JICA Research Institute

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Working Papers

No.170 Japan’s Experience of Creating Innovation for Smart Cities: Implications for Public Policy for Urban Sustainability

In our efforts to promote an urban sustainability, the transformation to smart cities will play a significant role. As smart cities are based on advanced systems of hardware and software—covering various types of products and services relevant to urban functions— innovation for smart cities requires a significant degree of diversity in knowledge, actors, and institutions. Hence it is important to understand the characteristics of the innovation system in smart cities and to introduce policies that will promote forms of innovation that incorporate local conditions and contexts.

In this paper, the innovation system of smart cities in Japan is examined to consider implications for public policies and institutional design. The analysis reveals a concentrated structure dominated by large actors, particularly in the public sector and the electric (power generation and distribution) and electronics (appliance and equipment) industries, with knowledge and technological domains concerning renewable energy, energy storage, community energy management, and applications for home appliances and electric vehicles.

Policies and regulations influencing the innovation system of smart cities include economic incentives to promote renewable energy technologies, liberalization of energy markets for new entrants, participatory processes of road-mapping on key technologies, localization of demonstration projects reflecting specificities, standard setting for component technologies, and platform creation for stakeholder partnerships including academia, industry, government, and civil society. A key implication for public policy is to facilitate communication and engagement with end users in jointly creating innovation for smart cities.


Keywords: smart city, innovation system, network analysis, stakeholder collaboration, Japan

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