Essays on Smart Cities

: Environmental, Social and Economic Impacts

Abstract

This thesis explores the multifaceted impacts of smart city policies (SCPs) and initiatives on environmental, social, and economic development. It is motivated by three overarching research questions: 1) To what extent and through what mechanisms do SCPs and smart initiatives influence environmental outcomes across different urban contexts? 2) How do SCPs affect corporate innovation behaviour within evolving urban governance frameworks? 3) What are the economic consequences of SCPs for resource allocation and productivity?
The first study investigates the impact of SCPs and smart city development on global urban air pollution governance. Using a comprehensive smart city index covering 166 cities across 82 countries over 16 years, the study employs staggered Difference-in-Differences (DID) and multilevel modelling approaches. The findings reveal that smart city initiatives across multiple dimensions—economy, governance, mobility, people, and environment—significantly reduce air pollution. Additionally, institutional quality amplifies this effect, while contextual factors such as city population size, economic level, capital status, and temperature influence the effectiveness of smart city initiatives in addressing environmental challenges.
The second study focuses on China, examining the impact of SCPs on corporate innovation. Using patent data from 3,417 listed companies across 246 cities, it applies a staggered DID approach. The findings show that SCPs significantly enhance firms’ innovation output, particularly among non-state-owned, small, and growing firms, as well as those in underdeveloped regions. Mechanism tests reveal that increased government R&D investment, eased financing constraints, and intensified industrial competition are the primary drivers. However, excessive government subsidies may hinder innovation capabilities. The study further uncovers heterogeneous effects: non-state-owned, small, and growing firms, particularly those in underdeveloped regions, benefit the most. Yet, in these regions, state-owned firms demonstrate higher innovation capacity than their non-state-owned counterparts.
The third study shifts focus to the economic consequences of SCPs by examining their impact on resource misallocation in China’s manufacturing sector. Using firm-level industrial data, it finds that SCPs significantly exacerbate resource misallocation, particularly by widening the gap between high-productivity and low-productivity firms, leading to an estimated total factor productivity (TFP) loss of approximately 0.8%. This misallocation arises from output and capital distortions driven by increased tax burdens and R&D subsidies. Additionally, the study highlights implementation biases in SCPs based on firm and regional characteristics. Small and medium-sized enterprises (SMEs), traditional industries, and firms in underdeveloped regions receive comparatively less support, further worsening resource misallocation.
This thesis makes several significant contributions to the literature and practice at the intersection of urban studies, environmental economics, and innovation policy.
Theoretically, it integrates three distinct strands of research—environmental governance, corporate innovation, and resource allocation—into a unified analytical framework for evaluating SCPs. Drawing on systems theory, socio-technical systems theory, and spatial–institutional perspectives, the thesis conceptualises smart cities as complex socio-technical systems whose effects unfold through multiple interacting mechanisms across environmental, economic, and institutional domains. This approach advances theoretical debates by shifting the focus from evaluating SCPs in isolation to understanding how their impacts are conditioned by institutional quality and spatial context, thereby providing a nuanced explanation for heterogeneous outcomes across different cities and firms.
Methodologically, the thesis develops a novel, comprehensive smart city index based on 35 indicators spanning six dimensions, enabling systematic longitudinal analyses across 166 cities in 82 countries over 16 years. This index contributes to the empirical toolkit for assessing smart city development, offering a transparent, replicable measure that future research can adapt to different contexts.
Empirically, the thesis generates new evidence on the diverse impacts of SCPs across environmental, innovation, and resource allocation domains. It shows that SCPs significantly reduce air pollution globally, enhance corporate innovation in China—especially for small, private, and growing firms in underdeveloped regions—but also exacerbate resource misallocation by favouring larger, more productive firms. These findings reveal both the intended and unintended consequences of SCPs, illustrating how spatial and institutional heterogeneity shapes their effectiveness. This contributes to ongoing debates about the transformative potential of smart cities and their uneven distributional effects.
Beyond academia, this research has important implications for policy and practice. For policymakers, the findings offer actionable guidance on how to design and implement SCPs more effectively. They highlight the importance of tailoring smart city strategies to local institutional and spatial conditions, rather than adopting one-size-fits-all approaches. Environmental benefits can be maximised by aligning technological initiatives with institutional quality, while innovation effects can be broadened through targeted support for disadvantaged firms and regions. Moreover, recognising and addressing the potential for resource misallocation is crucial to ensuring that smart city development fosters inclusive and sustainable growth rather than reinforcing existing inequalities.
For urban planners and international development agencies, the global evidence presented in this thesis provides a benchmark for evaluating and comparing smart city development across diverse urban contexts. It underscores the need for balanced strategies that integrate environmental sustainability, economic competitiveness, and social inclusiveness. By situating empirical analyses within broader theoretical and spatial–institutional frameworks, the thesis not only contributes to scholarly debates but also provides a foundation for evidence-based urban policy design.
Overall, this thesis advances academic understanding of smart city dynamics, develops novel empirical tools for policy evaluation, and generates insights with direct relevance to contemporary urban governance. It encourages future research to adopt interdisciplinary, multi-scalar perspectives and to consider both the benefits and unintended consequences of smart city initiatives in shaping urban futures.

Date of Award	10 Dec 2025
Original language	English
Awarding Institution	University of Bath
Supervisor	Chen Zheng (Supervisor), David Newton (Supervisor) & Masaki Mori (Supervisor)