Smart City policies have attracted relevant attention and funding over the last few years. While the time seems now ripe to conclude that such policies have a positive impact on urban economic growth, the picture is much less clear when looking at the microfoundations of this effect.
In this paper we look at the urban innovation impact of Smart City policies. In fact, typical Smart City projects imply the involvement not only of major multinational corporations, along with local public authorities, but also of local companies, typically with the aim to translate general technological solutions to the local needs.
A new data set collected for these analyses comprises data on Smart City features for 309 European metropolitan areas, Smart City policy intensity, and urban innovation outputs. The latter are proxied by calculating total patent applications to the European Patent Office between 2008 and 2013. Patent counts also include technologically narrower classes, namely high-tech, ICT, and specific Smart City technologies patent applications.
Propensity Score Matching estimates suggest that cities engaging in Smart City policies above the EU average also tend to patent more intensively. This effect is stronger for high-tech patents, while decreases for more narrowly defined technological classes. This last result suggests possible technological spillovers from technologies directly involved in Smart City policies.
Smart City policies have attracted relevant attention and funding over the last few years. While the time seems now ripe to conclude that such policies have a positive impact on urban economic growth, the picture is not as clear when looking at the microfoundations of this effect. In fact, while statistical evidence does suggest the existence of a positive association between the implementation of Smart City policies and urban economic performance (Caragliu and Del Bo, 2018a), how this exactly comes about is much less clear.
Are Smart City policies the new direction for urban initiatives? Are they conducive to sustainability, livability and economic growth? While these questions are still unanswered (and will probably be so for quite a while), in this paper we have added to our understanding of the mechanisms through which Smart City policies foster urban economic performance by investigating their impact through urban innovation. Our empirical findings, based on PSM, allow us to conclude that SC policies do have a non-negligible positive impact on urban innovation measured through patenting activity, especially in high-tech classes. Results are robust to a number of consistency checks, both in terms of the way Smart City policies are identified, as well as the way Smart City-related technologies are measured (i.e., which IPC classes are used to calculate Smart City technology intensity).