The financing of local digital infrastructures is not merely about finding public investments; it is rather a question of economic sustainability. Local public authorities need to assess the extent to which digital infrastructures can become sustainable without continued public investments.
Rallying key digital stakeholders for the sustainability of local investments in digital infrastructures
The mobilisation of all layers of governments and financial institutions is critical to achieve these smart investments. Development agencies, Local banks and private investors, financial Institutions and NGOs, have to be mobilised to co- finance the creation of technological infrastructures. A lot of European, national and local funds for regional development remain often little-known or unexploited. Local public authorities should leverage on them to finance their digital infrastructure needs.
New business models to support local economic sustainability
The rise of the sharing economy is highlighting the underutilization of resources within cities or regions. Many innovative business models are trying to tackle this issue by making sure the resources are fully exploited. Apart from the famous Airbnb or Uber, other examples now exist. Peerby.com is a website and mobile app enabling consumers to borrow products by asking around in their neighborhood. Similarly, office sharing brings new revenues to companies which own or manage an office, and wish to rent out redundant office space as workstation. Beyond underutilization of resources, new business models can also have a positive impact on the citizen’s quality of life. This is the case of the circular economy, which provides opportunities to reuse, recycle and upcycle. Further, the example of car sharing illustrates how new services can reduce traffic and pollution, thus improving the livability of the city.
Hackathons in Espoo
The city of Espoo is launching several initiatives to accelerate the digital transformation of the city. 3D city model hackathons are for instance used to activate the local community and to enable Espoo residents to solve societal challenges. These week-end long hackathons are framing the regional and local challenges behind the need for innovation and therefore act as a key enabler for citizen engagement in the digital transformation process.
Digital investment to improve utility management
Investment in digital infrastructure can improve the management of utilities. Electricity, water, traffic are all subjected to severe peak use. It is estimated that 20% of capacity sits idle for much of the time to cope with demand peaks. Digital technologies along with innovative pricing structures can help limiting these peaks and thus improve the overall efficiency of the utility network.
An infrastructure development strategy strongly linked with the level of development of the city/region
The digital transformation or replacement of existing infrastructures require an in depth-analysis of citizen’s needs and is highly dependent on the development stage of the territory. Catching up cities and regions often consider technological infrastructures as secondary investments needs and usually favour investments in social infrastructures.
The Łódź Special Economic Zone
In Poland, special economic zones are widely implemented as to attract investments and investors to Poland. Their objectives are to act as a catalyst for the economic development of cities or regions. A special economic zone is defined as a separate, uninhabited part of the country’s territory where business activity may be conducted under preferential conditions defined in the Act on Special Economic Zones of 20 October 1994.²⁸ To attract investors, tax allowance consisting in a corporate income tax exemption are offered. Investors running their business in an SEZ can also benefit from real estate tax exemption. Today, The Lodz Special Economic Zone occupies an area of 1302 hectares. 50% of operating companies are SMEs. Large companies active in the zone include Fujitsu, Infosys, Dell, Gillette, P&G, ABB, Indesit, Whirlpool, Kellogg’s.