The Impact of smart city policy on green innovation

Abstract

A smart city is designed to use technologies to improve the quality of life and help achieve sustainability and climate goals. There is a growing literature that analyses the impact of smart cities on urban innovation or CO2 reduction in developed countries, but few studies explore the relationship between smart cities and innovation in developing countries. This paper examines the effect of smart city policy on green innovation in the context of a developing country. Specifically, I investigate the effect of building new smart cities on environmental patent applications in India using panel data on 26 Indian state-level patents over the period 2001-2020. I find that a 10% increase in the proportion of smart cities was associated with a 17% increase in environmental patent applications. This effect was stronger for smaller states that experienced a 32% increase. Furthermore, I show that there were significant effects on patenting activities in environmental sectors: “air pollution abatement technology”, “waste management technology”, and “climate change mitigation technologies associated with energy and transportation”. The results suggest that smart cities in developing countries can play a critical role in encouraging green innovation