Government and governance for smart development in smart communities

Policy, together with polity an politics , is at centre stage of the debate on smart development and smart communities . Being conceived as an intentional action put forward by one or more of the governing bodies operating at a certain level, policy is crucial for implementing new strategies. Governing bodies of any aggregate – like a country, a city, a firm – are constantly concerned with forward-looking perspectives, forecasting and assessing, that is with policy. Even the choice of leaving things as they are is, usually, the result of intentionality. Globalisation has heightened the awareness of the need to keep up with competitors, and we speak of competition between nations, regions, cities, firms, individuals. Limiting ourselves for a moment to the first three items, more and more emphasis has been on being “attractive”: to attract investments, to attract firms, to attract educated people, and so on. Thus, a lot of attention has been devoted to explicitly analyse one’s institutional architecture in order to undertake those changes which are deemed necessary to reach the desired goal. The underlying idea is – one is tempted to say: obviously – that we identify some objectives which we want to achieve and act accordingly. Reality shows that objectives can be not as clear, may be difficult or impossible to achieve, trade-offs are always present, actions are imperfect both in the private and the public sector and can backfire. A macro-economic example can make immediately clear the difficulties which are incurred when one has to conceive and implement some policy: a look at the long world economic recession which started in 2007, and which we do not know exactly whether in early 2016 it is over, ought to make us reflect on our capabilities to understand phenomena, setting targets and act accordingly. Reasoning at the meso-economic scale of cities or metropolitan areas does not necessarily imply that things are easier. The quantity and quality of variables to be taken into account is extremely variegated, while local environments are never really “local”: that is, local environments are always interconnected with larger and international ones. About the latter point, the presence of an airport illustrates the point in that all the levels of government and regulation are involved – from worldwide air traffic control regulations, to safety, to the many services which are necessary to the airport itself many of which are regulated and supplied at the local level. When official papers and reports on smart specialization, smart cities and smart communities deal with government’s goals the latter look in general well defined and the task to actually manage them straightforward. For instance, we read: “... cities should be places of advanced social progress and environmental regeneration, as well as places of attraction and engines of economic growth based on a holistic integrated approach in which all aspects of sustainability are taken into account" (European Commission, 2012a). However, when we get closer to the actual implementation of the new policies and strategies, quite a few problems arise. First of all, in the last five years or so it became increasingly clear that the smart label can cover many areas; most of them are correlated and sometimes overlapping. Each actor, and among the others, European Union, municipalities, corporations, contributes to shape industry, cities and communities through. The role of public policy and public administration is recognized as crucial in providing a framework of opportunities and constraints for determining socio-economic development. Second, although national and local governments play an important role in local economic development, several groups and organizations are involved and they have to play a role in each strategy. These features, by themselves, contribute to increase the complexity of finding positive solutions. But, in third place, we are well aware that this complexity is augmented also by the fact that often the goods and services produced and exchanged in the sectors mostly concerned are not pure private goods. As we argue in Chapter I.2.3., social goods are at the core of the transformation paths and, given the fact that markets are efficient allocation mechanisms only for pure private goods, in a relevant part of the economy - central in our frame - a coordination mechanisms of a different sort is strongly needed. Fourthly, recent and less recent economic history suggests that not only at the micro level , but also at the macro and meso levels risks and failures are ordinary events. Unfortunately, even representative democracy contributes in making bulky and costly the application of a guiding principle that appears straightforward: “we must know in order to decide”. As we have learned trough experience, this is true for all levels of government - local, national, supra-national, sectorial. But also markets can fail both at the sectorial, local, national and global level. Moreover, as in the case of the global economic crisis just mentioned, they can fail simultaneously. On top, networks and cluster can fail as well, and this implies that partnerships can fail too. Of course, failures foster conflict which is embedded in social interactions and inequality can be amplified by strong diversity in the economic and social impact of different capabilities to implement smartness. As a consequence, under these circumstances, we cannot assume perfect rationality and optimal behaviours both in the public sector and in the private one. This suggests to take care of resilience in political strategy. In this book some of the key platforms which the core actors can and should rally in fulfilling their strategies for smart development have been identified. A first crucial platform relates to the capability to adopt new procedures for data collecting and processing in production and consumption activities. Many decisions crucially depend on data availability and information must be reliable. Nowadays the available tools allow governing bodies to monitor and manage loads of variables, on the side of production as well as consumption, concerning several kinds of flows of goods and services, from electricity to mobility , from finance to education, from housing to food eating, from potable water piped into networks to waste disposal, and many others. An example of application of this capability is what has been called the ‘sharing economy’. In this case network technologies can mitigate markets imperfections or failures through a solution that implies “commons-based peer production”. Yet disruptive effects takes place in the industries concerned, but these should be smoothed through new forms of regulation as well as prior planning of structural change. Another key platform has been identified in a true capability to innovate simultaneously at different levels, both through incremental and radical innovation. This capability can be reached when a full recognition of disruptive effects, failures and opportunity cost of innovation processes is on hand. Different types of knowledge are relevant drivers in this respect: knowledge of technological opportunities, scientific knowledge of the regulatory framework, creation of new knowledge. In this regard, there is room for the typical debate on the role of the public sector in providing incentives and disincentives for an appropriate economic organization of knowledge within and outside the firms. The creation and use of different types of knowledge is a multi-dimensional phenomenon that covers all the domains we have referred to. In addition, knowledge is characterized by a series of interactions that embraces scientific, technological, and economic fields. Meanwhile it is related to the demand for satisfying widespread social needs. We need to combine the smartness as defined in the document issued by the European Commission (2012b) - in which cities must be places of progress where all aspects of sustainability are taken into account - with the opportunities that emerge from new modes of knowledge production. A third platform relates to the capability to forecast and implement a provision of human capital satisfying investments as well as consumption needs, for individual agents and for the community as a whole, both on the side of the demand for and the supply of labour. But, since human capital can be considered as a necessary, but not sufficient condition for human development and the latter is crucial in smart development for reaching cohesion and sustainability, the capability to forecast and implement a satisfactory provision of human capital has to be coupled with that of forecasting and implementing the formation of an adequate amount of social capital in smart communities, through a dedicated fourth platform. Finally, the sector of public utilities can turn into engines able to serve, albeit in a selective way, all the four platforms. This sector is already playing an increasingly important role in the economy, due to the quantitative and qualitative performances of its leading groups. Nevertheless, multi-utilities may become strategic brokers for local systems in which they operate. In particular they can set in motion new innovative processes able to drive the potential of the new technological infrastructures towards the delivery of new and more effective services thanks to their experience in providing incentives for citizens’ involvement and in assessing their needs. However, having said this, we need to recognize that strategies for smart development face a huge and complex problem: how can it be possible to attain the relevant capabilities and mastering all these platforms together when starting from such a disarming state of affairs concerning policy limits? We suggest a positive answer to this question in section 3., while being aware of the complexity of the task and trying to do our best for not simplifying it too much. The nodal points which we are going to discuss, however briefly, in this chapter are the ones which ought to open the way to smart development in smart communities. The selection of these points might at first sight seem rather idiosyncratic, but they simply reflect the complexity of our societies. The first point to be investigated concerns the role of knowledge and technology - about the latter we will focus on ICTs. The second point has to do with the meaning of government and governance as it has evolved in recent decades and may serve for answering our question. These items open the way to a better understanding of what are in terms of policy action the implications for smart development and smart community. Therefore, in third place we look at the way smart development can be governed through smart communities. Fourthly, we focus on the critical role of the public administration and put forward some idea on the facilitation role that selected multi-utilities can play at the local level. The chapter will be concluded with a short list of preconditions and suggestions on how smart development could be managed in smart communities. Case studies presented in this book as well as the benchmarks envisioned in the studies of circular economy and in the experiences of the sharing economy give evident signals of the need of a coordination between government and governance in making available highly sophisticated services. Therefore, the central role of the public administration is stressed in regulating existing infrastructures and in providing new material and immaterial infrastructures. The assessment of future needs in a planning period ranging approximately from 10 to 15 years is becoming more and more important. This cannot be done with a week government and implies a strong cooperation between the private and public organizations. Crucial nodes for smart development and for an effective connection between the organization of knowledge internal and external to the firms rests on schools and, above all, on universities, as providers of fundamental research and radical innovation, as well as higher education. We cannot forget however all the limitations that affect the performance of public administration: from debt to failure. This is why a carefully planned division of labour between metropolitan authorities and multi-utility companies can be promising. The latter might enable multiplicative effects in the metropolitan areas through the provision of material and immaterial infrastructures complementary to their ordinary services.