Small City's Investigations & Economic Benefits


Smart city programs all over the world have been rapidly rising in the past decade or two. It brings up new innovative technologies and possibilities but also risks and could have unpredictable outcomes and consequences. A good way to portray the size and growth potential of smart city market is that today over half of global GDP is produced by 380 cities and by 2025 the estimates are that 600 cities will be responsible for more than 60% of economic growth (Iliev, 2018). For the sake of comparison there were over 4000 cities with more than 100 000 inhabitants in 2015 and to this date that number has undeniably only grown bigger (Brilliant Maps, 2018).

The IoT (Internet of Things) has given a possibility for cities to make themselves more reachable and interconnected with its citizens and the technological advancements in data gathering and analyzing will lead to substantial cost savings and economic growth. This will also give outside investors a chance to be part of these rapidly growing programs. The effect of big and smart cities in global economy and future growth cannot be underlined enough. And if estimates come true, 66% percent of human population will be living in urban areas by the year 2050 and therefore there needs to be major accomplishments in technology and proper allocation of resources to handle this huge population (Low, 2018).

What Makes a City Smart?A city might have a large population and a lot of big companies in technology and business, local public transportation and a good economical situation. But what makes a city smart is the communication, data collection and analyzation of this data and the use of it in daily life. Whether it is about optimizing the public transportation to efficiently match the needs of citizens and the current traffic flow or adjusting the lighting and heating in an office building based on the amount of natural light and warmth and more importantly the location of workers and the nature of work they are doing. The optimizing based on people’s location and the things they do extends all the way to water and energy usage and transportation and sewerage (Gardner, M., Brown, M. and Petel, G. 2018), (du Preez, 2017).

All these things have a huge impact on citizen well-being, cost-savings due to optimizing the usage of energy and water, transportation all-around and on environmentally sustainable life in a city. An optimal and desirable smart city is efficient, focused on making life better on all areas, non-discriminating, environmentally friendly and sustainable and has a wide range of possibilities on communication with the citizens and is continuously listening to ideas for improvement. That is a place everyone would be happy to live and should be a target for all governments and city councils all around the globe.

Strategy of Smart City Investing

As a company investing in a smart city is a little different from usual as there is also the government and city council to cooperate with and that lays out some new challenges that separate the smart city investing from regular business to business or business to customer -based thinking. There is a lot of restrictions involving the procedures used, quality, sustainability, safety and privacy and all the work has to be done with close interactions and communication with the authorities and there needs to be a report on everything that is done or will be done and it has to be properly and with caution delivered to the authorities who verify and check everything to make sure it matches the restrictions (Gardner, M., Brown, M. and Petel, G. 2018).

Since there is a lot of competition on the technological field concerning smart cities, the company absolutely needs to have a stand-out innovation plan that most proficiently fills the needs of the city and is sustainable, environmentally friendly and has an overall positive economic impact. And there must be a realistic plan to reach these requirements since failure in a matter of this significance and size is not really an option to the city and therefore the strict restrictions are in place.

Privacy Concerns

There has been a lot of talk about the privacy concerns a smart city faces since the whole idea is based on data collecting and analyzing. One idea to most effectively keep the information safe is to cooperate with technology-businesses that have a lot of experience in protecting data and all kinds of challenges it creates like Google, Apple and Facebook. Cities using this data will have to find the happy medium in the depth of the data analyzing since eventually there will be a gray area of information that the citizens will not be willing to give up for use and don’t want to risk losing that information to third parties.

A lot of the smart city ideas are based on following the locations of people. For example when a person wants to go to a business meeting in the center of the city with a car during the worst rush hour, an app could tell him where the nearest free parking spot is and where he has to turn to access this parking spot. Eventually this kind of location monitoring adds up to patterns that reveal extremely indistinguishable information about people that they certainly do not want to share. That kind of information can be where they live and work, what kind of hobbies they have, where do their friends live and what kind of medical issues they have. At some point in addition the law comes an obstacle in at least most of the modern states that value human rights and privacy (Gardner, M., Brown, M. and Petel, G. 2018).

Ways of Investing in a Smart City Ways of investing in a smart city vary on all levels of imagination. Whether it is about funding a sustainable green energy project just outside the city to cover a major part of the energy consumption in the city or developing a new kind of data storage system that can handle the massive amount of data collected and can withstand the growth of that data in the future as well (Iliev, 2018).

Most likely the most used way of investing is and will be buying shares of the companies that have the connections and possibilities to in a major way affect some aspect of smart city technology and can be most profitable in the long run. An investor has to be extremely careful when investing in these companies though, since the smart city program is relatively new and we do not yet know how everything will turn out with it because there are no experiences from the past to compare to. In addition there is a massive amount of technology companies that want to be part of these programs but only a small proportion of them will succeed and have a profitable role in the smart city world. An investor needs to find the most potent, innovative, stable, ambitious and well-funded companies that have the necessary elements to be a successful operator in the field.

Economic Benefits of a Smart CityI

mplementation of the Internet of Things allows a city to create variety of ways to both save and generate money through reducing energy and water usage and being more efficient in car-parking and speeding fines to name a few. Most importantly applying Internet of Things in the basic fundamentals of a city saves everyone’s time, money and effort and also the environment as the data collected allows cities to adjust their services and businesses to most efficiently do their work (Eichler, 2018).

A significant effect on being a stable and profit generating city is that it attracts even more investors to make the city an even better place to live through continuous investment and new smart technology projects.

Funding Concerns

There has been concerns about the funding necessary for cities to start a program to implement the Internet of Things even though the overall amount of money invested in smart cities is exponentially growing. The reasons to this are mainly location- and state -based since the main proportion of funding comes from the local authorities (Eichler, 2018).

If a proper plan is introduced, a smart city project will get a big share of private funding, but as mentioned before, the privacy and security concerns need to be properly addressed and that requires the local authorities to have a substantial part in the developing and maintaining process, hence the need for local funding too. In addition the city itself is always held accountable for the safety and functionality of the technological systems and the area as a whole. Therefore it is understandable that the first thing to start a smart city program is to find a government-backed funding plan. Other significant reason for the hold-ups of smart city projects is the lack of infrastructure to back the systems needed to create a sufficient technological entity for the Internet of Things to be implemented (Eichler, 2018). Business Insider's estimation of Internet of Things attracted investments. (Business Insider Intelligence)


As the technology grows and people keep on moving in large cities after work, family and way of life, the cities have to create more ways to save costs and at the same time be more reachable and environmentally friendly. This offers numerous chances for investors as technology companies implementing the Internet of things line up for cities to choose from. Investment choice has to be even more carefully planned than usual since the massive competition in the field compared to the amount of companies that will actually be used to build up the city’s communications- and data analyzing -systems.

There is a bright future in the technology-business considering the smart city programs. There is also a moral incentive as the smart city idea itself is to quarantee the well-being of the citizens and to provide sustainable and environmentally friendly services and power in addition to a huge impact on economic growth.


  1. Iliev, I. (2018). Top Ten Reasons to Back Smart City Investment Opportunities. [online]
  2. What Investment. Available at: [Accessed 20 Sep. 2018].Low, I. (2018).
  3. The Benefits of Smart Cities. [online] Available at: [Accessed 20 Sep. 2018].Brilliant Maps. (2018).
  4. The 4037 Cities In The World With Over 100,000 People. [online] Available at: [Accessed 20 Sep. 2018].
  5. Gardner, M., Brown, M. and Petel, G. (2018). Smart Cities: A Look at Risks and Opportunities for Technology Companies. [online]
  6. Available at: [Accessed 22 Sep. 2018].
  7. Eichler, W. (2018). Smart cities held back by ‘lack of funding’. [online]
  8. Available at: [Accessed 23 Sep. 2018].
  9. du Preez, D. (2017). Deloitte - Smart cities investment requires some “creative thinking”. [online]
  10. Diginomica government. Available at: [Accessed 23 Sep. 2018].
  11. Insider Intelligence, B. (2016). The US is investing $165 million into smart city solutions. [online] Business Insider. Available at: [Accessed 23 Sep. 2018].Page 2 of 2
03 December 2019
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