Smart Cities

Urban Innovation: How Cities Can Foster Inclusive Growth

Cities around the world face the challenge of managing rising populations that put a strain on urban infrastructure and public services. Strong partnerships with the private sector that benefit local residents and share data are key to building inclusive, efficient cities.

Urban Innovation: How Cities Can Foster Inclusive Growth

Construction of new skyscrapers towers over an older neighborhood in Jakarta on January 18, 2018. (Credit: Bay Ismoyo/AFP/Getty Images)

November 19, 2018

Cities are becoming increasingly influential on the world stage as people gravitate to urban centers in search of work and a higher standard of living. By 2030, 60 percent of the global population is expected to be living in cities, 1.4 billion more people than in 2015, according to the McKinsey Global Institute. But with that growth and dynamism come problems. Many cities are suffering growing pains, struggling to adapt their transport, health and housing systems fast enough to meet the demands of a bigger population. Even in cities with strong economies, mismatches have emerged between job opportunities and local workers, leading to a lack of inclusive growth.

The CityLab conference in Detroit on October 28–30 brought together the mayors of three U.S. cities that together are facing a broad range of these challenges – Detroit, Seattle and St. Paul, Minn. After decades of decline, Detroit is enjoying a revival that Mayor Mike Duggan said can’t leave local residents behind. The city’s policy of tying private-sector investments directly to improvements in social inclusion has been paying off in that regard, he said. In exchange for tax breaks on major commercial developments, for example, the city has stipulated that at least 51 percent of the labor hours are performed by Detroit residents. To make sure there’s enough skilled labor to meet the growing demand, the city has invested $20 million in training centers for trades that teach high school students during the day and adults in the afternoons and evenings.

“If you walk into our plumber or carpenter apprenticeship classes – and trades have not been the most friendly to people of color over the years – you now see 25, 30, 35 percent Detroiters,” Duggan said. “So we’re using the recovery to benefit our residents, otherwise it’s hard to understand why we ran for office.”

The mayors stressed that these “upstream” investments in the local workforce and infrastructure are a core part of making a city competitive as well as inclusive. Duggan cited the city’s move to pay for the first two years of community college for any high school graduate, and to fund a four-year college degree for high school graduates who meet certain standards

“These things, when they are targeted right, are not as expensive as they seem,” he said. “People now know if you graduate from high school in Detroit, college is paid for. If you graduate from high school in the suburbs, it’s not, and it has become a competitive advantage for us.”

Seattle has boomed on the back of the success of Amazon, the city’s largest employer, but the influx of highly paid tech workers has been accompanied by rising homelessness, displaced communities and a strained transport system. Mayor Jenny Durkan acknowledged that Seattle had not been fully prepared for the “Amazon effect.” To build the city of the future, Durkan said, you need to have as much ready as possible. “To retrofit a city is really hard.”

Investments in social capital, such as funding pre-kindergarten (pre-K) education, and helping workers earn a living wage can pay off over the long term, the U.S. mayors agreed.

In one small example of this, Saint Paul recently eliminated late fees in its library system after noticing that 51,000 library cards had been deactivated for fines as small as $10.

“It was a really hard decision until we realized that we actually want children to read,” Mayor Melvin Carter said.

Public-private partnerships and the rise of megacities

The Bloomberg New Economy Forum in Singapore on November 6–7 brought together several corporate leaders and urban experts in a discussion of how “megacities” can become more efficient and equitable. Defined as having over 10 million inhabitants, there are now more than 30 megacities globally, up from around 10 in 1990. The United Nations expects the world’s urban population to expand by another 2.5 billion people over the next 30 years, with 90 percent of the urban growth centered in Asia and Africa.

As these giants grow, they often lack sufficient data on the behavior of their residents to make informed decisions about how to solve problems such as congestion. That is where partnerships with private companies, which often have a wealth of such data, can be invaluable in helping target policies to make transport systems, hospitals and schools work better.

“This is the fundamental problem with city planning and city government in general,” said Nadiem Makarim, the CEO of Indonesian ride-hailing and food-delivery app Go-Jek, the country’s first $1 billion startup.

“They honestly do not have even enough data with which to ascertain the actual problems that matter to people, how acute they are and what the root causes are,” he said.

After initially giving Go-Jek a frosty reception, Makarim said Jakarta city authorities are working closely with the company, having realized that its data is an invaluable tool in identifying solutions to congestion and other urban problems. “As you digitize these movements of humans and goods, and track transactions, you create a new layer of visibility around how the city actually operates,” he said. Michael Froman, vice chairman and president for strategic growth at Mastercard, agreed there was an emerging gap between the data capabilities of the public and private sector. Sharing data and working with city authorities to bring residents into the formal economy has the potential to be mutually beneficial for companies and governments, he said.

“We’re only going to make progress on the goals that we all have if we’re aligning the commercial interests of the private sector with social impact,” Froman said. "That means being able to work with the private sector in a true partnership, having the private sector be very transparent and understand that the public sector has interests that have to be respected.”

With a population of around 6 million, Singapore falls short of megacity status, but the famously efficient city-state has valuable lessons for bigger urban areas. Chan Heng-Chee, chair of Lee Kuan Yew Centre for Innovative Cities, highlighted Singapore’s “whole of government” approach to urban planning. A developer building a shopping mall has to work with a host of government agencies to ensure their plans fit the city’s overall vision and its standards on congestion, as well as social and environmental impact.

“First, leaders must have a vision, then you must have leadership. But the implementation is extremely important, so you have to build the bureaucracy, get the right laws, get the right regulations,” said Chan. “And you have to have buy-in from the people.”

Singapore’s Changi Airport, consistently voted the world’s best, is perhaps the most famous example of the city-state’s holistic approach. Changi is a microcosm of a high-functioning city that has a lot to teach urban planners, said Makarim.

“For me, Changi is a real-world application that is designed around human-centered design. And it is masterful at it. I think that kind of human-centered design is a fundamental skillset that is missing in a lot of government bodies.”