This story appears in the May 24, 2015 issue of Forbes. Subscribe
THE UN SAYS the global population will reach 9 billion by 2050. Six billion of that population will live in urban areas. That's a jump of 2.5 billion city dwellers over the next 35 years.
Argue the numbers all you wish--I'm skeptical that world population will grow as fast as the UN predicts. Still, the effect on cities will be inescapable, whether the jump in city dwellers is 1.5 billion or 2.5 billion. The stresses on cities will be enormous: water, food, energy, transportation, health care, security, crime, quality of life.
This is why we love capitalism: The opportunities will be huge, too. The smart-city innovation race will generate tens of trillions of dollars in the coming decades. Which countries and companies will be the big winners?
I see three categories of winners. The first will be suppliers of digital technology, from high-speed telecom, cloud services and digital security to apps, for example, like Uber's and Airbnb's that use physical resources with greater efficiency. But these can get you only so far.
The second category will be traditional industry reborn. The trick will be to find breakthroughs in materials, construction and transportation--updates to the blood-and-sweat stuff that built the great cities of the 20th century. Will the winners be known names, such as GE, Mitsubishi, Tata and Samsung, or new players?
A third category will be the smart cities themselves. Leaders will likely create services that can be used to teach other cities, so their expertise will have value beyond the benefits enjoyed inside the cities. Smart cities will enjoy premium brands in a tough global economy, and they will attract talent. A great example is Singapore.
Last month I attended a smart-nations conference in Singapore.
--Aging population. It is imperative that older Singaporeans lead healthy and fulfilling lives. One out of nine today is over 65. In 15 years that number will be one in five, almost as high as in Japan now. Living in a small city-state, Singaporeans don't have the outsource-granny-to-Arizona-or-Florida option. Citizens will have to "age in place," while not burdening the economy. This means big opportunities at the intersection of health care and technology.
--Transportation. Land is scarce in Singapore. "We can't keep on building more and more roads indefinitely, becoming like Los Angeles." Singapore, like Denmark, taxes cars almost double the purchase price to discourage ownership. So what's next? The answer isn't more taxes. At some point the goose will squawk and talent will stop coming in. The answer is to use technology and data to seek new efficiencies. (Singapore's tropical climate makes increasing the number of people walking and biking unfeasible.)
Improved health and transportation--obvious, right? They're on every city's and country's wish list.
The third category discussed by Prime Minister Lee is rather unique.
--Up-and-coming marketplace. "We want to become a safe and secure data marketplace. A place where companies can easily conduct testing and extract insights on market research and consumer trends. A place where data can be shared in order to unlock value and innovation, and where the government releases many data sets to the public to build applications and services."
That's a bit different--and brilliant. Singapore will be positioned as part Switzerland/part Silicon Valley. Without saying so, the prime minister was addressing some people's fears that Hong Kong has been compromised as a "secure data marketplace." Mr. Lee is too much of a diplomat to say it directly, but the implication is clear: Singapore wants to be Asia's top banking city.
The coming revolution in financial technology--fintech, as it's called--is just starting. Will the winners be disruptors from Silicon Valley? Or, because banking is regulated in every country in which it is practiced, will the fintech winners be hybrids of disruptors and traditional bankers? My conference panel said the latter. In which case, part-Switzerland/part-Silicon-Valley Singapore is ideally positioned.
AG'S ROLE IN SMART CITIES
Let's not forget that most basic need: food. How will an additional 2.5 billion city dwellers be fed? Join the Forbes AgTech Summit on July 8-9 in Salinas, Calif. to find out. Go to Forbes.com/conferences to learn more.
