to problems faced by their inhabitants, promoting collaboration between themselves, as we could see when Tallinn and Helsinki jointly addressed an urban mobility challenge, collaborating on joint innovation-lab-type structures to conduct agile trials before traditional public procurement; (ii) cities are structuring programmes to study innovation applied to their realities, such as Amsterdam, and also promoting open innovation challenges, as in the case of Rio de Janeiro; (iii) cities are building their own innovation laboratories, like Seoul Innovation Park, a social innovation platform where people, companies and cooperatives can promote social experiments in fields such as economy, art, culture, education, human rights, and fair trade, among others; (iv) cities are the holders of an enormous volume of data on both the city and its citizens. These data are, not infrequently, essential inputs for many new technologies, which end up using APIs to consume them and making cities structure their databases so that they become gateways for cities to be consumed as a service (City-as-a-Service or CaaS concept) by start-ups, like Dublin, which created its own open data platform.

The importance of innovating cities is a reality already well-established in academic and public debates. However, there is an abyss between theory and practice, often exacerbated  when implementing public policies, as highlighted by Harguindeguy.[1] It is precisely in this gap that the Law can contribute as a transforming tool, bringing intentions closer to achievements. Often, regulatory legislative processes in the local sector do not consider innovation as a determining factor for decision-making, with the absence of regulatory frameworks promoting and monitoring innovation restraining political action,

[1] Harguindéguy, J. B. (2020). Análisis de políticas públicas. Comercial Grupo ANAYA, SA, p. 81-83.

[1] Blind, K. (2016). The impact of regulation on innovation. In Handbook of innovation policy impact (pp. 450-482). Edward Elgar Publishing, p.453.

[1] Edler, J., Cunningham, P., & Gök, A. (Eds.). (2016). Handbook of innovation policy impact. Edward Elgar Publishing, p. 1-4.

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