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        Smarter cities for smarter growth

        IBM Institute for Business Value
        IBM Global Business Services, through the IBM Institute for Business Value, develops
        fact-based strategic insights for senior executives around critical public and private
        sector issues. This executive report is based on an in-depth study by the Institute’s
        research team. It is part of an ongoing commitment by IBM Global Business Services
        to provide analysis and viewpoints that help companies realize business value. You may
        contact the authors or send an e-mail to iibv@us.ibm.com for more information.
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        Smarter cities for smarter growth

        In the twenty-first century, growth, economic value
        and competitive differentiation of cities will increasingly be derived from people andtheir skills, creativity and knowledge, as well as the capacity of the economy to createand absorb innovation. To compete in this new economic environment, cities will needto better apply advanced information technology, analytics and systems thinking todevelop a more citizen-centric approach to services. By doing so, they can better attract,create, enable and retain their citizens’ skills, knowledge and creativity.More than ever before, the traditional “bricks-and-mortar”drivers of economic growth are giving way to an economybased on “brains and creativity.” Competitive differentiationtoday is more likely to be based on the ability of the workforceto create and absorb skills and innovation than on traditionaldrivers such as available natural resources, physical labor ormanufacturing prowess. As a result, the skills, aptitude,knowledge, creativity and innovation of a workforce – whichcollectively can be viewed as the talent pool in the economy– have become increasingly important drivers of economic
        growth and activity.Cities, as hubs of the global economy, are the focal points forthis transformation. In the immediate future, three interconnectedfactors will place even more emphasis on the role ofcities in talent-based economic development:• The world is at an unprecedented level of urbanization.• Cities contain an increasingly large share of the world’shighly skilled, educated, creative and entrepreneurialpopulation, giving rise to highly concentrated and diversepools of knowledge and knowledge-creation networks.• Cities can support large-scale business and investmentnetworks that create economies of scale in absorbing andextending innovation.1Smart civic leaders will take advantage of the opportunitiespresented by the shift in economic development drivers, whileaddressing the challenges of demographic changes. They willalter their investment strategies from attracting and supportingmass labor pools to creating systems of services designed tooptimize the city around highly skilled, innovative citizens andcommunities, as well as knowledge-intensive businesses. Frombuilding better transportation systems to supporting creativeinnovation and technological research and development,strategic design of public services systems can provide asupportive environment for delivering a higher quality of life,making a city more attractive to a knowledge-based population.

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