Author | Lucía Burbano
The innovative strategies and adoption of cutting-edge technologies that define smart cities not only play a key role in their economic well-being but also position them among the cities with the greatest diversity of resources and efficient management, which also leads to greater savings. The smart city model is proving to be an economic driver, as shown by the examples presented below.
Smart technologies, powering the economy
The integration of digital economies into smart cities is radically transforming urban governance and service delivery. Key technologies such as Artificial Intelligence (AI), the Internet of Things (IoT), and blockchain play a crucial role in driving economic growth, sustainability, and urban efficiency.
Disruptive technologies like AI enable smart cities to filter and use real-time data to optimize responsiveness and reduce operational costs. Meanwhile, digital platforms such as e-commerce and fintech create new business opportunities, boost local economies, and generate jobs.
Innovation, entrepreneurship, and strategic partnerships drive urban economies toward a prosperity that attracts investment, spurs job creation, and supports sustainable growth.
Recent academic discussions highlight the link between entrepreneurship and the economic development of smart cities. When provided with a supportive environment, digital entrepreneurs become key contributors in areas such as economics, technology, infrastructure, environment, mobility, and governance.
Smart cities, smarter economies
Singapore
Singapore’s Smart Nation initiative illustrates the transformative potential of integrating digital economies into urban ecosystems. Fintech innovations like GrabPay and PayNow have processed over $10 billion in cashless transactions annually, contributing to a digital economy that now accounts for 22% of the country’s GDP.
Barcelona
Barcelona Impulsa, the city’s strategic plan backed by an investment of €890 million between 2024 and 2027, aims to strengthen the local economy through innovation and technology.
The plan is expected to create 180,000 jobs, with the goal of positioning Barcelona as a hub for technological innovation, a sector that generates significant revenue and employment in the region.
Tallin
Tallinn’s e-Residency program exemplifies how digital economies can attract global entrepreneurs while boosting national revenue. The initiative has registered over 100,000 e-residents who have collectively founded 25,000 companies, generating €41 million in revenue for Estonia. Digital governance systems, such as online tax filing and electronic medical records, have saved the country €500 million annually.
Kigali
Kigali’s digital economy has grown by 13% annually. Part of this growth is driven by fintech and e-commerce startups, which have attracted over $100 million in Foreign Direct Investment to Rwanda. In the first quarter of 2025, the information and communication technology (ICT) sector was the second-largest contributor to the country’s GDP growth.
Espoo
After the decline of Nokia’s mobile phone business, Espoo transformed from a city reliant on a single tech giant into a hub for startups and digital innovation. Today, Espoo is home to over 1,500 high-tech companies, with a startup ecosystem valued at €3.8 billion. Around 100 startups are launched in Espoo each year.
Forty-two percent of the revenue generated by companies listed on the Helsinki Stock Exchange is concentrated in this Finnish city, which also ranks sixth in patent applications in Europe.
Photographs | Unsplash/Andre Taissin, Unsplash/Denys Nevozhai
