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Smart Homes|Cities|Nations



Smart Homes|Cities|Nations


2019. 1st Issue Free of Charge

Current trends

Latest technologies

Challanges & Solutions


2019. 1st Issue Free of Charge

Smart Homes|Cities|Nations

All rights reserved. Articles found in this publication are the intellectual property of the Antall Jรณzsef Knowledge Centre. No part of this publication may be reproduced, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher.


Welcoming Words


Insights 6 Smart City & Smart Home Infographic 6 Hungarian Foreign Policy, Defense, and Innovation-Interview with HE Mr Péter Sztáray, State Secretary for Security Policy 8 Smart Cities: A Budapest Approach-Interview with Ms Alexandra Szalay-Bobrovniczky, Deputy Mayor of Budapest 12 The UK’s Modern Industrial Strategy 16

Smart Homes 24 Hungarian and Regional Challenges in Making Better Smart Homes—How to Connect Everything and Create Platformless Smart Solutions 24 The UK Trends in the Smart Home Business 28

Smart Cities Smart Cities—What Does It Mean and How Can We Get There? How Can Smart Cities Help Us to Cut Down Our Energy Consumption and Make Our Future Greener? Cities 4.0—Where Will the “Transcitizens’” Homes Be? Digitising the Land-Use Planning System The Future of Mobility? In Milton Keynes It Is Already Here The High-Tech City of Cyberjaya and The Economic Development Plan of Vision 2020 Smart Cities in the Gulf


think.BDPST Conference think.BDPST 2019 The History of think.BDPST in Pictures The UK’s Innovation Strategy—Lord David Willetts’ Keynote Speech at think.BDPST 2018

74 76 78

The Biotechnological Revolution Will Not Be Televised—Do Androids Dream of a Fair Society? The #positiveeffects of Social Media The #negativeeffects of Social Media Faster Communication and the End of Babel The Case Against Language Deflation

98 104 105 106 107

7 Smart Nations 108 Towards a Smart European Integration?—An Overview of the European Digital Revolution 110 The UK’s Digital Strategy: Rhetoric and Reality 116 An Overview on Industry 4.0 and Its Prospects in Hungary 123 The Better Life Index by OECD—What Makes a Country Happy? 127 China at the Vanguard of the Smart Revolution— China’s “Four Great New Inventions” and Their Social Background 131 Made in China 2025—China’s Industrial Modernisation Initiative Objectives and Their Global Reception 136 Game of Drones: the Possible Effects of Using Armed UAVs 139 The Survival of the Geekiest—A Case Study of the Israeli High-Tech Defence Sector 142 A New Era of Healthcare 146

34 38 44 49 55 63 68


Social Effects 84 Digital Transformation—How Should We Remould Our Old Models of City Operations to Adapt to Disruptive Technological Development? 86 Free Elections—How Do We Protect Our Democracies? 92

8 Antall József Knowledge Centre About the AJKC Our Releases Our Upcoming Event Guest Authors Authors of the AJKC References of Pictures and Used Data

150 150 152 153 154 157 159

9 Next Issue 162 In Focus: NATO 70/20 162


Dear Readers, It is a great honour to present you with the first 2019 issue of In Focus magazine. This issue’s topic is smartness from three perspectives: smart homes, smart cities, and smart nations. The past decade saw the emergence of the modified meaning of the word “smart”—a concept that is hard to define but is always connected with the notions of automation, user-customization, and adaptation. Making things “smart” is thus designed to make our lives more comfortable, more cost-efficient, and maybe cheaper, greener, and healthier too. A smart home saves fuel, costs and most importantly, time for those living inside it. In a smart city, utilities reportedly do not waste our time and money and do not pollute. Furthermore, a smart nation spends extensively on innovation, research & development, as well as sustainability but has enormous returns in safer defence, greener economy and developing industries. Are we really facing a smart revolution that might entail a radical shift in international relations as well? Well, that may well be. But there are dangers as well. Smart cities are suggested to be far greener than the more traditional types of urban development designs. However, the question becomes: will we be still able to own our houses, own our cities if they are getting smarter? The unhindered data flow useful in medical treatments can also be used for malicious surveillance and deliberate attempts at hijacking the political life our respective countries. Even if there are many present problems “smartness” can solve, it does create a series of new ones—unwanted social,

political, and environmental consequences that must be considered twice before endorsing those changes wholeheartedly. There have, however, never been serious changes in history that did not engender new challenges. Editing the present issue of In Focus has been a side project of the 2019 think.BDPST conference, to be held on 5 April 2019. Our aim was to introduce features of the smart revolution—its opportunities and dangers alike. We wish to bring together stakeholders from business, science, and public, to facilitate a discourse on innovation and how to use it best. At least there is one field in which our findings are clear: innovation is not only about technology but the way we see it develop and the way we ourselves adapt to it. The present publication as well as the conference, vow to contribute to such a public debate on “smartness,” innovation, and society. Now we are inviting our readers to examine both sides of the same coin, and join in shaping the discourse on innovation.

Tamás Péter Baranyi—Editor-in-Chief Head of Research Antall József Knowledge Centre WELCOMING WORDS








Energy management system allows you to monitor and control the power consump�on of light, electronics, air condi�oners, and appliances, gives you a detailed history and reports in real �me.

Smart control system allows the flow of water and controls the temperature and velocity of the water in the system. It has the ability to save your preferred se�ngs. The system also has a �pause func�on” if you want to stop the water for a short �me. Or set the �me and the wash cycle of your washing machine.

Now, using the applica�on on your smartphone or tablet, you can easily remotely control the garage door from anywhere in the world. You can also view the status and events in real �me.




The system can provide HD live streaming to owners’ phones with sound alerts, night vision, and digital zoom, so they can monitor their home 24/7 from anywhere. It can also ac�vate the alarm system to deter would-be intruders and record their ac�vity or be integrated with a smart lock system. By predic�ng possible failures and using a smoke detector, it helps prevent burst pipes, short circuits, and fires.

With a smart faucet you can customize the right balance of hot and cold water. It can be programmed in advance, which controls the temperature and remembers specific preferences. Also, the system is able to recognize faces and includes the necessary water temperature for each family member.

Uses Bluetooth technology, which allows you to lock or unlock the door with your smartphone or tablet. Smart door lock automa�cally unlocks the front door for you. It also allows you to send electronic keys to your friends that work only during �mes that you specify. Another smart door lock, during the opening of the door, can be connected to a smart thermostat that changes the temperature to what is comfortable for you.




The system uses Wi-Fi to download the weather forecast every day and adjusts your sprinklers accordingly. Turns off your sprinklers during rain. No ma�er where you are, you can also monitor and control irriga�on from your smartphone or tablet.

It works the same way as the Smart Thermostat: keeps a comfortable temperature at home, can be automa�cally switched off when the window is open or the house is empty. With the applica�on on your phone you can always find out what the temperature is in the house at the moment and you can easily change any se�ngs.

The system can control each lamp individually, detect and predict lamp failure. With wireless connec�on, Smart Lightning System allows you to adjust the brightness of the ligh�ng in the house and control switches.




The device automa�cally detects movement, takes a snapshot and video, and sends e-mail to no�fy the user. It has infrared night vision, which is automa�cally ac�vated in low light and in the dark. Takes HD video, also has a built-in microphone and speaker for two-way communica�on at any �me.

Smart thermostat is responsible for controlling a home’s hea�ng system. It allows one to control the tempreature in the room, making it comfortable depending on the �me of day and the presence of people in the building. Connec�ng to the internet allows the user to easily change the temperature from their smartphone or turns off the hea�ng when the house is empty.

This system allows you to manually control the curtain, set the �mer, and can be programmed to automa�cally open and close the curtains of your choice. Also has a sun sensor, and your curtains are closed automa�cally when the sun is strong.


17,024 newly-created jobs. Today, Hungary has the lowest taxes in Europe, the only single-digit corporate tax, and the lowest flat-rate personal income tax. It is essential for foreign investments that Hungary is now the safest country in Europe, a fact that propelled our country to the top ten investment venues in the world— according to one renowned business ranking.

HE Mr Péter Sztáray

The Ministry of Foreign Affairs and Trade does not only deal with interstate and integration issues in the traditional sense. Among the aims of the ministry is to further foreign trade aspects by bolstering and widening opportunities for research and development as well as innovation. How do you evaluate such activities of the MFAT? Hungary has reached new peaks in the year 2018 in the field of foreign trade. Never before has the country drawn so many investments and in such great value, having thus turned the past year the most successful of all time in terms of encouraging investment. 98 major investments arrived in the country, amounting to a total worth of HUF 1,380 billion, and producing a total of 8


What are those outstanding achievements in connection with innovation that the MFAT has played a key role in? Hungary’s economy is going through a shift of dimensions: the most important aspect is no longer the sheer number of new jobs; the technology and R&D these jobs represent is also in the focus. Foreign investments drawn to Hungary in 2018 were proven very expedient, as they generated much higher added value, technological quality, and R&D content much bigger than those of the earlier years. That made Hungary’s economy leap forward—not merely in quantitative but rather qualitative terms. It is safe to say that using innovative technologies and seizing the opportunities they engender are defining factors for a national economy. It is important for Hungary to shift from a productionbased economy to an economy based on knowledge and innovation, from the point of view of further sustainable development as well as of safeguarding the competitive advantages we have gained in the last couple of years. We often organize our science diplomacy and innovation development in a V4 framework. What is the role of the V4 countries in 21st-century Hungarian diplomacy?

The countries of the Visegrad Cooperation wish to remain the powerhouse of European growth in the 21st century as well. It is partly conditional on how flexible those countries are in adapting to changing circumstances and how quickly they adopt and use innovative technologies. On the other hand, cooperation between the participating states has never been as close during the history of V4 as it is today. Moreover, V4 Plus formations are opening the door for new forms of cooperation. Based on these two aspects, the opportunities are ripe for V4 countries to react to challenges in a timely and adequate manner. There are two extreme viewpoints on the role of the V4 cooperation in the field of innovation. On the one end, it is said the V4 could become the development powerhouse of Europe, while others insist that the lack of capital bars the V4 from becoming such an instrument. How do you assess the short term prospects of these ambitious goals? What factors impede this process? The Visegrad countries have by now become the motor of growth in Europe, and they have a full-fledged interest in preserving this trend. As competition for securing investments is becoming ever more poignant, it is not an infrequent occurrence that we find ourselves as each other’s competitors. This situation encourages the V4 countries to show constant development and keep on working for an investment environment increasingly attractive for foreign investment. Can innovation be bolstered by a discourse on innovation? What do you think could be the best way to use international meetings and conferences such as think.BDPST 2019? I think innovation conferences, and particularly the think.BDPST series, are actively contributing to the promotion innovation and provide an impetus to it by facilitating information sharing and providing a platform for all stakeholders to meet up, exchange ideas, and strengthen networks.

Do you see a particular domain in science, technology, and cybersecurity that could be a niche for Hungary where we could contribute to NATO’s defence with high added value? The introduction of ever newer achievements of science and the rapid advancement of technology are global features that have an impact on the field of defence, as well. This obviously sets higher requirements for the Hungarian Army as well. The era of levee en masse has passed; factors of quality are now essential, particularly real-time information and telecommunication technologies that are central to planning and operational support, but also to the everyday life of defence forces. The modern era calls for the Hungarian Defense Forces to be able to do their job in the cyberspace as well. Such an outlook in the ongoing development process of the Hungarian defence forces is already tangible, with the introduction and implementation of new solutions being in the forefront. Naturally, Hungary is not working in this field on its own—relations with our NATO allies and European Union partners provide us with excellent opportunities to exchange ideas, embark on common projects and finding synergies. How would you summarize the challenges Hungary and its NATO allies are facing in the field of innovation? The current NATO Strategic Concept defines three major tasks for the Alliance: collective defence, crisis management, and cooperation for security. NATO interprets and undertakes these three primary tasks with a 360 degrees strategic awareness. The challenges NATO, i.e. allies face are shifting constantly and dynamically—in terms of both geography and content. At this point, hybrid warfare, building on the weaknesses of adversaries, working with a versatility of tools, also needs to be mentioned. This is not necessarily a new phenomenon, but, in the age of modern technologies, battling hybrid warfare requires real innovation in both thinking and action. While countering hybrid warfare is primarily the duty of the targeted INSIGHTS


member state, NATO also has a counter-hybrid strategy, a framework in which it can lend help— if needed—to any individual member state in the form of counter-hybrid support units to counter adversary efforts in the fields of cyber defence, anti-disinformation, or energy security. There is strong cooperation between NATO and the European Union in the field of countering hybrid warfare, which is also essential for the efficiency of those activities. How acute is the problem emanating from the introduction of incalculable, disruptive technologies in the field of defence? Do you think those changes are already visible? Will the whole picture we make of this field change as it is often claimed? Hostile activities in the cyberspace are often considered as part of hybrid warfare, generating a plethora of new challenges for defence. It needs to be emphasized that it is not only the Hungarian Defences Forces that have a serious job to do in this field but also other governmental and non-governmental organizations and agencies. On top of that, individuals who use the opportunities of the cyberspace have their own respective responsibilities, as well. Their cyber-awareness is a factor that cannot be underestimated. Countering cyber threats needs serious specialized competence and equipment, which leads us back to the notion that all this is based on innovative thinking. We have extensively relied on our partnership and cooperation with allies and European partners in countering those threats. Working together in NATO and in the European Union framework in the cyberspace is growing in strength, which is manifest among others in planning and implementing joint war exercises and synchronizing cyberdefence trainings. Regarding cyberspace, the toolkit of cyber diplomacy, a European Union project, needs to be highlighted— this is a register containing the possible protocols in case of a malign cyberattacks. There is a growing tendency that in case of such malign activities—if there is a foreign state involved—to name publicly the state deemed responsible for that particular action. This may incur a degree 10


of deterrence. Obviously, such a step is always political in nature. Nevertheless, national defence can hardly be put under any other umbrella. Which are the challenges to which NATO as an alliance needs to adapt in particular? What are the steps that have already been taken, for example in the field of cyberdefence? I have already touched upon the issue of cyberdefence. NATO considers cyberdefence as an element of common defence which is core to its mission. It is a priority task that NATO defend its own networks and strengthen resilience on the whole territory covered by NATO. Nothing indicates the significance of this field than the fact that NATO declared cyberspace as an operational area in which it needs to defend itself with the same efficiency as it does in land, in air, or at sea. Interalliance information sharing aims at strengthening the cyberdefence capabilities of respective member states. Cooperation adds another layer that protects member states, enabling them to prevent attacks, and to mitigate negative effects should prevention fail, as well as to recover the normal way of operation. NATO has also created rapid reaction cyber units that are ready to be deployed within 24 hours. As a further measure, during the 2018 makeover of NATO’s command line, a decision on establishing a Cyberspace Operational Center has also been taken. On top of that, NATO is working on a closer relationship with industry in the framework of a dedicated cyber-partnership. It goes without saying that there is an constantly evolving and extremely tight cooperation between NATO and the European Union on issues related to cyber defence as well. Innovation has also become a field of primary importance for defence, but it is hard to look over the whole process from the inside. How does supporting innovation actually work in the field of defence? Where do “all ways lead to,” and what results are you expecting, particularly as a result of the Zrínyi 2026 program?

The Zrínyi 2026 program is the most comprehensive and complex defence development initiative of the past almost 50 years, with all combat arms will undergo a process of modernisation. Naturally, defence technology to be procured would only become the foundation of a modern army if there is matching personnel with excellent training. Hungary’s government allocates the necessary resources to all that, and we have a detailed roadmap at our disposal about how to reach the self-imposed defence minimum of member states, that is 2% of their respective GDP. The unanimously accepted goals of 2014 included the clause that at least 20% of the defence budget should be diverted to the purchase of modern defence technology. In this field, too, we are progressing pretty well to fulfil those goals. Coming back to the particular question, the units responsible for force development programs at the Ministry of Defence coordinate the planning, administration, and coordination of programmes to develop military equipment, including potential international initiatives on the field such as the management tasks of our participation in the European Defence Fund. What do you think about the relationship between the increased defence industrial budget and innovation? It is often cited that the defence industry is the engine of innovation all around the globe. Are you expecting that defence industry might become the power behind the Hungarian economy? The government’s aim is to create a modern, efficient armed force that is organically connected to research, development, and innovation. This is the foundation of the Zrínyi 2026 program. The example of ZalaZone vehicle test track should be mentioned in this regard: it is both suited for testing innovations in the field of defence industry, as well as autonomous combat vehicles. In the field of electronicallycontrolled vehicles, the Hungarian automobile industry is in a globally competitive position: Hungarian devices are built into the products of many renowned global vehicle brands. It has

THE MODERN ERA CALLS FOR THE HUNGARIAN DEFENSE FORCES TO BE ABLE TO DO THEIR JOB IN THE CYBERSPACE AS WELL. been observed in technological development that the achievements of space technologies first appear in defence, and then spill over to civilian usages. We are working to the effect that Hungary become an active future player in world trends. Innovation and R&D are important fields in foreign trade as well. Which countries or country groupings do you think could the Hungarian innovative fields work together as complementary halves? Our membership in the European Union basically defines a framework for cooperation with other member states in the field of innovation as well. For instance, German companies are the ones that bring the highest technological know-how to Hungary, thus contributing to the new dimensions of the Hungarian economy and to amplifying the added values thereof. Due to its geographical, historical, and economic features, the opportunities lying in the V4 cooperation are likewise essential. Hungary wishes to focus on making and strengthening contacts in the world’s fastest growing and developing regions. This is what our policies of Opening to East and South are all about. There is ample evidence of that success, for example, if we take in to account that in the year 2018, 17 major investments have been brought to Hungary from South Korea, India, Japan, and China.




Ms Alexandra Szalay-Bobrovniczky

It has been over a year and a half since the capital city administration published its SMART Budapest plan in January 2017. What has been the response to it from representatives of the field and the public? Has there been a professional debate over the plan? The vision that the plan lays out is a very important document. For us, SMART Budapest is not just a series of measures, but a way of thinking that also represents a change in approach regarding what we think about the city and life therein, as well as how we think about the city and its future. The concrete district-based, action-planlevel work is a very long process, but it already includes the credo we outlined in the document, and it is along these lines that we strive to improve all city-related processes, and make Budapest more liveable with many innovative solutions, while also using it as a guide along which we seek partners for cooperation. 12


There have already been several forwardthinking steps toward making Budapest into a smart city. Of these, FUTÁR and MOL Bubi are likely the most well-known and popular among the general public. Would you say that these services have lived up to expectations, and do you see any room for improvement? These two developments might just be the clearest examples of how much potential there is in smart solutions. The city is a combination of large systems and networks, which provide a tremendous amount of data. These help make communal transportation more punctual, predic­ table, and plannable. This is useful not only for users, but also helps service-providers in their mission to organise the operation of the city in a more efficient manner and meet users’ needs. Real time passenger information services also make it possible to help people after unforeseen incidents and provide updates. Such things are very important in a city of two million people. We do not yet use these large, integrated systems to their full potential, but the direction is clear, and we are acting accordingly. The MOL Bubi is one such success story, and its expansion and improvement is currently on the agenda. It is not only a good system but a very good solution. Bicycle traffic in the city is a key issue. It is an environmentally friendly means of transportation, which is becoming increasingly popular, and is capable of serving many people’s daily transportation needs in the most efficient way. That said, within this field, infrastructural development and educational campaigns about safe cycling are just as important as the development of smart systems.

Are there any ideas for using big data, artificial intelligence, and IoT solutions to improve public safety in the city? There are ongoing projects that use oppor­ tunities provided by technical and technological developments to improve public safety. Once again, we are talking about integrated systems, in which we are fundamentally reliant on internal authorities. Here, I would approach the issue through our accomplishments, as the city’s crime statistics are improving, so is the locals’ sense of security. If we look at smart cities as large, “living” organisms, we can consider residents’ homes the small organs of this larger organism. Is there any intention on the city administration’s part to promote making more homes in Budapest “smarter”? This is another goal that changing attitudes can help achieve. We are already surrounded by countless devices and systems. At work, at home, during exercise, and on the road. These systems are not just practical, but also capable of making us more aware and environmentally conscious. Instead of concrete incentives, our goal is to show an example, introduce the advantages and opportunities of such systems, and raise awareness via their citywide application. At the same time, supporting innovative solutions is an emphatic priority. We are working to make Budapest an international innovation hub, and thereby a destination of knowledge transfer. Why is it important to involve citizens in this and make the wider community embrace the smart approach? Without communities, you do not have a city. The strength of Budapest, its special fundamental vibe, is also its self-organised communities. It is not up to the city administration to organise life in the city. It does have a role in it, such as guaranteeing public services, but it is merely a frame, which cannot really be effective unless the locals take advantage of it. The city administration’s role is to help various grassroots

THE CITY ADMINISTRATION’S ROLE IS TO HELP VARIOUS GRASSROOTS INITIATIVES, AND GIVE THEM SPACE. PEOPLE NEED TO BE GIVEN A PLACE IN PLANNING AND ACTIVELY SHAPING THE CITY’S FUTURE. THERE IS NO SMART CITY WITHOUT “SMART PEOPLE” AND “SMART COMMUNITIES.” initiatives, and give them space. People need to be given a place in planning and actively shaping the city’s future. There is no smart city without “smart people” and “smart communities.” The people are probably even more interested in how liveable their environment is than in increasing smart capabilities and efficiency. What are the capital city’s plans in this regard—are there ideas for increasing green areas, making the city more liveable and environmentally friendly, reducing the urban heat island effect, and satisfying the INSIGHTS


city’s energy demand from environmentallyfriendly sources? Budapest has the opportunity to become one of the most influential cities in Europe, but in order for things to turn out well, we will need more than technical innovation: we will need considerable economic development and the right mentality from the people who live here. In order to make Budapest a major city by European standards, a strong knowledge economy has to form here—resulting in a city that is home to intense R&D activities, a strong financial sector, differentiated services, modern and affordable internet, and residents from every corner of the world. It is no accident that these are the indicators that are taken into account when the liveability index of a city is calculated. At the same time, these reflect the expectations of the residents. Such a city has quality public spaces, the environment is protected, and its residents want to live in nicely-renovated smart apartments with sensors and remote control functions. We have made a lot of progress in the field of intelligent transportation, and the next phase may be the ability to tell where to find open parking spots— which is already available in a street in Kecskemét. Special resources have been allocated to developing transportation, which also includes making cities smarter by, for example, having electric buses within the Buda Castle. We need to reduce the ecological footprint of cities, and achieve lower carbon-monoxide emissions. The attitude of the locals is very important—there has to be a demand for intelligent services—but it is just as crucial to have the necessary funds available: it is the richer and more developed places that tend to operate as smart cities. Are there plans to involve residents to an even greater degree in decisions affecting the future of the city, survey their ideas in an interactive manner, and improve participation? Such a process has gotten underway to create the plans for the city’s long-term development. If the city administration wants to involve residents in decisions, it has to change itself as 14



The city needs the people of Budapest, since only certain initiatives can come from the city administration. It helps with everyday tasks, solves problems, but cannot figure out how to live our lives for us. This is much harder in Budapest, as the dual administration is a very heavy burden in our daily operation. Take, for instance, NGOs. The NGO roundtable could not get anything done, because the organisations were unable to agree on an issue that the environmentalists from Rákospalota and the pensioners from Újbuda could both get behind. Then, after two years, it finally happened: free short-term parking in front of hospitals. By this time, the government had taken the hospitals away from the city. It was difficult to get over the different partial interests and the district-level thinking. Moreover, “smart” qualities also have to extend to the operation of city hall itself. Convenient, online administration—we need to use the opportunity, and talk to the people. We also need to let them talk, and give them a chance. This is also an essential element of the trans­ parency expected from us. The most important thing is the mentality: these developments should be tackled not in isolation but as parts of a coherent system. The essence of smart networks is unified, coordinated operation. However successful they may be on their own, programmes that run separately hold back the rapid proliferation of smart cities and systems. It also does not help that, depending on the field (e.g. transportation, homemaking), the introduction of smart systems is overseen and financed by a different ministry or organisation. What does a smart approach entail in the field of tourism, and how does this affect Budapest? Indeed, such developments extend beyond transportation—take, for example, the tourism and culture-themed city cards, which are a way of tailoring offers to the needs of residents and tourists alike. Of course, this is also a platform that helps people get to know each other. We can bring the city closer to the people, and it works both ways, as it also helps people become more a part of the city.

Ms Alexandra Szalay-Bobrovniczky at think.BDPST 2018

There is work to be done on the issue in Budapest, and no one can promise to solve it overnight—still, we have to act. If we do not, not only will we fail to reach out to the people of Budapest, but we will also fall behind in the region in terms of competitiveness in tourism. What is more, there can be planning involved in tourism. Tourism overload is becoming an ever greater burden on cities as well. When there are more and more people involved in tourism globally, it is very important to have the ability to tell before their arrival what tourists would like to do and what they will do. This way, we can prepare and foresee potential problems, and manage them before it is too late.




Since its launch in November 2017, we have been implementing our modern Industrial Strategy in earnest. It comes at a time when the UK and the world are changing in funda­ mental ways: technological innovations are trans­forming how we work and live; the proportion of older people in our society is growing; the ways we move around and connect are changing; and the way we generate and use energy is shifting rapidly. At the same time, in the UK, we face challenges to productivity growth. This has all led to the development of our Industrial Strategy, which seeks to build on

AI TECHNOLOGIES COULD ADD AN ADDITIONAL £630 TO THE UK ECONOMY BY 2035 We are backing research and development for data science and AI. £300m has been allocated by the Engineering and Physical Sciences Research Council to fund relevant projects


IN THE FIRST HALF OF 2018, 1 IN 5 ELECTRIC VEHICLES SOLD IN EUROPE WAS MADE IN THE UK OVER 1,100 BUSINESSES START EVERY DAY IN BRITAIN— ONE EVERY 75 SECONDS We are helping small businesses to grow. This year, the British Business Bank launched four new programmes and is now supporting over 78,000 smaller businesses with more than £5.5bn

We are driving research and innovation through the Industrial Strategy Challenge Fund. 602 different projects have already received £652m in funding support


Some results of the UK’s Industrial Strategy in figures 16


UK strengths, to grasp new opportunities to boost productivity and earning power, while at the same time, tackling some of the big challenges facing industrial societies today. The strategy was developed following extensive public consultation that reinforced the primary importance of five areas to productivity, which we have termed the “foundations”— Ideas, People, Infrastructure, the Business Environment, and Places. For each of these, we have set ourselves ambitious targets; for example, we have committed to boosting total investment in Research & Development (R&D) to

We are committed to reducing emissions, with £1.5bn investment for ultra low emission vehicles by 2020

MORE THAN 30 AUTOMOTIVE MANUFACTURERS BUILD VEHICLES HERE IN THE UK We are agreeing partnerships with industry to boost productivity, employment, innovation, and skills. The Automotive Sector Deal will boost the level of UK-made parts in UK-built vehicles so that at least half of their value is manufactured in this country by 2022

2.4% of the GDP by 2027. In education, we are delivering a new approach to technical education through a new qualification called T-levels. Our approach to upgrading our infrastructure includes investment in full-fibre and 5G to deliver the next generation of digital connectivity. In addition, we have launched a Business Productivity Review to understand how we can get UK businesses to be more productive and innovative, and what further measures are needed to ensure the UK is the best place to do business. Finally, we are rolling out Local Industrial Strategies, which will set out a distinct and long-term vision for how each local area will maximise their potential. The UK has had strategies before—so what is different about this one? Two words stand out: place and partnership. Partnerships with central government and local government. Partnerships between government, business, academia, and

civil society. And it is about all the different places in the UK working together in partnership to ensure that the benefits of the strategy mean increased prosperity for everyone, everywhere, in the UK. Our Sector Deals are an example of how we are finding innovative new ways for business and government to work together towards common goals. We have so far agreed nine Sector Deals; long-term strategic partnerships between government and industry, in sectors from aerospace to AI. This new approach to public-private partnership challenges all sectors, across the economy, to make proposals to the government on how we can work together to be world-leading, boost-earning power, and bring local, regional benefits. These deals require strong business leadership, and contain measures such as committing to greater representation of women within sectors, as

Industrial Strategy Forging Our Future

THE UK WILL BENEFIT FROM £600 bn INVESTMENT IN INFRASTRUCTURE OVER THE NEXT 10 YEARS We are investing in sustainable and public transport. The Transforming Cities Fund will provide £2.5bn for local projects

THE £92 bn CREATIVE INDUSTRIES SECTOR IS GROWING AT TWICE THE RATE OF THE ECONOMY We are supporting cultural contributions to our local economies. £20m will be awarded to cities and towns for creative, cultural and heritage projects through the Cultural Development Fund

2017 WAS THE UK’S CLEANEST, GREENEST YEAR YET THOSE AGED 50+ NOW MAKE UP NEARLY A THIRD OF THE ENTIRE UK WORKFORCE We are developing technologies and industries to support our ageing society, with £300m from the Industrial Strategy Challenge Fund for relevant research projects

We are partnering with business to maximise the opportunities from clean growth. The first Green GB Week in October 2018 saw 67 pledges, from organisations including HSBC, Tesco and John Lewis

THE UNEMPLOYMENT RATE HAS DROPPED TO 4% —THE LOWEST IN OVER 40 YEARS We are building the technical skills our workforce needs. Over the past year, 47,000 people started higher level apprenticeships— an increase of 30% .




seen in the aerospace and nuclear deals. Furthermore, these aim to align government spending to support development of specific technologies or projects, as seen in our Automotive Sector Deal. However, we are not working with business alone. Our Grand Challenges rally all parts of society to address the big problems and opportunities of our modern industrial society; focusing on Artificial Intelligence and Data; the Future of Mobility; an Ageing Society; and Clean Growth. These are areas where the best from public and private sectors are coming together to respond with innovative ideas, collaboration, and investment. These Grand Challenges are thematic umbrellas with specific missions targeted within them; the first of these have already been announced, with specific timebound goals to galvanise and inspire transformational action. For example, we recently announced a new Clean Growth mission to de-carbonise industrial clusters in the UK, where we will work collaboratively with industry and academia to reduce carbon emissions. The publication of the Industrial Strategy was not the end of a process, but rather the start of our work to strengthen the UK economy. It set out a clear long-term ambition and framework with a series of policies supporting it. It will continue to evolve, responding to ongoing changes in society and the global economy, and listening to the feedback from businesses, academia, and civil society. We have established an independent Industrial Strategy Council, drawn from senior leaders in these areas, to monitor the ongoing impact and effectiveness of the strategy and to ensure we are doing all we can to boost productivity and earning power. With that focus on constant re-evaluation and improvement in mind, we recently celebrated the first anniversary of the Industrial Strategy. Over the first year, there have already been many important achievements across the five foundations, four grand challenges, and sector deals. We now have record levels of public investment in research and development, matched by sustained growth in public sector spending. 18


We have the fastest wage growth in nearly a decade, and a record number of people now in work. We have had major upgrades to our infrastructure, such as the expansion of Heathrow and the roll-out of 5G test beds across the UK. In addition, we are delivering the biggest shake-up to technical education and retraining in a generation, to make sure we have the skills we need to future-proof our workforce. The UK’s Industrial Strategy is international in its outlook. It positions the UK as one of the world’s most open economies–welcoming investment from overseas, participating in global supply chains, buying and selling goods and services from all over the world, as well as finding solutions to the world’s shared Grand Challenges. An open economy brings inward investment into businesses and communities across the UK, with a positive spillover relationship with benefits for both the domestic firms and the investors. This can enable individuals to benefit from higher quality jobs, greater spending power, and higher living standards. However, it is not just about the money. We work with international partners to share knowledge and innovation, collaborate on research and projects to tackle the Grand Challenges, and work together to ensure global frameworks and standards are supportive for our rapidly changing economies. Our Grand Challenges are not isolated to the UK; they are seismic global trends, requiring international collaboration. Countries globally are looking at how they can build on their strengths to ensure prosperity for their populations. Many are being forced to consider how they can best equip themselves for a rapidly-ageing population. Many are grappling with how to manage productivity through the move to clean energy and clean technologies, systems and services, whilst making the most of the opportunities these new markets create. Across the world, many countries are on the cusp of a profound change in how things move and are moved around our cities, towns, and countryside, with autonomous zero-emission vehicles, drones, and virtual movement. In addition, many are looking to get ahead of the curve in exploiting




Bloomsbury AI used supercomputers to test new AI ideas through a programme run by the Digital Catapult. The resulting technology, called Cape, converts text to knowledge with close to human performance.

Through the Better Business for All programme, Lynher Dairies Cheese Company in West Cornwall received support to pass food inspections by US regulators. This allowed them to start exporting their handmade cheese to the USA.

We are helping Swansea University develop new building materials which generate electricity from light and heat, with a ÂŁ36m grant for the Active Building Centre.

W5 is an interactive discovery centre in Belfast. The Inspiring Science Fund awarded it ÂŁ3m to create new immersive exhibitions, encouraging young people to consider science careers.

The Industrial Strategy is supporting business, research and training throughout the UK

Industrial Strategy Forging Our Future

Consortiq, based in Southampton, are expert drone professionals providing bespoke unmanned technology solutions. They have clients in Canada, UAE, Kenya, and South Africa.

We have launched a Local Digital Skills Partnership between regional business, local authorities and educational institutes in the West Midlands to boost digital skills and opportunities and support the growth of the local economy.

The Nissan Leaf car plant in Sunderland currently has capacity to manufacture 50,000 electric vehicles per year. Sunderland builds Leafs for 23 markets, including Western Europe, Argentina and Israel.

THURN Group is using robot submarines to enable engineers to see hazards that ice may cause to infrastructure, pipelines, and ships around the Arctic. They have received project funding from the Industrial Strategy Challenge Fund.

As part of the High Value Manufacturing Catapult, supported by Innovate UK, the Nuclear Advanced Manufacturing Research Centre in Rotherham is boosting the competitiveness of the UK civil nuclear manufacturing industry.

Greater Manchester will boost the contribution of older workers through its Local Industrial Strategy. Building on the Working Well programme, their objective is 5,000 more 50-64-year-olds in employment by 2020.

Bio Technics Ltd. exports innovative hygiene solutions to 17 global markets. They have worked with the Department for International Trade, Scottish Enterprise and Scottish Development International to help them reach their global expansion goals quicker.




The Newton Prize is funding scientists in the UK and Chile to develop ways to strengthen energy infrastructure so that it can withstand extreme weather and natural disasters.

Some of the UK’s most innovative businesses met their US counterparts on board the HMS Queen Elizabeth in New York, for a trade mission on cyber security and AI.

The UK-Canada AI Innovation Challenge is inspiring AI solutions in aerospace from companies in both countries.

£32m invested in Technology Accelerators to build innovative business links between Africa and Britain.

$500m invested by Japan’s Softbank in Improbable, a London-based company crafting virtual worlds.

13,000 delegates welcomed to the International Business Festival in Liverpool to see UK start-ups involved in the Grand Challenges.

The Industrial Strategy is having an international impact

Industrial Strategy Forging Our Future

$72m co-invested with South Africa in our Clean Growth ambitions for battery storage.

The second UK-India Energy for Growth Dialogue took place in September 2018.

The UK is chairing the EUREKA programme for 2018/19. This intergovernmental network supports innovation-driven entrepreneurship in Europe.

Novo Nordisk is investing £115m in a new centre for development of medicines that will transform the lives of people with diabetes.

£10m invested by the UK and Singapore in a joint quantum space programme.

Chinese robotics company JEE Automation Equipment is investing £6m in the UK to establish an assembly and testing facility in Birmingham.

£35m planned for investment in British AI start-ups by Japan’s AI-focused Global Brain.

In May 2018, the UK signed agreements for science and innovation with Israel, for greater collaboration in shared priority areas including advanced materials and Ageing Society.

new artificial intelligence and data technologies, whilst at the same time ensuring that these things work for, and not against, people and society. Looking ahead, we have ambitious plans to take forward our modern Industrial Strategy in 2019. We will provide more support for inter­ national research and innovation programmes, including through the second stage of our Fund for International Collaboration. We will continue to advance reforms to technical education, for example via a new GBP 170 million network of Institutes of Technology, and through our apprenticeships programme. We will continue to work with business to agree new and improve existing Sector Deals. Moreover, we will look to support societally transforming technologies with sensitive and forward-thinking regulation— from the development of drone technology, our use of AI, data, and automation to our ambition to create the world’s first zero-carbon industrial district. These are just a few of our many plans for the year ahead. I am extremely excited about the opportunities and challenges that lie ahead of us. We are looking outward to our partners abroad to help us in this, making an open offer of collaboration. We are keenly aware that we must always seek to improve our approach, and we are keen to hear your ideas and opinions on what countries can do domestically and inter­nationally to innovate in the face of these shared challenges. CENTRE FOR DATA ETHICS AND INNOVATION Advances in the way we use and deploy data and AI are revolutionising almost every aspect of our lives. From faster, more accurate diagnosis of illnesses to smarter and more sophisticated solutions to energy use and security threats— the use of data and AI has the potential to enhance our lives in unprecedented, powerful, and positive ways. Nevertheless, the use of data and AI is giving rise to complex, fast-moving, and far-reaching economic and ethical issues. Increasingly sophisticated algorithms can glean powerful insights, which can be deployed in ways that

influence the decisions we make or target the services and resources we receive. Moreover, new economic models are emerging, with data at their core, giving rise to questions around how we best incentivise and facilitate innovative, efficient, and fair use of data. We need to be able to respond quickly and effectively to these and other emerging issues. This is why the UK Government has established the Centre for Data Ethics and Innovation. The Centre will identify the measures needed to strengthen and improve the way data and AI is used. This will include promoting best practice and advising on how we address potential gaps in our regulatory landscape. The Centre will play a pioneering role in shaping how we use data and AI, now and in the future, and ensure that data and AI-driven innovations continue to deliver maximum benefits for society. The UK is well-placed to establish itself as a world leader in the ethical and innovative use of data and artificial intelligence. We have a strong tradition in data and AI innovation, careful navigation and management of the ethical and social complexities of new technologies, and a proportionate pro-innovation approach to regulation. The UK already benefits from a world-class regulatory regime, and the Centre will build on this by making sure we understand and respond to the rapidly-evolving way in which data is impacting our lives. The Centre will identify the measures needed to strengthen and improve the way data and AI is used. It will operate by drawing on evidence and insights from across regulators, academia, the public, and business, and translate these into actions that deliver direct, real world impact on the way that data and AI are used.






We are witnessing the revolution of smart homes. Today, the technology stands where smartphones did 10 years ago. People were aware of them and knew that they could be used to go online and run apps, but had no idea what their actual real-life applications were. Just like how nowadays we no longer say “I’m buying a smartphone,” in 10 years, we will no longer feel compelled to announce that our new apartment is a smart home. It will have become standard for machines to assist us in living in a manner that is safer, more comfortable, and more environmentally conscious.

It will become standard for machines to assist us in living

The first challenge of smart homes is educating people about what they are in the first place. Most of them think that it is an extended hand or a remote device that can be used to control certain functions of the home. However, anyone who has lived in a well-designed smart home knows that the primary advantage of such 24


a system is that it operates in the background, handling minor, mundane tasks for us: alerting the user when they forget to unplug the hair iron or close the attic window when there is rain coming, sending a notification if it detects running water, or watering the plants on the balcony. Making matters more difficult is the proliferation of manufacturers on the market, with now a large number of them developing and selling partial solutions covering only certain functions. These include smart light bulbs that can be adjusted from a distance, a smart thermostat, remote-controlled blinds and garage doors, alarm systems, smart shower heads. These systems usually come with their own apps, which cannot easily be connected with each other, with the user thus having to navigate multiple pieces of software. Since people are not entirely aware what an integrated smart home solution means, when they tell their neighbor about their new Philips Hue bulb they will say that they already have a smart home. The market is only beginning to get to the point where it understands the difference between a complete solution over partial ones. It is like buying a new car with an integrated, complete audio system, on-board computer, phone speaker, and GPS. While you can also get these devices separately, the music will not go quiet for an incoming call or the parking radar, the volume will not be adjustable from the wheel, and the GPS will not use the car’s own speakers to give directions. Most people will desire a complete solution to the problems at

The four distinct segments of the smart home market

hand, not a range of separate devices from different manufacturers. Today, we distinguish between four distinct segments of the smart home market. The first one includes smart home systems that provide complete solutions to smart home tasks, with one system integrating all functions. The drawback here is that these are mostly closed systems, and any expansion requires the user to turn to the manufacturer. Those who go with such manufacturers tie themselves to their chosen system for a good while, with a hardto-replace central controller, containing the various functions and the underlying logic. The three tech giants—Google, Amazon, and Apple—have all released their own controllers, but these manufacturers tend not to release any external devices and remain focused on central control. They rely on a system already built into the home that they can connect to. Manufacturers do not always include support for such devices in their system, and, thus, one might easily be disappointed by the result when they tell their newly-purchased Google Home device to turn on the light. There is a wide variety of small IoT-based smart devices that can only handle certain partial tasks. These are suitable for creating

typical island-like systems, but they do not provide the feel of a complete system. There already exist software platforms for these IoT devices aimed at integrating them under a unified system, but, since these are software-based solutions, there is a rather wide gap between a pre-planned and pre-installed smart home and a system comprising IoT devices. This shows that the best option is to plan smart functions into our home already during construction. However, those who decide to undertake such a project are faced with a number of questions: which manufacturer to go with, what functions to install, how to do the cabling, what to keep in mind. Often, these questions cannot be answered during construction, but a decision still has to be made, as the installation, the environment, and the cables all revolve around the system. When it comes to cabling, manufacturers often follow a star topology, which greatly differs from the standard electrical installation practice. There are also purely wireless systems, which give us more freedom for installation, as there is no need for cables, but these usually involve a fair amount of compromise. They require maintenance, and battery-operated devices SMART HOMES


The advantages and disadvantages of wired and wireless solutions

need to have their batteries regularly replaced. In case of a complete system, motion sensors and mechanisms for opening doors and windows alone necessitate monitoring dozens of devices for battery levels. Moreover, wireless systems will never be as stable as a cable-based one. Stability depends on a number of external factors (radio towers, neighbours with smart homes, radio interference in the area, etc.). Troubleshooting is not deterministic, and it is harder to trace the cause of issues. The response time with such systems is also usually slower than with wired ones. Clearly, the future belongs to complex, installed systems—but who will carry out the installations? The market can only grow if there are enough building and installing contractors on the market. Installing today’s systems requires considerable expertise, often even programming skills. Experts—electricians, mechanics, alarm experts, low-voltage installers, etc.—who have not worked in a related field have a hard time entering the market, but, during projects, they come in contact with buyers, and become interested in novel solutions. The costs involved also limit the proliferation of smart homes. Currently, the installation costs of a complete system for a 100-square-meter 26


house can be as high as the price of a new car. Most manufacturers are still targeting the high-end market, and there are few affordable smart home systems for middle-class consumers. Luckily, manufacturers are beginning to pay attention to larger consumer groups as well, albeit still mainly via IoT-based solutions. Another great challenge is making smart homes available for apartment-dwellers. Many people assume that the advantages of smart homes are primarily aimed at houses. This is not the case, as there are countless functions that can be used in apartments, such as heating control, multi-room audio, lighting control, blinds, keyless doors, intercom on a cell phone, etc. However, most people buy apartments that are already complete, and retrofitting them with smart capabilities is rather inconvenient. It is not in the interest of the real estate developer that good-quality and expensive systems be installed in the apartments, even when they do feature some sort of system, it is usually a very basic wireless one, with limited functionality. More complicated—and complex—solutions are not part of the basic package. Developers will not outfit the apartments with special cabling if it necessitates a completely different electrical model, they are

not informed regarding what smart functions can be used in an apartment complex, and have no time or energy to investigate. Manufacturers have not yet recognised that, instead of apartments using separate smart home systems, they should be creating smart apartment buildings, where home users can also access building-level functions (to call the elevator, control and measure electric chargers for each individual user, show the outside intercom video feed in the smartphone app, open the door remotely). One Hungarian start-up, Chameleon Smart Home, has recognised the above problems, and undertook a massive development project five years ago to bring solutions to the current challenges of the smart home market. Chameleon developed a hardware system capable of controlling traditional analogue devices and connecting to other complete systems. This allows it to create a futureproof basic infrastructure that can serve as a stable foundation for the building. Chameleon is an independent smart home system, but, thanks to its integration, users can tailor their smart home system to their own needs, and access the same functionality at a price that is as much as 30% lower. The system controls all functions, while also allowing users to choose a supported external smart home system. What is more, it is capable of managing not just one but multiple smart home controllers simultaneously, combining their positive characteristics. The company developed a proprietary apartment building model that allows developers to preinstall cabling in the entire structure at a minimal cost, independently from smart home manufacturers. It is a stable cable-based solution, but does not require a special star topology, and thus current electricians can easily be retrained. It also supports the smart apartment building model, providing a unique connection between building and apartment-level functions.




We are doomed if the smart home becomes a conversation about Zigbee vs Bluetooth vs Wi-Fi. The mass market consumer does not care, nor should they have to care. However, there is an incredible market if we can demonstrate that technology can play a role in allowing us greater control over our most personal of environments—and, ultimately, help to give us peace of mind. To deliver that, we need to create compelling narratives, find new ways to educate, and change consumer perceptions as well as address justified concerns.

STATE OF THE MARKET So let us start with where we are as a market. At techUK, we commission market research 1,000 UK consumers every year to assess their claimed ownership, perception, and concerns of smart home technology.1 In our most recent report, the message was positive but it was with some warning signs about both consumers’ concerns and the value that they attribute to these products. The positive news was that device ownership is growing. The number of households owning



Extremely appealing

Very appealing

Fairly appealing

Not very appealing
















26% 27%


































7% 8%

Not appealing 6% 5%

Appeal of smart home devices

more than three devices is up by a quarter since 2017. The breakout product—and one with a potential gateway effect—were smart assistants/ speakers. On the downside, however, the knowledge and appeal of the smart home in general appear to have stagnated. Turning to Hungary, current estimates are that revenues in this market are around USD 43 million for 2018. This is a significant increase on 2017, and revenue is expected to multiply at an impressive 43.5% annual growth rate out to 2023, resulting in a total market of USD 264 million.2 Care, as always, should be taken with such statistics—the appetite is clearly there, but they are still dependent on the market delivering a compelling consumer narrative and addressing concerns. A COMPELLING NARRATIVE Across any market, value has consistently remained the biggest barrier for the connected home market.3 This is true both when consumers are asked about the smart home in general and when asking them about specific devices. However, what is apparent is that the market has started to address these concerns, parti­cularly in areas where existing services are offered. For instance, the US smart home market is being powered in part by smart security services; this




is helped by the fact that a service/remote monitoring model is well under­stood in general, and that there is a general trend in America to do more to protect homes. In other countries, it might be another segment that is driving the overall market—in Germany, for instance, we see greater adoption of smart energy solutions. Identifying the market driver is not always possible, indeed, in some countries, such as the UK, this may be because there is no single breakout segment. A general driver of greater smart home adoption seems to be smart assistants or speakers. These are relatively new products to the smart home market; Apple only launched their hub in early 2018. In the UK, we have seen their ownership double over the last year,4 and, critically, owning one of these significantly increases the likelihood of ownership of other devices. It is not clear from our research whether this is because an owner of multiple devices is more likely to seek to tie them together through a hub, or whether buying a hub opens up opportunities in multiple smart home market segments. If it is the latter, then they could be an important driver for pushing the smart home into the mainstream. They also help address the narrative and value challenge with 38% of smart speaker owners finding that their appliance’s most SMART HOMES



Smart set top box

Smart interactive speakers


Smoke alarm and air quality sensor





Smart thermostat







Energy manager

Fitness and activity tracker

24% 18% 7%

Blood pressure monitor

18% 17% 9%






Smart personal scale

17% 16% 9%


Smart toothbrush






2018 2017

16% 18%


13% 12%



4% 3%

5% Alarm system




Smart (energy) meter

Smart washing machine


4% 4% 4%

What connected home devices do consumers own?

appealing function is that “they make my life easier.”5 Additionally, the demographic profile of smart speaker owners is interesting for commercial reasons—they are more likely to be aged 25-44, have an above average income, and more likely to have children in the household. The last statistic coupled with their age is interesting. They are more likely to have elderly parents and grandparents, meaning that “peace of mind” to this demographic is particularly sought after. JUSTIFIED CONCERNS Delivering better value to customers will only do so much. Our research shows that there are serious and persistent concerns about the privacy and security of connected devices. 30


These two issues are closely interlinked— they are both dynamic concepts for instance; our perception of them changes both over time and in different contexts. For instance, we are generally more concerned about how our data is used today than we were ten years ago, but we might also expect there to be more security around the network in our work­place than we use at home. Despite these similarities, the policy response to them is likely to differ. In the EU, the debate around privacy has led to the development of the General Data Protection Regulation (GDPR). This offers a strong legal framework for both consumers and businesses seeking to utilise data and offers confidence to both parties. It remains to be seen

Top barriers to purchase (2018)

41% 23% 16% Cost



whether GDPR alone will help address the concerns from consumers—and given that our homes are, of course, our most private of spaces, it seems unlikely that the regulation alone will address this issue. Indeed, there is likely to be a segment of the market which will be open to companies seeking to commoditise privacy—making a clear distinction about how data is, and critically, is not used—in at least the medium term. With regard to security, the issue is more complex. Firstly, there is an active opponent in cyber security—for every defensive measure, there is someone looking to exploit a vulner­ ability. Secondly, for consumers, there does not appear to be a direct link between concerns around security and willingness to pay for it. This is partly because of the breakdown between purchasing decision and impact of cyber security—at the moment, if a home security camera is hacked, then you may not be aware that it is compromised. This is because, outside of some niche cases, the real victim is not you, the consumer, but some other part of the internet in which your device is one of potentially millions being used as part of a distributed denial of service (DDoS) attack. This is unlike, let us say, the approach consumers take when they purchase a bike lock – there the penalty for choosing a lock with poor protection is clear to see. The UK has approached this challenge not through direct regulation—although it is likely to be necessary between, let us say, fridge freezers or other appliances and the energy network if

they were being used for demanding a side response. Rather, the UK Government has worked with industry, academia, and citizen groups to develop a Secure by Design Code of Practice. This details 13 commitments which device manufacturers, app developers, and service providers should adhere to when bringing their products to the market. At the moment, this helps strike the balance between encouraging companies to take more responsibility for security without hindering innovation in consumer IoT. What we need to see now is greater standardisation of these commitments—and greater adoption around the world to ensure that international manu­ facturers can maintain the level of scale needed to deliver devices at a cost point that delivers value. If we can address these concerns, then we are free to make a compelling case to consumers about the undoubted benefits that smart home technology can deliver, and there is no doubt that the Hungarian and British markets can learn from each other which is the best way to do so.

ENDNOTES 1 Cf. Publications. TechUK. < connected-home/publications > 2 Smart Home. Statista. The Statistics Portal. < hungary > Accessed: 22 November 2018. 3 The Connected Home Market. McKinsey&Company. < pdf/mckinsey_connectedhome.pdf > Accessed: 22 November 2018. 4 Connected home device ownership up but consumers remain skeptical. TechUK. 12 September 2018. < > Accessed: 23 November 2018. 5 The dawn of the connected home. YouGov. 6. < YouGov_UK_2018_08_smart_homes.pdf > Accessed: 23 November 2018. SMART HOMES





INTRODUCTION Urban development issues have become more and more important globally in the recent decades, mainly because of the ever-increasing economic, social, political, and geopolitical role of cities. According to the latest UN estimate, in 2018, 55% of the world’s population resided in urban areas, and, by 2050, 68% of the total population is projected to be urban,1 which means a huge increase, considering that, throughout history, we have mostly lived in rural areas, and, for instance in 1950, two-thirds of the total global population was still rural. In 2018, 4.2 billion people lived in urban areas, and, by 2050, another 2.5 billion are expected to relocate; almost 90% of this growth will happen in Asia and Africa.2 This progress can be illustrated by the fact that, nowadays, only in the

developing world, more than a million people are born or move into cities every week.3 Building smart infrastructure seems to be of fundamental importance for these rapidly-sprawling cities to cope with their population boom (as well as its complex consequences). The increasing economic importance of cities is not to be overlooked either. 80% of the global GDP is produced in cities,4 and their economic weight is getting more and more concentrated. In 2010, 600 metropolises produced almost 50% of the global GDP.5 Today, the 300 largest metropolitan areas in the world account for almost half of all global output, and, between 2014 and 2016, 67% of global GDP growth came from these 300 cities.6 If the five economically largest cities were a single country, they would be the world’s third largest economy (after the US and China).7

The cities contributing most to global GDP by 2030 New York-Newark-Jersey City



410 390

Tianjin Beijing Los Angeles-Long Beach-Anaheim Guangzhou, Guangdong Shenzhen London - Metro Chongqing Suzhou, Jiangsu Tokyo Jakarta São Paulo Foshan, Guangdong Wuhan, Hubei


342 335 333 312 283 259 244 232 220 198 197

This chart shows the top 15 cities worldwide by GDP in 2030, when the world’s 750 biggest cities will account for 61% of the planet’s GDP 34


Info-communication technology (ICT) solutions are also playing a more and more extensive role in the operation and management of cities; therefore, the urban management and ICT solutions are increasingly interwoven and interconnected. The fourth industrial revolution, through digital revolution, will expectedly implement the fusion of different technologies, blurring the lines between physical, digital, and biological areas,8 and that is exactly what is happening in urban planning and city management. The following article attempts to find a definition for smart cities, then it introduces some key issues and challenges to be taken into consideration related to this topic. WHAT DOES A “SMART CITY” MEAN? The emergence of the smart city concept is clearly related to the extended spread of digital technology, the internet, and mobile electronic devices over the past decade. Nevertheless, similarly to other “new concepts,” it has its antecedents or broadly identical terms. These include, inter alia, digital city or intelligent city, coined in the 1990s and used widespread for a long time, as well as many “co-concepts” such as information city, innovative city, virtual city, liveable city, eco-city, green city, and sustainable city.9 In most cases, these labels are given to certain cities only for marketing purposes to enhance their attractiveness as well as to make them somehow unique, and to help them stand out from other cities. For that reason, even more complex and hardly understandable terms (smart-eco-city, smart-sustainable city), or strange labels such as “wise city” or “brilliant city” have emerged as well.”10 Although the term smart city was introduced in urban development literature just around a decade ago, the expression had been coined somewhat earlier—first, not related specifically to cities, but used more comprehensively as “smart growth.” Harrison and Donnelly (2011) originates the spread of the term from the late 1990s, exactly in relation with a study on smart growth. From the middle of the 2000s, many

tech companies (Siemens in 2004, Cisco in 2005, IBM in 2009, etc.) applied the label as a common reference for complex urban infrastructural and public service provider IT systems.11 At that time, tech companies began to create their first divisions dedicated to urban development issues (e.g. IBM Smarter Cities,12 Siemens Smart City,13 or Microsoft CityNext14). On definition issues, almost everyone dealing with this topic points out right at the beginning of their analyses that there is no unified or standardised, universally accepted or applied definition of smart city.15 There are various reasons behind that, but the two most important ones are the following: First, the concept itself is a combination of different tools and systems; therefore, smart city is more like a label, a fuzzy notion that only helps us to avoid having to use much more complicated circumscriptions.16 Second, since a wide range of professionals with entirely different approaches use this term, every area of expertise highlights their own understanding while conceptualising smart city solutions. Of the almost infinite number of definitions, this article has chosen one that meets the following criteria: comprehensive, objective (which means that it is not a definition of any specific area of expertise, institution or corporation), and relatively well-known in the Hungarian literature and practice. The standardisation of the concept and the establishment of a general indicator system to measure and assess the impacts of smart city instruments has already been started by the International Standardization Organization17 along with the British Standards Institution, and the article found the latter18 the fittest to clarify the subject of this writing. According to this definition, a smart city means the “effective integration of physical, digital and human systems in the built environment to deliver a sustainable, prosperous and inclusive future for its citizens.”19 HOW CAN WE GET A SMART CITY? If we would like to find an answer to the question, “How can we create a smart city?,” we fail to pose the right question. SMART CITIES


Tri-bowl Building at Central Park in Songdo district, Incheon, South Korea

Since these kinds of urban innovations have huge market opportunities,20 not surprisingly, when the smart city concept was first initiated, the leading role in smart city developments was taken by technology companies. These companies offered different solutions for cities to build them in their infrastructure, so cities had only an inferior role. The literature calls that period the phase of technology-led/business-led urban developments,21 as illustrated by large-scale greenfield developments such as the South Korean Songdo CBD or Masdar City from the United Arab Emirates. Other sources refer to the initial period of smart city developments as Smart City 1.0,22 when the developments’ focus was only on technology and infrastructure development, effectiveness, and cost reduction. After this period, the attention of the academic sphere (social sciences, urban development experts) also turned toward smart city innovations, criticising the one-sided entrepreneurial approach in this issue. Recently, a new kind of approach has become more important, claiming that “smart city” only means a framework for urban 36


developments; smart innovations are only tools to be used by policy makers and the citizens to make our cities more resilient, sustainable, and socially-economically developed. This is the Smart City 2.023 phase, developments achieved by citizen co-creation,24 that came to the forefront from the second half of the 2010s. To return to the question posed above, we simply cannot “get” a smart city, since it is not a state, but only a development tool. Establishing a “smart city” should not be an objective of any developments, or the ultimate goal of city management. Instead, the urban development objective should be to achieve a more liveable, cleaner, more comfortable city with improved standards of living and high level of well-being through the selection of proper development tools–which undoubtedly tend to be technological. To reach this objective, city management, together with citizens and service providers, have to identify the challenges and targets, and have to find the optimal tools to meet the needs. The creation of smart cities starts with smart people, not with smart technology.


15 Hafedh Chourabi [et al.]: Understanding Smart Cities: An

1 UN: World Urbanization Prospects: The 2018 Revision.

on System Sciences. 2289–2297. <http://observgo.uquebec.

Key Facts. United Nations, New York, 2018. 1.

ca/observgo/fichiers/78979_B.pdf > Accessed: 20

2 Ibid.

November 2018; Marianna Cavada—Dexter V.L. Hunt—

3 PADCO: Housing for All: Essential to Economic, Social,

Chris D.F. Rogers: Smart Cities: Contradicting Definitions and

and Civic Development. Habitat for Humanity, 2006.

Unclear Measures. World Sustainability Forum 2014 –


Conference Proceedings Paper. 1–13. <http://liveablecities.

for_all.pdf > Accessed: 20 November 2018.

4 Richard Dobbs [et al.]: Urban world: Mapping the economic

cities_dvlh_mc.pdf > Accessed: 20 November 2018.;

power of cities. McKinsey Global Institute, 2011. 1.

Vito Albino—Umberto Berardi—Rosa Maria Dangelico: Smart

5 Ibid.

Cities: Definitions, Dimensions, Performance, and Initiatives.

6 Max Bouchet [et al.]: Global Metro Monitor 2018.

Journal of Urban Technology. 2015/1. 3–21.; Igor Calzada:

Brookings Institution, Metropolitan Policy Program,

(Un)Plugging Smart Cities with urban transformations:

Washington, 2018.

Towards multi-stakeholder city-regional complex urbanity?

7 Jesus Leal Trujillo—Joseph Parilla: Redefining Global

URBS. Revista de Estudios Urbanos y Ciencias Sociales.

Cities. Brookings Institution. 29 September 2016. <https://

2016/2. 25–45.; Karvalics. >

16 Albin—Berardi—Dangelico.

Accessed: 20 November 2018.

17 ISO: ISO and smart cities. International Organization for

8 Klaus Schwab: The Fourth Industrial Revolution: What It

Standardization, Geneva, 2017.

Means and How to Respond. Foreign Affairs. 12 December

18 BSI: BSI Standards Publication: Smart Cities –

2015. <

Vocabulary. The British Standards Institution, London, 2014.

fourth-industrial-revolution> Accessed: 20 November 2018.

19 The Hungarian translation of this definition is also taken

9 Mircea Eremia—Lucian Toma—Mihai Sanduleac:

by the Lechner Knowledge Centre, the institution assigned to

The Smart City Concept in the 21st Century. Procedia

provide professional background for the smart city planning

Engineering. 2017. 12–19.

process and policy making.

10 Alex Herceg—Mark Bunger: Cities as Technologies:

20 Monitor Deloitte. Smart cities… Not just the sum of its

Using Data and Analytics to Grow From Smart to Brilliant.

parts. Deloitte. <

Lux Research. 29 December 2015. <https://members.

Deloitte/xe/Documents/strategy/me_deloitte-monitor_ > cited by Z.

smart-cities.pdf > Accessed: 20 November 2018.

Karvalics László: Okos városok: a dekonstrukciótól a

21 Boyd Cohen: The 3 Generations Of Smart Cities. Inside

Integrative Framework. 45th Hawaii International Conference

hiperkonstrukcióig. Információs Társadalom. 2016/3. 9–22.

the development of the technology driven city. Fast

11 Colin Harrison—Ian Abbott Donnelly: A Theory of Smart

Company. 8 October 2015. <https://www.fastcompany.

Cities. Proceedings of the 55th Annual Meeting of the ISSS,

com/3047795/the-3-generations-of-smart-cities > Accessed:

International Society for the Systems Sciences. <http://

20 November 2018.

22 Jonathan Woetzel—Elena Kuznetsova: Smart city

view/1703 > Accessed: 20 November 2018.

solutions: What drives citizen adoption around the globe?

12 Smarter Cities. New congnitive approaches to

McKinsey Center for Government, 2018.

long-standing challenges. IBM. <

23 Ibid.

smarterplanet/us/en/smarter_cities/overview/ > Accessed:

24 Cohen.

20 November 2018. 13 Smart Building in Smart Cities. Siemens. <http://w3. smart-cities-en/index.html#/en/home > Accessed: 20 November 2018. 14 Microsoft CityNext. Microsoft. <https://enterprise. > Accessed: 20 November 2018. SMART CITIES



Despite the frequency of city “smartness” labelling—as mentioned in many other articles of this magazine—there is no accepted definition for the smart city concept. However, in general terms, all definitions of smart city have a common element: the use of state-of-the-art technology to improve the sustainability and energy efficiency of public services. “The story of electric power is the beginning of the story of modern urbanisation.” In Edison’s world of electricity, we can find a power station fired by coal every couple of kilometres. With direct current, it became possible to operate motors, enabling businesses to be more productive and to grow. Alternating current, on the other hand, made it possible to send electric power across long distances, so alternating current-generating plants allowed us to electrify complete parts of a town and to expand them. Parallelly much more efficient forms of mass transit arose: electricity-powered trolleys and subways opened the era of public transportation. The life of people moving to the city became powered by electricity, and these urban areas became the engines of growth. At the same time, this rapid increase brought about health and safety issues, and expanding industrial cities became the centre of contaminated water and air, and communicable diseases. Similarly, the fast-paced population growth and uncontrolled urbanisation today raise the need for harnessing the fourth industrial revolution for sustainable cities. The crucial importance of energy efficiency is (among others) indicated by the fact that 55% of the world’s population lives in urban areas. Smart city solutions are indispensable when over 4 billion people eat, 38


shop, work, study, and travel in cities. Additionally, as many more are aspiring to the city lifestyle, global urban population is expected to increase to 68% by 2050.1 Today, cities—requiring an uninterrupted supply of energy—are responsible for 75% of the world’s energy consumption, and they emit between 50% and 60% of the world’s total greenhouse gases,2 but only occupy 5% of the earth’s landmass. Thus, cities are among the biggest opportunities to mitigate climate change. But, seemingly, the world is not able to bridge sustainably the gap between energy demand and supply. However, technological inventions and smart city applications could offer a blueprint for more efficient use of energy resources and for better living conditions as well. Smart city initiatives have been attracting technology investments worldwide; according to a research by Zion Market Research, the global smart city market accounted for more than USD 955 billion in 2017, and according to forecasts, it might reach more than USD 2,700 billion globally by 2024.3 On a geographic division, the Asia-Pacific will account for more than 40% of global investments this year, followed by the Americas (33%) and Europe, and Middle East and Africa (25%).4 China is the largest country market for smart city solutions. Another potentially big market is India, where the government’s Smart Cities Mission—including 100 cities of the country—allocate USD 29.9 billion for smart technology solutions. Smart solutions might keep the pace with the deeper integration of intermittent renewables, such as wind and solar. The drop in the prices of





52 9

44 21

2004 2005


151 133



83 38










177 148 126 103











2014 2015



Global new investment in renewable energy: developed and developing countries, 2004–2017, billion USD

renewables made them cost-competitive with fossil fuels, leading to new power deals across the world; solar's price feel especially steeply after the Chinese manufacturing boom.5 However, if renewable energy is so beneficial, why have we not stopped fossil fuel consumption yet? Well, it is in progress… Variability of supply is the biggest issue, and, in practice, the storage of renewable energy runs into several problems as well.6 However, according to the research of Wood Mackenzie,7 more than a fifth of the investment by the largest oil and gas companies could be in wind and solar power in just over a decade. Countries dominating the production of fossil fuels, such as the oil-rich countries of the Arabian Gulf, take a keen interest in renewables. However, the last half century has been a rather bad time for establishing liveable cities in the region. Cities are rising out of the desert on the Arabic Peninsula, and where many have tried to design cities whose inhabitants can live in harmony with nature, automobile-based, energy-hugging urban areas were formed. From the point of view of sustainability, they provoke some questions, and there are some “solutions” which occur when cheap energy meets environmental indifference. Considering these huge cities, the natural tendency to accommodate automobiles has been one of the main aspects of construction. Walking around in Abu Dhabi, in Masdar City,

or in Dubai is quite the same: they are surely not listed among the most pedestrian-friendly places in the world. The United Arab Emirates is sitting on the 10% of the world’s oil reserves,8 which does not mean that people behind these cities would not be determined to find alternative answers, such as carbon-neutral, pedestrian-friendly solutions empowered by renewable energy. (Most probably cheap energy will not last forever.)9 Another big player is China, where the first smart city development-related projects appeared in the 2010s, and now the country has about 500 smart city pilot projects, the highest in the world, according to a leading auditing and consulting firm Deloitte.10 As per the Chinese government’s plan, about 60% of the total population should live in cities by 2020, and this accelerated urbanisation has entailed a series of environmental and energy resources-related concerns. A study conducted by scientists in Germany and the United States examined the typology of global urban energy use.11 The energy use of 274 cities across the world were evaluated, looking at various city sizes and regions. According to the research, without any mitigation actions, if the current trends in urban expansion continue, urban energy use will increase more than threefold from 240 EJ in 2005 to 730 EJ in 2050. However, it also SMART CITIES


Indoor skiing in Dubai

predicts that, with well-established urban planning and transport policies, it might be possible to limit future increase in urban energy use to 540 EJ by the same date. No doubt that a shift to a sustainable, efficient energy generation and transport is necessary, but this shift also means that a new set of elements will become key in order to fulfil the needs of global urban energy use: not only in technology but in policy as well. The findings of a sustainability index developed by Columbia University, Tsinghua University, and McKinsey in 2010 show that the fastest-growing cities in China are also the ones with the best environmental performance, achieved with the help of new policies, i.e. through better planning of transportation services, clear targets for industry plus clear monitoring standards, and investments into resource efficiency.12 Efforts to take control over energy-hugging, fasturbanising cities, for example in Asia, might potentially help to reduce total energy use in cities by more than 25% according to the research.13 Globally, industry is responsible for around 38% of final energy consumption and almost one-quarter of total CO2 emissions. Global energy demand in transport currently accounts for about 28% of overall energy consumption and for 23% of energy-related greenhouse gas emissions. Oil products account for around 93% 40


of final energy consumption in transport, according to IEA.14 Buildings constitute nearly one-third of global final energy consumption and 55% of global electricity demand. In rapidly growing economies, including China and India, electricity demand in buildings grew by more than 8% per year on average over the last decade. Much of these regions have a relatively warm climate, which means that the demand for space heating is small. Conversely, the majority of demand is driven by the need for air conditioning, together with lighting and electrical devices. Many say a city cannot be truly smart without smart water management and infrastructure: it is not just the latest marketing hype, but a real issue when it comes to the fact that water utilities have to manage aging networks with limited resources. Efforts are taken in all these sectors, as applied smart technologies have been most evident in the industry, transport, buildings, and water management. The following chart shows the magnitude of the potential change in energy demand that different tech solutions can provide. These technologies can contribute to the reduction of the energy intensity of services, while some could also induce rebound effects that increase overall energy use. In the Arabic Peninsula, cutting-edge smart technologies in the industrial, transport, and building sectors are maturing. Dubai-like cities

projects are quite different in terms of capital, paying parties, and beneficiaries; there is a huge difference between decisions such as establishing a free Wi-Fi system or installing a cutting-edge stormwater management system. They should not be considered in the same pool of “tech dreams.” Energy security issues and global warming, due to the impact of increased energy usage, are some of the key issues the city managers are looking to solve; however, the (smart) energy situation of a country or region—besides technological development—relies to a great extent on urban form and economic, and geographical characteristics. The above-cited research conducted by PNAS in order to bridge the gap in comparative analysis about which conditions drive urban energy usage the most, claims that, to analyse urban attributes related to energy consumption, it is necessary to take into consideration multidimensional features: urban form (structural characteristics, population density), economic (economic activity, gasoline prices), and geographical characteristics (heating degree days, but not cooling degree days, and coastal city location). These variables


Autonomus cars/trucks

Mobility as a Service

Smart thermostats

User programming

Op�mised process control LOW

Magnitude of poten�al change to energy demand

have one of the largest ecological footprints of any city in the world; by 2050, Dubai plans to have the smallest.15 The turning point in the Arabian metropolis came when Sheikh Mohammed bin Rashid Al Maktoum, taking over in 2006 as the Ruler of Dubai, announced that the city will get 75% of its energy from clean sources by the middle of the century. Another huge project launched in the neighbouring Abu Dhabi in 2006 was the construction of Masdar City, where the aim of the USD 22 billion project was to create the world’s first zero-carbon, zero-waste city. The concept looks simple, but let us focus on the energy of the future. Undoubtedly, growing energy efficiency would also provide more fossil fuels for export, but disregarding the motivation, Arabia is confirming its place on the renewable energy map. (It is also worthwhile to note that such prompt increase is also due to the lack of political or public opposition, so projects advocated by the Ruler are very unlikely to be brushed aside.) The type of solutions that change the life of a resident in the United Arab Emirates or China is much different from what a correct solution in an African urban area means. In addition, smart city

Industrial automa�on

Addi�ve manufacturing

Occupancy sensors

Accelera�ng innova�on in industry Dayligh�ng sensors

Unmanned shipping

Big data in avia�on

Beyond the plant fence

Remote control Drone delivery




Barriers to digitaliza�on TRANSPORT


Digitalisation’s impact on industry, transport, buildings SMART CITIES


Sandbag housing in South Africa

can explain an important fraction of the energy use variedness of cities. The dataset of the previously-mentioned research evaluated 274 cities of various sizes from 60 countries with a combined population of 775 million, i.e. 21% of the global urban population. The analysis finds that final energy consumption is mostly influenced by the effect of economic activity—economic factors are more closely correlated with energy use than, for example, with population density—and is followed in importance by climatic variables (heating degree days), household size, and urbanisation rate. (This corresponds with other studies,16 which assess the ecological footprint of cities and countries, and find that the factor which determines the magnitude of the ecological footprint the most is aligned with the level of economic activity.) Final transport energy use, which was examined separately, is mostly affected by fuel price and population density. The study also finds that the greatest potential for reducing energy use is in the rapidly-urbanizing Asia, Africa, and the Middle East, mainly because OECD cities are more mature, built-up environments with established infrastructure, which is accompanied by locked-in behaviour and energy consumption patterns. 42


In the African building sector, at the moment, smart solution might mean something different than the high-performance glass buildings in Asia, for example. In Cape Town, sandbag homes are built, replacing brick-and-mortar, as a safe and cheap way for affordable housing.17 In Lagos, floating schools are constructed which are suitable to accommodate more than hundred students. In this case, everything is nature-based, no high-tech instruments are included in the system. In contrast, cutting energy use in Europe’s old building stock requires a different approach, which is one of the biggest possibilities to make Europe’s future greener: buildings account for over 40% of the EU’s final energy demand. We all can easily visualise the developing and emerging cities of Asia, which became the worst cities for traffic: old infrastructures cannot accommodate the ever-growing number of vehicles. The trail system of Japan and the bike- and car-sharing system of Seoul are some outstanding examples. However, in less developed economies in the region, the construction of road infrastructures, the installation and maintenance of traffic control systems, and the education of commuting people take some time and money. Other

commuting methods, such as inland waterway transport—considered as the “poor man’s transport”—is still the most climate-friendly solution in the applicable areas. It is unclear how urban energy use changes with economic growth, fuel prices, and shifts in population density, but, where infrastructure is still nascent, there might be the greatest prevention potential. Nonetheless, there is an ever-growing demand in these regions for water, food, building material as well as for pollution control measures and waste management. Urban infrastructures modulate energy flows in economic activities, buildings, and transport, and these built environments might shape energy consumption patterns for decades; meanwhile, smart applications appear daily on the market. However, in order to breathe new life into centuries-old infrastructure, sometimes technology needs to be retrofitted, while in a new infrastructure, built from the ground up, it is easier to test new projects. > Accessed: 2 December 2018. 6 Storage is renewable energy’s greatest challenge – this low-cost sulfur battery may help. ScienceDaily. 11 October 2017. < releases/2017/ 10/171011123826.htm > Accessed: 2 December 2018. 7 Renewables on the rise: are the Majors ready to invest? Wood Mackenzie. < feature/renewables-on-the-rise-are-the-majors-readyto-invest/ > Accessed: 2 December 2018. 8 A united approach. Middle East and Asia Reservoir Review. 2000/1. 110–115. 9 Average annual OPEC crude oil price from 1960 to 2018. Statista. The Statistics Portal. < statistics/262858/change-in-opec-crude-oil-prices-since-1960/ > Accessed: 2 December 2018. 10 PTI: China has highest number of smart city pilot projects: Report. The Economic Times. 20 February 2018. < world-news/china-has-highest-number-of-smart-citypilot-projects-report/articleshow/62998738.cms > Accessed: 2 December 2018. 11 Felix Creutzig [et al.]: Global typology of urban energy use and potentials for an urbanization mitigation wedge.


Proceedings of the National Academy of Sciences of the United States of America. 19 May 2015. 6283–6288. 12 Urban Sustainability Index (USI). The Urban China

1 68% of the world population projected to live in urban

Initiative. <

areas by 2050, says UN. United Nations. 16 May 2018.

usi.html > Accessed: 2 December 2018.


13 David Thorpe: How can cities cut energy use by 50%.


World Economic Forum. 2 February 2015. <https://www.

html > Accessed: 2 December 2018.

2 Energy. UN Habitat for a Better Urban Future.

use-by-50/ > Accessed: 2 December 2018.

< > Accessed:

14 Global Overview. In: Renewables 2017. Global Status

2 December 2018.

Report. REN21. <

3 Global Smart City Market Will Reach USD 2,700.1 Billion

chapter_01/chapter_01/ > Accessed: 2 December 2018.

By 2024: Zion Market Research. Zion Market Research.

15 Robert Kunzig: The World’s Most Improbable Green

23 August 2018. <

City. National Geography. 4 April 2017. <https://www.




Market-Research.html > Accessed: 2 December 2018.

urban-city/ > Accessed: 2 December 2018.

4 Smart city spending to top $81bn this year. SmartCities-

16 Daniel Moran [et al.]: Carbon footprints of 13 000 cities.

World. 24 July 2018. <

Environmental Research Letters. 19 June 2018.

news/news/smart-city-spending-to-top-81bn-this-year-3157 >

17 Olamide Udoma: 10 Examples of ‘Green’ Architecture in

Accessed: 2 December 2018.

Africa. Smart Cities Dive. <

5 Samuel Corwin: How China Can Make the Most of Its


Solar Energy Boom. The Diplomat. 30 June 2018. <https://

africa/243566/ > Accessed: 2 December 2018. SMART CITIES



PREAMBLE Undoubtedly, our planet’s human population has entered a new stage in its evolution. New and disruptive technologies change decades- or years-old rules almost every month in almost every area of life. Who records grandma’s voice on tape cartridges? Who invests in the VHS movie rental business? How many members of Generation Z do set up a meeting by voice call? How big is the postcard printing business, and where are the corporate postmen? The internet-based technologies are re-writing our shopping and personal communication habits today, the autonomous cars will change our travelling or parking facility management practices in the cities tomorrow, and there are some Future technologies such as Artificial General Intelligence, Mind Uploading, and Cybernetics, which can change human species in their entirety. The human phylogenesis could reach its next milestone—the Transhuman age—in the upcoming decades. What is

Planning and Management



the role of 21st-century megacities in this transforming world? Will they be the living place of “Transhumans?” WHAT IS THE CITY 4.0? As of August 2018, the total population of the world exceeds 7.63 billion people,1 and the number is growing daily. 55.3% of this population live in urban areas around the globe.2 In the late 1960s, when this article’s author was born, only approx. 36% of the cca. 3.5 billion humans lived in cities. Therefore, the statement that, “the 19th century was a century of empires, the 20th century was a century of nation states. The 21st century will be a century of cities,” seems to hold water.3 By 2050, the world’s population living in urban areas is expected to peak at 66%. Consequently, there is no question that the importance of cities is on the rise. But what is the exact definition of a city? Cities are globally integrated, servicebased economical, technological, social, and Planning and Management Design and implement a city plan to realize full potential for citizens and businesses; while efficiently running daily operations Infrastructure Deliver efficient fundamental city services that make a city desirable for citizens Human Provide effective services that support the economic, social and health needs of citizens

According to IBM, a city is a “system of systems” 44


Government and city administration

Easing traffic congestion improves emergency response


Public safety

Energy and water


Liaising with social services enables early intervention

Lower crime increases use of public transit


Social and healthcare

Enhanced quality of water improves health

A city works well if the different interconnected subsystems work in synergy

political hubs. Operationally, cities are based on a number of core systems composed of different networks, infrastructures, and environments related to their key functions: city services, citizens, business, transport, communication, water, and energy. According to IBM, a city is a “system of systems,” and should be threated holistically. Modern cities face several social challenges such as overpopulation and migration. The urban area’s higher quality of life, including its health system, has a magnetic pull force towards modern humans. As a consequence, urban density is growing, which creates not only sustainability and environmental challenges but also public safety questions to solve. According to IBM’s approach, a city works well or smarter if different city core subsystems are interconnected, work in synergy, and support citizens’ needs. The goal is simple: improving “liveability” both for citizens and businesses operating in a symbiosis within municipalities. The magical label “4.0” came from the so-called Fourth Industrial Revolution. The profit-hungry, effectiveness-driven “turbo capitalism,” armed

by info-communication technologies, induces fundamental changes in industrial production. After “steam machine mechanisation,” “mass production,” and “computer driven automation,” the so-called “cyber-physical systems” are changing the industry for the fourth time. The basic principle of Industry 4.0 is that, by connecting humans, machines, workpieces, and systems, businesses create intelligent networks along the entire value chain that can control/impact each other autonomously. The new industry trend is fuelled by several ICT technologies such as the IoT (Internet of Things), advanced analytics on Big Data, and AI (Artificial Intelligence). The IBM Institute of Business Value’s latest AI research paper reported in 2017 that 34% of the interviewed 3,069 C-suite executives from 91 countries and 20 industries worldwide plan to push ahead with AI technology. The parallel technological evolutions—such as the developments in cognitive machines—have reached a critical mass, so it seems that a new industrial revolution has indeed arrived. Some human professions—among them call centre agents or semi-skilled office administrators—will SMART CITIES


disappear or be replaced by cognitive machines, while some other new professions will also emerge. The home of Industry 4.0 activities is industrial cities. Its direct social, security, and economic impacts will first occur in urban industrial areas, so they are to answer the new social, security, and cultural challenges first. The magical “4.0” also appears in fields of economics: Globalisation 4.0 has also arrived. As digital disruption significantly affects global corporate investment patterns, a next wave for the global economy is emerging. This is what we call the era of Globalisation 4.0—an era that aligns international value creation with the promise of technologies associated with the Fourth Industrial Revolution.4 Of course, main global investment destinations are the urban areas where the required resources such as infrastructures, human resources, and knowledge hubs (universities, research centres, etc.) are granted. Nowadays, cities consume approx. 70% of all energy produced globally, while they are responsible for generating 70% of the world’s total GDP. As the famous international relations expert, Parag Khanna, states in one of his books, “today, just 40 cityregions account for two-thirds of the world economy.”5 According to the findings of the IBM IBV’s 2018 annual report, Global Location Trends, global foreign investment activity, measured by the number of jobs created, declined in 2017 by approximately 5%. In contrast, the number of foreign investment projects increased by almost 10% to record levels, suggesting a shift toward small-scale projects on average. Technology jobs continued to increase. In the above-mentioned study, the rankings of cities are not surprisingly driven by London’ because of its investment in job creation—it is also ahead of Paris and Singapore. Meanwhile, the nature of globalisation is also changing. For quickly launching a breakthrough innovation that provides competitive advantage, the monolithic, hierarchical global enterprise structure is not the most appropriate. The new types of economic “platforms”—which integrate ecosystem-like, multi-role players in a loose net and dynamically organise/reorganise themselves 46


for a particular business—are better adapted to new challenges. Clearly, new jobs are opening up in cities which operate ecosystems that offer technological background, stable infrastructure, and higher-skilled workforce. In a changing economic environment, cities are also forced to play a new role: successful cities are not just passive basic infrastructure providers but rather active ecosystem partners who maintain co-operative contact with urban economy players, citizens, and institutions. As stated above, more than half of the population of the Earth lives in towns today, and in view of the mentioned trends, the flow of population into cities will remain unbroken in the coming decades. The importance of living an independent life well into an old age, or at least having a “liveable” urban life, is an increasing challenge today with the ever-growing number of city dwellers (think of traffic jams, parking problems or the resulting air pollution). A modern city, meeting the challenges of accelerated urbanisation, Industry 4.0, and Globalisation 4.0, and utilising the achievements of the 4th Industrial Revolution in urban subsystems, can be called City 4.0. But what is in it for citizens? Smarter cities—even Cities 4.0.—have the potential to “give back” each city dweller 3 working weeks’ worth of time every year, which results in a 3-week-long, less stressful period in a year.6 As a Juniper Research study demonstrated, the most time could be regained by using better inner city mobility (smart traffic lights, smart parking, connected cars, etc.), more advanced safety solutions, and more effective communication with city agencies. The 360 hours thus saved yearly would bring various benefits: the possibility of two common meals a week with our family or friends, doing 45 minutes of exercise 3 times a week, or suffering from less stress can improve citizens’ productivity or decrease the risk of depression. WHO ARE THE “TRANSCITIZENS,” AND WHERE DO THEY LIVE? Transhumanism is “the belief or theory that the human race can evolve beyond its current

physical and mental limitations, especially by means of science and technology.”7 It is a “social and philosophical movement devoted to promoting the research and development of robust human-enhancement technologies. Such technologies would augment or increase human sensory reception, emotive ability, or cognitive capacity as well as radically improve human health and extend human life spans. Such modifications resulting from the addition of biological or physical technologies would be more or less permanent and integrated into the human body.”8 21st-century scientists are divided on the transhumanism question. Some of them support it, whereas others see it as empty futurism, scientism, fanaticism, and nihilism. Transhumanists support the emergence and convergence of technologies such as nanotechnology, biotechnology, information technology, and cognitive science as well as hypothetical “future techs” such as simulated reality, artificial intelligence, superintelligence, 3D bioprinting, mind uploading, or cryonics. They believe that humans can and should use these technologies to become more than a human: a “transhuman.” So speaking of of a future “transhuman” who lives in a future city (City 4.0), we could call him/her a “Transcitizen.” The US Department of Defense has several research programs on brain and body alteration technologies to create a “supersoldier,” with some partial results. Neuroscientist Anders Sandberg has been practicing the method of scanning ultra-thin sections of the brain. This method is used to help better understand the architecture of the brain. As of now, this method is only used on mice. This is the first step towards uploading the contents of a human brain, including memories and emotions, onto a computer. “Braincopy,” i.e. the virtualisation of a human or a human ego, could open dramatic new perspectives. From Cities 4.0’s point of view, we do not know where “Transhumans” will live, but a “virtual human” or “transhuman” can (only) live in the cyberspace; so it does not need a house or a parking place. It sounds as science fiction, but also opens a new view on a kind

of urban planning which aims at preparing cities for the next 30-90 years where futurists expect “Singularity,” the breakthrough point of transhumanism.9 CONCLUSION 21st-century cities have to face many well-known challenges. Because of climate change, Earth’s temperature may rise several degrees, causing serious problems in water management (just think of sea level rise, floods after heavy rainfalls, the shortage of drinking water in drought-hit areas, etc.). Due to the planet’s overpopulation and the new type of globalisation, an increasing number of citizens forces almost every urban subsystem to develop. Sustainable development, the reduction of environmental pollution (energy supply, sewage treatment, transport), and ultimately, maintaining the quality of urban life pose a serious problem. Technological achievements of the Fourth Industrial Revolution offer cities new solutions in many areas. Intelligent transport (eg. autonomous cars), energy supply (eg. renewable energy-based “energy islands”), public safety, or health systems SMART CITIES


(eg. smart pills) can be more harmoniously matched to each other, and to the personal needs of city dwellers utilising IoT sensors together with artificial intelligence. New technological solutions can create new needs and challenges. Just think about data security issues in the field of public security (cybercrime now seems to generate more revenues for criminals than the drug business). But there is also a change in urban retail sales with the maturing 3D printing technology. Will you suffer from traffic jams, parking spaces hung, and crowd at shops of children’s plastic toys before Christmas if you could print them in your garage? Urban strategists have to anticipate these, and even more. Some of the future technologies can not only change our natural and built environment and the way citizens coexist but also the human race itself. The goals of transhumanism include the realisation of immortality, or at least the extension of the average human age (by hibernation, Braincopy, or 3D printed implants). Public health in some countries has already increased the predicted human average age by 4-7 years, but what will happen with our cities if the average age of the population increases to 120-140 years? What if telecommunication and computer capacities needed for extending human capabilities and reaching high age are more important than public transport, water supply, or housing? Is it possible that we need more new data centres than homes? City planners, who think about urban development of the next 50-100 years, should also consider these possibilities. Finally, to answer the question posed in the title: we cannot predict if there will be ”transcitizens,” and where they will live (maybe in skyscrapers, in supercomputers’ memory, or in colonies on Mars?). We know, however, that the Fourth Industrial Revolution has brought opportunities and challenges for Cities 4.0 leaders and residents, and will fundamentally change the quality of urban life. Successful cities along with futureproof City Strategies provide a new, active economic and social ecosystem, and a “liveable” environment for their residents. 48


ENDNOTES 1 2018 World Population by Country (live). World Population Review. < > Accessed: 30 August 2018. 2 UN: World Urbanization Prospects: The 2018 Revision. Key Facts. United Nations, New York, 2018. 1. 3 Wellington E. Webb, former Mayor of Denver, Colorado cited by Chad Vanderveen: The Unseen City. How What We Can’t See Shapes Our Future. Government Technology. 30 May 2014. < The-Unseen-City.html > Accessed: 30 August 2018. 4 IBM Institute for Business Value: Global Location Trends. 2018 Annual Report: Getting ready for Globalization 4.0. IBM Corporation, Armonk, 2018. 1. 5 Parag Khanna: How to Run the World. Charting the Course to the Next Renaissance. Random House, New York, 2011. E-book. 6 Smart Cities – What’s in It for Citizens? Juniper Research. 3. < sites/11/2018/03/smart-cities-whats-in-it-for-citizens.pdf > Accessed: 30 August 2018. 7 Transhumanism. Oxford Living Dictionaries. <https://en. > Accessed: 30 August 2018. 8 Sean A. Hays: Transhumanism. Encyclopaedia Britannica. < > Accessed: 30 August 2018. 9 Raymond Kurzweil: The Singularity Is Near. When Humans Transcend Biology. Viking Adult, New York, 2005. E-book.


The land use planning system—how cities allocate land for development, develop policies for the kind of development cities want, and assess applications for development against those policies and allocations—is broken. Or at least that is what many people think. In the media and in political debate, the planning system is often the first to be fingered as the source of problems, ranging poor urban design, citizens opposing new development, and lack of affordable housing. Yet the planning system is central to shaping the places where we live, the amount of green space we have access to, the types of jobs that are available, the affordability of housing, the accessibility and capacity of new schools and much, much more. However, when you look at the way in which the planning system operates, there is no truer representation of the Madilyn Albright observation that we use 19th-century governance and 20th-century tools to solve 21st-century challenges. Observe many planning departments, and you will still see planners use scale rulers to review printed drawings to determine whether developments conform to minimum space standards. Look at any local authority website, and you will struggle to find1 a clear representation of how that place is expected to change over the next 5, 10, or 15 years. Observe any planning committee meeting and, even if you can interpret the jargon, you will find it hard to understand what is going on. These challenges were at the front of our mind when we first set up the future of planning programme in late 2016. However, these were just hunches that we needed to explore. First, we commissioned a report into the state of the art2—who was doing interesting things with data and digital tools in the planning process? The final report noted a number of discreet initiatives

in both the public and private sector, but these were not connected, and did not span the full range of components of a planning system. This led us to conduct user research with planners, property developers, architects, citizen groups, utility companies, and many others who are involved in the planning system across England (in London, Manchester, and Plymouth). This user research3 flagged four areas where the planning system is in need of transformation—how plans are made; the planning application service; how planning is communicated; and the use of data within the system. I will explain some of these in more detail. WHY CITIES NEED TO UNLOCK THEIR PLANNING DATA Big data, artificial intelligence, and visualisation are transforming the way that people process and interpret information. However, the methods used by cities to plan new developments creak with age, and smack of desperate inefficiency. It is time that those systems caught up with the modern world. The processes in place within city authorities to gather information about sites, compare proposals from developers, and engage with citizens are certainly rigorous, and produce huge quantitates of data at no small expense. If you are sufficiently determined, you can find it in the appendices of local plans—and those brave enough to bother will discover reams of data, pages of tables, and an atlas-worth of maps. However, as well as finding it difficult to understand, they will also see that it is locked up inside PDFs that are impossible to search or analyse. However, the offices of the architects and developers who bring those developments to life things look a little different. There, before SMART CITIES




How the planning system in the UK works today

bricks or steel are even considered, data, models, and digital maps are used to explore sites, proposals, and plans in exquisite detail. Crucially, these organisations have come to realise the value of maintaining easily accessible data, which they can draw on quickly, easily, and repeatably. Comparatively, the cost of generating data to support local plans is sunk when it is dumped into a series of analogue reports and planning applications. Not only do local planning authorities have to commission new studies, time after time, to obtain the same evidence, but because it is stored away in a PDF, it cannot easily be used to inform other services. For example, many of the datasets collected as part of a housing market assessment are the same as those which inform a community infrastructure levy, a strategic housing land availability assessment, or an infrastructure capacity assessment. But, bewilderingly, the information for these four studies is all procured separately. And any synergies or interdependencies that do occur between the four are managed by human hand—so the process is slow, with errors and loss of fidelity throughout the process. What is needed, then, is for cities to hold their spatially relevant data in one place, where it can be used over and over again, not just for multiple plans but across departments. Such a system would not just provide efficiency savings by reducing the cost of updating the evidence base for local plans, but also ensure that everyone is working with the same figures and assumptions and make it easier to build tools to access, interpret, and analyse the data. Who pays for all of this? Well, much of the evidence required for local plans is driven by national legislation, and the costs of building-planning data platforms is too large to be borne by any single planning authority. So, ideally, central government should be investing in UK local authorities and companies to prototype the planning system of the future. Such a system will allow local authorities to maximise the value of the data that is generated as part of the planning process. In turn, it

will reduce the time it takes to produce local plans, and make them more transparent and understandable to citizens and developers. The data is there to be used—cities just need to modernise a little to make use of it. WHY PLANNING NEEDS TO COMMUNICATE BETTER Control of the planning process currently rests in the hands of a selected few. As a result of complex language, aged processes, and professional hand wringing, experts obscure the development process from outsiders—bringing about criticism of a difficult, but vital, process. A digital overhaul could help solve the problem. The roots of the opacity are varied. Planning jargon certainly creates barriers which make it difficult for outsiders to understand the process. The problem is exacerbated by the fact that gatekeepers of knowledge—developers, consultants, planners, infrastructure agencies, and politicians amongst them—habitually use such language, and, in doing so, keep knowledge hidden, or at least privileged. At its worst, such obscurity can be used to game the system. On other occasions, information is simply locked away by those who control it. Much of the time, that is simply because it is difficult to share: what are effectively analogue records—at best in proprietary, non-machine readable formats, at worst on paper—are clumsy and ill-suited to sharing. Sometimes, it may be a conscious decision on the part of the expert. Either way, a lack of transparency and asymmetry of information is central to the poor functioning of the housing and development market, and it means that the barriers to entry are huge even for the largest foreign developers. Skanska and Bouygues, for instance, have taken over a decade to enter the UK housing market. What hope, then, is there for challengers and disruptors who would encourage competition and boost standards? HOW PLANNING CAN MAKE BETTER PLANS The UK Government’s most recent Housing White Paper boldly suggested that the SMART CITIES


How the planning system may work in the future 52


GrowthPlanner—A prototype software application that tracks utility capacity over time

housing market was broken. Unsurprisingly, this generated very little dissent. Our contention is that there is an asymmetry of information and analytical capability between the major developers and their consultants and public planners, smaller developers, and citizens. This is one of the causes of the ill-functioning housing and land market, which leads to (unfair) accusations by citizens of the planning system being played by developers. Currently, the way in which sites are allocated for future development is through a haphazard combination of local knowledge and a volunteer “call for sites.” Local planning authorities ask anyone (but in effect landowners, land agents, and larger developers) to come forward with sites where new development can and should be accommodated over the next 5, 10, and even 15 years. Whilst valuable in its own way, this process only surfaces land which owners and developers are actively trying to build on. Anything else such as publicly owned land, land whose owners are absent, or land that developers have options on, but want to keep their value low, is often missed. Many local planning authorities tend to exclude smaller sites, as the more sites you have, the more work will be required to survey and manage the information, and instead create broad brush figures which they group as “windfall.” This

deterrent against identifying a range of sites means there is less information available for smaller developers to understand where their next opportunity may come from, leaving them at the mercy of local land agents. At both the plan-making stage and during the planning application submission process, we often hear the cry that new development, and the new residents that come with it, will put more strain on the existing and often “at-capacity” local infrastructure. Despite developers financially contributing to new physical and social infrastructure, and public servants diligently working out when and where they will need to build the next primary school or GP surgery, no one effectively communicates the full picture of how new development will affect local infrastructure. This information is often the needle in the haystack of planning documents and only the well trained or well informed can locate it, or even interpret it. Critically, the Government now understands that digital transformation is part of the solution. The Housing White Paper devoted a section to “Digital planning: making plans and proposals more accessible” which stated that “we are working with local authorities, users of plans and other innovators through a pilot programme to identify opportunities to (…) use digital tools to support better plan-making, improve the SMART CITIES


accessibility of information and help people identify and develop appropriate land for housing.â&#x20AC;? Future Cities Catapult worked with the Government department responsible for planning and various users of the planning system throughout England to identify priorities for digitally-driven innovation in plan making. The result of this work was the design of a user experience/conceptual prototype for a Land Information Platform. The platform would contain a number of core functions that would allow local planning authorities to identify, prioritise, and allocate sites for new development; improving how and at what speed they allocate land for new development. It would use a variety of data sets from Ordnance Survey and Land Registry, as well as historic planning data and open government information, such as energy performance certificates, to automatically screen and identify potential development opportunities. Not only would the tool identify potential land, it would also, with reference to policy, context, and some key urban design rules of thumb, be able to estimate how many homes could be accommodated on a site in a much more precise way than through current methods. On giving a preview demonstration of the conceptual prototype to a visitor from the US, it was likened to a Bloomberg Terminal for land, planning, and housing. The use of platforms to efficiently provide the same information to many users has significantly reduced costs, and lowered the barriers to entry in financial services, and we hope it will do the same in the land, planning, and housing market.

ENDNOTES 1 Stefan Webb: Local Plans â&#x20AC;&#x201C; Error 404 Not Found. Catapult Future Cities. 24 May 2018. < uk/2018/05/24/local-plans-error-404-not-found/ > Accessed: 30 November 2018. 54


2 Future of Planning. State of the Art Innovations in Digital Planning. Catapult Future Cities. <https://futurecities. > Accessed: 30 November 2018. 3 User Research Insights Report. Prototyping the Future of Planning. Catapult Future Cities. <http://futurecities.catapult. > Accessed: 30 November 2018.


For a glimpse of what transport everywhere could one day be like, head to Milton Keynes, where the council is trialling a fascinating range of new mobility products and services. If you go down to Milton Keynes today, you are sure of a big surprise. Driverless pods, robot goods deliveries, “petrol stations” for electric vehicles—Milton Keynes has them all, perhaps providing an insight into how towns and cities everywhere will look in the future. This “new town” in Buckinghamshire, which developed from the late 1960s to house population overspill from London, has always been big on innovative transport thinking. It is the exemplar of a town built for mass motorisation: low density development, grid layout streets, endless roundabouts, and the segregated Redways network of paths for pedestrians and cyclists. Yet, all of this proved to be a bit of an intellectual cul-de-sac as far as British town planning goes. Brian Matthews, Milton Keynes Council’s Head of Transport Innovation, says the town’s unique design helps explain why the council is now pioneering so many new mobility products and services. “When we set off as a unitary authority [in 1997] we struggled to meet the agenda that was being set by the Government of promoting public transport, walking, and cycling. It is not that we did not want to do it, but we found we were up against it in a way because of some of the infrastructure we had to work with. [We are] a city of the car: lots of roads, lots of capacity, lots of car parking spaces, not good bus operating conditions, and low density development, which often means walking and cycling distances are quite long.” “We thought about a plan B—how do we work with what we have got to make it more

sustainable? It started with the council developing a low carbon strategy, so that started us thinking, ‘well cars are the biggest sources of carbon, how do we make them more sustainable?’” The answer was electric vehicles. From that, the council’s appetite for all sorts of other mobility innovations flowed. Matthews and Steve Hayes, the council’s head of transport, are going to give LTT a tour of the innovations in the town. We start outside the council offices where Matthews’ plug-in hybrid car is taking a charge from one of the hundreds of charging points in the town. Milton Keynes is “electric city,” he says, but we will discuss electric vehicles properly later. Right now, they want to show me something a little less obvious, pointing to a sensor on a lighting column. More than 2,000 sensors have been installed in the town—about 1,800 overseeing car parking spaces and a further 500 overseeing all major junctions. The equipment was developed by Vivacity Labs, and installed last spring with the help of GBP 1.7 million from Innovate UK, the Government’s innovation agency. Each sensor contains a camera and a processor, and artificial intelligence is used to detect and classify road users, including pedestrians and cyclists. Anonymised data feeds then present information such as counts of vehicles along a road. Vivacity’s system also features predictive analytics to project traffic flow forward. “They have got a very comprehensive dashboard that brings out the information from the junctions so you can see in real-time the typical profile of traffic by vehicle class and you can see if something happens, what the impact is at that junction and all the surrounding junctions,” says Matthews. SMART CITIES


The Electric Vehicle Experience Centre

With the Innovate UK-funded trial having come to an end, Matthews says the council is in negotiations with Vivacity about the long-term use of the system. Hayes explains some of the possible applications. “It can detect what type of vehicle is approaching, so you could feed that potentially into urban traffic management and control [systems], for example to give buses priority, without needing loops in the road, which are notoriously unreliable in terms of being dug up or stop working. (…) We have been thinking about the implications for traffic modelling as well, because what it is doing is using the artificial intelligence to generate some real time traffic modelling, so if a junction gets congested or blocked, it can predict where the traffic is going to go.” The sensors also open up new possibilities for the council’s parking contracts—the council this month commenced new contracts with Egis (parking technology) and Indigo (enforcement). “We are working with Vivacity to understand how their system could help give us more efficient and effective enforcement,” says Hayes. 56


“Legislation requires that traffic wardens visit illegally parked vehicles and issue tickets, but the sensor system might help identify where there are vehicles that have not paid, so wardens can be deployed more effectively.” The town’s Business Improvement District is launching an app next month using Vivacity data to show users where there is good parking availability in the town centre. It is not only Vivacity’s sensors that are changing parking management in Milton Keynes. Hayes explains that the council has just become the first authority in the UK to run with a “multi-vendor platform” for parking. “At present, people can pay for parking either via cash or app (Ringo). In the future this will not be constrained to Ringo. Other pay-by-phone suppliers may wish to sell parking in Milton Keynes, or a cinema might sell you a parking space with your cinema ticket, or a restaurant might sell you a space with your booking. Connected vehicles would be able to pay for themselves, or the manufacturer of the vehicle on the owner’s behalf. It could be very disruptive to the parking industry and we are working with

the Transport Systems Catapult (based in Milton Keynes) to understand how the ecosystem may develop.” POD POTENTIAL We drive down to Milton Keynes railway station, which is otherwise a brisk 20-minute walk from the town’s retail centre. As if on cue, some autonomous pods appear on the pedestrian plaza, Station Square. They are actually being driven today as part of a training exercise. Trials of autonomous pod began in Milton Keynes in 2016 as part of the UK Automotive Council’s LUTZ (Low Carbon Urban Transport Zone) Pathfinder project. The two-seater pods were manufactured by Coventry-based automotive engineering firm RDM Group. The pods used cameras, LIDAR (a “light radar” that usespulsed laser light and measures their reflection), and radar to navigate and monitor their surroundings, and Matthews explains that the initial trial was to see if all the technology actually worked. A follow-on trial has been run through the three-year UK Autodrive project to promote connected and autonomous vehicles, focused on Milton Keynes and Coventry. RDM again supplied the pods, but, this time, they are four-seaters. The pods operate on footways rather than the carriageway, and are limited to under 10 mph (their top speed is 15  mph) to minimise the risk of conflicts with pedestrians. “We have developed Traffic Regulation Orders to allow the pods to operate on the footways,” says Matthews. “Technically a car can run on here but we ban cars and allow pods. We might create dedicated lanes for them to speed up in the future.” Passenger trials of the pods will take place before the Autodrive project draws to a close at the end of October. “We will recruit people to be part of it, give them access to the App to order the vehicle and we will see what the demand is,” says Matthews. The pods will operate in autonomous mode in some places, but a driver will have to control the pods on footways that are not yet cleared for autonomous operation

because of things such as parking machines, bollards, and trees. The pods are operated by Aurrigo, an offshoot of manufacturer RDM. “We went to the market to procure an operator—we asked [local bus operator] Arriva and we asked taxi companies. [They were a] little bit nervous—and RDM, Aurrigo, put in a compelling bid.” says Matthews. Although Autodrive is coming to an end, this does not spell the end for pods in Milton Keynes. A follow-on Innovate UK project called SWARM involves RDM Group, the University of Warwick’s Warwick Manufacturing Group, and Milton Keynes Council. “This will upscale the intelligence of the vehicles and that will be running to late-2019 at least, by which time we have perhaps made a decision on whether we keep them here,” says Matthews. The SWARM project will require ten vehicles in the town (RDM’s total fleet is 25), of which five will have enhanced intelligence. “They will have the ability to communicate with each other and one vehicle will be the master vehicle and control all the others,” says Matthews. “It is all to drive down the operating costs because if you get one of these [acting] as the control centre you do not have to have a big control room. If you have to reposition them, then one will be used as a marshalling pod.” Another project could see a trial of pods in passenger service: Milton Keynes is part of a consortium that has just submitted a bid to the Government’s Connected and Autonomous Vehicles round 4 funding round. Trials are one thing, but does Matthews believe autonomous pods have a long-term role providing mobility in the town? “It is great at the moment because it is a novelty and people welcome it,” he says. “We will see if they use it every day and pay a little bit of money for it, then we will learn whether it is something we can keep.” One route that has been mooted for pods is to connect the railway station with the shopping district, but Matthews is unsure if this is where the demand lies. “I am not sure there is a huge demand for that, and it can be met by the Hopper bus service anyway [the GBP 1 single SMART CITIES


A satisfied customer: Steve Hayes, the council’s Head of Transport, receives his bottle of water from Starship’s robot

ticket available on all of Arriva’s buses between the station and the shopping district]. I think it is more likely to be from the railway station to businesses as a visitor, or somebody in a business saying, ‘I need to go and see Fred in another building.’ They have also got potential because we are putting more housing in Central Milton Keynes over the next 10-15 years—the housing sites are at the end of the city—twice the distance from the railway station to the council offices. A pod could be the ideal vehicle to do that [journey]—you can walk or cycle, of course, but it gives you another option.” RETHINKING PUBLIC TRANSPORT While we are discussing the pods, an electric bus pulls up at a stop outside the railway station. A fleet of eight vehicles were introduced in 2014 on Arriva’s Route 7 operating north–south from Wolverton to Bletchley via Central Milton Keynes. At each end of the route the bus takes a charge inductively while sitting over a charging plate. At the time of launch, 58


this was the first large-scale trial of inductively charged buses in the UK. “The buses get back to base with their batteries about 30 per cent full and then charge up overnight plugged in,” explains Matthews. “They come out with about 80-90 per cent of the charge, so you are protecting the battery. If you overcharge them or let them run down it affects the battery life, therefore operating them charged between 80 and 90 per cent protects the battery. The economics of the operation are that we have had to increase the number of buses on the route by one vehicle to compensate for the dwell time at the charge points. But that is compensated by the lower operating costs because the fuel is so much cheaper.” The upfront capital cost of the vehicles is still considerably more than their diesel equivalent. The Government has awarded the council a further GBP 1.75 million for a further fleet of electric buses, and discussions are underway with Arriva about how this will be used. “Arriva are not as keen on a ‘big’ bus, so [we are] exploring potential demand responsive transport minivans with a network of supporting wireless charging.” says Matthews. Plenty more public transport innovations lie on the horizon. The council’s policy documents refer to a new form of public transport dubbed “micrometro.” Matthews explains what this is all about: “that is looking at the potential of a new form of mass transit that could be developed in the next 15-20 years that does not rely on rails or bus lanes. We have just kicked off a study with consultants David Lock Associates, ITP [Integrated Transport Planning] and the University of Cambridge to look at that in more detail.” The idea, he explains, is similar to the rubber-tyred Advanced Very Rapid Transit (AVRT) concept championed for Cambridge by John Miles, the University of Cambridge’s Arup/Royal Academy of Engineering Research Professor in transitional energy strategies. AVRT appears to have been rejected by councils in Cambridge, but Miles is part of the team looking at its application to Milton Keynes.

“John’s a good friend of ours at the council, he lives in Milton Keynes, I see him every other day,” says Matthews. “He is working on the AVRT micrometro for Milton Keynes to see if the Cambridge idea—we are not saying we are going to do the same as Cambridge, we are not going to tunnel, I do not think—could the same principles be adapted to Milton Keynes? It could be autonomous in restricted space and operate at a high-speed, which makes it more attractive to more users, especially park-and-ride. And could you then integrate it into developments that we build at the edge of the city? After all, Milton Keynes is going to double in size. Could something like that fit in Milton Keynes, could it fit in Cambridge, could it fit in Oxford?” he asks. “Because all three cities are working together on the Oxford–Milton Keynes–Cambridge arc idea, and we have been set a challenge by the National Infrastructure Commission to sort out the 'last mile' transport [in each city].” Micrometro is for the long term. More immediately, there are developments afoot on demand responsive transport. “Many of our residential estates are quite difficult to serve by bus because of their layout—lots of cul-de-sacs—whereas if you have got a demand responsive minibus-type service, which a number of companies are looking at now, that could complement a fixed route bus route or rapid transit routes in the future quite nicely,” says Hayes. An announcement of a commercial DRT venture in Milton Keynes may be imminent. Meantime, the council has just invited potential suppliers to an engagement event to look into DRT applications, including whether it could replace some subsidised conventional bus services. Mobility as a Service (MaaS) is also a “hot topic” for the council, says Hayes. “We are in advanced discussions with a company keen to work with us to implement MaaS in the area and should be in position to launch a scheme in 2019.” The council held a forum this summer to bring local transport operators—bus companies, taxi operators, bike hire, car hire—up to speed on the MaaS concept.

A smart ticketing platform is also under development. “We are bidding to the South East Midlands Local Enterprise Partnership (SEMLEP) for Local Growth Fund grant to deliver a multi-modal smart ticketing solution—initially for Milton Keynes, but one which we could roll out to other areas of the England’s Economic Heartland [that stretches from Swindon in the west to Cambridgeshire in the east]. We are not going to invent something from scratch but have been talking to authorities with existing platforms about sharing those,” says Hayes. ROBOT DELIVERIES As we leave the pods, Hayes arranges something using his smartphone for our next innovation—a robot goods delivery! In April, Starship Technologies teamed up with the Co-op to launch a robot delivery service in the Monkston residential area of the city. Using an app, residents can order from a choice of 250 items in the shop and have their purchases delivered to their door by a four-wheeled robot. Hayes has ordered a bottle of water to demonstrate the system. En route to collect our delivery, we spot a parked Range Rover that is part of the UK Autodrive project, testing level 4 autonomy. Matthews pulls in to have a quick chat with the research team. “Jaguar Land Rover are wanting to test with us car share—premium car share,” he later explains, as an aside. “There might be a sector [of the population] who want to use a JLR premium car but cannot afford one, but can afford to rent one a couple of times a week.” Back on the road, Hayes’ app notifies him that the bottle of water has arrived at its delivery address. We are a few minutes away, but, fortunately, the robot has the good grace to wait for us. After inputting a code to his app, the robot’s lid opens and—voilà!—we have our bottle of water. Soon it is returning along the footway to its base, a shop unit next door to the Co-op store. We are heading there too. Starship was set up in 2014 by two of the co-founders of communications software Skype. The company’s initial UK trials were in London with online takeaway delivery firm Just Eat. Then SMART CITIES


came the opportunity to work with the Co-op in Milton Keynes, and Starship has thrown all its UK resource into this. The service operates from 9am to 8pm seven days a week. Users are charged GBP 1 per delivery. If the amount of goods requested exceeds the capacity of one robot, then another is sent at no additional cost. By the summer, the business was seeing about half a dozen orders in the morning, a lull in the lunchtime, and 20-plus in the evening. When Starship sets up in an area, a human takes the robots out to map the area. After that, the robots’ day-to-day operations are described as 99 % autonomous. A human oversees them at all times from Starship’s operations centre in Tallinn, Estonia. So, for instance, if the robot comes upon an obstacle, such as an overhanging bush, it will stop, and the operator will make a decision whether it is safe to proceed. Signs in the Monkston neighbourhood declare that this is a “robot delivery area.” “What we have agreed with Starship is to run the system for a period to evaluate its capabilities, issues, and public reaction, so we can develop a set of operating protocols,” says Matthews. “We are requiring Starship to provide weekly reports on how it is operating, incidents, learnings, and we will put it all together and then look to develop guidance. I think Starship have ambitions to use that to stimulate national guidelines so they can operate in other cities.” Is the idea that Starship will eventually cover the whole of Milton Keynes? “I am sure that is Starship’s ambition,” says Matthews. “Subject to protocols and everybody being happy, then we will have a discussion about how that might be achieved. Because one of the concerns we have is we do not want all the Redways flooded with robots when they are for cyclists and pedestrians as well. So we need to understand what is the optimum number of vehicles we can assimilate. One thing we have got to think about is should we licence it? Because we do not potentially want a free-for-all. We are reasonably comfortable with Starship, we can see they are a professional organisation. But you could get some [operators] who are not so professional 60


and just jump in and that could spoil it for everyone, spoil it for the city. So that is the idea behind the protocols—you could potentially have a licence to operate in Milton Keynes if you sign up to these protocols.” Matthews is reassured by user surveys, suggesting that the robots are more likely to replace car trips to the shop than walking trips. He thinks that they could offer other potential benefits to the town. “We have regular meetings with Starship to stimulate discussions about uses. Library services was a Starship idea. Social care applications was our idea. Ringway, our main [highways] contractor, is working with Starship to use the robots to detect outages in lighting columns. And they can detect potholes. The police are interested in them as mobile incident devices because they have got all the surveillance equipment on.” SCATTER GUN, OR SELECTIVE? I am wondering if the council says “yes” to every approach it receives to test an innovation, or if it is more discerning. Matthews smiles. “I think I have got this personality trait where I try to say yes at the beginning to most things just to learn a little bit more, but then we have to [sometimes] say, ‘Well actually that does not fit with us, it is a great idea, do not take this to mean we do not think it is good.’ What I have to be careful about is I am a public servant and I am charged to deliver the objectives and policies of the council. I cannot go off on a whim and just do something I am personally interested in—much as people think I do that anyway! I think I have got a reasonable view of that having done the job for 20 years, so I have got a fairly good idea of what is relevant, what is not relevant.” So what is not relevant? “I think we are having to say a lot of ‘nos’ to some of the parking ideas, not necessarily because they are bad ideas, it is just they do not fit in with what we want to do with parking. Some of them [the proposals] are to make parking really easy.” Sometimes Matthews would suggest that a promoter should test their idea on private land first. In other instances, he passes the idea to the Transport Systems Catapult. The

Steve Hayes (left), the council’s Head of Transport, and Brian Matthews, its Head of Transport Innovation

Catapult and the council collaborate on a number of projects. “They [the Catapult] have a particular ilk of person—technologists, industry [backgrounds]—and, hopefully I am not being rude, they have not a clue how cities work sometimes, so we try to ground them into the real problems of the city.” ELECTRIC BOULEVARDS Our next stop is to see an electric vehicle charging station—the equivalent of a petrol station—being built on the edge of the town close to junction 14 of the M1. The facility is expected to open this autumn, and will feature eight rapid chargers (50 kW) capable of charging a vehicle in around 20 minutes and four superchargers (350  kW) that can charge a vehicle in five minutes. The rapid chargers have been funded by the Government’s Office for Low Emission Vehicles. The superchargers are privately funded by Ionity, who are backed by car manufacturers VW, BMW, and Audi. Another

EV charging station is planned for Central Milton Keynes, says Matthews. This is just the latest demonstration of the town’s support for electric vehicles. “We are running just under double the national average of electric vehicle ownership in Milton Keynes,” he says. “We have been at it for four to five years getting the infrastructure in place, we have been highly visible promoting it.” The town now has 300 7 kW fast chargers, and 56 rapids, soon to rise to 64. The council is also installing residential EV charging points. “We have got this initiative called MK Promise where we will with best endeavours put a charge point as near to where you live [as possible]. That is been a long and tortuous process, but we have just had our first installation,” Matthews explains. Vehicles that qualify for the Government’s plug-in car grant can benefit from free parking in council spaces. “We do not give the premium bays [for free] because we do not want EVs SMART CITIES


clogging up bays that are programmed to be high turnover,” says Matthews. “So 15,000 [out of roughly 21,000] bays are available for electric cars to park for free.” The Electric Vehicle Experience Centre is our final destination. Located in the Centre, MK shopping centre, it is a brand-neutral showroom, the only place of its kind in the country. The centre gives the public free advice about EVs, the opportunity for free 20 minute test drives, and even a loan of a vehicle for four or seven days, with prices starting at GBP 50. A fleet of 50 vehicles is available to choose from, provided by seven manufacturers: Kia, Renault, BMW, Volkswagen, Volvo, Mitsubishi, and Nissan. The fleet is refreshed every six months, so the latest models are always available. The centre was set up with funding from the Government’s Office for Low Emission Vehicles under a five-year deal and had its first birthday in July. It is operated by Chargemaster, which also has the council’s contract to manage electric vehicle charging points in the town. “We [the experience centre] do not sell cars, we just advise and give information to try and break down barriers. There is no better way to do that than by letting people experience things without the pressure of a sale. If you are willing, they can make an introduction to the dealer for you, [but] they are on no commission, so they have got no vested interest in what you then do,” says Matthews. THE INNOVATIVE COUNCIL Over a coffee at the end of a fascinating day, Matthews and Hayes talk about some of the wider issues that all this innovation poses. “I could get a council visit to talk about electric vehicles every week,” says Matthews. “We try to do that because part of the remit from Government is ‘we are investing in Milton Keynes, we want this disseminated.’ So I will quite happily do that.” Councillors wholeheartedly support the ventures, he says. “Our political leaders expect innovation, they fully support what we are trying to do, and that is cross-party [the council is no overall control]. They see it as enhancing the 62


reputation of Milton Keynes and it leads to other things—jobs created by Starship, Chargemaster are moving their whole factory and operations from Luton to Milton Keynes on the back of ‘this is electric city,’ and so 300 jobs are created here.” Hayes says the innovations are redefining the activities of local authority transport departments and requiring new skillsets. “A good example of this is we had a guy whose job was to do traffic monitoring, so he would go out and put loops in the road and organise all the traffic counts—all those kind of things. He left us about six months ago and rather than replace him like-for-like, we sort of thought, ‘Well, hang on, this kind of role is going to change very much in the future given all the sensor technology and development in this area.’” “I think the council is starting to bring through cohorts of talented graduates and apprentices that are not traditional transport planners. It is shaking the tree a bit, and I do not think that is a bad thing. It is not about getting rid of people, I am not saying kick them out and bring new in—it is about retraining and re-energising, this is a positive thing,” Matthews adds. Hayes says that the very nature of the council’s role in transport is changing. “A lot of it these days is more about working in collaboration with suppliers. It is not necessarily specifying what we want and expecting someone to deliver for us, it is working with these companies to develop and design solutions for Milton Keynes.”


SMART CITY Smart cities, despite the lack of a specific, clear-cut definition, have grown to be more than a buzzword. It is not only being acknowledged but also adopted globally. Today, cities are becoming “smarter” than ever before, with advances in areas such as smart governance, smart infrastructure, and smart technology. While the term, smart city, might infer different connotations in different countries, the development of a smart city typically involves applications of information and communication technologies (ICT) and other smart policies. This is overarchingly intended to raise the quality of urban living that has been constrained by exponential population growth. In the Asia-Pacific, an exceptional scale of urbanisation is expected to transpire over the next few decades. It is projected that more than 550 million people will move to cities by 2030, driving the grasp of the smart city revolution. This is reflected in the fact that a large portion of investments into smart cities are from the Asia-Pacific countries, constituting a large portion of the total amount spent globally, forecasted to reach USD 135 billion in 2021. Malaysia is no exception to this bandwagon, realising its visions through the high-tech city of Cyberjaya. THEN AND NOW Before, what is known today as Cyberjaya, the area to the southwest of Kuala Lumpur, was actually an undeveloped rubber estate. This estate, then called Prang Besar, which literally means “big war,” was purportedly named after World War I by the soldiers who opened the land for development. In 1997, following the foresight of then (and current) Prime Minister

Prime Minister Mahathir Mohamad

Mahathir Mohamad, the Government of Malaysia undertook to clear the plantation, and, in its place, planted the seed for Malaysia’s Multimedia Super Corridor (MSC). The transformation of what was once a 7000-acre plantation into the sprawling city of Cyberjaya, spearheading Malaysia’s entrance into the digital age, is emblematic of the intentions to progress from an agricultural dependent economy into the future. VISION 2020 In Prime Minister Mahathir Mohamad’s 1991 speech outlining Vision 2020, he identified SMART CITIES


Buildings in Cyberjaya

various objectives and challenges for Malaysia’s stated ambition to be a developed country by 2020. Most relevant to this paper are the objectives and challenges at the intersection between Malaysia’s ambition to become a developed country and the technological process that needs to be obtained to get there. The Vision 2020 document sets out, under the fourth strategic pillar, to “create a society that is scientific and progressive in nature, with capabilities to adapt and constantly look forward, not just as adopters of new technologies but also as contributors to scientific bodies of knowledge and future technologies.” Pursuant to that, in the challenges section of the document, it lays out, inter alia, that “…for Malaysia to become a developed country involves not only transitioning from an agricultural way of life to an industrialised one, but it also involves changes in the fields of technology, economy, social and 64


cultural.” The section then added that “…citizens of developed countries are those with knowledge and expertise in science and technology, not only as adopters and adapters but also as creators, value-adders, and improvers.” Towards these twin ends of achieving developed status by 2020 and making Cyberjaya a success, two government agencies were established. The first of the two is the Multimedia Development Corporation (MDC). Incorporated in 1996, MDC was responsible for advising the government on legislation, policies, and standards for Information Communication Technology (ICT) and multimedia operations to make Cyberjaya a success. Besides that, MDC was also tasked to oversee the development of the MSC Malaysia initiative, the platform to nurture and spur the growth of local technology companies, to attract Foreign Direct Investment (FDI) and domestic direct investment (DDI) from global multinationals.

15 years after its establishment, MDC received a larger mandate to catalyse Malaysia’s transition towards a developed digital economy by 2020. This new mandate was later reflected in 2016, where MDC was renamed as Malaysia Digital Economy Corporation (MDEC) in conjunction with its 20th anniversary. Towards the simultaneous development of the economy and technology, MDEC is authorised to grant MSC status to companies, start-ups, incubators, and institutes of higher education. A SMART CITY MODEL In recent years, together with the advancement of technology and the growing importance of innovation, Malaysia acknowledged “smart solutions” as the key towards growth. Under the 11th Malaysia Plan (2016–2020), Malaysia vows to strengthen its infrastructure to improve mobility and connectivity, critical to support the progress of smart cities. To this end, in December 2015, MDEC funded the implementation of the Smart Traffic Management System in Cyberjaya. The first of its kind in the country, the traffic management system utilises strategically-placed cameras to analyse traffic situations and to intelligently direct traffic at intersections to reduce waiting time at the lights. This has been reported to have reduced waiting times at traffic light junctions by almost two-thirds—indirectly improving the quality of life and productivity of citizens. Furthermore, in May 2017, Then Prime Minister Najib Razak announced 11 major projects and initiatives to turn Cyberjaya into a smart city model. Cyberview Sdn Bhd, who started its journey as a landowner, is now a key player in most of Cyberjaya’s major projects, and has been mandated to drive the tech hub in the city. There are multi-prong strategies, plans, and initiatives to uplift Cyberjaya that focus on at least three areas: one, encouraging Internet of Things (IoT) applications and services, two, enhancing innovation capabilities, and three, developing Financial Technologies (FinTech). Cyberjaya is projected to be the first city in Southeast Asia to be powered by low-power and long-range technology (LoRa), developed to support IoT

demands. The LoRa network’s coverage allows the connections of IoT devices over a wide area, from 5 km to 15 km, more than enough to cover the entire Cyberjaya. Applications in Cyberjaya’s LoRa network focusing on smart city solutions, such as intelligent street lighting, smart parking solutions, and smart traffic lights, are encouraged in the initial phase. As one of the key technological trends that propel smart city solutions, the IoT envisions that everything in the physical world is connected seamlessly and is securely integrated through Internet infrastructure. Cyberjaya also aims to be a potent platform and birthplace for innovative activities and strengthens the start-up ecosystem. Among major projects that could spur these developments are the Cyberjaya Futurise Centre, which aims to be the heart of the country’s future innovation pioneers, housing research universities and innovation outfits, as well as encouraging more robust collaborations between corporations, universities, and entrepreneurs. Furthermore, there is the Cyberjaya Innovation Fund for the Future (CIFF), a geocentric fund that will be channelled for local and international businesses’ innovation and smart city related projects, and the Blue Ocean Entrepreneurs Township (BOET) project, which will provide physical infrastructure and training. In addition, Cyberjaya will also house the Global Tech Hub agenda where “living lab” initiatives are carried out to enhance the start-up ecosystem through vigorous testing and piloting activities. The third focus for Cyberjaya is to develop FinTech and cashless payments. Collaboration with Mastercard allows Cyberjaya to be tested as a cashless society through various piloting efforts in, for example, transportation or food and beverage (F&B) sectors, integrating digital payment platforms, and making simpler, faster, and better security transactions. One of Cyberjaya’s major projects, the Financial Technology Regional Hub, which is in collaboration with The Barrington Group and Beijing Fullrich’s Regional Fintech, aims to support up to 3.2 billion transactions, equivalent to USD 20 billion in transactional value, in the fifth year. SMART CITIES


CHALLENGES While these initiatives are applauded and welcomed, it has to be noted that, after two decades on, the success of Cyberjaya as a way of spurring the growth needed to drive Malaysia towards a developed country status has been mixed. This could be attributed to various reasons. One would be the liberalisation of “cyber-city” and “cyber-centre” status, which are physical locations meant to facilitate “industry clustering” to fuel economic growth. For investors, the liberalisation of these statuses meant that they could invest or base their companies in various other locations around Malaysia, while enjoying similar benefits and incentives listed under the MSC Malaysia Bill of Guarantees (BOGs). The increase of competition from other locations in Malaysia, coupled with similar benefit and incentive structures, indicated that Cyberjaya’s attractiveness as an investment destination was reduced. This was exacerbated by the fact that Cyberjaya, being a relatively new city, lacked the “soft infrastructure” necessary for holistic and vibrant lifestyles. In fact, it is common among those working in Cyberjaya to lament the lack of “social life” after working hours. This has presented itself as a significant challenge to attract and retain top-tier talent to work in Cyberjaya, and as an indirect deterrent to foreign investors looking to set-up high value operations in the city. To these investors, Kuala Lumpur, the financial and social capital of Malaysia, is a more attractive option—directly cannibalising Cyberjaya’s intended market. These factors together led to Cyberjaya being unable to attract the critical mass of talent necessary to create and leverage the “network effect.” The network effect is where organic interactions between people increases the possibility of the cross-fertilisation of knowledge and expertise. Symbolic of this is the fact that none of the largest co-working spaces in Malaysia, which essentially are microcosms for network effects, have a presence in Cyberjaya. This is contrasted to what is seen in places such 66


as San Francisco or the Silicon Valley, the startup capitals of the world. Therein lies Cyberjaya’s chief problem. It is not the lack of political will or mismanaged policies that have affected its success and, by extension, its contribution towards Vision 2020, but rather the fact that these policies are not complemented with other aspects critical to attract talent and investors. Importantly, out of 3,421 companies granted MSC status as of February 2018, only 480 are located in Cyberjaya. VULNERABILITY Furthermore, as Cyberjaya becomes the stage for “smart city experiments,” it also opens up vulnerabilities in terms of data privacy and security. IoT-based services rely on data that may be personal or commercially sensitive; thus, it is important for the value chain to store and process data securely. Malaysian Communications and Multimedia Commission (MCMC), a regulator of the convergent communications and multimedia industry, has identified the regulatory challenges regarding this issue and calls for coordination efforts with the Department of Personal Data Protection, Cybersecurity Malaysia, and The Royal Malaysian Police. Even though Malaysia ranked third in the Global Cybersecurity Index 2017, cyber threats are dynamic in nature and could be orchestrated by anyone from anywhere. The year 2017 was also the time when Malaysia faced the biggest cyber security incidents witnessed so far, with data breaches not only affecting corporate but also personal data. For instance, the biggest data breach in Malaysian history involving the data leakage dated from 2012 to 2015 was published for sale on a well-known internet forum, Consumers globally are also increasingly concerned about the safety of their IoT data, demanding transparency from companies, stricter regulations on parties that violate consumers’ privacy, as well as higher accountability by relevant parties before it spirals out of control. Another flipside is Malaysia’s dependence on foreign collaborators in building its smart cities. Although joint collaboration is a great pathway

2018 as just an “ordinary development” due to its lack of applications. Nevertheless, he also mentioned the intention to revise the idea, whereby technology and its applications will focus on administration and decision making. Perhaps the Prime Minister, who introduced Malaysia’s Vision 2020 and Cyberjaya in the 1990s, and is back in power after winning the historic May 9th General Elections, will be able to review Cyberjaya’s blueprint for it to become the smart city Malaysia was promised.

Statue of 2020 Vision, UMS, Kota Kinabalu, Malaysia

for technology transfer, sharing of best practices, and so forth, the question remains whether it has political and security implications. For example, security analysts opine that the involvement of foreign actors in areas such as public services could raise concerns of espionage. Could systems that are successfully applied overseas be replicated and accepted in Malaysia, especially when it comes to monitoring and surveillance? Furthermore, when it concerns data, there are various potential implications on privacy that need to be considered. REVIEWING THE PLAN Malaysia needs to manage its social and political challenges, as well as others that come hand-inhand with the advancement of technology. It would seem that Cyberjaya has failed to live up to its initial expectations. Indeed, Cyberjaya was described by Prime Minister Mahathir in July SMART CITIES



The countries of the Arab/Persian Gulf have witnessed very rapid population growth, fast economic development, and increased agricultural production, which have led to a sharp increase in the demand for energy, water, and food. In the meantime, the abundance of natural resources in the Arab/Persian Gulf region has enabled a very swift infrastructural development in the Gulf countries over the past couple of decades. Due to the speed of urbanisation and the massive growth of urban population, they feel pressured to be actively engaged in the smart development of existing cities and to develop newly constructed cities that are competitive and comparable with global cities. The traditional societies of the Arab Gulf states might seem to be odd places to test how state-of-the art technological innovation can be harmonised with everyday life. Indeed, Western-educated state and business leaders who advocate a modern life involving the products of globalisation often compete rhetorically with cool-headed social science researchers and traditionalists who point out and back the need for preserving the traditional forms of society. In the Gulf, cities “faced at different times and in different ways the push for the future,” and eventually “modernization challenged the preservation of values that had been immutable for centuries.”1 Among the member states of the Gulf Cooperation Council (GCC), the United Arab Emirates is the most eminent in developing both brownfield and greenfield projects, with Dubai being widely regarded as a paradigm for smart cities in the region. However, Abu Dhabi, Doha, and Riyadh are also considered to be success stories, while greenfield projects, such as Masdar City in the UAE, Lusail City in Qatar, or King Abdullah Economic City in the Kingdom of Saudi Arabia, has built up high expectations. 68


However, taking aside the very ambitious promises these governments often make, how do we measure the success and the development of these projects, and how do they fare in the global competition of smart city development? There does not exist a universally accepted definition of what might be considered a smart city. Broadly speaking, a smart city is an urban space that is surrounded by or embedded with “smart systems” or a city with ideas and people that provide clever insights. It is defined by the European Commission as a user-driven open innovation environment.2 Technically speaking, a smart city uses information and communication technology (ICT) to improve its sustainability and efficiency and its services. A smart city has physical and social components or hard and soft infrastructure that correspond with the built environment and the system which operates in it. However, these components have to coexist in perfect harmony, as a fully intertwined system. While it is very difficult to measure how successfully smart cities build and harmonise their hard and soft capabilities, some useful standards were set by audit firms, research institutes, governments, and international organisations. The IESE Business School’s Center for Globalization and Strategy produces an annual analysis and a ranking of the best-performing smart cities in a global perspective. In 2018, the IESE Cities in Motion Index (CIMI) ranked Dubai and Abu Dhabi amongst the 100 most developed smart cities globally, while other cities in the region did not lag far behind them on the list.3 CIMI assesses the economy, human capital, social cohesion, environment, governance, urban planning, international outreach, technology, mobility, and transportation developments of each city when it establishes its ranking. The Smart City









The Smart City Initiatives Framework

Initiatives Framework identified eight core pillars for measuring smart cities:4 Although annual reports point out the gradual developments of the GCC region on the issues of sustainable development, many caveats exist that qualify optimism. Researchers have identified many political, socio-economic, technological, policy, cyber, infrastructural, and local talentrelated aspects of the challenges the smart city developments in the GCC countries need to address. Although the governments and private entities are working on finding smart solutions for single issues, they still have not succeeded in finding the intrinsic linkages among single issues; thus, they failed to achieve the full potential of a smart and integrated city.5 Another issue, mainly with greenfield developments, is that, many times, political will creates a project which is not followed by execution, or circumstances hinder the materialisation of the plan. A case in point is the Neom project, an entirely new, master-planned smart city, to be created in an agricultural region of northwestern Saudi Arabia. The international political developments between Saudi Arabia and its Western partners seem to delay the project’s advances, as many Western entrepreneurs, the actual owners of the know-how, are reluctant to provide their help to a widely criticised political leadership.

Despite all the criticism, bad planning, and the circumstances, the cities and projects listed below are here to remain the future centres of development and some of the most attractive destinations for leisure and work globally. Let us have an assessment of the most famous, most ambitious, and most developed smart projects in the Gulf from the many cities regarded as “smart.” DUBAI (UNITED ARAB EMIRATES) The United Arab Emirates has seen the fastest development amongst the Gulf countries in the last fifty years. Most of the population live in large cities. Dubai is the most populous but, at the same time, the most developed of the seven emirates of the UAE. As a city, it has been the “smartest” one of the whole Middle East region for years, according to the rankings of CIMI. In 2018, Dubai was ranked number 60 on the global list of the research institute. Dubai especially stands out in technology, where it occupies the fourth position for this dimension on the global list, only preceded by Hong Kong, Singapore, and Amsterdam, respectively. Its international outreach also puts it amongst the world’s leading nations. Dubai’s smart city project has been conceptualised under the visionary leadership of Sheikh Mohammad bin SMART CITIES


Solar-panel-powered palm-tree with Wi-Fi stations promote Dubai smart plans

Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, and Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and General Supervisor of the Dubai smart city project. One of their most important concerns is the “happiness index,” which monitors the quality of public services, and is aimed at improving overall citizen satisfaction.6 Dubai’s projects include many initiatives from the government itself that are in line with the sustainable development goals or follow the latest trends in digital technologies. According to the plans, by 2021, the Dubai government will go completely paperless, and, thus, 100% of the internal and customer transactions will be digitised. Technology will also increase the city’s cost-effectiveness. As planned, Dubai wants to be the first city fully powered by blockchain by 2020. It has ambitious plans, and is ready to showcase and test its achievement at the Dubai Expo in 2020. ABU DHABI AND MASDAR CITY (UNITED ARAB EMIRATES) Abu Dhabi was elected the second most developed smart city of the Gulf by CIMI in 2018. Other analyses, e.g. the one made by McKinsey, 70


a global management consulting firm, put Abu Dhabi on par with Dubai in many regards.7 However, the great things are to come in the future. Abu Dhabi’s Department of Urban Planning and Municipalities has launched the pilot phase of the five-year plan for Smart Cities and Artificial Intelligence (2018–2022) named Zayed Smart City Project in early 2018. The project includes such deep inquiries as air quality monitoring, asset tracking, logistics monitoring, structural health monitoring, water metering, palm tree weevil detection, street lighting, smart parking, waste management, water storage tank monitoring, and swimming pool monitoring. Abu Dhabi has a comprehensive development named Abu Dhabi Economic Vision 2030, which seeks integrated solutions for the sustainable development of the city, and targets most of the smart city pillars, putting a great emphasis on ICT solutions.8 Abu Dhabi has also a master-planned city development project named Masdar City, which has been planned to rely only on solar and other renewable energy sources to power itself. Founded in 2006, Masdar is a wholly-owned subsidiary of the Mubadala development company, formed by the Abu Dhabi government as one of the means for realising of the economic

vision of the UAE and Abu Dhabi. Through Masdar, the UAE demonstrates what a “responsible” producer of oil can do to create a balance between hydrocarbons and renewable energy to address both climate change and energy security.9 Masdar is going to operate on the nexus of smart people, smart mobility, smart building, and smart energy. The city is going to be an incubator of smart research institutes and business firms that operate responsibly. DOHA AND LUSAIL CITY (QATAR) Doha, the capital city of Qatar, a tiny peninsula north to the UAE, is amongst the top-performing smart cities of the Middle East, right behind Dubai and Abu Dhabi. It also stands out in technological development. Qatar has its own National Vision 2030 development plan, and it is preparing for the organisation of the 2022

football World Cup, which puts pressure on the city leadership while also providing many opportunities for development. The project includes the development of a brand new business and residential district, named Lusail City, which is to be built up 23 km north of the capital. As per the official description of the project, Lusail is “the future city of Qatar that enhances people’s lifestyle and empowers businesses through efficient & sustainable services delivered by an integrated ICT infrastructure.”10 Lusail is going to operate as a fully integrated ecosystem overseen by the Lusail Command & Control Centre (LCCC), which will monitor the system through one single control panel. Officially, one of the stated goals of Lusail is to show the world that Qatar is an advanced society and a great nation capable of extraordinary progress. There is also a
















Framework for the Abu Dhabi Economic Vision 2030 SMART CITIES


Quatar, Lusail City

criticism regarding the project, as the new city will be able to house almost half a million people in a country where the population is just the half of that number. KING ABDULLAH ECONOMIC CITY (SAUDI ARABIA) Saudi leaders talk more about greenfield development projects and master-planned megacities than about the development of 72


existing cities. Named after the late King Abdullah bin Abdulaziz Al Saud of Saudi Arabia, the King Abdullah Economic City (KAEC) is a megaproject developed near Jeddah and Riyadh. 11 The masterplan, north of Jeddah, incorporates the King Abdullah Port, and it is designed on social, economic, and environmental sustainability principles. Just like its counterpart, Masdar, in the UAE, KAEC is developed and operated by Emaar, a real estate development

and management company, which started the project in 2006. The development of this project is complicated, as KAEC was part of the vision of King Abdullah. When he died in 2015, King Salman, who became his successor, and the crown prince, Prince Mohammed, decided to create their own vision and their own master-planned megacities. While KAEC has remained an ongoing project, it has a few thousand inhabitants in 2018 instead of the planned two million, and Prince Mohammed bin Salman decided to build a new megacity, Neom. It is not only Saudi Arabia’s domestic politics and its international political environment that hinder these developments, but seemingly, the scattered resources also endanger their success. However, Saudi Arabia has both the resources and a large population to make these projects viable and popular either among tourists, businessmen, or those who simply look for a place to settle down in these new smart cities.

9 Eleonora Riva Sanseverino [et al.]: Smart Cities: Case Studies. In: Smart Cities Atlas. Western and Eastern Intelligent Communities, edited by Riva Eleonora Sanseverino—Raffaella Riva Sanseverino—Valentina Vaccaro, 47–140. Springer, Cham, 2017. 48. 10 Smart city. Lusail City. < the-project/smart-city/ > Accessed: 3 January 2018. 11 For more info, visit the King Abdullah Economic City’s official website at

ENDNOTES 1 Wael A Samad—Elie Azar: Smart Cities in the Gulf: Current State, Opportunities, and Challenges. Springer, Singapore, 2019. 239. 2 A definition by Hans Schaffers [et al.]: Smart Cities and the Future Internet: Towards Cooperation Frameworks for Open Innovation, cited in Leonidas G Anthopoulos: Understanding Smart Cities: A Tool for Smart Government or an Industrial Trick? Springer, Cham, 2017. 7. 3 IESE Business School, University of Navarra: IESE Cities in Motion Index, 2018. For more info, visit <https://media.iese. edu/research/pdfs/ST-0471-E.pdf > Accessed: 3 January 2019. 4 Samad—Azar, 87–88. 5 Ibid. 6 For more info, visit the Smart Dubai official website at 7 McKinsey Global Institute: Smart Cities: Digital Solutions for a More Liveable Future. McKinsey&Company, 2018. 8 The Government of Abu Dhabi: The Abu Dhabi Economic Vision 2030. < Abu-Dhabi-Economic-Vision-2030.pdf > Accessed: 3 January 2018. SMART CITIES




think.BDPST 2019 Organised by the Antall József Knowledge Centre, the fourth instalment of think.BDPST, a strategic conference, will be held on 4–5 April 2019. In 2019, the conference series, revolving around research, innovation, and future technologies, and regional development, will focus on smart home, smart solutions, and challenges of digitalisation, facilitating cooperation opportunities and initiating dialogue between the governmental, academic, and business sectors. The main patron of the conference is HE Péter Szijjártó, Minister of Foreign Affairs and Trade of Hungary. The primary goal of think.BDPST is to put Hungary and the V4 on the innovation map of Europe. The event is realised in cooperation with the Ministry of Foreign Affairs and Trade of Hungary and with the support of the International Visegrad Fund. Speakers of the two-day conference include HE Péter Szijjártó, Minister of Foreign Affairs and Trade of Hungary, Karol Okoński, Secretary of State of the Ministry of Digital Affairs of Poland, Artur Bobovnický, Director of Department of Innovation and International Relations of the Slovenská Inovačná a Energetická Agentúra of Slovakia, Kimmo Rönkä, Future Living Specialist of the Housing Fair Finland Co-operative, Akira Maeda, Program Officer/Research Supervisor of the Department of R&D for Future Creation of Japan Science and Technology Agency, Matthew Evans, Executive Director of TechUK, Brian Matthews, Head of Transport Innovation of Milton Keynes City Council, Zuzana Nehajová, Head of InnovEYtion Centre of Ernst&Young from Prague, Ebtesam Al-Ketbi, President of the Emirates Policy Centre, Jamie Shea, Former Deputy Assistant Secretary General for Emerging Security Challenges of NATO, Csaba Krasznay, Professor of the Cybersecurity Academy of the National University of Public Service, and HE Zoltán Cséfalvay, Senior Scientist of the Joint Research Centre of the European Commission. 76


Side events of think.BDPST include the Start-up Expo and the Young Leaders’ Forum. This year, seventeen start-ups focusing on smart homes and smart cities will introduce themselves as part of the Start-up Expo during pitchsessions, and visitors will have the opportunity to meet the winners of Europe’s most prestigious start-up competitions. The Young Leaders’ Forum (YLF) welcomes young professionals from the Central European region who are active in the field of innovation, and provides them a platform where new innovative initiatives can be discussed and employed. The main aim of YLF is to facilitate the establishment of multidisciplinary partnerships by connecting young innovators, inventors, entrepreneurs, PhD candidates, and policy experts in public administration, and young professionals working at companies that are investing in innovative projects. During the event, selected participants have the opportunity to exchange best practices, experience and ideas, and improve their soft skills through panel discussions, workshops and leadership seminars.












Well, thank you very much indeed for the opportunity to join this conference today, and I very much welcome it, not least because way back in my youth, I worked for Margaret Thatcher, and I know the particular regard she had for József Antall, and the way that he stood for the values of freedom in a historic European country such as Hungary. So, the fact that the think tank named after him is hosting this event gives me a particular pleasure for being here. And, of course, our theme is innovation in transport, and the importance of innovation in transport was brilliantly brought home to us all by the appalling traffic jams we all face getting here from the airport. So, anything that can promote innovation, so that we can use our existing transport infrastructure better, is something that we must welcome.



For us in the UK, we are actively promoting innovation in transport alongside other sectors. Now, I would like briefly to describe how our innovation system works. Some of the weaknesses—nothing is perfect—that need to be tackled. Some of the immediate challenges we face both with Brexit and its implications for our innovation system, and also the changes in our organisation of our research funding. But let me start therefore with how our innovation system works. We have a network of autonomous universities, often with long histories and a strong commitment to excellence in research. And they have to earn their research funding through competition. Nothing is guaranteed because of status, either for a university as an institution, or for an individual researcher. So, the funding for

universities is re-allocated every six or seven years on the basis of an objective assessment of research performance, and applications for research funding from our research councils are determined on their merit. So, one of the crucial ways in which you keep a research system favouring innovation and novelty is not to reward people for being however distinguished or institutions simply for their history. So, this combination of challenge funding, divided up and competed for between a wide range of universities, I think, has been important in maintaining the quality of our innovation. We have also funded research across a wide range of disciplines. Of course, today we think of the importance of the digital economy, and there are some fantastic innovations there. But life sciences are also important, and are also funded, together, of course, with a range of other disciplines in the social sciences and the humanities. And trying to retain a very wide range of research strengths has been crucial for our innovation agenda. Now, I will come back to that at the end of my talk. And we have tried to promote links between universities and business. I set up a research capital funding programme, which said to universities “you can bid for funding, but you need to come with your bids for funding with commercial partners that will put in substantial amounts of money of their own, so that we can co-fund new research facilities at universities.” And they rose to that challenge. We now fund increasingly our doctorates on that basis, in our centres for doctoral training, where there are often businesses sponsoring them alongside the government and public agencies. So it is a lively research culture, where the crucial doctrine is that we are always on the lookout for the insurgents, and you should not simply protect the incumbents. But it has its weaknesses, which I would like to tackle. First of all, because it is so focused much on the university, we have been relatively weak on promoting research institutes outside universities, and they can be the ones that are the most focused on business need. That is why when I was the minister, I created a network called

IT IS A LIVELY RESEARCH CULTURE, WHERE THE CRUCIAL DOCTRINE IS THAT WE ARE ALWAYS ON THE LOOKOUT FOR THE INSURGENTS, AND YOU SHOULD NOT SIMPLY PROTECT THE INCUMBENTS. “catapults,” which are really based on German Fraunhofer institutions, and aim to promote innovation in R&D in a shared space of public funding and private funding. We also have not succeeded in spreading the opportunities of innovation in R&D and high tech business across the whole country. There are very prosperous areas: the golden triangle of Oxford, Cambridge, London, the networks around other great cities like Manchester, and up in Scotland around Glasgow and Edinburgh. But there are still too many parts of Britain that are left behind that are not participating in this, and we need to do better there. And thirdly, I would say our public procurement has not been imaginative enough in reaching out to new providers with new solutions to the problems that we face. So, that is the backdrop. The immediate issues we face which are very relevant I think here for this audience is first of all, after Brexit, what is that going to mean for our research policies? And the companies, many companies, that are active in more than one country and look for continuing links between Britain and the EU? And I certainly hope we can retain very close links, and indeed the prime minister in a think.BDPST CONFERENCE


recent major speech on policy said that she was looking to a far-reaching science and innovation pact with the European Union to facilitate the exchange of ideas in researches. And we made it clear that we would like to participate in FP9, in Framework Program 9, that is obviously still something that is open to negotiation. But we very much hope that it will remain open to our association, and we recognise that such an association would necessarily involve our making an appropriate financial contribution as part of that. So, we hope that we will be able to continue to contribute to Europe-wide science, research, and innovation programmes, as we have been in the past. And we have indeed gone so far as to present a position paper on how we think FP9 could develop, in the hope that we are able to secure some association with it. We have always argued for the importance of excellence. I know in countries, such as Hungary, excellent people argue quite rightly that excellence needs to be combined with a commitment to spreading excellence so that a wide range of member states have an opportunity to participate in R&D funding. And that is something that we very much understand. 82


We believe in a mission-oriented approach. We think that could be a useful framework for European research funding in the future. There are always complaints from businesses about the administrative burdens of these funding schemes, so we believe in the further rejection in the administrative burdens for participants. And we also think that the FP9 agenda should really take Europeâ&#x20AC;&#x2122;s innovation challenge and the challenge facing some of our industries as its starting point. So we hope that even post-Brexit, we will be actively involved in EU programmes such as that. Meanwhile, back in Britain, we have got our own reorganisation underway, indeed literally this weekend a new structure of research and innovation funding in the UK comes into force. An organisation called UKRI. UK Research and Innovation will become an umbrella body across our different research councils and innovate UK, and I will be one of the members of the board. It will have very substantial funding. It will have a combined budget of over 6 billion pounds a year. It is running at a rate of 3,900 research and business grants issued every year. It will take over responsibilities for research funding going to 150 universities. And the government has

identified some key challenges which it wants UKRI to focus on and to direct funding toward. And those key challenges are an aging society, and the challenge of absorbing AI into the modern economy. The challenge, of course, of clean efficient use of energy. But the fourth challenge, which is most relevant to this conference, is the future of mobility. That is one of the explicit priorities for our research funding in the future. And I would like to end by describing a little bit of how we are, what we are looking to fund as a part of that. Obviously, autonomous vehicles is an incredibly important area. We already have created a safe space in Cullen outside Oxford, where autonomous vehicles and other autonomous systems can practice in a range of different environments. We are also very keen to promote electric vehicles, as we decarbonise transportation. Those are very important initiatives. But beyond that, there is the whole challenge of the smart city. We see the mobility challenge as closely linked to the challenge of urbanisation. Britain was actually the first country in the world to go through more than 50% of its population living in cities. It was only in 2008 that the world as a whole went through that barrier. Now, more than half the worldâ&#x20AC;&#x2122;s population is living in cities, moving around in cities, being able to enjoy the incredible economic and productivity benefits of dynamic clusters, means solving the transportation challenge, and there will be substantial research funding for transportation initiatives that particularly help in the city areas. We are not just looking, however, at promoting the hard physical technologies, or the digital technologies, or other things that governments can do. We are currently passing through parliament, we have just recently been debating in the House of Lords new regulatory frameworks to enable driverless cars to function on British roads. And we understand that one of the best ways that governments can help technology and innovation is providing the regulatory regime which gives innovators the confidence to develop new products and services, rather than preserving old regulatory regimes which

often include assumption about how the technology works that are no longer up to date. So we are focusing very much on getting a regulatory regime that permits and encourages autonomous vehicles. And as part of that of course, one realises that these difficult challenges cannot simply be solved by people working within one discipline. You certainly need the lawyers that can help write the regulations. You need the moral philosophers who can answer devil questions about moral responsibility and agency, if a software programme installed in a car leads it to behave in a certain way that a pedestrian is injured or killed. There is a whole range of different disciplines that we need to draw on. And, as I look at how we would characterise our approach, and why we in Britain want to work with countries such as Hungary and the other countries represented here today, I would say it is a recognition that problems cannot be solved by any one country working on their own. In fact, when we look at our Nobel Prize winners, one of the things that strike us is how many have had some event in their lives that has led them to see the world differently. They have moved from one country to another, moved from one discipline to another, worked with collaborators from a different country, something like that that has broadened their horizons. Now, this is not just a matter of general government policyâ&#x20AC;&#x201D;there are real commercial examples out. People presenting today during this conference. From British companies that we are proudly supporting. Companies that I have been meeting during the afternoon. Companies such as Modalgo, companies such as Navigogo, ZLO, City Swifter, companies that are trying to apply the spirit of British innovation to solve these transport problems, often with a distinctive focus. Not simply on the technology or on the system, but on the individual. And ultimately, this is about making lives better for individuals, giving individuals greater control, greater access to a greater range of services. And, if we take that approach, I think we really will see transport innovation thriving in the future. Thank you very much indeed. think.BDPST CONFERENCE





THE EFFECTS OF TECHNOLOGICAL EVOLUTION ON OUR SOCIETIES In previous centuries, every major technological leap had a huge impact on the world, an impact that lasted for several decades. Nowadays, it is no different: we have moved into a new technological era, the so-called cognitive era, and we cannot even guess yet what its impact will be on the future of our business environment, on our cities, or on our societies in general. Today, we cannot be sure about what skills and competencies could help us in the near future, or what jobs will become obsolete or even replaced by technology in the upcoming years. Only one thing is certain: emerging technologies will reshape every segment of the world, not just the business environment but also cities or even nations. The changes will impact every area:

agriculture, retail, finance, transportation, industry, services, healthcare, and education. The biggest challenge, however, is not the evolution and adaptation of new technologies but the cultural impact of these changes on our society. Humanity’s collective knowledge is growing extremely fast: at the age of the steam engine, it took more than 150 years to double human knowledge—in the near future, it will take only a few years or even days thanks to technological evolution. We need to learn how to use technology to succeed; not just to run our operations, but also because technology will help us tackle future challenges. Today’s societies are also transforming into high-tech societies; humans are becoming digital citizens, and we need to develop digital skills and competencies. In order to do so, we need to

2003 1999 1990 1970 1940 1900 1800 1000 0 3000 BC 10 000 BC This curve shows how much time it took for humanity to double its knowledge 86



100 90 80 70

% urban

60 50 40 30

World More developed regions Africa Asia Latin America and the Caribbean

20 10 0 1950






1980 1985







2020 2025


2035 2040

2045 2050

Percentage of population living in urban areas by region

better understand the relationship between technical and cultural changes, and the causes of those changes. We need to have a clear understanding of the benefits, the promises, and the related risks. Instead of technology being simply a support function, it is now seen as a broad and powerful force driving innovation and influencing strategy in practically every sector. This change has an effect not just on technological functions, but it also requires managerial action involving processes, cultures, and organisational structures. SMART CITIES ARE DIGITAL CITIES The urban world is a network of cities where billions of people live in millions of buildings. By 2050, more than 9 billion people will live on Earth, and 75% of them will be a city (or even a mega-city) resident. This number is equal to the current population of Earth, which is already above 7.5 billion. Currently, the number of people living in cities is above 3.5 billion, which is 50% of the total human population, and this will double in the following 30 years. Apart

from the dramatic population increase and the boost of urbanisation, we also need to deal with problems such as global warming and the shortage of resources. These challenges cannot be solved with the same techniques or approaches we have been applying for the last 200 years. In the past decade, many cities have recognised such challenges and started to use digital technologies to overcome them. Smart cities are instrumenting every part of the city in order to generate data. We now have the ability to measure, sense, and extract the conditions of mostly everything. Sensors can monitor a plethora of parameters such as temperature, motion, humidity, capacity utilisation rate, and lights. Smarter cities have also started to interconnect data sources, and previously stand-alone systems can now communicate and interact with each other in many different ways. The most important improvement of all is that, by using proper analytical tools, smart cities have started gaining insights into the everyday life and pulsation of the city. Based on information and insights, we can predict SOCIAL EFFECTS


problems, and apply mitigation measures even before they occur. On a higher level of maturity, a city can establish intelligent control and coordination systems in order to increase effectiveness and efficiency of everyday operations, so they can quickly and accurately respond to the smallest changes, or even learn the recurring patterns and optimise future operations. Several years of effort and related experience have made it clear that making a city smarter is not as easy as applying the latest technologies to its every segment and every governance levelâ&#x20AC;&#x201D;the challenge is way more difficult than that. Even in a single smart building, we might already have 5-6 different technologies implemented, and still, there is no single solution that could always integrate those separate components. In smart cities, most of the instrumentation is implemented in an isolated 88


way, serving local needs principally. Therefore, information flows are not interconnected, and even if they are, they are used merely for monitoring purposes what enables reactive actions exclusively. Without holistic approaches, it is not possible to introduce proper intelligence into the system in order to increase predictive possibilities. The number of questions is overwhelming. Let us list just the most crucial ones: How can we increase the instrumentation level of a city? What data are necessary? How can we really measure and collect such data? Who is responsible for harmonising the different sources, and how can we interconnect the currently isolated information flows? How can we integrate the different technologies into a holistic intelligence system? Who will be and who shall be the owner of the gained insights? Who shall benefit from it?

Many models exist for assessing the maturity of each of the above-mentioned segments. By following predefined frameworks, we can continuously benchmark the level of implementation compared to other best practices. Every city that has future plans and desires has already embarked on the journey, but there are also others who just want to tick this exercise, and look for some simple and cheap solution to pretend that they are â&#x20AC;&#x153;smart.â&#x20AC;? Cities are now competing with each other in which one of them will be smarter. But which will be the smartest of them all? In this competition, the winner will attract more companies and wealthier citizens. DIGITAL REINVENTION OF OUR CITIES AND NATIONS The digital and physical infrastructures of the planet are converging, but this is not yet enough, we need much more. But what would that be? Cities will not become smarter just by introducing emerging technologies. Smartness is rather a cultural change for the citizens who live there,and for the people and companies that work in the area. In digitally reinvented cities, technology is used symbiotically by all participants in an ecosystem where everyone plays their distinct role. In a well-established ecosystem, we can see at least 4 different types of roles. The first is the so-called asset provider, who is responsible for the basic infrastructure. Examples include the companies providing different types of car, bike, or scooter sharing. They are becoming an integral part of the city by making transportation more flexible and adjustable to the exact needs of the citizens. Their responsibility is to provide and manage the physical assets in the life of the ecosystem. Another role in the ecosystem is the platform provider; these organisations are responsible for ensuring the integration of the different solutions and for acting as catalysators supporting the daily operations of the ecosystem. Unfortunately, most of the examples we can see still operate in an isolated way, and there are many overlaps but also huge gaps among them. One example

is the Connected Citizens Program of Waze, a solution that the city of Debrecen has recently implemented successfully. By observing the daily pulsation and circulation of the city, local authorities have adjusted and are continuously adjusting their operations, according to real life data gained from the displacement of digital citizens who are ready to share their personal information in order to help the ecosystem operate more smoothly and optimally. A smart city will not operate properly if the daily information and insights gained from city operations are not taken through well-established processes. The so-called process providers are responsible for ensuring and managing service level agreements between the different members of the ecosystem, and they are continuously working on further optimising process efficiency and effectiveness in every segment of the city. The fourth role is that of the experience providers. They are the participants who develop citizen-centric solutions and services; they share best practices learned from other smart cities, and adjust the proposed solutions to local needs. Their primary task is to manage citizen engagement and public relationship by creating the best experience for the people. The citizens are also active participants of the ecosystemâ&#x20AC;&#x201D;even a single person can influence the operations of a smart city. Individuals are the primary source of information, and one can even earn extra benefits by actively participating in the operations of a smart city. For example, if a citizen does not have enough money to use a shared car, he or she can earn extra usage time by taking the car for a wash, or filling it up at gas or energy stations. But what is the role of the state or the local municipalities in the smart city ecosystem? The answer is simple: they are like a conductor who instructs the orchestra. Who makes sure that the musicians are playing the score well without forgetting that the melody is played for the audience, the citizens? Their role is not to enforce the direction but only to harmonise the activities and responsibilities among the different participants in the ecosystem. SOCIAL EFFECTS


Agglomerationen 1950 - 2050

The change in the agglomeration of global big citiesâ&#x20AC;&#x201D;urbanization seems an unstoppable process

The global network of big cities 90


Governance is very much needed, as, in most cities, several participants have already started taking initiatives on parallel tracks. The role of the orchestrator is to create a reliable ecosystem and to ensure the perfect conditions for the different players. A conductor helps organise activities or processes, spanning all stakeholders in the ecosystem for delivery of experience, process, platform, or asset. We can define as many different roles as we want, but one thing is sure: participation in the ecosystem is only valuable if the ecosystem fulfils the goals of the participantsâ&#x20AC;&#x201D;including the citizensâ&#x20AC;&#x201D;better than what would have been achievable through operating outside the ecosystem.

Thanks to technological evolution, we now have the possibility to measure every activity within our cities. This can be used for good but also for bad purposes. One thing is for sure: enhancing the user experience of the citizens living in the city should be one of the main priorities. A Digital City should always be liveable, serving the needs of the citizens living in it, while the technology and the intelligence behind it should remain invisible without scaring or blocking its residents.

INVISIBLE CITY INTELLIGENCE Smart cities are not just fancy things anymore. It is our obligation towards the environment and the future of our planet to find synergies and develop smarter cities by establishing flexible, adaptable, and agile ecosystems around them. We need to define new ways of governing the city by engaging every member of it to the maximum. We need to make sure that our citizens feel safe, secure, and comfortable. On the other hand, costs and energy consumption need to be controlled. Although there is a competition between cities of who will become smarter and quicker, in reality, not every city should target the same level of maturity, and they do not need to become equal. Technology is just an enabler and not the driver of this journey. Every city should define their own vision and missionâ&#x20AC;&#x201D;something that, in many cases, is missing. Think for a second: Do you know the vision of the city you are living in? Vision and mission are very clear statements that every member of the ecosystem, including the very last citizen, should be aware of and should accept and follow. This vision and mission need to be formulated in a clear strategy, which is broken down into tangible operative actions unlike what many of us do when we buy a nice new tech gadget and then try to define the vision based on it. SOCIAL EFFECTS



If you want to fundamentally change society, you have to break it.1 (…) Technology is a social issue. Technology is a national security issue. Technology is a consumer rights issue. Everyone has a stake in this, not just engineers. My generation’s future will involve technology in almost every space and part of our lives. … But we should not walk into the future blind, and it is the job of lawmakers to ensure that technology serves citizens and not the other way around. Christopher Wylie, Whistle-blower of Cambridge Analytica2 Whistle-blower Christopher Wylie

Critical systems and networks. Free flow of data. Russia. Iran. North Korea. China. State and non-state actors. Attacks. Spying. Hacking. Disinformation operations. Fake news. Undermining international law and international institutions. Destabilising democracy. Resilience. Cooperation. These are some of the key words in today’s news flood. With just one click, it is possible to hack a referendum, hijack an election, any time and anywhere, and suddenly all what we believe in is declared to be fake. The truth is stolen by a ransomware programme, and trust is evaporated. Welcome to the new world of realities, where the whole election cycle, and also their observers, are fake, as we learnt it from our Ukrainian colleagues. The internet as a public property has given immense possibility to our civilization to develop. Information, data, and messages reach millions. Targeted political messages, tailor-made posts, and behavioural algorithms, 92


executing sophisticated campaign strategies paid by those who do not mind paying for these services, are trying to influence the decision-making process. The internet is efinitely a good business. Elections and electoral campaigns are no exceptions either; and now the two businesses are fully intertwined. Sir Julian King, Commissioner for the Security Union, wrote in The Guardian that attacks on elections and electoral campaigns fall into two main categories: those based on systems and those based on behaviours.3 According to the Commissioner, the first category includes cyberattacks that manipulate the electoral process, or voting technology to change the number of voters or the number of votes. Threats of the second category, however, are much subtler and more harmful and include attempts at manipulating voting behaviour in three forms: hacks and leaks designed to change public opinion by revealing damaging information at a crucial point during a campaign; the use of





1 , 0 7 9,0


1,0 96 ,66 6



political advertisements based on their psychological profile from more than 50 million Facebook profiles without permission. Neither the CEOs of Facebook, nor Cambridge Analytica was condemned for criminal offences. The state has indeed a very critical role to play. As we all want to benefit from the positive attributes of the internet, we must create a safe environment. To access data freely, to use our networks safely, and to have critical systems, which run on the basis of the rule of law, accountability, and transparency, and are not supervised by continuous censorship, we have to do our outmost to protect our digital world. This domain is still hardly regulated. More laws (even with sanctions), accepted code of conducts, united standards, and trusted open platforms


fake news to sway public opinion and influence results; and the misuse of targeted messaging based on psychometrics derived from mined user personality trait data. The most striking case was done by Cambridge Analytica,4 which is a political consulting firm illegally exploiting cybernaut data to enhance political campaigns. Actually, it used data harvested by a survey app called “thisismydigitallife,” developed by Global Science Research (GSR), a company that purported to carry out academic research. This app was used to gather psychographic data from Facebook’s users. According to Christopher Wylie, former Cambridge Analytica contractor turned whistle-blower, personal information was harvested to build a system that could target US voters with personalised


1 2,


,4 562







United States



United Kingdom








Facebook’s estimates on users affected by Cambridge Analytica SOCIAL EFFECTS


A Joint Cyber Analysis Course during at Information Warfare Training Command, US

are needed, so nation states, with the help of private companies, can protect and defend their citizens and their digital ID, when necessary. The number of cyberattacks on our democratic institutions has tripled in the last few years. After the 2016 US presidential elections, another tip of the iceberg was the Dutch referendum on the trade pact with Ukraine in 2017, where a handful of hackers from a special â&#x20AC;&#x153;Ukrainian teamâ&#x20AC;? was able to prevent the EU trade agreement from entering into force.5 Then came the national elections of the Netherlands, France, Germany, and Italy, where there were noticeable but not critically harmful attacks mainly by state-sponsored Russian actors. In a handful of cases, these attempts served the objective of the Russian leadership, who, according to Sico van der Meer, cyberexpert of the Netherlands Institute of International Relations, view the West as an adversary, so they would do anything to make it weaker. One of their tools is to support anti-establishment populists, whose aim is to undermine the European Union, its Eastern Partnership program, its transatlantic ties, and its role as member of the NATO by weaponising the internet. Disinformation and fake news campaigns circulating videos made by troll factories based 94


in Moscow and St Petersburg are one of their favourite means. Among the 29 NATO members, at least eight have established an independent cyber command or service until now to be prepared. The biggest ones are in France (COMCYBER), Germany (CIR), Italy (CIOC), the Netherlands (DCC), Norway (Cyberforsvaret), Spain (EMAD), Turkey, and the US (USCYBERCOM). Belgium, Canada, Denmark, the Netherlands, Norway, the UK, and the US also have cyberattack capabilities in their military intelligence and/or national intelligence organisations, according to Piret Pernik, cyberexpert of Estonian International Centre for Defence and Security, who pointed out that Estonia established its cyber-command this summer.6 These countries consider cybersecurity as a top security priority. However, it is important to underline that these cyber commands are usually there to protect vital infrastructure of the state. Ian West, Chief of Cybersecurity at the NATO Communication and Information Agency, told Reuters that, by 2023, a new NATO military command centre will be fully staffed with around 70 cyber experts to deter computer hackers. As NATO communication and computer networks also face hundreds of significant

hacking attempts every month, mainly from Russia, North Korea, and China that spend millions of euros on sophisticated computer hacking weapons and surveillance software,7 it is really important for the Western alliance to know what is happening in the cyberdomain, and try to have full control of it. Since the October 2018 mid-term US elections, as the US Department of Justice declared, there is an “information warfare” campaign carried out by Russians, it is also well-known (ie. it is not a covert operation) that the US Joint Cyber Command – NSA team has been working to identify and deter foreign influence campaigns.8 American officials have stated that this campaign is part “of a broader effort, which includes purges by social media companies, like Twitter and Facebook, of fake accounts that spread propaganda, to fight Russian intrusion in democratic elections.” According to recent data, these efforts do have a deterring outcome. On the other hand, many could raise the question if a cyber-command, which is part of the military establishment, is really there to fight against fake news. Officials and experts alike agree that the Russian effort to destabilise the American

elections is actually closely tied to Russian cyberattacks in Europe. Elena Alekseevna Khusyaynoava’s case is just one example of how sophisticated the Russians can be when it comes to interfering with elections. The Russian influence operations labelled “Project Lakhta” cost USD 35 million and were coordinated between January 2016 and June 2018. They involved all major social media platforms where, by running fake accounts, Russians could place fake information with the aim to make mischief from US to Europe and from the Balkans to Ukraine. As FBI Special Agent David Holt said “the conspiracy has a strategic goal, which continues to this day, to sow division and discord.”9 In democracies, voting is a constitutional right. When the right to vote is someway influenced, disturbed, disrupted, or when there is any concern that people cannot vote freely, then that democracy loses the people’s trust and confidence. It is very important to raise awareness of the fact that elections and electoral campaigns have seriously been affected by digital technologies and the internet. The whole election cycle, therefore, shall be considered as a critical infrastructure by a democratic state. As David P Fidler points it out,

The diagram shows the workings of Spearphishing, a technique used by Russian hacker groups to interfere in foreign elections SOCIAL EFFECTS


democratic countries should declare that their election systems are considered as a critical infrastructure, and that international (national and local) law and cyber norms should protect them.10 Any cyber interference should be regarded as a violation of the international legal principle of sovereignty and non-intervention with serious consequences, such as financial, economic, trade, diplomatic, or travel sanctions, in case of any foreign involvement and with criminal sanctions against intruders from inside the country. As of today, election cybersecurity is not taken seriously. There are examples, such as in the Netherlands, Estonia, or in Switzerland, where authorities decided to return to a paper ballot system after realising that their electronic technologies are flawed. However, it is important to point out that the whole election cycle can be affected: voter registration, voting and vote-counting machines, data storage, the transmission of the results, the publication of election outcomes, etc. are all digitalised and run on internet-based applications. Moreover, we should keep in mind that campaigns, political advertisements, political parties’ infrastructure, candidates’ and public authorities’ systems, and even the mass media, can be a target if there is a cyberattack. Providing the integrity of the elections has already become a major concern in some countries, as the cyber vulnerability of the election system do undermine confidence in democratic processes and elections. Protecting the sovereignty and integrity of our democracies is the responsibility of the democratic institutions of the nation state. Therefore, preventive measures are necessary to reassure voters that their basic constitutional right is defended. Given the nature of the internet and our digital world, cyber vulnerability cannot be addressed at a national level exclusively; we also need more cooperation and trusted information-sharing behaviour from public institutions as well as private players. This is the reason why the European Commission took the lead in launching several initiatives to give an idea of how elections and electoral campaigns can be protected, especially at a time when Europe is preparing for 96


its own parliamentary elections in May 2019, not to mention the at least seven national parliamentary elections scheduled for the same year. Although it is the responsibility of Member States to run elections freely and fairly, there is a European dimension to this. Therefore, to strengthen the resilience of the Union’s democratic systems and to protect its democratic values, the European Commission published a communication this September on securing free and fair European elections.11 Considering the new challenges Europe is facing, the Commission suggests a 5-pillar action plan to protect free and fair elections. 1. The General Data Protection Regulation (GDPR), in force since 25 May 2018, is a good legal basis to protect personal data. National data protection authorities have to enforce this regulation and address possible breaches. 2. Transparency measures should be taken at two levels: • Offline transparency is guaranteed by the limits on electoral spending (stipulated by the revised Regulation on the statute and funding of European political parties on 3 May 2018), the silence period, and the equal treatment of candidates by the media (according to the proposed Regulation on Privacy and Electronic Communication). • Online transparency is to be guaranteed by the Communication of 26 April 2018 on tackling online disinformation which aims at establishing a Code of Practice on Disinformation. This code essentially contains recommendations for authorities, political parties, and political foundations on how to be more transparent when it comes to advertising. 3. Recommendation on establishing national election cooperation networks; it is recommended that Member States appoint contact points to detect potential risks. 4. All parties should be aware of the vulnerability of networks and information systems; therefore, it is important to keep

these secure. The EU Cybersecurity Agency, ENISA, together with a Cooperation Group, which comprises the national authorities responsible for cyber-security, and the Commission have identified risks affecting the next elections and has issued a Compendium on Cyber Security of Election Technologies, which is a practical guidance. The Group encourages Member States to establish national election networks, or so-called Cybersecurity Competence Centres. 5. Member States should monitor the system and, when there is a breach, the law enforcement authorities should apply appropriate sanctions. The European Commission is ready to take away 5% of the annual budget of a European party when it sees it necessary.

The Guardian. 28 July 2018. <https://www.theguardian. com/commentisfree/2018/jul/28/democracy-threatenedmalicious-technology-eu-fighting-back > Accessed: 1 December 2018. 4 Patrick Greenfield: The Cambridge Analytica files: the story so far. The Guardian. 26 March 2018. <https:// > Accessed: 2 December 2018. 5 Andrew Higgins: Fake News, Fake Ukrainians: How a Group of Russians Tilted a Dutch Vote. The New York Times. 16 February 2018. < > Accessed: 1 December 2018. 6 Piret Pernik: Estonian Cyber Command: What Is It For? Rahvusvaheline Kaitseuuringute Keskus. 26 November 2018. < > Accessed: 1 December 2018. 7 Robin Emmott: NATO cyber command to be fully operational in 2023. Reuters. 16 October 2018. <https://

Last but not least, Member States are encouraged to raise awareness of the risks including all parties. Increasing the transparency of election processes would contribute to keeping the trust of the citizens at a time when campaigns, voter registration and election systems, voting systems, and even election night reporting can be hijacked. In the US, by 2020, more than USD 300 million will be invested in election systems’ upgrades and security.12 What about the European Union? > Accessed: 1 December 2018. 8 Julian E. Barnes: U.S. Begins First Cyberoperation Against Russia Aimed at Protecting Elections. The New York Times. 23 October 2018. < > Accessed: 1 December 2018. 9 Adam Goldman: Justice Dept. Accuses Russians of Interfering in Midterm Elections. The New York Times. 19 October 2018. < > Accessed: 1 December 2018. 10 David P. Fidler: Transforming Election Cybersecurity. Council on Foreign Relations, Digital and Cyberspace Policy program. 17 May 2018. < transforming-election-cybersecurity > Accessed:


2 December 2018. 11 European Commission: Communication from the commission to the european parliament, the council,

1 The Guardian: Cambridge Analytica whistle-blower: ‘We

the european economic and social committee and

spent $1m harvesting millions of Facebook profiles’. YouTube.

the committee of the regions. Securing free and fair

17 March 2018. < > Accessed:

European elections. COM(2018) 637 final, 12 September

1 December 2018.

2018. <

2 Christopher Wylie: Written Statement of the United

HTML/?uri=CELEX:52018DC0637&from=EN > Accessed:

States Senate Committee on the Judiciary. In the matter of

2 December 2018.

Cambridge Analytica and other related issues. US Senate,

12 Willian A. Carter: 2018 Election Security Scorecard.

Committee on the Judiciary. 18 May 2018. <https://www.

Centre for Strategic & International Studies. 29 October

2018. <

Testimony.pdf > Accessed: 1 December 2018.


3 Julian King: Democracy is under threat from the

beyond > Accessed: 2 December 2018.

malicious use of technology. The EU is fighting back. SOCIAL EFFECTS



There is no consensual definition of intelligence. For some, it is the ability to acquire and apply knowledge, and, in biology, it is broadly formulated as an organism’s ability to adapt to its environment. When it comes to details, further criteria are often added, such as self-awareness, abstract reasoning and learning, or planning and creativity. The addition of these elements typically occurs to place a dividing line between us, humans, as intelligent beings, and animals, who are somehow different—even though it is blatantly obvious that they are but differently intelligent. They may be overall less intelligent by certain measures, and, yet, they may be actually more intelligent in specific areas. Migratory animals have superior spatial cognition. Dogs have a fantastic sense of smell. Animals’ innovative use of tools was recently amply demonstrated by a sea lion, captured on a video footage, using an octopus to slap a kayaker in the face.1 In other areas, animals do not lag so far behind as some would imagine. It seems that even pigeons may experience cognitive dissonance.2 Rhesus monkeys showed observational learning based on witnessing the conditioned fear reactions of their fellow cellmates in a famous (albeit somewhat unsatisfying) 1967 experiment.3 Many more random examples could be offered, but, ultimately, the question shall be asked: Why are all of the above-listed manifestations of intelligence required, all at once, for us to call an organism intelligent? This might carry relevance for a magazine issue looking at “smart” technologies and tools of all kinds. If we are ready to deem a phone smart, and to regard algorithmically learning 98


software as artificial intelligence, why would we stop short of referring to all living organisms as intelligent, even as they are intelligent to different degrees and in distinct ways? We often think of artificial intelligence as something to be constructed in the form of hardware and software. However, in fact, synthetic biology is also a field where practitioners are by rule involved in creating partly or fully artificial, intelligent entities. Call it another way of reaching technological singularity (or artificial superintelligence) if you wish, especially keeping in mind that organic and inorganic intelligence can be combined. Having considered this, the issue becomes not whether biological can be smart, but how synthetic biology masters the kind of smart that is biological. As Emily Leproust, CEO of the firm Twist Biotechnical, puts it: “The last century was about computers, and now we are entering an era of biology.”4 For the interest of historians: the choice of any milestone development to mark the beginning of this era of synthetic biology is bound to be arbitrary by nature, but a useful reference point may be 2004. This is when MIT’s “Synthetic Biology 1.0” conference, the first annual worldwide convention of synthetic biologists, was held in Cambridge, Massachusetts. Otherwise, people have sought to manipulate biology for a very long time: actually, since the beginning of animal breeding and plant cultivation, to be precise. Humanity worked to perfect plant and animal species for its needs, through selection, generation by generation, and through cross-breeding. This may have been the beginning of the real Anthropocene,



Transgenic mice expressing green fluorescent protein, which glows green under blue light

transforming much of the biomass that surrounds us, globally. Animals have since been cloned, from mice (in 1986) to macaques (2017). The history of animals and plants modified genetically in laboratories begins in 1974 and 1983, respectively. Genome editing has become much easier, with the availability of technologies such as CRISPR/Cas9. Already before the millennium, viral vectors (retroviruses) were used to insert functional genes into the DNA of children suffering from a fatal genetic disorder called X-linked SCID, successfully correcting the disease phenotype in a number of cases.5 Jellyfish and coral genes have been combined into other organisms’ DNA through recombinant DNA technology (rDNA), from mice to chickens, rabbits, and pigs to add the trait of bioluminescence (glowing in the dark) to individuals of these species. CRISPR/Cas9 has been used for genome editing since 2015. Researchers using the latter technology on animal subjects can learn more about the effects of changes to the genetic code of organisms, allowing them to model disease emergence connected to its specific genetic sources, and eventually to reverse the process by targeting human pluripotent stem cells—possibly embryonic stem cells as well as pluripotent stem cell cultures induced in a lab—to grow a specific organ that is free of disease, for example. CRISPR/Cas9 has even been used to edit out viruses integrated into human cell DNA.6 100


There is a practically endless number of possible uses of genome editing. For example, it offers researchers a more convenient way to study bioluminescent chicken embryos (which are more trouble-free to study than mammal/human embryos in the first place) as a result. However, bioluminescent plants and animals may also be bred for a host of other reasons such as to make a point in the form of art, as Eduardo Kac tried with the bunny Alba, a green-fluorescent rabbit glowing under blue light, created for him in a French laboratory back in 2000.7 Such creatures may also be bred for the pleasure of a pet owner with quirky preferences. And it is not just the DNA that can be synthesised but other complex molecules too, including proteins. Moreover, even the cell-free synthesis of unnatural amino acids is possible.8 We are now at a point where the creation of unnatural molecules, cells, and even organisms, as well as the re-creation of extinct species and the synthesising of full genomes based on computer data is happening. Take the example of Mycoplasma laboratorium, a laboratoryengineered bacterium species, derived in 2007 from the natural Mycoplasma genitalium. During this experiment, the original bacterial DNA was simplified considerably, and inserted into another bacterium species’ cell whose DNA had before been removed. In the future, B2D2B converters; that is biological-to-digital-tobiological converters, may make it possible to quickly upload and download, as well as to print out organic molecules between two connected nodes in cyberspace.9 Synthetic biology opens up fantastic possibilities for humanity. In fact, the question may be not how much we may need the achievements of this field, but how we could even hope to survive without these in the future. For instance, processes of globalisation and climate change help lethal disease-spreading mosquito species, such as Aedes aegypti, make their home in an increasing area on all continents, bringing malaria, Dengue fever, the West Nile virus, and other pathogens closer to everyone—especially with human mobility in mind. Areas on Europe’s peripheries, such

A photobioreactor to fuel biofuel industry

as Madeira or the Caucasus, have been gradually colonised by Aedes aegypti, while in the Netherlands, these mosquitoes have recently also been imported because of human activities.10 Or let us take another, even more important example of the kind of challenges faced today; a growing human population on planet Earth may only be sustained thanks to the continuation of the agricultural revolution, partly through genome-editing, to increase crop yields, as well as plants’ resistance against pests and pathogens. The world economy’s fuel needscan also be supplied through genetically modified algae. All of this carries major risks. Through the introduction of genetically-modified organisms, horizontal genetic drift may occur, and armed with new genes captured from modified organisms (genes that migrate from species to species), new and lethal pathogens may appear. Alternatively, existing pathogens may opportunistically colonise hitherto unavailable ecological space from which our intervention

excludes their up-till-now dominant rivals. Emergent and unexpected new qualities of crops, as well as dairy and meat products may include toxicity or become an allergen for humans consuming them. In the meantime, precious biodiversity is lost, which may increase humanity’s vulnerability, along with its dependence on the new plant and animal variants, should new pathogens successfully attack these.11 Further problems arise from the complex social, economic, and political environment in which synthetic biology’s achievements are introduced. The weaponisation of biology. Bioterrorists may seek to synthesise viruses and other pathogens based on genomes for which they are able to obtain exact genetic codes, perhaps from Darknet sites that share them for just this purpose, or actors that look to commercialise this information, with their services paid in cryptocurrencies. That bioweapons, as a lead to uncontrollable or difficult-to-control collateral damage would not necessarily hold bioterrorists back: non-state SOCIAL EFFECTS


actors, such as the Rajneesh sect in the US or the Aum Shinrikyo sect in Japan, in the past, carried out attacks using various pathogens. In fact, future advances may make the targeting of bioweapons much more precise, for instance with genetically-targeted weapons developed against specific ethnicities. Genetic ancestry testing is now a widely-available service that identifies with great accuracy the ethnic backgrounds of one’s pool of ancestors. The so-called single nucleotide polymorphisms (SNPs); that is genome variations specific to people of a common background, may make it possible to target people with a certain dominant ethnicity on the basis of a much larger dataset now, with differences increasingly clearly mapped out. Once targeting is possible, states will have a radically changed set of incentives for the development and use of bioweapons, too. Past biological weapons programmes (before the Biological Weapons Convention of 1972) often focused on limiting lethality, aspiring only to make available the means of rendering an enemy army unable to fight, and not necessarily to kill its soldiers, in part because of concerns over possible blowback. Better-targeted weapons may neutralise such considerations, even as blowback will always remain a possibility when a pathogen is released into the wild. Resistant pathogens. Growing Antimicrobial Resistance (AMR) to drugs and treatments renders making new classes of drugs available an existential imperative for humanity, but the manipulation of the genome of various organisations may itself contribute to the emergence of multiresistant bacteria and viruses that are able to get around interferon treatment. Unsafe health data. A lot of health data will be generated by future research and in the process of the medical use of its results. The trend is already pointing towards increasing digitalisation in this field, which—according to current hopes—should make relevant medical data accessible and possible to share for both patients and doctors in a timely manner, for example, across the EU Single Market. Of course, there will be efforts to preserve security and privacy. But with the characteristics of 102


cyberspace in mind—where offense dominance means that defenders not only cannot have a perfect defence against all conceivable attacks but will usually find out about attacks only after the integrity of their data has already been compromised—the most sensible assumption is that a lot of health data being accessible, even when they are stored behind firewalls of various kinds, means a lot of health data being hacked, ultimately. “Hacked” can mean stolen as well as erased, rendered inaccessible, or manipulated. Ransomware developers have already sought with success to exploit the vulnerabilities of health data.12 In a future where every individual’s genome may be mapped, and treatments may be personalised or tailor-made with a view to an individual’s specific traits, data manipulation (especially when it is not discovered) could pose a new type of threat. A rigid application of distorted market mechanisms for the fruits of biotechnology. Patents and intellectual property rights will continue to increase the rigidity with which biotechnological innovations can be marketed and used in a world that will be growingly dependent on these. The documentary, titled The Patent Wars (2014), spectacularly captured this trend, and it is noteworthy that there is, even at the time of writing this, a protracted legal battle over patent rights to the aforementioned CRISPR/Cas9 technology of genetic engineering. But patent wars, in fact, extend far beyond technological innovations, and there is a fight for patent rights to the genetic codes of modified organisms, including, prospectively, that of humans. A 2013 decision by the US Supreme Court ruled that natural DNA cannot be patented, and this is absolutely welcome in that it clears the road to the development of genomic medicine. At the same time, however, it boosts the race for achieving breakthroughs in developing synthetic DNA (cDNA).13 This brings us to a further key consideration: the role of inequalities. Inequalities. Most of the world’s economic activity as such is embedded today in an only partially free market economy. Transnational

oligopolies emerge, market failures occur, and even as this unfolds, there is little in the way of limitations to the degree to which the provision of health benefits can be commercialised and, as a consequence, withheld, based on the absence of purchasing power. The biotechnological revolution may, thus, create a world of hitherto unimaginable inequalities where human being to human being may ultimately compare like God to an ape. It is the idea of just this kind of world that has long been probed by science fiction. With the realms of the possible and the plausible expanding by the moment, it is ultimately in this literature and its scenarios that one may come across useful hints as to what may—or perhaps should—be expected. The answer regarding the question in the title is not entirely reassuring. Humanity is certainly capable of coming up with intelligent innovations. It is fairness that has traditionally been the greater challenge in terms of how society organises itself upon the application of new technologies.

6 For a basic introduction on the subject from one of the pioneer researchers see Jennifer Doudna: How CRISPR lets us edit our DNA. TED Talks. London, September 2015. < edit_our_dna_but_let_s_do_it_wisely > Accessed: 10 November 2018. 7 Transgenic bunny by Eduardo Kac. Genome News Network. 29 March 2002. <http://www.genomenewsnetwork. org/articles/03_02/bunny_art.shtml > Accessed: 10 November 2018. 8 Yuan Lu: Cell-free synthetic biology: Engineering in an open world. Synthetic and Systems Biotechnology. 2017/ March. 23–27. 9 Crow. 10 See basic information on Aedes aegypti from the European Centre for Disease Prevention and Control at mosquito-factsheets/aedes-aegypti. 11 For a good conceptualisation of types of risks see Joel P. Hewett [et al.]: Human Health and Environmental Risks Posed by Synthetic Biology R&D for Energy Applications: A Literature Analysis. Applied Biosafety. 2016/October. 177–184. 12 As an example, see: US hospital pays $55,000 to hackers after ransomware attack. ZD Net. 17 January 2018. <


to-ransomware-operators/ > Accessed: 10 November 2018. 13 For more information on this see the US National Library of Medicine at

1 Seal slaps kayaker in the face with an octopus. The


Guardian. 27 September 2018. <https://www.theguardian. com/global/video/2018/sep/27/seal-slaps-kayaker-inthe-face-with-an-octopus-video > Accessed: 10 November 2018. 2 Thomas Zentall: Justification of Effort by Humans and Pigeons. Current Directions in Psychological Science. 2010/ October. 296–300. 3 Gordon R. Stephenson: Cultural Acquisition of a Specific Learned Response Among Rhesus Monkeys. In: Progress in Primatology, edited by Dietrich Starck—R. Schneider—HansJürg Kuhn, 279–288. Gustav Fischer Verlag, Stuttgart, 1967. 4 Quoted in Diana Crow: 6 Amazing Things to Watch in Synthetic Biology. 12 October 2017. <https:// > Accessed: 10 November 2018. 5 Marina Cavazzana-Calvo [et al.]: Gene Therapy of Human Severe Combined Immunodeficiency (SCID)-X1 Disease. Science. 2000/April. 669–672. SOCIAL EFFECTS


THE #positiveeffects OF SOCIAL MEDIA Péter Selján

Defining social media is not an easy task, since it is a popular term used by the general public and not a scientific label. Besides, every discipline can see things differently, and apply differing definitions. However, one of the main difficulties of studying the internet and the impact of social media is that we cannot generalise across different groups. When we intend to conduct tests about social media and friendship in one population, we cannot assume that friendship means the same everywhere. This also applies when we would like to evaluate social media in general from a specific perspective. For educational purposes, however, we can look for evidence to shed light on what effects social media has on our lives. Prior to Facebook and other social media platforms, there were only the public broadcast media and private communication. Due to the development of the internet, this polarisation between public and private media changed significantly. Social media platforms gave us new ways of communication and interaction that we had not had previously, and they are constantly changing in functionality, developing, and introducing new features year by year. Many studies focuse on specific platforms, partly because we tend to forget that every kind of content can migrate between different platforms. Some argue that the platform is surprisingly irrelevant to finding explanations for why and how people use social media. As the authors of the book How the World Changed Social Media note it: “it is the content rather than the platform that is most significant when it comes to why social media matters.” In this regard, maybe the most important thing is that social media content can transform and reshape relationships and issues locally. During the last decade, we witnessed how social media became a coordinating tool for political 104


movements (elections, civil uprisings), and that the real potential of social media lies in the support of civil society. New technologies are often accompanied by doubts and concerns. These responses to technological development have been common throughout history. Some argue that these technologies bring about no change whatsoever to our essential human nature, and whatever we do with new technologies must be something that we have always had the potential to do. Whether sending stickers or selfies through social media, for example, is good or bad, it has just become part of what people can do. By now, the online world has become just as real as the offline world; thus, it makes no sense to see it as separate. We have to accept that social media has become an integral part of our life, whether we like it or not. We just need time to learn to use it to our advantage.

THE #negativeeffects OF SOCIAL MEDIA Annamária Tari

Researchers have been looking at the negative effects of social media within different age groups, and have found that the two that face the greatest risk are the youngest: Generation Z and the Alphas. Social media use interferes with their personal development, and no one can tell what consequences it will have that, from a very early age, (sometimes) the majority of their waking hours are taken up by constant comparing, rivalry, and seeking new content online. They do not appear lonely, even though they often are, and they do not seem mistrustful, even though they are just beginning to learn how to protect themselves from the attacks that they receive instead of likes in their social relations. This is no longer a carefree childhood but a part of a person’s life when they would need adult skills and self-power to avoid having a series of traumas that define what used to be one’s best years, because, in their early years of socialisation, what they receive in the online space is not acceptance but unpredictably changing emotional reactions. UNCONSCIOUS EMOTIONS IN THE ONLINE SPACE During the development of one’s personality, as a result of unconscious emotional development, an idealised image of the self is created, which can provide a healthy and ideal inner security, self-awareness, and calm confidence. However, when the online space becomes a primary scene of identification, not only it does not provide a suitably unmarred and gradual opportunity for development, but also maintains an excessive idealisation. The constant use of social media— as we now know—relaxes self-control, and results in a considerably more impulsive and unchecked emotional functioning. What may be even more important is that the constant demand for feedback provides a certain kind of “external”

self-worth, since a constant stream of emotional support is a positive thing (even though one cannot be certain that it is genuine). The online space allows for the creation of a narcissistic bubble which provides a steady dose of this emotional infusion, thereby enabling one to ignore reality. Similarly unhelpful in one’s personal development is another characteristic of online activity, emotional incontinence, which is a process where immediate sharing appears to enable a constant permeability. Thus, what happens is that technological development continues to support an emotional process even into adulthood which, as a step toward emotional maturity, used to be replaced—during the development of one’s personality—by an increase in response time and the development of the skill of holding. Constant sharing, the immediate broadcasting of moments experienced, leads to a noticeable decrease in the holding skill, which is considered to be an important starting point of interpersonal skills, emotional resolution strategies, and confronting strategies. Social media already provides hyperconnectivity, immediate emotional satisfaction, and readiness at a point in a person’s life when emotions should, in fact, take shape in slow motion. We now know that the addiction to various websites is caused by the dopamine kick that keeps up the desire to connect. Thus, the greatest risk is that the emotional maturity associated with a certain biological age does not allow one to fully internalise the experiences available via social media, which, in turn, interfere with one’s intrapsychic development.




For thousands of years, innovation had no role in the evolution of languages. From prehistoric times, many thousands of languages flourished in groups from small companies of hunters and gatherers to larger “societies”—and, meanwhile, a huge number of languages evolved, and many of them vanished too. Then, around 3000 BC, Sumerians wrote down the first symbols on clay tablets and started written history. With the advantages of a written language, communication reached a new level, and, this way, greater civilizations could emerge from the groups of hunters and gatherers. Thus, the development of these civilizations and eventually languages, accelerated once and for all. The next big step and a whole new form of communication started in 1792 in France with Claude Chappe’s invention, the telegraph, which allowed, for the first time in history, or communication to possible from a great distance. The system conveyed encoded information via visual signals, using a chain network of towers. A few years later in 1809, Samuel Soemmering invented the electrical telegraph, which led to even faster information flow. These machines changed everything, and, alongside the steam engine, they were the key innovations of the industrial age. Despite its success, the telegraph had a number of disadvantages as well. It relied on the so-called Morse code, and, therefore, it was limited to sending and receiving one message at a time. Alexander Graham Bell reached a breakthrough in 1876 by inventing the telephone, the first machine that could transmit voice electrically, making instant communication possible from far distances. This new form of communication had an impact on language patterns and introduced new words, and, as a corollary, led to a great decline in the art of writing. 106


Living languages always evolve, sometimes slowly, sometimes quickly. However, in the age of the internet, interconnected computers started the Third Industrial Revolution, which eventually had and still has an enormous impact on the written and spoken language. Although every form of communication became possible in the digital world—from social media to blogs, videos, emails, calls, video chats, etc.—it does not mean that languages are equally present in the online space. According to researchers, English accounts for half of the websites globally, and, regarding spoken languages, just a handful of them dominates the world. Thus, as new generations start learning these major languages, the smaller ones increasingly vanish—and growing globalisation is only to further speed up this process. Although there are approximately 7,000 living languages today, a significant part of them faces the risk of disappearing very quickly. Beyond the natural selection of languages, the new forms of communications eventually will change the usual evolution of languages. Fast communication requires solid sentences such as the 60-character-long tweets and snapshots, and, with a growing number of instant messages, grammar has become less important. Furthermore, the endless opportunities of expressions—through emojis, gifs, etc.—also have a negative impact on careful wording. So, the questions remains: Is the Shakespearean language the past? And, if so, how will this process affect languages in the long run?


Faster communication has often been suggested to be a panacea to all problems of misunderstanding and ignorance. According to this view, a natural evolution of languages, propped up by mass media, contributes to the emergence of a global lingua franca to be used all around the globe. It is said to be a good thing that might reduce the number of conflicts of cultural differences, create a common culture, and further global governance. True, languages are not set forms of communication, as they are under the constant influence of their own native speakers. Some linguists argue that there are no such things as a poorer variety of a language; that is only different. In this vein, some radical linguists label French-based Polynesian creole languages as français avancé—a more developed French. Cultivators of languages, prescriptive linguistics, on the other hand, are often deemed unnecessary, or even harmful, as they are trying to intervene in natural processes. This general outlook is a little one-sided: it admits that contemporary influences from native speakers have been constantly fermenting language varieties since time immemorial but fails to accept that other forces were also in play: conservative forces, archaic substrates, purification movements. The literary authority of the holy Quran kept Arabic dialects in the confines of the same language, cyclical political centralisations in China helped maintain a script that connects all Sinitic languages. Historical evidence shows it has never been completely up to language use to shape a language. We may identify three major traits in present-day tendencies: 1) As the global prestige language has become English, some regional tongues decline; 2) new means of communication conditions people to think in shorter terms with simpler grammar; 3) the use of sophisticated

language increasingly recedes to the domain of art. All of those changes may well be deemed as worthy because efficient: easier and faster communication, lesser lexicalities to learn, the emergence of “democratic communication.” Nevertheless, language is not only a certain code with which we communicate. It is also the carrier of mindsets, attitudes, a certain way of thinking and creating—in short, a carrier of culture. With less culture, it is more difficult to talk about the most important things in life. Literary and visual arts have, for centuries, been struggling to express things that are not easy to circumscribe with quantities or in exact terms. With simpler languages and faster communication, a global babel may only grow far higher. Even if we set aside the problem of how to explain complex ideas, feelings, and subtleties, we still face some tangible issues. It is no accident that those who really like the idea of simplifying languages are often autocratic leaders. This, too, is a very strong proof against the outlook that the convergence and simplification of languages is a good thing overall. A lesson to draw from this debate is not to embrace changes without criticism even if they seem all too beneficial. There are always two forces at play, and the drive for change should always be balanced with a commitment to conservation. Innovation, anyway, is not only about making things more comfortable or newer—it is about finding a way to make things better.






The free movement of goods, persons, services, and capital is undoubtedly the biggest advantage for the citizens of the European Union. However, when it comes to the digital sphere, barriers are still present among the 28 member states and other nations on our continent. As there is a potential market of 500 million people, the European Commission aims to remove the barriers to integrate the states in the cyberspace as well. But the Commission is treading on thin ice with this ambitious project, as a compromise has to be reached between the different stakeholders, member states, and the European Parliament. The digitalisation of the European public services has been an ongoing process, and such innovative solutions are being supported through the Digital Single Market strategy. What is the main potential of the strategy, and how far have the member states got with their e-transformation process? Which countries are the smart frontrunners in the EU? This article will review the development of the European digital

The three pillars of the 2015 EU DSM initiatives 110


revolution by giving an overview of the Digital Single Market strategy and the development of e-governance. THE DIGITAL SINGLE MARKET STRATEGY: A SHORT BACKGROUND The Digital Single Market strategy (DSM) was launched in 2015 through which the European Union (EU) aimed to follow the objectives of the Lisbon Strategy. A major aim of DSM is to create unrestricted access to digital goods and services, and contribute to a competitive and knowledgebased economy in Europe. The strategy is based on three pillars: (1) ensuring better access to digital goods and services; (2) creating an environment for digital networks and innovations; (3) reaching the potential of the digital economy.1 A completed Digital Single Market would be one of the most tangible results of the European integration project. Europeans across the whole EU would be connected, and Europe might finally become an important digital power on the globe.

The Roadmap for the EUâ&#x20AC;&#x2122;s 2015 initiatives

For this reason, the DSM strategy is a top priority for the Juncker Commission. According to the EU statistics, DSM could contribute with EUR 415 billion to the EU economy. Since the project was launched, 35 legislative proposals have been delivered by the European Commission. In order to implement these ideas successfully, an agreement between the European Parliament and the European Council is needed on the proposals. In May 2017, the Commission highlighted three main areas where action is required. The first of them is the development of the European Data Economy, the second is tackling cybersecurity threats that the EU is facing, and the last one is the promotion of a fair internet ecosystem.2 As mentioned earlier, DSM would contribute to the European economy with more than EUR 415 billion per year, and according to estimates, it would create around 1.3 million new jobs. In addition, the strategy opened space for large

investments. As an example, in the first three quarters of 2016, EUR 10.1 billion was invested into European tech companies. If such trends continue, the European data economy will have a 4% share in the EUâ&#x20AC;&#x2122;s GDP by 2020.3 When it comes to the digitalisation of the society and economy, EU member states are amongst the best global performers in terms of connectivity, digital skills, use of internet, and e-public services.4 In order to make DSM complete, the EU institutions, and the member states as well, have to take actions. Besides boosting the e-commerce in the EU and improving the European cybersecurity, there is also a need for investing in the relevant fields of digital infrastructures. WHAT HAS BEEN ACHIEVED SO FAR? Since May 2015, EU citizens have been able to experience significant and substantial changes. Small businesses can now make easier sales in SMART NATIONS


The Digital Agenda for the Western Balkans

their cross-border commerce, local authorities are able to offer “free WiFi4EU connections” to their communities, and there are clear limits on the use of personal data published online. The transition to e-procurement and e-signatures will allow governments to save around EUR 5 billion per year in the framework of the e-government action plan. Beyond any doubt, the abolition of roaming charges (on 15 Jun 2017) was the most visible achievement for the Europeans. Moreover, as of 2018, cross-border portability is provided for online films and sport broadcasts, music and e-book subscriptions.5 Europeans can now enjoy services such as Spotify and Netflix, in all EU member states. The Network Information Security Directive (NIS Directive) is the first EU-wide legislation on cybersecurity.6 Its expected benefits are linked to economic growth and the creation of new jobs—the changing economic environment will certainly require the creation of new kinds of jobs. Increasing investment within Europe is also a huge potential of DSM. Besides the obvious economic and job market advantages of the strategy, DSM could potentially be a breakthrough for Europe. Firstly, because the EU is lagging behind Asia and the United States when it comes to technological development. Secondly, because Europe is currently divided on many political issues—so it is time to get the skates on, and develop a more coherent and unified European economy. If the EU wants to deal with external threats in the cyberspace, the single market has to be extended in the digital sphere as well. 112


TACKLING IMPLEMENTATION RELATED CHALLENGES: THE ROLE OF THE EU INSTITUTIONS AND THE MEMBER STATES According to a Commission-released brief, the European Commission made 35 legislative and policy proposals related to the Digital Single Market. Commission Vice-President Andrus Ansip, the Commissioner for Digital Single Market, put pressure not only on the European Parliament but also on the member states by saying that they have to take actions in order to adopt the proposals made by the Commission as soon as possible.7 Commissioner Ansip’s view was also echoed by the Estonian, Bulgarian, and Austrian presidencies. The eighteen-month programme of the Council prepared initiatives and actions for the Digital Single Market. The presidencies aimed to remove the remaining barriers, facilitate connectivity and cross-border e-commerce, and move towards smart economy by enhancing the free flow of data and advancing digital public services by implementing the principles of the EU e-Government Action Plan 2016–2020. As a part of this plan, electronic identification will be facilitated on the internal market.8 CONNECTING EU CANDIDATE COUNTRIES WITH MEMBER STATES The principles behind the DSM strategy might also be a good accelerator for the EU when it comes to value transfer to non-EU countries. Removing digital barriers could also contribute to a stronger regional and cross-regional connectivity in Europe. Not only member states but also other European countries performi well concerning the digital reforms. For instance, besides the EU28, Norway, Switzerland, or Iceland are also frontrunners in the European digital revolution. Transition to digital economy is not only important for the member states, but it is also a priority for the European Union when it comes to supporting the EU accession process of the Western Balkan countries.9 In order to assist the modernisation of public administrations, the strengthening of cybersecurity, and the increase of the connectivity between the EU and the enlargement countries, Mariya Gabriel,

The EU’s eGovernment Action Plan 2016–2020

Commissioner for Digital Economy and Society, announced on 25 June 2018 that a Digital Agenda for The Western Balkans is to be launched. Investing in digital economy allows a higher degree of connectivity between the EU member states and the region. Moreover, improving online security is a common objective for both sides. For that reason, the Digital Agenda will allow the participants to increase cybersecurity in Europe. MODERNISATION OF THE EUROPEAN PUBLIC ADMINISTRATION: CROSS-BORDER ACCESSIBILITY The digitalisation of public services and the eGovernment make governments more efficient and transparent. For instance, eGovernance means not only digitalisation and modernisation but also a change of attitudes. DSM launched a new eGovernment Action Plan for 2016–2020 to modernise the public administration systems of the member states. The vision behind the Action Plan is to channel technological and digital opportunities in the public administration environment to facilitate the relations of the citizens and the public institutions. The European Commission’s strategy would like to catalyse the

transformation of the administrative systems. The concept framework of the Action Plan is to realise these goals by following different principles to increase digital services, transparency, and facilitate mobility. It can be seen then that these principles are in compliance with the four EU freedoms; moreover they also aim to strengthen security and trust. In the future, banking, finance, commerce, and other economic activities in Europe will be shaped and formed by these innovations. Cross-border and cross-sector interactions will be facilitated by electronic identification.10 THE FRONTRUNNERS But how different countries are progressing in their digital economic development? Thanks to different types of measures, the European Commission is able to assess the progress made by member states in their modernisation of public services. No doubt, the best performers are the Scandinavian countries (Denmark, Sweden, and Finland are in the top3), the Benelux states, and the United Kingdom. In the Eastern part of the EU, Estonia is the leader, by far. These countries are able to provide high level of eGovernment services not only for their SMART NATIONS


80 1Connectivity

2 Human Capital

3 Use of Internet Services

4 Integration of Digital Technology

5 Digital Public Services

70 60 50 40 30 20 10 0 DK SE FI







Digital Economy and Society Index (DESI) 2018 ranking

but for European citizens as well. In practice, this means that governments are bringing more and more public information and services online. Cross-border mobility generated more interconnections between different start-ups. The advantages of the digitalisation could be observed not only on a state level but also locally.11 The Digital Economy and Society Index (DESI) ranks countries by five criteria: connectivity, human capital, use of internet services, integration of digital technology, and digital public services. Concerning digital public services, Estonia is one of the countries that are possessing the highest score of this category. For instance, the proportion of eGovernment users reaches 96%, more than twice as much as the EU average. But what does it mean in practice? The online service completion and digital services are available for the business sector. The launch of X-road project (digital information infrastructure) highly contributes to the Estonian success story.12 In the Central European region, Austria seems to be the best performer. Just like Estonia, Austria put great emphasis on the digitalisation of public services. Thus 98% of the public services are available online. In addition, when it comes to mobile devices, Austria is among the best performers.13 As for Hungary, our country is lagging behind the European average in this 114


field. In 2014, Hungary started the adoption of the National Infocommunication Strategy, but Digital Public Services are still part of the most challenging issues. The share of the eGovernment users is 45%, which is under the EU average.14 THE CHALLENGES AHEAD The DSM strategy initiated by the European Commission aims to transform the European Union to a digital superpower. European digital revolution has started, and this will certainly have a strong impact on the life of European citizens. The EU has successfully started to remove the unnecessary barriers, and the digitalisation of public administration services will turn the European member states into â&#x20AC;&#x153;smart countries.â&#x20AC;? The digital transformation of Europe will also contribute to the development of many other related fields, such as cybersecurity, healthcare, job creation, and connecting small and medium-sized enterprises. The main challenges for the DSM strategy are currently related to legal and technical issues, but there are some political challenges, too. The lawfulness of data transfer, as well as personal data connections, professional and business secrecy are the main concerns regarding the legal approach. A higher degree of influence is needed from the EU in order to regulate data

sharing between member states. Regarding the technical challenges, cross-border data sharing represents another barrier besides legal issues. As a matter of fact, different information and communication technologies (ICT) are not harmonised between the member states. For this reason, differences in data quality, models, and systems are culminating on the top-European level, preventing the compatibility of the national levels. For this reason, the European Union will have to support and initiate a major technological, organisational, and legal harmonisation on the European level.15

(1 July – 31 December 2018). European Council. 2 June 2017. < out?&typ=ENTRY&i=LD&DOC_ID=ST-9934-2017-INIT > Accessed: 30 November 2018. 9 Albania, Bosnia & Herzegovina, Kosovo, Montenegro, Macedonia, and Serbia. 10 European Commission: Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions. EU eGovernment Action Plan 2016–2020. European Commission. 19 April 2016. 2–5. < communication-eu-egovernment-action-plan-2016-2020accelerating-digital-transformation > Accessed: 30 November 2018. 11 eGovernment Benchmark 2018. European Commission.


22 November 2018. < > Accessed:

1 Fredrik Erixon—Philipp Lamprecht: The Next Steps for the

30 November 2018.

Digital Single Market: From Where do We Start? European

12 Digital Economy and Society Index (DESI) 2018. Country

Centre for International Political Economy, Policy Brief. No.

Report Estonia. European Commission. <http://ec.europa.



2 Digital Single Market: Commission calls for swift adoption


of key proposals and maps out challenges ahead. Press

B43FFF58-F3FD-633C-F5833D8295BB9EB0_52221.pdf >

release. European Commission. 10 May 2017. <https://ec.

Accessed: 30 November 2018.

13 Digital Economy and Society Index (DESI) 2018. Country


Report Estonia. European Commission. <http://ec.europa.

maps-out-challenges-0 > Accessed: 30 November 2017.


3 Digital Single Market. Completing the Digital Single Market


State of Play. European Commission. 19 October 2017.

B43F6A5A-DBC1-9317-32CB0433D96B5FA6_52212.pdf >


Accessed: 30 November 2018.

completing-digital-single-market-state-play > Accessed:

14 Digital Economy and Society Index (DESI) 2018. Country

30 November 2017.

Report Estonia. European Commission. <http://ec.europa.

4 I-DESI 2018: How digital is Europe compared to other


major world economies? European Commission. 26 October


2018. <

B4406CA5-96ED-7301-4ADE21CA97CA133A_52227.pdf >

how-digital-europe-compared-other-major-world-economies >

Accessed: 30 November 2018.

Accessed: 30 November 2017.

15 Tarmo Kalvet—Maarja Toots—Robert Krimmer:

5 European Commission (19 October 2017).

Contributing to a Digital Single Market for Europe: Barriers

6 The Directive on security of network and information

and Drivers of an EU-wide Once-Only Principle. Proceedings

systems (NIS Directive). European Commission. Last update:

of the 19th Annual International Conference on Digital

24 August 2018. <

Government Research: Governance in the Data Age. DOI:

en/network-and-information-security-nis-directive >


Accessed: 30 November 2018. 7 European Commission (10 May 2017). 8 Council of the European Union: Taking forward the Strategic Agenda 18-month Programme of the Council SMART NATIONS



BACKGROUND TO THE STRATEGY Technology has long been a source of immense strength for the UK, and an area that has defied political and economic headwinds over the past decade better than any other major UK industry. In the years following the global Financial Crisis in 2008, the technology sector has consistently grown at a faster rate than the wider economy, with growth in 2017–2018 outstripping the wider economy by 2.6 times.1 In addition, the UK’s digital economy is producing jobs at twice the rate of other sectors, and delivering average salaries of GBP 50,000 or a full 30% higher than the national average.2 Even with statistics this impressive, there are developments that suggest there is significantly more yet to come. The UK is home to 37% of Europe’s tech unicorns; tech start-ups with a market value of over USD 1 billion.3 Furthermore, in a world where technology is rapidly altering

the nature of work across almost all sectors, the number of digital jobs and the need for people with advanced digital skills will only become more prevalent in the years to come. Despite these successes, like in every nation, there are major challenges; both in terms of how technological innovations are impacting lives now, and how as a nation the UK can exploit the opportunities these changes create. The UK has lagged behind equivalent nations in terms of broadband speeds, falling to 35th in the world in recent studies, behind 25 other European countries, including Hungary.4 A further issue, albeit one shared by many other developed nations, is the tentative pace of utilising technological innovations in public organisations. Both public apprehension over sharing data and flawed technical rollouts have helped result in a situation where major organisations, such as the National Health Service

GVA growth from 2010, %

25 20 15 10 5 0 2011


2013 Digital sectors




From 2010 to 2015, the digital sectors’ contribution to GVA grew by 21.7%, compared to the UK’s total GVA, which grew by 17.4% 116


Growth in number of enterprises from 2010, %

30 25 20 15 10 5 0 2011



Digital sectors



The number of businesses in the digital sectors grew at a faster rate than the total number of businesses in the UK between 2010 and 2014

(NHS), are vulnerable to basic cyberattacks, and are still using pieces of technology like the fax machine.5 In addition, despite the tech sector employing record numbers of people in the UK, there is a worsening digital skills gap—there is estimated to be 1 million unfilled jobs in the IT sector by 2020.6 This could equate to more than GBP 300 billion of unrealised revenue by 2030 if left unchecked.7 With the uncertainty around immigration resulting from the UK’s decision to leave the European Union (European immigration has long supplemented the UK’s IT workforce) and far from enough young people taking up courses in Computer Science at school to fill the gap, new solutions need to be found to help ensure the right supply of tech professionals now and in the near future. THE PROVISIONS WITHIN THE STRATEGY It is against this backdrop of notable successes and areas of legitimate concern that the UK’s Digital Strategy has been developed. The strategy covers a diverse portfolio of areas, ranging from online safety to upgrading the UK’s digital infrastructure and broadband speeds. Overall, the strategy focuses on the following

seven areas, or “pillars,” as per the terminology in the strategy itself.8 Each pillar is in bold, with some of the major policies announced for each following: Building world-class digital infrastructure for the UK • Launch of Business Connectivity Forum to develop specific and regionally specific solutions to enable businesses to access superfast broadband. • GBP 400 million Digital Infrastructure Investment Fund to promote the expansion of full fibre broadband networks. • Coordinated programme of 5G and integrated fibre trials.9 Giving everyone access to the digital skills they need • Investment of GBP 1.1 through the NHS on projects to support digital inclusion. • Improvement in the ability for adults lacking core digital skills to access free of charge training. • Establishment of a new Digital Skills Partnership to bring together parties interested in closing the digital skills gap.10 SMART NATIONS


Value of equity investments in UK digital companies ÂŁ billion

1,600 1,400 1,230 1,000 800 600 400 200 0 2011





Investment in UK technology businesses is growing

Enterprises adopting digital technologies, %

100 UK







Internet access


Use of enterprise Use of costumer Sharing of supply resource planning relationship chain management software management information software

UK businesses are lagging behind their competitors in adopting some digital technologies 118



Making the UK the best place to start and grow a digital business • Commitment to work with regulators to balance the benefits and potential difficulties caused by new disruptive technologies. • GBP 17.3 million of grants given to support the development of new Robotics and Artificial Intelligence (RAI) technologies in UK universities. • Reviews into various aspects of cultivating new digital growth, including how to create the conditions to expand the UK AI industry, the creative industries sector, and how to attract tech entrepreneurs.11 Helping every British business become a digital business • Review into industrial digitalisation to see how UK manufacturing can become more efficient by utilising digital innovations. • Commitment to developing and adopting open standards of validating information that can be used by businesses effectively and at low cost.12 Making the UK the safest place in the world to live and work online • Establishment of two innovation centres to support start-ups with cyber security by offering high quality support. • Creation of higher and degree-level cyber apprenticeships to grow the pipeline of people with top level cyber skills. • Setting up a taskforce to make cyberspace “secure by default,” rather than secure optionally.13 Maintaining the UK government as a world leader in serving its citizens online • Establishment of a new Digital Government Partnership to enhance collaboration with external partners who can help drive digital change within government. • Increasing the number of digital, data, and technology (DDat) professionals in government. • Ensure that government departments have interoperable technologies.14

Unlocking the power of data in the UK economy and improving public confidence in its use • Full implementation of the GDPR by the May 2018 deadline designated by the EU. • A package of proposals implemented to raise the level of data analysis skills in the UK. • Review of data protection offences with the strong possibility of heavier sanctions for deliberate and negligent poor treatment of anonymised data.15 As evidenced by the breadth of topics covered in those seven areas, the government had made a concerted effort to apply this sort of comprehensive strategy to policy topics; both to help improve the pace of change and tackle areas not likely to respond to piecemeal legislation. This has been exemplified through the Industrial Strategy, a comprehensive policy package designed to improve the UK’s long-term issue of sluggish productivity.16 It is this logic that has carried over to other, more specific, areas such as the Digital Strategy. While setting out a strategy on paper is one thing, following up on its provisions is another. While there are risks with all major government strategies, those around digital issues are perhaps even more prone to failure due to a variety of factors, including legacy systems, lack of buy-in and wider reticence towards change. This has resulted in situations, such as the failure of the NHS National Programme for IT between 2005–2013.17 With this in mind, how has the Digital Strategy fared so far, and what have been its strengths and weaknesses? STRENGTHS While there are always going to be difficulties in affecting change in private sector organisations, the government has, by international standards, done a good job in digital transformation internally where it has the ability to do so. The continued expansion and success of the website and rollout of more flexible ways of working in certain civil service agencies has been notable, and the UK continues to rank in SMART NATIONS


the top ten of the 2018 UN E-Government Development Index and E-Participation Index.18 There has also been progress in some of the most important areas outlined in the strategy, such as in digital infrastructure and closing the digital skills gap. One of the more notable examples of this has been around AI. In recent months, the UK has founded the Centre for Data Ethics and Innovation, which is a world first in terms of a state body that is focused on not only the commercial aspects of new technologies but also the ethical questions that relate to them. There has also been an AI “Sector Deal” launched through the wider UK Industrial Strategy,19 that has allocated GBP billions worth of funding to a variety of projects involving AI technologies. This sort of action does genuinely show a long-term and well-funded commitment to one of the key issues of our time. Although there are issues around split responsibilities in digital within government that will be touched upon later, designing a comprehensive strategy has overall allowed a better level of joined-up thinking on topics that need it. The Digital Strategy allows accountability and long-term planning that is an improvement on ad hoc digital policies within government. As a result, more specific policies developed to help progress the wider strategy, such as the Internet Safety Strategy,20 which are working towards coherent end goals. WEAKNESSES Despite the aforementioned strengths, there is a disconnect between the lofty rhetoric of the strategy, the money invested, and the policies that have made significant progress. While the policies outlined above next to the seven “pillars” will undeniably help each target area, it is not at all clear that they are enough to achieve aims, such as eliminating the digital skills gap and making the benefits of digital growth felt across the entire country (both stated aims in the strategy document). In addition, throughout the strategy, there is a reiteration of existing funding for projects (as opposed to their being new money available), and the onus is often put on private sector 120


organisations to find the solution to issues such as the digital skills gap, with government operating predominantly as a conduit through which to do this. Consequently, certain pillars have made limited progress, at best, over the past two years. Further issues with the strategy have arisen due to both bureaucratic and political problems. The Department for Digital, Culture, Media and Sport (DCMS) is currently on its third leader since the strategy was initially announced in March 2017. While the UK’s civil service allows an often-remarkable level of continuity between departmental heads, the changing policy priorities from one DCMS Secretary of State to the next makes it difficult to ensure the sustained effort needed to push such an ambitious strategy forward. Related to this is a wider issue of departmental responsibility for digital issues. While DCMS, by definition, is the department responsible for digital policy, the Industrial Strategy falls under the Department for Business, Energy and Industrial Strategy (BEIS), whilst the Cabinet Office retains control of elements of the digital portfolio. Additionally, the Department of Health and others are engaged in major digital transformation

fleshed out, and the government of the day decides on whether they want to merely identify, or truly attempt to solve these major societal issues. In the UK and elsewhere, it is vital that the government does rise to this challenge, and ensure that lofty rhetoric and firm policy realities are in tandem.

ENDNOTES 1 Tech Nation. Report 2018. Tech Nation. <https:// wp-content/uploads/2018/05/Tech-NationReport-2018-WEB-180514.pdf > 6. Accessed: 3 December 2018. 2 Chris Rhodes—Georgina Hutton: The Future of the UK digital and tech industries. House of Commons Library. Debate Pack, CDP 2018/0096. <http://researchbriefings.

projects that also muddy the waters of where responsibility lies for all the areas that the Digital Strategy covers.

0096.pdf > Accessed: 3 December 2018. 3 The Global Unicorn Club. CB Insights. <https://www. > Accessed: 3 December 2018.

THE OVERALL PICTURE SO FAR: STRONG AMBITIONS, MIXED RESULTS AND A FUTURE YET TO BE DETERMINED It is fair to say that the results of the strategy so far are mixed, although in its defence, these are relatively early stages in a strategy designed to last for five to ten years. There is an undeniable difference between the aims of the strategy, and what can be realistically delivered, given the policies put forward in it and the funding available. However, that is not to say that progress has not been made in key areas. The limitations in terms of delivery so far should not detract from the fact that this is a good model for governments to adopt for dealing with and making the most from digital change. Challenges like those identified in the seven “pillars” to have comprehensive, national, and sustained government attention, are at least provided by the Digital Strategy. Overall, the success and the failure of the Digital Strategy will be decided in the next few years as policy packages for each topic are

4 Worldwide broadband speed league 2018. Cable. < > Accessed: 3 December 2018. 5 Hannah Crouch: NHS hospitals accused of being ‘stubbornly attached’ to fax machines. Digitalhealth. 18 July 2018. < nhs-hospitals-accused-of-being-stubbornly-attached-tofax-machines/ > Accessed: 3 December 2018. 6 Tony Parish: We’re Facing a Huge UK Digital Skills Gap – Infographic. Ignite Digital. < > Accessed: 3 December 2018. 7 UK risks labour shortage of millions by 2030. 17 July 2018. < uk-risks-labour-shortage-of-millions-by-2030 > Accessed: 3 December 2018. 8 UK Digital Strategy. 1 March 2018. <https://www. > Accessed: 3 December 2018. 9 1. Connectivity – building world-class digital infrastructure for the UK. In: UK Digital strategy. 1 March 2017. < > Accessed: 3 December 2018. SMART NATIONS


10 2. Digital skills and inclusion – giving everyone access

2010. <

to the digital skills they need. In: UK Digital strategy.

reasons-why-the-NHS-National-Programme-for-IT-failed >

1 March 2017. <

Accessed: 3 December 2018.


18 UN E-Government Survey 2018. UN E-Government

giving-everyone-access-to-the-digital-skills-they-need >

Knowledgebase. <

Accessed: 3 December 2018.

egovkb/en-us/Reports/UN-E-Government-Survey-2018 >

11 3. The digital sectors – making the UK the best place to

Accessed: 3 December 2018.

start and grow a digital business. In: UK Digital strategy.

19 AI Sector Deal. 26 April 2018. < 1 March 2017. <



ai-sector-deal > Accessed: 3 December 2018.

the-uk-the-best-place-to-start-and-grow-a-digital-business >

20 Consultation outcome. Internet Safety Strategy green

Accessed: 3 December 2018.

paper. Last updated: 7 June 2018. <https://www.

12 4. The wider economy – helping every British business

become a digital business. In: UK Digital strategy.

green-paper > Accessed: 3 December 2018.

1 March 2017. < publications/uk-digital-strategy/4-the-wider-economyhelping-every-british-business-become-a-digital-business > Accessed: 3 December 2018. 13 5. A safe and secure cyberspace – making the UK the safest place in the world to live and work online. In: UK Digital strategy. 1 March 2017. < government/publications/uk-digital-strategy/5-a-safe-andsecure-cyberspace-making-the-uk-the-safest-place-in-theworld-to-live-and-work-online > Accessed: 3 December 2018. 14 6. Digital government – maintaining the UK government as a world leader in serving its citizens online. In: UK Digital strategy. 1 March 2017. < government/publications/uk-digital-strategy/6-digitalgovernment-maintaining-the-uk-government-as-a-worldleader-in-serving-its-citizens-online > Accessed: 3 December 2018. 15 7. Data – unlocking the power of data in the UK economy and improving public confidence in its use. In: UK Digital strategy. 1 March 2017. < government/publications/uk-digital-strategy/7-dataunlocking-the-power-of-data-in-the-uk-economy-andimproving-public-confidence-in-its-use > Accessed: 3 December 2018. 16 International comparisons of UK productivity (ICP), final estimates: 2016. Office for National Statistics. 6 April 2018. < economicoutputandproductivity/productivitymeasures/ bulletins/ internationalcomparisonsofproductivityfinalestimates/2016 > Accessed: 3 December 2018. 17 Alistair Maughan: Six reasons why the NHS National Programme For IT failed. Computer Weekly. September 122



REVOLUTION OR EVOLUTION? Attaining higher living standards has always played an important role in the development of human societies. From this viewpoint, the aim of industrial revolutions is always the same: to ease everyday life by operating state-of-the-art technologies based on available resources. There are plenty of studies and articles that describe the concept of Industry 4.0. These all start with the enumeration of the industrial revolutions, which have thus far taken place in history. Nevertheless, the term “Industry 4.0” cannot be defined as innovation in manufacturing, because its essence has great influence on our everyday life, too. We use its results day by day, as smart

devices, robotics, and digitalisation are an integral part of our time. The concept of Industry 4.0 goes beyond the boundaries of smart factories, despite its industrial production-bound definitions. According to one of its interpretations, it is a process in which real life and the digital world are merged into each other. Digitalisation plays a central role in the Industry 4.0 concept, to which advanced computing technology is indispensable. Many sources refer to Industry 4.0 as a higher grade representation of the 3rd industrial revolution, since computer technology has been continuously developing from the 1960s onwards. From this viewpoint, Industry 4.0 does not imply new,

A demo lab at Bay Zoltán Research Institute SMART NATIONS


A digital twin designed by Bay Zoltรกn Research Institute

revolutionary technologies, but it means the actual and very progressive phase of the computer science evolution. The technological background of Industry 4.0 consists of Cyber-Physical Systems, Internet of Things, Cloud-Based IT Systems (Big Data), and Smart Factories. Essentially, any system that is able to perform its task independently from human interactions and is based on IT solution-operated electronic and mechanical components could be referred to as a Cyber-Physical System. The Internet of Things is the name of the new communication standards that are designed to supply machines with connection to ensure cooperation among them, with their environment, or with external systems. The standardised specification of IoT communication enables real time distribution of machine-bound data (i.e. really short messages), so quick operation could be an essential feature for such systems. Real life processes generate enormous quantities of data which drive the digital representation of these processes; therefore, data are the building blocks of the digital world. 124


The large amounts of data are managed by cloud-based data storage and data processing systems. Cloud-based storage systems make data accessible, distributable, and ready for analysis, which means prediction rather than interpretation in business. The efficiency of data processing brings about significant business advantage for competitors; therefore, the development of cloud-based data processing systems are of particular significance today. The quality of the manufactured product is optimised from several aspects. The data collected from the different phases of the product-life cycle (manufacturing, use phase, end-of-life) are used to discover the factors influencing product quality. This data gathering is done by in-built sensors that are able to identify the actual circumstances, as well as functional errors. Smart products are constructed in this way. Product manufacturers use these data to decide whether the detected fault originates from the usage conditions, or it has manufacturing-related roots. The collected data from smart products help improve the quality of both the manufacturing procedures and the product. Such data collection at the

manufacturing steps helps to reduce the rate of production losses, which means a parallel cost reduction for both the manufacturers and the customers. All the above-mentioned tools and technologies have contributed to the reformation of industrial production. The digitalisation of manufacturing systems enables the application of processsimulation techniques whereby production system examinations can be carried out without causing negative impacts on the actual production processes. “Digital twins” of production systems help examine the effects of development alternatives and make better decisions during the continuous improvement of a product. Computer-controlled production machines have been applied at factories for a long time. Nevertheless, Industry 4.0-related technologies offer a new toolset in this field. This is often referred to as Smart Factory. One of the most impressive elements of this toolset is collaborative robots. These manufacturing appliances are able to detect their barriers, as well as the co-workers in a shared workspace; thus, seamless co-operation can be realised without endangering employees. Smart factories are characterised by processes involving interlinked work pieces and associated tools, as well as logistics operations. These interlinks help to establish and maintain harmony autonomously between production machines and the production environment. Besides, interlinks extend synchronisation possibilities towards the suppliers and distributors. Therefore, its advantages can be realised along the whole supply chain. Improving the IT competences of the workers is necessary for the efficient use of Industry 4.0-related advantages. Establishing Smart factory functions requires innovative attitude both on the operative and on the strategic level from decision makers. The implementation of the new “smart” functions to a production system increases the competence-related requirements from the employees. Thus awareness-raising activities on the necessity of higher graduation are essential to ensure manpower for factories in the future.

INDUSTRY 4.0: STATE-OF-THE-ART IN HUNGARY More than half of the Hungarian GDP is produced by SMEs that, directly or indirectly, contribute to the activities of multinational companies. As this hierarchical structure of OEMs and Tier 1, 2, 3 level suppliers may be considered static, suppliers need to advance continuously to hold their market positions. Improving effectiveness by introducing new technologies is crucial for being or becoming a supplier in such a system. New solutions applied at multinational companies are spread among SMEs as a requirement in the supply chain. Consequently, most Hungarian SMEs in the supply chain consider the Industry 4.0 strategy and solutions a substantial matter. However, SMEs outside these supply chains usually do not elaborate such a strategy due to the lack of urge. Overall, most of the companies in the country lack the needed technical evolution level for applying Industry 4.0 solutions. Although the first steps have already been made, SMEs are on standby due to high investment needs. Progress in production, quality assurance, and IT are mainly the focus of investments at SMEs, and training employees, developing logistics, and R&D are behind these. In order to introduce R&D&I into their activities, strengthening co-operation between companies, research institutes, and universities are required. On the one hand, the integration of new technologies into production processes is made easier this way. On the other hand, training labour capable of operating this infrastructure is also resolved. The demand for labour has changed significantly in modern factories as opposed to traditional ones: the sheer number of workers or their physical strength have lost its importance, while qualification has come to the foreground. State contribution for spreading technology solutions for Industry 4.0 is also a requisite in Hungary. As the recent developments of SMEs are mainly for implementing resource planning (ERP), scheduling (PPS), and manufacturing execution (MES), systems with high investment needs, the state can significantly support these solutions by opening sources for new SMART NATIONS


calls or tax modifications. These may result in the rise of new products and services, increasing competitiveness, and further improving developments. The Industry 4.0 National Technology Platform tackles challenges in the field of Industry 4.0 applications. The Platform was established in 2016 with the support statement of the Hungarian government, addressing provisions for the development of regulations and innovation ecosystem, supporting national and international co-operation, the integrating activities of companies, and last but not least, the applications for financial support for the vertical and horizontal integration of supply systems. RESEARCH INTO INDUSTRY 4.0 IN BAY ZOLTรN RESEARCH INSTITUTE Cost-effective design solutions are available, based on the digital factory concept to improve the effectiveness of enterprises. These solutions involve computer-based modelling and simulations of processes as well as advanced display technologies, such as virtual or augmented reality. The Bay Zoltรกn Research Institute has been conducting research into production, supply, and logistic systems by modelling and simulation for several years. Its main priority is the improvement of competitiveness of enterprises by developing appropriate products and services. Thus the institute focuses on Industry 4.0 solutions for SMEs with affordable prices. The applied digital factory principle enables the measuring of the resource efficiency of production or logistic units together with the improvement and optimisation of corresponding system parameters, and the harmonisation of activities of different subsystems, while also scrutinising the impacts of different management scenarios. Production systems with integrated logistics are quite complex systems with several parameters, indicators, and influencing connected processes. The computer-based representation of such real systems calls for a highly sophisticated development environment with analysis tools and for a model with appropriate level of 126


abstraction: neither too simple nor too complex. The foundations of the production-planning and -monitoring solution developed for SMEs in the institute are the digital model- and the automated simulation-based analysis. The essentials of the solution include the comparison of real life sensor data with optimal production parameter values obtained from a simulated production in the digital twin of the plant. Errors in the production process can be detected by interpreting discrepancy in time. Therefore, mitigation activities to avoid further impacts and normalise processes can be implemented. Identifying errors caused by both machines and workers is an important advantage of the solution, which enables all-purpose application in production systems. Currently, 120 engineers are working in the institute not only on Industry 4.0 solutions and ICT but also on other domains of sciences such as biotechnology, nanotechnology, material science, and laser technology. The Bay Zoltรกn Research Institute has been providing applied research and engineering services for more than 200 enterprises for more than 25 years.


Everybody wants to be happy, live a better life than his ancestors, and make progress during his/her lifetime. However, the term “better” is quite loose, and humankind has been struggling with capturing, measuring, and comparing its own well-being throughout its history. As Yuval Noah Harari, author of popular science books such as Sapiens—A Brief History of Humankind and Homo Deus—A Brief History of Tomorrow said, we are far more powerful than our ancestors, but we do not seem happier, although we may live in a paradise that most people in history have only dreamt about. GDP (Gross Domestic Product) is the widely used measure of a country’s well-being, as it includes all the output, income, and spending at the same time. In post-war Europe and America, growth in living standards and in GDP were synonymous. Therefore, GDP growth became a desirable target for politicians and a scorecard by which they were judged by voters. Even though GDP has always been widely used, it has also come under widespread criticism and divided the economist society about how much GDP reflects the happiness of a country’s people. However, over the past few decades, concerns have been strengthened that macroeconomic data do not show satisfactorily how ordinary people think of their own lives, and new, extended measures are needed which integrate life satisfaction and spiritual well-being. Environmentalists have long warned that GDP treats the resources of the planet as something that adds to income rather than being counted as an expense. In addition, a repeated criticism is that GDP neglects the notions of spiritual well-being. Robert F Kennedy once famously said that GDP counted cigarette advertising and jails, but did not include “the beauty of our

poetry or the strength of our marriages.”1 Still, GDP growth has been a decent, albeit only a rough, guide to material progress, and it still owns a nimbus because of its exact definition and objectivity. The more output and income was generated (after adjusting for inflation), the better off we were. However, it seems, that wealth does not mean everything, and money cannot buy good life quality factors, such as life satisfaction, environment, or work–life balance. Not to mention the fact that after the massproduction era, in today’s service focused economies, the quality of services is prized over simply having more stuff. Health, nutrition, housing, and conditions are better now than ever during our history, and poverty has been considerably eased. But for some reason, we do not feel that we live in a paradise, except maybe the people of Bhutan, where The Gross National Happiness (GNH) Index is used to measure the happiness and well-being of the population. GNH is different from GDP as it considers collective happiness as the goal of governance, emphasising not only harmony with nature and traditional values expressed in the usual living standards, such as health and education, but also cultural and environmental aspects. However, according to critics, GNH is just a propaganda tool whose aim is to distract public opinion from the human rights abuses of the government and poverty.2 Still, Bhutanese people are relatively happier and more satisfied, according to the GNH surveys that have been conducted in the last ten years, compared to western people who live in relatively better material conditions.3 So why is GDP a poor measure of a society’s well-being? Why are western citizens more dissatisfied than others who live in less fortunate SMART NATIONS



Israel Hungary






France Chile








Czech Republic









Better Life Index visualisation with its typical “flower tool,” where each flower represents one country and each petal represents a key factor that contribute to well-being in OECD countries

parts of the world? An explanation from Harari points out that happiness depends less on objective conditions and more on our own expectations. Expectations, however, tend to adapt to conditions. When things improve, expectations inflate, and consequently, even dramatic improvements in conditions make us as dissatisfied as before. The author also says “that both our expectations and our happiness are determined by our internal biochemical system. And our biochemical system has no real interest in happiness. It was shaped by evolution to increase our chances of survival and reproduction, and evolution has made sure that no matter what we achieve, we remain dissatisfied, forever grasping for more.”4 One solution offered by the OECD for this debate on measuring the well-being of societies is the Better Life Index. The Index aims to involve citizens in this debate and to empower them to 128


become more informed and engaged in the policy-making process that shapes all of our lives. The Better Life Index is a composite index that allows individuals and policymakers to compare well-being indicators across countries, based on 11 topics the OECD identified as essential in the areas of material living conditions (housing, income, jobs) and quality of life (community, education, environment, governance, health, life satisfaction, safety, and work–life balance). The index covers the 35 member countries of the OECD, which brings together most of the world’s developed economies and a number of emerging economies, plus key partners such as Brazil, Russia, and South Africa. The data mostly come from official sources such as the OECD or national accounts, United Nations Statistics, national statistics offices, and the quality of the data is very important in comparing the results of the different countries

South Africa


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in different topics.5 The BLI’s website is an interactive tool that allows one to see how countries perform according to the importance you assign to each of 11 topics that make for a better life. This way, we can better understand what drives BLI users’ responses, in other words, whether views on what matters most in life depend on living conditions and satisfaction with the 11 topics of well-being.6 Thanks to the answers given through this survey, the OECD will be in a better position to advise policy makers on the priorities they should concentrate on to ensure better lives for their citizens. Let us take a look at how life is in Hungary according to the Better Life Index. Hungary performs well in only a few measures of wellbeing, relative to most other countries in the Index. However, our country ranks above the average in work–life balance. Around 3% of employees work very long hours, much less than the OECD average of 13%. It seems that Hungarians have enough time for recreation and

HUNGARY Housing Income Jobs Community Education Environment Civic Engagement Health Life Satisfaction Safety Work-Life Balance 0





for spending time with their children. Hungary ranks below the average in social connections (84% of people believe that they know someone they could rely on in time of need, less than the OECD average of 89%), civic engagement, and in environmental quality. Good education and skills are important requisites for finding a job in Hungary, where 83% of adults aged 25–64 have completed upper secondary education, higher than the OECD average of 74%, but, unfortunately, we tend to underperform the OECD average in the PISA (Programme for International Student Assessment) tests. In terms of health, we can state, that life expectancy at birth in Hungary is 76 years, four years lower than the OECD average of 80 years, and one of the lowest in the OECD. In general, Hungarians are less satisfied with their lives than the OECD average. After South Africa, Portugal, and Greece, we are the fourth nation most dissatisfied with our lives among the OECD countries.7 It seems that, in Hungarians, Harari’s idea of evolutionary dissatisfaction works really well, while it is also obvious that our country is lagging behind the wealthier and more developed countries, such as Norway, Iceland, and the USA, in most well-being factors. In general, we tend to perceive our conditions much more negatively than it could be deduced from objective data. Hopefully, this force drives our leaders and ourselves to make further advances and carry out a structural conversion in areas which are needed for a better life.While on a global scale, the Better Life Index will provide a better understanding of human well-being and satisfaction, and, this way, orient policy making in a direction which effectively increases the quality of our life.

ENDNOTES 1 Robert F Kennedy: Remarks at the University of Kansas, 18 March 1968. See the full text of the speech at http://www. Accessed: 19 December 2018. 130


2 Cf. Vishal Arora: Bhutan’s Human Rights Record Defies ‘Happiness’ Claim. The Diplomat. 25 April 2014. <https:// > Accessed: 19 December 2018.; Kai Schultz: In Bhutan, Happiness Index as Gauge for Social Ills. The New York Times. 17 January 2017. <https://www. > Accessed: 19 December 2018. 3 Bhutan’s Gross National Happiness Index. Oxford Poverty & Human Development Initiative. < national-policy/gross-national-happiness-index/ > Accessed: 19 December 2018. 4 Yuval Noah Harari: Happiness. Yuval Noah Harari. < > Accessed: 19 December 2018. 5 What’s the Better Life Index? OECD Better Life Index. < > Accessed: 19 December 2018. 6 OECD Better Life Index. How’s life? Truth & Beauty. < > Accessed: 19 December 2018. 7 Hungary. OECD Better Life Index. <http://www. > Accessed: 19 December 2018.


HISTORY Four significant inventions can be attributed to ancient China. The Chinese were familiar with the compass as early as 1000 BC: a small plate attached to a wooden base in a dish filled with water showed the cardinal directions on carts. During the Han dynasty, Cai Lun elaborated the process of papermaking. His method was codified in a decree by the Emperor in 105 BC. The method of papermaking was introduced to Europe by Arabs only in the 16th century. Paper banknotes were invented in the early 14th century. The method of printing on wooden printing blocks was invented in the 9th century. The Chinese could make gunpowder in the 1st century AD, but its military use was first recorded during the Song dynasty in the 13th century. The flamethrower, poison gas, the fragmentation bomb, and the cannon were also invented in this period. The Chinese used metal tools instead of wooden and stone ones already in the 4th and 3rd centuries BC. Tools made of cast iron, the use of fire, and the technology of iron founding were already widespread at that time. The Chinese were able to produce steel in the 1st and 2nd centuries AD. In Europe, the first attempts at iron casting were made in the late Middle Ages. By the 14th century, China had created the first mechanised industry in the world. With slight modifications, Wang Zhen’s invention, the hemp spinning machine powered by water, could have been suitable for launching a true industrial revolution in China—more than 400 years before the European one (James Hargreaves invented the “Spinning Jenny” in 1764). In the middle of the 14th century, rapid development in the

Chinese economy halted, and a period of decline ensued. No industrial revolution took place during the later period of the traditional China, despite the fact that all the necessary elements were present. The main obstacle was the weakening of the economic and intellectual forces that could have inspired invention and innovation. During the Ming and Qing dynasties, Western technologies were widely adapted, and the Chinese successfully copied anything as an evidence of high-standard Chinese craftsmanship. However, through minor innovations, a whole range of Chinese technologies were also developed. Such innovations included wind power pumps using rotating canvasses, the bulletproof dress, and soil-ameliorating soybean scones.

The Four Great Inventions of Ancient China SMART NATIONS


In this period, the level of technology in China was not inferior to that of Western countries, and the country had had long scientific traditions. However, due to historical conditions, it joined the age of industrial revolution at the wrong moment. During the Opium Wars, China still had the opportunity to build a modern industry, and thus eliminate backwardness, but by the end of the 19th century, it deprived itself from the chance of closing the gap. For 150 years, China lost its leading position in the world. Inventions seemed to disappear from Chinese history for a time. DEDICATED STATE POLICY In 1978, the policy of reform and opening-up launched the idea of creating a modern China. The backwardness and isolation of the Peopleâ&#x20AC;&#x2122;s Republic of China alarmed the pragmatists led by Deng Xiaoping. The so-called â&#x20AC;&#x153;four modernisationsâ&#x20AC;? linked to the name of Deng Xiaoping promised changes in agriculture, industry, science and technology, and the armed forces. Chinese politics have since been committed to promoting science and technology, and China has understood the changes in the world, and it has become an incentive and a driving force behind the smart revolution. The resolution of the 16th Congress of the Chinese Communist Party, held in 2002, pointed out that IT industrial developments must have a priority, information technology must be used in promoting industrialisation, and in every area of economic and social development. Two new doctrines were submitted for development and management at the third plenary session of the 16th Congress of the Party in 2003. The Scientific Outlook on Development is a comprehensive and well-orchestrated development approach that focuses on people, and is economically, socially, and environmentally sustainable. The second doctrine was submitted subsequently, at the fourth plenary session of the 16th Congress of the Party, in 2005, under the title Socialist Harmonious Society and projected a vision of a fair, just, honest, and vibrant society. The leadership of Hun Jintao focused on sustainable development, on the management of society, and 132


on social stability. According to the declaration made by the Chinese government in 2005, an information society should focus on people and on development, it should be inclusive, it should be operated by broad public participation, and it should neutralise the inequalities resulting from regional development. In 2015, Li Keqiang set the aim of promoting internet-based technologies in the action plan called Internet Plus. The large-scale plan, called Made in China 2025, was published in 2015 for the implementation of the fourth industrial revolution and the integration of Chinese high-tech manufacturing in the world market, thus making China a high-tech and internet superpower. As the Chinese version of Industry 4.0, the Made in China programme promises innovative solutions, inter alia, in automotive manufacturing, aviation, robotics, marine technology, railway equipment manufacturing, energy efficient vehicles, IT, industrial robots, smart detectors, smart data cards, wireless sensor networks, energy efficient transport, and medical instruments. In 2016, under the leadership of Xi Jinping, the goal of promoting the significance of science-based innovation was set in the 13th five-year plan. During the 40 years that has passed since the start of reforms, China has closed the gap to the fourth industrial revolution, and it is in the forefront of modern technologies in the world. The leadership of the Chinese Communist Party is committed to digitalisation, and has intensive and long-term plans. ACHIEVEMENTS OF THE FOURTH INDUSTRIAL REVOLUTION In order to make use of all the business opportunities offered by the fourth industrial revolution, the creation of appropriate infrastructure is indispensable. The Chinese state places special emphasis on the expansion and density of the transport infrastructure; the construction of the rapid transit train network is in full swing. The first rapid transit train started operation in 2008 between Beijing and Tianjin. Since then, every provincial capital of China has been connected to Beijing by rapid

The Chinese high speed train

transit trains. The length of the Chinese rapid transit train network will increase by 25,000 km by the end of 2030. China is trying to catch up. In 2011, the CRH train running between Beijing and Shanghai reached a record speed of 487  km/h, and this gave Chinese people a reason for pride as a nation. However, in the same year, a disaster also happened on the railway line between Wenzhou and Fuzhou, killing 35 and injuring more than 200 passengers. But the development of the Chinese rapid transit train network is pursued with relentless efforts. The internet plays a decisive role in the history of the fourth industrial revolution, as it provides a large number of people with a faster and more convenient access to services. For us Europeans, the Chinese mobile payment revolution is a shocking experience, while it is just natural for the Chinese a service offered in the consumer market, which can be used by everyone who has a mobile phone. Mobile services are cheap, and this industry is characterised by continuous development and improvement. Alipay, a company nobody can beat with its comprehensive software, including all kinds of payments, rolled out the QR code payment method in 2011, both effective and convenient, as the seller gets the price of the purchased goods immediately on swiping the QR code. Approximately 424 million people

used QR codes for payment last year, representing 65% of smartphone users, and they spent about half of China’s GDP on their purchases. The success of Alipay is based on the popularity of Taobao, as the former rode on the coattails of the latter. Users like it, and they are satisfied with the security of the service. The unbelievable success of Alipay is due to the fact that the credit card system was adapted relatively late in China, and is still in its early phase. The Chinese still nurture the tradition that they only borrow money from acquaintances and not from banks, and banking companies cannot provide their customers with suitable services. During the first 10 months of 2017, more than 700 million internet users in China spent USD 12.7 billion on WeChat, Taobao, and Alipay. The almost 10-year-old online commercial market is the biggest and fastest developing market in the world. In urban China, cash payment is no longer comprehensible. Alipay and WeChatpay have become the biggest tech giants in China. An important element in the success of the fourth industrial revolution is sustainable development based on renewable energy sources, and the increase of energy efficiency. Although China’s energy needs are constantly growing, the Chinese government emphasises the importance of improving green energy production, such as solar, water, and wind SMART NATIONS


Mobile payment in China

energy. The system of bicycle-sharing networks became popular in 2016. In order to use a bicycle, one needs a smart phone application: bicycles can be opened and closed with a QR code. There are 400 million registered bike users in China and 23 million bikes to rent. The analysis of large amounts of data using artificial intelligence has a dual purpose. On the one hand, one of China’s significant development strategies relies on solutions based on Big Data in order to increase consumption and improve welfare programmes from education to charity or healthcare. The purpose of the Healthy China 2030 programme is to increase online healthcare services, which may generate diagnostic and treatment advices with the help of Big Data. Using Big Data technology, China is building a network of “smart cities.” In order to tackle the effects of urbanisation, in the framework of the Digitalization and Information Development Plan, Hangzhou, the hometown of Alibaba, undertook to use modern technologies in building a service-providing government, and in other field of social services and public transport. By Big Data analyses, China’s leadership is thoroughly transforming the approach to economic and social management. With the help of Big Data, China’s leadership makes efforts 134


E-commerce in China

to eliminate the errors made by communist systems, and equips the country’s political system with the hardware and software provided by digital transformation. The purpose of the central co-ordination and control termed as “top-level planning,” implemented under the control of Xi Jinping, is technological innovation, and the maintenance of business performance along with political stability. Nothing evidences the Chinese success of the fourth industrial revolution more clearly than the society’s ability to make use of its achievements: technological innovations have been embraced and integrated in Chinese people’s normal way of life because they are technologies that help life. This is confirmed by a 2017 survey, which inquired about the four modern Chinese inventions Chinese people considered the most significant. The replies included the rapid transit train, payment by a QR code, online purchase, and the community bicycle share system. CHALLENGES OF THE FOURTH INDUSTRIAL REVOLUTION The differences between the country’s poor and rich regions may lead to a digital gap between cities and rural areas. Digital benefits are primarily enjoyed by the urban population. Companies such as Tencent,

Shared bikes in China

Alibaba, Alipay, and WeChatPay are interested in the better utilisation of the consumption habits of the middle-class population and the application of innovation projects focused on consumers. Supplying broadband internet access to backward rural areas and the popularisation of electronic trade in business activities are indispensable in overcoming inequalities. The largest challenge of the fourth industrial revolution concerns employment, which will restructure the labour market. In the 1980s, China’s competitiveness was guaranteed by the success of a cheap and work-intensive business model; however, today the country is gradually turning to a knowledge-intensive development. As a result of digitalisation, the replacement of human labour by robots is even cheaper than the cheap live work performed by people in Chinese factories. Improvement in education, the establishment of a knowledge-based economy, and the supply of experts for the economy, training technical specialists and engineers, talent promotion, and the establishment of research centres and laboratories may help China in the even more successful implementation of the fourth industrial revolution. Development in the field of artificial intelligence also evokes rightful concerns in Chinese people,

as confirmed by the fact that at the 2017 Go Championship, Ke Qie, the best player in the world, was defeated by the Alphago computer. Undeniably, China has made outstanding achievements in numerous industry lines, but in order to also meet the challenges of global innovation, technological and science-based innovation needs to be facilitated. Only the principle of “guaranteeing quality above quantity” can offer China the opportunity of also serving the global consumer market. SUMMARY Technology and science in the modern world owe a lot to China. In the 20th century, China underwent an enormous and radical change, and the persistent work performed by several generations of the country’s leaders to turn China a global power suggests that they can overcome any problem they face. Today, China is the second biggest economy in the world. Inevitably, China will probably regain its former splendour during the period of the fourth industrial revolution.




Today, nearly everything is defined by technological development and innovation, and in the future this tendency will be expected to intensify. Merely being a big economy is not an exclusive key to success; a real economic juggernaut needs to have not only productive capacities but innovation potential, too. The Chinese leadership realised the importance of the R&D sector after Mao, but, until recently, this sector has only played a marginal role in the country’s economy. The idea of the “Chinese dream,” announced by the current President of China, Xi Jinping, also takes up the necessity for economic restructuring, scientific and technological development, and the project named Made in China 2025 could be a real alternative for China to catch up with the world’s leading economic leaders. As a result of a more than three-decade-long process,1 China has reached the forefront of the world’s economic powers. This fact is conclusively illustrated by the fierce market competition among the growing number of foreign firms settling in the country, the ever-intensifying domestic companies, and by the fact that, for a while now, China has been the world’s largest foreign currency holder.2 However, China’s economic successes are somewhat overshadowed by the fact that they have been achieved by extensive growth, i.e. by exploiting its resources and reserves to the maximum, and, in the meantime, the country has turned into a kind of “assembly plant.”3 Using foreign technologies, developments, and ideas, products were manufactured there by cheap but typically unskilled local labour. However, this model is not in keeping with 136


China’s intentions any more, either politically or economically. From an economic point of view, this development model is unsustainable, so one of the primary goals of the Chinese leadership is to switch to a more efficient, intensive economy.4 Their core foreign policy motive is mainly related to ruling the cyberspace,5 which has nowadays become indispensable to having a great global power status. This also requires the development of artificial intelligence—but until it has to rely on foreign supply chains to acquire the necessary components, China rightfully deems itself unsafe. To solve these problems, a 10-year strategy named Made in China 2025 was drafted by the Li Keqiang Government in May 2015. The initiative was inspired by German Industrie 4.0,6 and its fundamental aim is for China to break free of its status as the “world’s factory,” through modernising the Chinese industry, and moving towards “smart manufacturing,”7 which uses innovative production technologies. As a result of this process, China would become a completely independent manufacturing superpower that does not need to rely on foreign supply chains and technology. In the spirit of lofty slogans such as “domestic innovation” and “self-reliance,” China intends to increase the domestic market share of the domestic producers of “core components and materials” from 40% to 70% by 2025. To achieve this, it is necessary to increase the competitiveness of Chinese companies in high-technology industries both in domestic and global markets, thus contributing to the improvement of the country’s position in the global value chain.8 There are three basic preconditions for this: the ability to develop innovative products,

the creation of new internationally-known brands, and the construction of modern industrial facilities. China now fulfils all of the three. Yet, the strategy developed by the Chinese government to achieve the above objectives is subject to very negative international assessment. According to the official Chinese view, the goal is the “reform of the domestic financial sector” and the “gradual establishment of a market equally open for all foreign companies.” One of the reform’s key purposes is to protect intellectual property. However, in the developed, industrialised countries, there is a serious doubt about the latter claim. International companies accuse China of stealing technological know-how and intellectual property, and they say that the conditions set in Made in China 2025 breach the WTO rules of global competition and free market,9 as the Chinese state disproportionately benefits domestic companies through the various state funds and legal regulations that adversely affect foreign organisations. It is true that “brain drain,” and “stealing” intellectual property, for example, belong among typical Chinese tactics for technology and knowledge transfer. It is also worth mentioning the increasingly apparent recent phenomena where Chinese investors or companies with Chinese background acquire advanced technologies by investing in or buying up foreign companies.10 This is frowned upon by the Western world, because, on the one hand, while Chinese companies globally use the benefits of free market competition, within its own borders, the country follows the principles rooted in socialist market economy formulated by its state, which makes it difficult for foreign companies to start their business in the local market. Moreover, China’s growing international presence also implies that the country exports not only its products but also its own economic policy principles, which only allows room for free market principles to a certain degree and under the close watch of the state. From this aspect, Made in China 2025 is more than an “economic development milestone;” it can be interpreted as the part of a comprehensive, long-term foreign policy programme that is not intended to involve

This year’s Smart China Expo in Chongqing, showing off the latest Chinese technology

the country in the existing world order, rather to create a new economic block based on Chinese leadership and rules. Thus, it might pose a danger to the current status of the US. China, therefore, aims to globalise its economy. Some leading Chinese companies, such as Alibaba and Huawei, have already begun to break into the European and the US markets. Although they are less popular among customers of these markets than their competitors, because they are backed by their huge domestic market, they can easily afford to provide low prices. Therefore, their Western rivals cannot compete with them. In the words of Xi Jinping, those companies are the “Chinese national champions” of artificial intelligence, and that is exactly what upsets the US the most. They fear that China can start to increase party control over global companies at any time, and that artificial intelligence will be used for collecting data and military purposes. To avoid this, Washington has SMART NATIONS


ENDNOTES 1 A kínai gazdasági forradalom három évtizede. Múlt-kor. 20 December 2008. < gazdasagi_forradalom_harom_evtizede > Accessed: 3 October 2018. 2 Foreign Exhange Reserves. Trading Economics. <https:// > Accessed: 3 October 2018. 3 Prableen Bajpai: Why China Is “The World’s Factory.” Investopedia. Updated: 22 October 2014. <https://www. > Accessed: 3 October 2018. 4 Martin Wolf: Consumption to replace investment as key to China growth. Financial Times. 29 May 2018. <https://www. > China is now aspiring to the United States’ leading role

Accessed: 3 October 2018. 5 Xinhua/Mu Xuequan: China Focus: Xi leads China in building

made it difficult for Chinese telecommunications companies to operate in the US, and it sets limits on Chinese investments in US technology companies. In the meantime, the Australian government would ban Huawei from contributing to the 5G network in the country. Whether Made in China 2025 can live up to Chinese expectations depends on many factors. Western media countries regularly say that the initiative will fail on China’s political and economic unpreparedness.11 As a result of top-down decision-making mechanisms, there is no consistency between industry needs and economic policy. And although industrial modernization, internal consumption, and service sector growth is well under way,12 British HSBC economists state that the new challenge to China will be the fast growth of the tertiary sector and the slowdown in productivity growth. For instance, Chinese GDP per capita is still only a fraction of that of the US, which can cause serious problems by de-industrialising too early. Nevertheless, with Made in China 2025, China presents a challenge to the world, and this challenge must be dealt with accordingly. If the US, the EU, and the rest of the global economic actors do not put Beijing under pressure, especially in terms of market opening and intellectual property protection, they will soon be at a serious disadvantage to China’s benefit. 138


cyberspace strength. Xinhuanet. 18 April 2018. <http://www. > Accessed: 3 October 2018. 6 Bernard Marr: What is Industry 4.0? Here’s A Super Easy Explanation For Anyone. Forbes. 2 September 2018. <https:// > 3 October 2018. 7 Smart industry and smart manufacturing – industrial transformation. I-SCOOP. < manufacturing-industry/ > Accessed: 3 October 2018. 8 OECD: Global Value Chains (GVCs): China. OECD. <http:// - CHINA.pdf > Accessed: 3 October 2018. 9 Susan Ariel Aaronson: Is China Killing The WTO? International Economy. 2010/winter. 40–67. 10 Cory Bennett—Bryan Bender: How China acquires ‘the crown jewels’ of U.S. technology. Politico. 22 May 2018. < > Accessed: 3 October 2018. 11 Linette Lopez: Here’s a controversial idea about China’s economy that no one wants to hear. Business Insider. 21 July 2016. < > Accessed: 3 October 2018. 12 Xinhua/Xiang Bo: Economic Watch: Service industry steering China’s firm growth. Xinhuanet. 30 July 2018. <http://www. > Accessed: 3 October 2018.


The rules and features of warfare have constantly been changing during the history of mankind. However, the most radical developments took place in the 20th century, and the Revolution in Military Affairs (RMA), which characterises the turn of the 21st century, still has not reached its peak. Militaries and warfare undergo several processes of structural transformation, from the doctrinal level to operations. Armed drones used for military purposes offer an excellent example of the complex way in which new weaponry and new technologies may change the characteristics of warfare—sometimes even in spite of the fact that they have been assumed to be eternal and everlasting for centuries. WHAT ARE COMBAT DRONES? Unmanned Aerial Vehicles (UAV) or Remotely Piloted Aircraft Systems (RPAS), commonly named drones, are “pilotless aerial vehicles which can be guided either through remote control by a military squad in its home country or that can navigate autonomously based on a pre-programmed software.”1 This article focuses on combat drones used for military purposes. Combat drones are capable of providing information, as well as disposing over strike capacity: “they can kill, disable, support fighters on the ground, destroy, harry, hinder, deny access, observe, and track.”2 The first drone strike was carried out in Afghanistan in November 2001. After this, sporadic US operations took place in Yemen in 2002 and in Pakistan between 2004 and 2007. The regular application of drones in the United States started in 2008. George W Bush approved 57 drone strikes during his two presidential terms, while, under Barack Obama’s two terms,

An MQ-9 Reaper drone, frequently used over Somalia by US forces

a total of 563 strikes targeted Pakistan, Somalia, and Yemen (not mentioning Afghanistan, where the strikes were carried out as a part of military operations and not by the CIA). Donald Trump claimed that he did not want to follow in Obama’s footsteps, disapproving the—by that time severely criticised—use of drones. Nonetheless, in 2017 and 2018, Trump launched 238 drone strikes in Pakistan, Somalia, and Yemen, according to data by US Central Command (CENTCOM) and the Bureau of Investigative Journalism in London. The advantages of armed drone use can be summarised as follows: • Reduction of the number of casualties to a minimal level • Reduction of the number of civilian casualties to a minimal level • Efficient and effective operation in terms of costs and benefits included • The possibility to target specific persons SMART NATIONS


CASUALTIES OF US DRONE STRIKES (2002–2018) Pakistan (2004–2018)

Yemen (2002–2018)

Somalia (2007–2018)

Afghanistan (2015–2018)









Civilians killed





Children killed









Number of strikes (min.) Deaths


• Deployability in remote areas with difficult accessibility • The possibility to increase psychological pressure on the enemy • An ethical applicability which is in line with the regulations of international law There are also disadvantages and controversies that often occur in connection with combat drones: • The reliability, relevance, and validity of official reports and statistics proving the efficiency and success of drone strikes is questionable and controversial. • The actual methods of deploying armed drones claim several civilian casualties. • The tactical advantages gained through their use may cause strategic disadvantages, such as the rise of hostile sentiments against countries that carry out armed drone strikes. • Drone strikes in the area of allies may undermine the authority and legitimacy of local governments, contributing to the same instability that they intend to reduce. • The democratic control of their deployment runs into controversies. Overall, the obvious advantages notwithstanding, there are several blind spots from ethical and international legal perspectives, which fosters controversies as long as these issues are not solved in an unambiguous way, acceptable for the majority of the international community. 140


DRONE POWERS ALL OVER THE WORLD: A VULNERABLE INTERNATIONAL BALANCE Combat drones are often mentioned as the weapon of choice of the United States. However, other countries also dispose of armed drone programmes. In 2018, 26 countries (Azerbaijan, China, Egypt, France, Georgia, Germany, Greece, India, Iran, Iraq, Italy, Kazakhstan, Nigeria, Pakistan, Poland, Saudi Arabia, South Africa, Spain, Sweden, Switzerland, Turkey, Turkmenistan, the UAE, the UK, the US, and Ukraine) had armed drones, although not all of them produce these systems at home. As for countries working on the development of their own drone programmes, in 2018, 22 countries (Australia, China, France, Georgia, Germany, Greece, India, Iran, Italy, Jordan, North Korea, Pakistan, Saudi Arabia, South Africa, South Korea, Spain, Sweden, Switzerland, Turkey, the UK, the US, and Ukraine) chose this way to develop their armed forces. The proliferation of drones is proceeding very rapidly—in 2007, the United States was the sole drone power of the world, and by 2010, only the UK and Iran had joined the club, but in 2015, six additional countries got hold of combat drones, and in 2016, as many as 10 countries acquired this capability. Until today, ten countries have used armed drones in combat: Azerbaijan, Iran, Iraq, Israel, Nigeria, the UAE, the UK, the U.S., Pakistan, and Turkey.3 The level of technological development is of key importance in the processes of developing

combat drones. This raises a further question related to an already-existing and important matter: the always-widening gap between developed and developing countries. As the use of armed drones is only available for those countries that can allow their development or purchase, developing countries are automatically hindered in this field. While drones are used in wider and wider circles in the developed world, and begin to become a mainstream weapon for several armies, developing countries, which cannot allow themselves to use them, are becoming more and more vulnerable. SUMMARY There are two main narratives concerning armed drones and their effects on the nature of warfare. On the one hand, there is the argument that these weapons make warfare more human and ethical by keeping soldiers away from battlefields and possible injuries, while also contributing to the maintenance of peace with their deterring impacts. On the other hand, several analysts claim that the underregulated use of drones lays the foundations of a more inhumane, more violent, and more irresponsible world, where the lack of risk leads to the unrestricted use of weapons, followed by the growing number of casualties and conflicts. One thing is sure, the use of armed drones will increase to a significant extent in the near future—as it is already visible in the published statistics. Under the circumstances of war, in active war zones, UAVs can provide tangible advantages, which cannot be ignored by any states being capable of developing or purchasing these weapons. However, the present strategies of using drones do not seem to utilise the opportunities well, neither concerning the precision nor the efficiency of drone strikes. The issue of the so-called “drone blowback,” including the possible causal link between drone strikes and increased terrorist activities should also be a subject of consideration, and so is the question of trading tactical advantages to other strategic disadvantages. Dealing with ethical and legal controversies, and establishing institutions

A female military drone operator—may drones also revolutionise the image of the hero?

to constrain the use of armed drones are also important tasks for the future of the international community. Departing from the facts mentioned above, the conclusion can be drawn that the extended use of drones will further revolutionise military affairs, possibly changing several features assumed to belong to the very nature of warfare.

ENDNOTES 1 Giordano Bruno Antoniazzi Ronconi—Thaís Jessinski Batista—Victor Merola: The Utilization of Unmanned Aerial VEhicles (UAV) for Military Action in Foreign Airspace. UFRGSMUN. 2014/2. 137. 2 Roconi—Batista—Merola, 138. 3 Peter Bergen [et al.]: Who Has What: Countries with Armed Drones. New America. <https://www.newamerica. org/in-depth/world-of-drones/3-who-has-what-countriesarmed-drones/ > Accessed: 19 December 2018.




There are certain locations on the globe which are so unfavourable geographically that controlling them not as part of a wider empire but as an independent political entity is a rare occurrence in history. A particularly disadvantageous geographic location for independence is the land of Israel, ancient and modern. The small landmass, situated at the crossroads of Eurasia and Africa, serves as their only land bridge, which, therefore, being an extreme geopolitical example, may provide us with the most thorough insight into how security may be achieved through outstanding strategic use of frontier technologies. Israel uses technology in three main ways to create a more robust security presence in its sovereign territory and beyond. The first is boosting its monitoring and surveillance capabilities, ensuring the ability to maintain a positive asymmetry in knowledge vis-à-vis its adversaries. The second dimension is creating advanced physical defences, through developing offensive and defensive capabilities. Thirdly, beyond the physical realm, it aims to secure cyberspace for its own use, and utilise it to damage its enemies. Israel was hardly a high-tech power a generation ago, but a rather curious mixture of constraints, opportunities, and human decisions made all the difference. Two of these constraints were crucial when it comes to the development of high-tech weaponry. First, the Israeli military procurement was informed by a series of major powers abandoning Israel, opting to build alliances with the Arab states instead. Israel, therefore, had to create a home-grown military-industrial complex. This factor met the even harder truth that Israel might divide its adversaries as much as possible, but it would have to prepare to face quantitatively superior forces eventually, which 142


means that it would always have to have the qualitative edge, may it be through importing better equipment, or developing its own supreme technology. These hard constraints met two wise decisions which unleased the Israeli high-tech potential. First, Israel moved gradually towards a true market economy in the late 1970s from the semi-socialist planned economy of its first three decades under the Labour Party’s rule. The educated, entrepreneurial population (for more details on the national characteristics of Israelis, it is recommended to read the bestseller Start-up Nation. The Story of Israel’s Economic Miracle by Dan Senor and Saul Singer) has created a fertile ground for innovative companies and allowed access to global venture capital sources quite easily. Secondly, based on the OECD’s statistics, Israel has become a country which spends more than any other country on R&D: a robust 4% or more of its GDP, a figure which is sometimes matched only by the Republic of Korea, another innovation giant. Finally, Israel had an opportunity it used to the maximum—the cohesion of its society. The Global Innovation Index (GII) 2018 shows that academia and business is highly interconnected in Israel; actually, it is number one in the world in terms of “innovation linkages.” What these figures do not and cannot show is that the military is also an integral part of the fabric of society, not only because of the mandatory conscription of males and females for almost three and two years respectively, but also because of the networks created in the army and the annual training drills for the men. The three sectors of academia, business, and military are, therefore, very fluid, a quality further aided by the new ventures of universities,

housing academic, business, and military facilities, such as the Advanced Technologies Park of the Ben-Gurion University of the Negev. Scientists, engineers, and experts move in and out of the Israeli military-industrial complex and its attached institutions, and create not only new security solutions but also new revenues for the companies and the Israeli state by extension. All of the above shows how hard the necessities of a state, combined with excellent capabilities, can create a model innovation environment. Showing that even excellent innovation capabilities cannot guarantee a smooth solution to all security challenges, Israeli research is moving in the following directions in the next couple of years. In the field of surveillance, Israel is employing a three-layer approach in which it painstakingly maintains a satellite-building capability, combined with the Jericho intercontinental rocket programme, to have a domestic platform to fall back upon in the first layer, space-based surveillance. It is important to note that, even though certain voices call out the government on artificially maintaining its lavish space programme, Israel will never abandon what the military jargon refers to as the

â&#x20AC;&#x153;ultimate high ground.â&#x20AC;? Small wonder that it will be the fourth country to send a rocket to the Moon, and land its (unmanned) spacecraft there in February 2019â&#x20AC;&#x201D;although in a relatively cheap and smart way, through international partnership. The second layer is a bit closer, just above ground: Israel is an industry leader in drone technology, which is supremely suited to operate in confined spaces such as Israel, its disputed/ occupied territories, and its environs. Drone technology also provides a great reason for other countries to cooperate with Israel, as deploying a high-quality drone fleet is not an especially raw material-demanding but rather a technologically nuanced endeavour. Countries as diverse as India, Brazil, and Kazakhstan has already developed partnerships with Israel to share in its cutting-edge military technology, and Israel is not shy to use these joint ventures to cement its other security interests in the international arena. Finally, as a third layer, Israel had to face a security challenge in recent years which cannot be managed through satellite spying and drone surveillance, which do excel at monitoring rocket

An Israeli-made unmanned ground vehicle, the Guardium UGV SMART NATIONS


sites in Syria and force build-ups in Lebanon and Gaza. Terror groups at its northern and southern border, realising that they cannot avoid Israel’s all-seeing eyes above the surface, started digging tunnels into Israel. Again, the Israel Defense Forces had to resort to advanced technology to rapidly deploy devices which can detect these tunnels underground. Although the technology is itself a secret, we can suspect that they upgraded certain drilling technologies, previously exclusive to mining, deploy them in active military operations. Of course, it is not enough to merely notice the threats. Israel has also used its research base to create defensive and offensive instruments to counter these attacks, while it has to face a severe paradox of technology, demonstrated by the Iron Dome defence system. The anti-rocket equipment is part of a three-layer rocket shield, protecting Israel from the different categories of missiles from its nearby and faraway enemies. The problem with developing effective, technology-intensive solutions is that they are usually very expensive, as they need a massive R&D and industrial base to support the effort and, of course, taxable income to channel into these defence ventures. Staying with the Iron Dome system, one anti-rocket missile costs USD 10,000, and each positive alarm would trigger the launching of two of such missiles. On the other hand, rockets used by Hamas and Hezbollah cost only a few hundred dollars. A massive rocket barrage from Lebanon, for example, could very well empty the Israeli public

Iron Dome intercepts rockets from the Gaza Strip 144


coffers. Therefore, even the most high-tech solution, with 99%+ efficiency, has serious limitations in real life military engagements. Innovation is not a one-way street, and expensive mistakes can also be made in the process. Israel has made such a mistake when it stopped the massive research into laser technology for rocket defence twelve years ago, and opted for anti-rocket missile systems, such as the Iron Dome. It had to realise that it is not a complete solution, and it needs a fourth layer of defence, a lower energy variable to detonate incoming rockets which may just be provided by laser batteries. However, even in case of this relative mistake, the efficiency and integrated nature of the Israeli innovation scene kicks in; although the formal military has abandoned this type of research into laser batteries, the diverse and buzzing civilian R&D base, deeply integrated with the global tech scene, kept on going, and so the new developments of later technology for military use can start from a much higher basis than twelve years ago. The benefit of having competing tech centres in your country is that you always have multiple options to fall back on when national interest calls for it. Another type of weapon system family Israel is moving towards is drones; they are used not only to enhance its surveillance capabilities, but also to increase its firepower. This technology has gradually matured into game-changing Unmanned Combat Air Vehicles (UCAV) in Israel, such as the world’s largest UCAV, the IAI Eitan, which can carry almost three tons of payload (e.g. air-to-surface missiles). Israel, in order to compensate for its low population of nine million, has also applied the idea of unmanned combat vehicles in the maritime and land domains, and has developed a model for swarms of combat drones, swimming in the Mediterranean Sea, arguably to protect its coastline and drilling installations. The Israeli arms manufacturer company, Rafael, experiments with semiautonomous armoured ground vehicles, guided from a “mothership” unit. Finally, with all the missile threats and terror tunnels that Israeli generals have to consider to defend their nation, we must not forget that a

Security cameras are recording all steps of the passers-by

whole new security dimension has co-evolved beyond our material realm. Israel realised early on that the push it had been making in high-tech military equipment also creates a significant vulnerability in the cyberspace. Just imagine the aforementioned domestic missile systems and drone fleets turning against their own users, and you can see how Israel has found itself at another paradox of technological development. There are no good solutions to this conundrum, but to carefully balance between the vulnerabilities and opportunities advanced technology provides. Israel has made its mark in this field profoundly with the Stuxnet virus in 2010, which destroyed a significant part of the Iranian uranium enriching centrifuges, setting back the countryâ&#x20AC;&#x2122;s disputed nuclear programme by years. Another current example is the ongoing effort by Israel to utilise cyberspace for pre-empting terrorist attacks by monitoring the social media and other communication channels used by the Palestinian population of the West Bank. However, unlike a generation ago, when security personnel had to actually analyse what potential spies or terrorists said or wrote, Israel is building AI applications to analyse millions of messages

simultaneously and alert human operators only when necessary. Security is in the eye of the beholder: On the one hand, technology might lead to suffocating supervision and the irrelevance of the general population or of countries not possessing the most cutting- edge technologies. On the other hand, by extending the qualitative edge of countries such as Israel, it can mitigate the geographic and demographic constraints of states, and make their defence viable. High-tech technological solutions, which came and continue to come online in Israel, stemming from robotics, AI, advanced algorithms, and other frontier technologies basically, give Israel more options to reach its goals vis-Ă -vis its adversaries. In a campaign, military or otherwise, the most benefit comes with keeping the most viable options until the endgame. Technology excels the most when it is employed to give options to decision makersâ&#x20AC;&#x201D;it widens their strategic and tactical palette, thereby providing the physical and/or cyber variant of the coveted manoeuvrability of old armies to those working on the mission, including the political leaders, military commanders, intelligence officers, down to the frontline soldiers, facing the enemy in person. SMART NATIONS



CHANGING DEMOGRAPHIC TRENDS Demographics are drastically changing all around the world, and these changes bring about serious challenges for healthcare systems, both in developed and emerging countries. In the Western world, it is the aging of the population that gives reason for growing concern, and a shift can be experienced from the need for acute treatments to the long-term treatment of chronic illnesses. Besides the prolonged longevity, urbanisation also contributes to healthcare providers’ challenges. Half of the world’s population now lives in urban areas, and, as a result of radical lifestyle changes over the past decades, obesity is becoming an urgent medical problem in the developed world. The financial burden on national healthcare systems and the proportion of healthcare spendings in the national budgets are increasing. There are very different reasons for concern in the developing world. Africa’s population is estimated to double by the middle of the 21st century, and following this boom, the shortage of medical staff is expected to reach critical levels. A recent World Health Organisation survey shows shocking results regarding the doctor-to-patient ratio, as in most Sub-Saharan countries, there is less than one available physician per 1,000 patients. The digital transformation of the healthcare sector is of a crucial importance in order to face the brand-new challenges of the future’s societies. The lack of traditional healthcare infrastructures explains the much faster spread of mobile healthcare solutions in developing countries than in developed economies. The reason for mHealth’s popularity is the neccessity of care, and this urgent need compels people to lower their online security expectations. No matter on which side of the globe one may live, the shared goal is to reduce medical costs and make care more efficient. 146


CHANGING DEMANDS—PERSONALISED HEALTHCARE It is not only the demographics that are changing but also the society that we live in. The globally growing middle class is gaining ground in consumption, and it has become more aware of its needs. And what they want is custom-made healthcare. Most countries in Europe have already taken a huge leap in transforming their healthcare systems, and healthcare as it has become a highly technology and information-intensive sector. The evolution of technologies in the industry is extraordinary. The use of computers to register and share medical records marks the beggining of eHealth. With the general spread of the internet, telemedicine allowed for the remote treatment of patients who had difficulties accessing care because of financial or distance barriers. Nowadays, it would be very hard to find a person without a mobile phone in a devoped country. The notion of smarthealth developed simultaneously with the advancement of GPS tracking and networks of context-aware intelligent instruments, such as mobile applications, wristbands connected to the internet, or sensors or devices that constantly dose certain medications according to instantaneous measurements. The diagnostic accuracy of these devices is quickly improving, and so is their significance in the provision of healthcare. AI’s ability to recognise and predict patterns of costumer behaviour makes healthcare truly personalised. What makes smart healthcare so accessible for everyone is that we usually do not think of these new technologies as a medical device. The accessibility of many smart health services creates a competition between healthcare providers, making it much cheaper than traditional care. The benefits of smart solutions can be classed in four not-so-distinct groups. For most healthy

individuals, the main function of smart health devices is prevention: to promote wellness, to track activity history, and to gain customised fitness advice. The use of weight management applications and performance measuring watches have become commonplace amongst the younger generation. The second function of smart healthcare is the remote and continous monitoring of patients. This is especially important for patients with life-threatening and chronic illnesses, such as cardiovascular diseases. The third function is the early detection and diagnosis of illnesses with the help of AI. The fourth and the most important application of the internet of things is the care for the most vulnerable population, the elderly. Ambient Assisted Living (AAL) uses smart devices with the aim to help the elderly stay rather independent but monitored at the same time. The insertion of intelligent objects in aging adults’ homes can assist in many different ways. Most devices are oriented towards raising the level of independence and help with everyday tasks. These technologies are capable of delivering autonomous actions, such as turning off household appliances or measuring levels of medication, and dose it accordingly. Some of the most popular devices made for the elderly population are appliances that continously monitor vital functions and authomatically notify the ambulance in case of emergency. These technologies greatly reduce the time spent at the GP’s, and, therefore, they ease the charge and cost of national healthcare systems. THE POWER OF SOCIAL PLATFORMS However, the benefits of the digitalisation of healthcare do not end with the use of smart devices. It would be a big mistake to underestimate the power of social platforms. The internet helps the exchange of information not just amongst healthcare professionals but also amongst patients. With the development of communication, and with less and less life-threatening situations, the modern middle class started to look at healthcare as a service instead of a necessity. There are websites that make it possible to exchange information, to

MHealth—a cardiograph app running on a smart phone

rate the performance of healthcare professionals, and online platforms have also become a place to report less important misconduct. However, the power of social media works the other way around too: platforms can help general practitioners to reach out to their communities on an everyday basis with lifestyle advice, or to a large amount of people quickly in case of an epidemic. SECURITY When it comes to cybersecurity, one hardly ever thinks of healthcare. However, the Internet of Medical Things (IoMT) can be hacked similarly to any other device connected to the internet. With the common use of implanted wireless devices amongst cardiovascular patients, rumours have emerged about hackings that can cause battery drain and the malfunctioning of pacemakers. In theory, hackers can even remotely deliver fatal shocks to patients. In 2017, the Unites States Food and Drug Administration agency almost caused a heart attack to hundreds of thousands of cardiovascular patients when recalling faulty pacemakers. So, how likely is it to die of an intentionally caused heart attack? The FDA issued security alerts after discovering that flaws of the connected pacemaker’s security system allow hackers to reprogramme devices. Measures were taken by the concerned health tech firm Abbott, and doctors say there is no need to worry. Benefits greatly outweigh the risks of being killed by a remotely caused heart attack, as connected pacemakers with wireless software SMART NATIONS


Wearables open up new perspectives in health data collection and analysis

updates help patients avoid risky heart surgeries over and over again. ICT professionals also generally agree that the risk of a computer virus accidentally attacking the system is a lot higher than individually targeted hacking. To this day, there has only been one case of medical device hacking reported: a substance-addicted Austrian couple hacking their own morphine pumps at the hospital. DATA COLLECTION Most of the above-mentioned functions come back to the fact that many smart devices, worn on the body, continously collect first-hand data about patients. The main achievement of IoT in healthcare is, therefore, its ability to give real-time access to personal and also to aggregated data by connecting multiple agents. In the meantime, not only directly health-related data can be useful. The pace at which one walks, online shopping habits, and the time spent in front of the computer can all become useful information in predicting oneâ&#x20AC;&#x2122;s state of health. Pooling these 148


data, therefore, has an incredible potential for the healthcare sector. As the collected data is of a high value, privacy has become a more concerning question than hacking. Healthcare data and devices are generally less protected than, for example, banking data, and often do not require any passwords to be accessed. The advantages of data collection are unquestionable. Analysing aggregated patient information, healthcare service providers and governments can better cater for future demands by improving the planning of vaccination producionâ&#x20AC;&#x201D;they can also more effectively monitor how pandemics spread, and take the necessary countermeasures. With the use of smartphones, our personal and professional lives have become intertwined. The Bring your Own Device (BYOD) culture at workplaces has allowed employers to avoid having to continuously buy the latest devices for employees, as personal laptops are often more cutting-edge than company ones. Despite its advantages both for employers and employees,

A glimpse into the not-so-distant future: a robotic surgery training program at the US Air Force

BYOD has increased the risk of data breaches. Government regulations have to find the right balance between protecting citizens’ rights and confidential data and allowing for the efficient use new technologies.

trends, the public sector’s healthcare providers and the private tech sector’s developers have to find common ground. And even though the future of healthcare might look like a science-fiction movie with implanted intelligent devices and bio-sensors, we are still far away from becoming Star Trek’s Borg-like creatures. While the risk of losing control over a large amount of confidential information is undeniable, at the moment, advantages seem to greatly outweigh the risks. Smart technologies contribute to the creation of a new, more efficient and transpartent healthcare environment with reduced corruption, reduced privileged access, and a more personalised and holistic approach to healing.

DIGITALISATION OF EUROPEAN HEALTHCARE The improvement in Member States’ healthcare systems is a priority for the European Union. The eHealth Action Plan designed in 2012 focuses on the creation of efficient and sustainable healthcare systems. In order to boost the competitiveness of the healthcare sector, the European Commission proposed actions boosting interoperability and standardisation. Ineroperability is an important element of smart health, as service providers collect data, using a wide range of platforms, from self-assesment forms to electronic health records. This disjointed healthcare environment is not efficient, so integratiing data collected from different platforms is crucial. In October 2018, the European Parliament voted in support of the new cornerstone legislation on the free flow of non-personal data across the European Union. This will help enhance cross-border cooperation between the Member States, and will have a huge effect on the use of smart technologies in healthcare. As we are about to enter a new digital era, sustainable healthcare is unimaginable without the cooperation of experts in different disciplines. In order to tackle challenges of new demographic SMART NATIONS



The Antall József Knowledge Centre (AJKC) in Hungary, during its ten years of existence, has introduced a variety of events targeting Hungarian students enrolled in higher education, as well as domestic and international professional audiences. The Knowledge Centre is named after József Antall (1932–1993), a Hungarian teacher, educator, librarian, historian, and statesman, who served as the first democratically elected Prime Minister of Hungary after the fall of communism (from 23 May 1990 to his death on 12 December 1993). The Knowledge Centre’s main objectives, in line with the Antall philosophy, are talent management and providing students and young professionals with wide-ranging practical knowledge through various events. The Knowledge Centre is a Budapest-based think tank researching topics of national, regional, and international relevance such as the Visegrad Cooperation, the future global role of the US, China, and the Middle East, security policy, sustainable development, as well as technological and social innovation. Our institution is structured into three international offices—dealing with the EU and the V4, the USA, and Asia and Africa—three thematic offices—focusing on security policy, sustainable development, and talent management—two regional offices in Pécs and Győr, as well as the

Brussels Office, all of which are working toward strengthening institutional relations both at the national and international level, developing scholarship and internship programmes, and boosting professional cooperation via international conferences, workshops, and event series. The publishing activities of AJKC involve releasing professional publications, scientific works on political and social sciences (with special regard to security policy and international relations), as well as university textbooks. In our autobiographical series, prominent personalities of the Cold War period, including Ronald Reagan, George Bush, Margaret Thatcher, and Helmut Kohl recount crucial years and decisions still affecting their lives. Reacting to events of political, social, and economic significance in the 21st century, the professional publications series of the Knowledge Centre is made up of works incorporating the latest results of international relations and geopolitics, the history of politics, economics, and psychology. The think.BDPST conference is AJKC’s most ambitious professional event. The main aim of the project focusing on innovation, new technologies, and regional development, is to put Hungary on the map of large-scale regional conferences, such as GLOBSEC, the Krynica Economic Forum, and the

Prague European Summit, by organising the most significant innovation forum in the region, thereby facilitating a dialogue between the representatives of the economic, governmental, and scientific spheres. The event enjoys the support of the Ministry of Foreign Affairs and Trade of Hungary and the International Visegrad Fund. The aim of the Creative Hungarian Minds lecture series is to introduce the research results, inventions, and innovations of Hungarians to as wide an audience as possible. Contemporary Hungarian inventors have achieved great results in many scientific fields (Leonar3do, Masatâ&#x20AC;&#x201C;1, Puli Space Technologies, 3D technology, and BPGuard). Therefore, in addition to promotion, AJKC stresses the importance of providing young researchers with practical assistance in improving and developing their inventions. The lectures primarily target young people pursuing their studies at technical, environmental, and economic faculties, as there are many Hungarian talents and inventions yet to be discovered. In addition to innovation, the Knowledge Centre puts special emphasis on sustainable development. During the five instalments of the SUSCO Budapest conference series, many topics were examined including sustainable development in general and the sustainable development goals (SDGs)

developed by the United Nations, such as sustainable cities and communities, clean water and sanitation, or affordable and clean energy, and environmental migration. In 2018, the Knowledge Centre organised the sixth Antall JĂłzsef Summer School. Every year, 30-35 students from more than 20 countries enrolled in different MA and PhD programmes participate in the two-week event, the aim of which is to strengthen and render the Visegrad Cooperation more visible in the field of education. The Antall JĂłzsef Summer School provides those interested in Central European studies with the opportunity to deepen their knowledge of the V4 region and Hungary. The objectives of the Knowledge Centre include talent management and the establishment of a higher education network. For these purposes, AJKC organises the annual Danube Regatta. The number of participating universities has grown year after year since its inception: in 2018, on the occasion of the Hungarian Presidency of the Visegrad Group, we welcomed teams from the Visegrad Countries again, who this time not only competed in the rowing and dragon boat races, but in other sports events as well. Other aims of the Regatta include encouraging a diverse use of the Danube and improving the image of Hungary.


Péter Stepper (ed.): Central Europe and the Visegrad Cooperation

Mózes Csoma: A History of Korea

The first edition of this textbook on Central Europe and the Visegrad Cooperation presents the brief history of the regional partnership, the road to the EU accession of 2004, the Group’s role in contemporary European politics, as well as the internal dynamics and foreign relations of the V4 Group. We hope that students and experts who use this book will receive the necessary scientific background to recognize the importance of East-Central European countries and their voice within the Euro-Atlantic community. In the last three decades, a number of international and regional alliances have been established, involving the countries of the region. Several formats were adapted, such as the pre-integration projects of CEFTA, CEI and the V4, reductionist cooperation formats, such as the Weimar Triangle and Slavkov, issue-based initiatives focusing on transport networks, such as TSI and 16+1, as well as partnerships focusing on defence, such as the B9 and the CEDC. Among these, the V4 is the most well-known, a platform which, as we believe, is able to facilitate further cooperation, serves as the very core of Central European politics and contributes to the emerging relevance of this pivotal region in Europe.

The situation of the Korean peninsula has become a hot international affairs topic in the last years. Korea researcher Dr Mózes Csoma gives us an overview of the peninsula’s history from the beginnings to the latest developments, while also pointing out the differences in the North and South Korean interpretations of the various periods. The Cold War division has also had an impact on historians’ interpretations of ancient, medieval, and modern history: the textbooks of the Korean Republic and Democratic People’s Republic of Korea present these eras and their historical figures in diverging ways. In discussing 20 th -century developments, the author relies heavily on previously unpublished archival material containing a plethora of new information regarding the development of relations on the peninsula. For this monography the author also conducted a series of interviews with diplomats and eyewitnesses, providing valuable accounts of Korean political processes and trends.



Release Date: June 2019



1-12 JULY 2019, BUDAPEST


1-31 MARCH 2019










Evans, Matthew Associate Director of techUK, leader of techUK’s Smarter UK and Internet of Things Programmes

The UK Trends in the Smart Home Business

Forster, Andrew Editor of the fortnightly magazine Local Transport Today, covering transport policy and

The Future of Mobility? In Milton Keynes It Is Already Here

practice from across the UK

Georgiu, Achilles Technology Support Services Director at IBM, Program Director of MSc in Technology Management & Innovation at the Department of

Digital Transformation—How Should We Remould Our Old Models of City Operations to Adapt to Disruptive Technological Development?

Economics and Business in CEU

Gere, László Senior Researcher, Pallas Athene Innovation and Geopolitical Foundation

Smart Cities—What Does It Mean and How Can We Get There?

Knott, Theo Policy Programmes Manager, BCS,

The UK’s Digital Strategy: Rhetoric and Reality

the Chartered Institute for IT

Kozjek-Gulyás, Anett Assistant Professor at the Department of Chinese Studies of Pázmány Péter Catholic University


China at the Vanguard of the Smart Revolution— China’s “Four Great New Inventions” and Their Social Background





Ladányi, Richárd Head of Department of System Design, Bay Zoltán Nonprofit Ltd. for Applied Research

An Overview on Industry 4.0 and Its Prospects in Hungary

Lister, Sam Director of Industrial Strategy at the Department of Business, Energy and

The UK’s Modern Industrial Strategy

Industrial Strategy (BEIS)

Marton, Péter Associate Professor, Corvinus University of Budapest

Prikk, János Energy and Utility Industry Leader, E&U Industry Expert, IBM Hungary Ltd.

The Biotechnological Revolution Will Not Be Televised—Do Androids Dream of a Fair Society?

Cities 4.0-Where Will the “Transcitizens’” Homes Be?

Selján, Péter International Relations PhD Student,

The #positiveeffects of Social Media

Corvinus University of Budapest

Szarvas, Péter CEO, Founder, Chameleon Smart Home Ltd.

Hungarian and Regional Challenges in Making Better Smart Homes—How to Connect Everything and Create Platformless Smart Solutions






Tari, Annamรกria Psychoanalyst, psychotherapist

The #negativeeffects of Social Media

Webb, Stefan Head of Digitising Planning,

Digitising the Land-Use Planning System

Future Cities Catapult

Dr Yatid, Moonyati Senior Analyst at the Technology, Innovation, Environment and Sustainability (TIES) division of ISIS Malaysia Zainul, Harris Researcher at the Economics, Trade and Regional Integration (ETRI) division of ISIS Malaysia

The High-Tech City of Cyberjaya and the Economic Development Plan of Vision 2020




Baranyi, Tamás Péter Historian, PhD Head of Research





Hungarian Foreign Policy, Defense, and Innovation Smart Cities: A Budapest Approach The Case Against Language Deflation

Braun, András Political Scientists, PhD candidate International Relations Manager, Brussels Office

Towards a Smart European Integration?—An Overview of the European Digital Revolution

Csepregi, Zsolt International Relations Expert, MA International Relations Coordinator,

The Survival of the Geekiest—A Case Study of the Israeli High-Tech Defence Sector

Head of Security Policy Office

Debrenti, Félix International Relations Expert, BA

Faster Communication and the End of Babel

Project Coordinator

Éva, Ádám Arabist, PhD Candidate International Relations Manager

Gulyás, Zsófia Undergraduate Student in East Asian Studies (MA) Intern

Smart Cities in the Gulf

Made in China 2025—China’s Industrial Modernisation Initiative Objectives and Their Global Reception









Herédi, Elina Economist, BA Project Manager, Brussels Office

Szálkai, Kinga International Relations Expert, PhD Researcher

Varsányi, Cecília Economist, MA Head of Sustainable Development Office

A New Era of Healthcare

Game of Drones: The Possible Effects of Using Armed UAVs

How Can Smart Cities Help Us to Cut Down Our Energy Consumption and Make Our Future Greener?

Voller-Szenci, Ildikó Lawyer, MA, Certified Cybersecurity Expert Head of Brussels Office

Free Elections—How Do We Protect Our Democracies?

Zborai, Eszter Economist, MA Head of Talent Management Office


The Better Life Index by OECD—What Makes a Country Happy?


PICTURES AND USED DATA Cover Photos Source: Shutterstock, Pixabay Photos for the 3 rd, 4 th, 6 th and 7 th chapter Source: Shutterstock Photo for the 5 th chapter Source: AJKC


bWUtZGV2aWNlLW93bmVyc2hpcC11cC1idXQtY29uc3VtZXJzLXJlbWFpbi1zY 2VwdGljYWw > What connected home devices do consumers own? Source: techUK: The State of The Connected Home. Edition two. 2018/ September. 10. < securit y/download/13914?file=The_State_of_the_Connected_ H o m e _ 2 018 _13 914. p d f& I t e m i d =17 7& r e t u r n = a H R 0 c H M 6 Ly 93d3cudGVjaHVrLm9yZy9pbnNpZ2h0cy9uZXdzL2l0ZW0vMTM5M TQ tY2 9 u b mV j d GV k LW h v bW U t ZGV2aW N l LW 9 3 b mV y c 2h pcC11cC1idXQtY29uc3VtZXJzLXJlbWFpbi1zY2VwdGljYWw >

INSIGHTS Smart City & Smart Home Infographics Source: Shutterstock Hungarian Foreign Policy, Defence, and Innovation Portrait of Dr Péter Sztáray. Source: Ministry of Foreign Affairs and Trade Smart Cities: A Budapest Approach Portrait of Ms Alexandra Szalay-Bobrovniczky. Source: The Municipality of Budapest Ms Alexandra Szalay-Bobrovniczky at think.BDPST 2018. Source: AJKC The UK’s Modern Industrial Strategy Some results of the UK’s Industrial Strategy in figures. Source: https://, licence: Open Government Licence v3.0 The Industrial Strategy is supporting business, research and training throughout the UK. Source: /government/ publications/forging-our-future-industrial-strategy-the-story-so-far/ forging-our-future-industrial-strategy-the-story-so-far, licence: Open Government Licence v3.0 T he Industr ial Strate g y is hav ing a n inte r national impact. Source: https://w w /government/publications/forgingo u r- f u t u r e - i n d u s t r i a l - s t r a t e g y - t h e - s t o r y - s o - f a r/ f o r g i n g our-future-industrial-strategy-the-stor y-so-far, licence: Open Government Licence v3.0

Top barriers to purchase (2018). Source: Source: techUK: The State of The Connected Home. Edition two. 2018/September. 12. <https://w w /techuksecurity/security/ d o w n l o a d / 13 9 14? f i l e =T h e _ S t a t e _ o f _ t h e _ C o n n e c t e d _ H o m e _ 2 018 _13 914. p d f& I t e m i d =17 7& r e t u r n = a H R 0 c H M 6 Ly 9 3 d 3 c u d GV j a H V r L m 9 yZy 9 p b n N p Z 2 h 0 c y 9 u Z X d z L 2 l 0 Z W 0 v MTM5MTQtY29ubmVjdGVkLWhvbWUtZGV2aWNlLW93bmVyc2hpc C11cC1idXQtY29uc3VtZXJzLXJlbWFpbi1zY2VwdGljYWw >

4 SMART CITIES Smart Cities—What Does It Mean and How Can We Get There? This chart shows the top 15 cities worldwide by GDP in 2030, when the world’s 750 biggest cities will account for 61% of the planet’s GDP. Source:, author: Niall McCarthy, licence: CC Tri-bowl Building at Central Park in Songdo district, Incheon, South Korea. Source: Shutterstock How Can Smart Cities HeIp Us to Cut Down Our Energy Consumption and Make Our Future Greener? Global new investment in renewable energy: developed and developing countries, 2004–2017, billion USD. Source: Bloomberg New Energy Finance: Global Trends in Renewable Energy Investment 2018. Frankfurt School of Finance & Management gGmbH, 2018. 15 (Figure 4). < > Indoor skiing in Dubai. Source: Shutterstock

3 SMART HOMES Hungarian and Regional Challenges in Making Better Smart Homes—How to Connect Everything and Create Platformless Smart Solutions All pictures are provided by Chameleon Smart Home Ltd.

Digitalisation’s impact on industry, transport, buildings. Source: Digitalization and Energy 2017. International Energy Agency. 5 November 2017. < > Sandbag housing in South Africa. Source: Design Indaba 10 × 10 Sandbag Housing, Mitchell’s Plein. Designspace Africa. <http://www. >

The UK Trends in the Smart Home Business Smart Home: Shutterstock

Cities 4.0—Where Will the “Transcitizens’” Homes Be? According to IBM, a city is a “system of systems.” Source: IBM

Appeal of smart home devices. Source: techUK: The State of The Connected Home. Edition two. 2018/September. 9. <https://www. e =T h e _ S t a t e _ o f _ t h e _ C o n n e c t e d _ H o m e _ 2 0 1 8 _1 3 9 14 . pdf&Itemid=177&return=aHR0cHM6Ly93d3cudGVjaHVrLm9yZy9pbnNpZ2h0cy9uZ XdzL2l0ZW0vMTM5MTQtY29ubmVjdGVkLWhv-

A city works well if the different interconnected subsystems work in synergy. Source: IBM Picture 3. Source: Shutterstock Digitising the Land-Use Planning System

All pictures are provided by Future Cities Catapult. The Future of Mobility? In Milton Keynes It Is Already Here All pictures are provided by the author. The High-Tech Cit y of Cyberjaya and the Economic Development Plan of Vision 2020 Prime Minister Mahathir Mohamad. Source: Mahathir_Mohamad_(43814329771)_(Mahathir_cropped).jpg, licence: public domain Buildings in Cyberjaya. Source: Shutterstock Statue of 2020 Vision, UMS, Kota Kinabalu, Malaysia. Source: https:// Vision%2C_UMS.jpg, author: Mfook, licence: CC BY-SA 4.0 Smart Cities in the Gulf The Smart City Initiatives Framework. Source of information: Wael A. Samad—Elie Azar: Smart Cities in the Gulf: Current State, Opportunities, and Challenges. Springer, Singapore, 2019. Solar-panel-powered palm-tree with Wi-Fi stations promote Dubai smart plans. Source: Shutterstock Framework for the Abu Dhabi Economic Vision 2030. Source: The Government of Abu Dhabi: The Abu Dhabi Economic Vision 2030. < > Quatar, Lusail City. Source: Shutterstock


The global network of big cities. Source: Shutterstock Free Elections—How Do We Protect Our Democracies? Whistle-blower Christopher Wylie. Source: Shutterstock Facebook’s estimates on users affected by Cambridge Analytica. Source:, author: FallingGravity, licence: CC0 1.0 A Joint Cyber Analysis Course during at Information Warfare Training Command, US. Source:, author: Petty Officer 3 rd Class Taylor L. Jackson, licence: public domain The diagram shows the workings of Spearphishing, a technique used by Russian hacker groups to interfere in foreign elections. Source: GRIZZLY STEPPE – Russian Malicious Cyber Activity, <https://w w _ 16-20296A_GRIZZLY%20STEPPE-2016-1229.pdf >, licence: public domain The Biotechnological Revolution Will Not Be Televised—Do Androids Dream of a Fair Society? CRISPR-Cas9. Source: File:CRISPR-Cas9-biologist.jpg, author: J Levin W, licence: CC BY-SA 4.0 Transgenic mice expressing green fluorescent protein, which glows green under blue light. Source: Genetically_modified_mouse#/media/File:GFP_Mice_01.jpg (Ingrid Moen [et al.]: Gene expression in tumor cells and stroma in dsRed 4T1 tumors in eGFP-expressing mice with and without enhanced oxygenation. BMC Cancer. 2012/January:21. doi: 10.1186/1471-240712-21), licence: CC BY 2.0 A photobioreactor to fuel biofuel industry. Source: Shutterstock

think.BDPST Conference All pictures in this section are from the AJKC.

6 SOCIAL EFFECTS Digital Transformation—How Should We Remould Our Old Models of City Operations to Adapt to Disruptive Technological Development? This curve shows how much time it took for humanity to double its knowledge. Source: 2011-02-15+a+las+10.57.17.png, author: Mariana Ludmila, licence: CC BY-NC 3.0 Percentage of population living in urban areas by region. Source: Living_in_urban_areas_1950-2050.png, author: Rcragun, licence: CC BY 3.0 Picture 3. Source: Shutterstock The change in the agglomeration of global big cities—urbanization seems an unstoppable process. Source: https://commons.wikimedia. org/wiki/File:Urbansierung.svg, author: Ktrinko, licence: CC BY-SA 3.0

7 SMART NATIONS Towards a Smart European Integration?—An Overview of the European Digital Revolution The three pillars of the 2015 EU DSM initiatives. Source: A Digital Single Market for Europe: Commission sets out 16 initiatives to make it happen. European Commission Press Release Database. 5 May 2015. < >. Licence:https:/ /legal_ notices_en#copyright-notice The Roadmap for the EU’s 2015 initiatives. Source: A Digital Single Market for Europe: Commission sets out 16 initiatives to make it happen. European Commission Press Release Database. 6 May 2015. < >. Licence: https:/ /legal_notices_ en#copyright-notice The Digital Agenda for the Western Balkans. Source: European Commission launches Digital Agenda for the Western Balkans. European Commission. 25 June 2018. < digital-single-market/sites/digital-agenda/files/newsroom/da_for_ western_balkans_34086_172_35218_368.jpg >. Licence: https://

The EU’s eGovernment Action Plan 2016–2020. Source: European eGovernment Action Plan 2016-2020. European Commission. 16 August 2018. < digital-agenda/files/egovhouse.jpg >. Licence: info/legal-notice_en#copyright-notice

Mobile payment in China. Source: Shutterstock

Digital Economy and Society Index (DESI) 2018 ranking. Source: The Digital Economy and Society Index (DESI). European Commission. 14 January 2019 Licence:

Made in China 2025—China’s Industrial Modernisation Initiative Objectives and Their Global Reception This year’s Smart China Expo in Chongqing, where the latest Chinese technology developments have been exhibited. Source: Shutterstock

The UK’s Digital Strategy: Rhetoric and Reality From 2010 to 2015, the digital sectors’ contribution to GVA grew by 21.7%, compared to the UK’s total GVA, which grew by 17.4%. Source: 3-the-digital-sectors-making-the-uk-the-best-place-to-start-andgrow-a-digital-business, licence: (Open Government Licence)

China is now aspiring to the United States’ leading role. Source: Shutterstock

The number of businesses in the digital sectors grew at a faster rate than the total number of businesses in UK between 2010 and 2014. Source:, licence: terms-conditions (Open Government Licence)

Casualties of US drone strikes (2002–2018). Source of information: Drone Warfare. The Bureau of Investigative Journalism. <https://www. > Accessed: 19 December 2018.

Investment in UK technology businesses is growing. Source: https:// /government/publications/uk-digital-strategy/3-thedigital-sectors-making-the-uk-the-best-place-to-start-and-grow-adigital-business, licence: (Open Government Licence) UK businesses are lagging behind their competitors in adopting some digital technologies. Source: /government/ publications/uk-digital-strategy/4-the-wider-economy-helping-everybritish-business-become-a-digital-business, licence: https://www. (Open Government Licence) Picture 5 & Picture 6. Source: Shutterstock An Overview on Industry 4.0 and Its Prospects in Hungary All pictures are provided by Bay Zoltán Research Institute. The Better Life Index by OECD—What Makes a Country Happy? Better Life Index visualisation with its typical “flower tool” Source:, licence: https:// China at the Vanguard of the Smart Revolution—China’s “Four Great New Inventions” and Their Social Background The Four Great Inventions of Ancient China. Sources: (LT) jpg, author: Jiao Yu and Liu Ji, licence: public domain; (RT) https://, licence: public domain; (LB) (188 0)_ pg36 _ A _CHINESE _ PRINTING _OFFICE _ AND_ BOOK _ BINDERY.jpg, licence: public domain; (BR) https://commons., licence: public domain The Chinese high speed train. Source: Shutterstock

E-commerce in China. Source: Shutterstock Shared bikes in China. Source: Shutterstock

Game of Drones: The Possible Effects of Using Armed UAVs An MQ-9 Reaper drone, frequently used over Somalia by US forces. Source: jpg, author: US Air Force, licence: public domain

A female military drone operator—may drones also revolutionise the image of a hero? Source: Shutterstock The Survival of the Geekiest—A Case Study of the Israeli High-Tech Defence Sector An Israeli-made unmanned ground vehicle, the Guardium UGV. Source: photostream/, author: Israeli Defense Forces/Cpl. Zev Marmorstein, IDF Spokesperson’s Unit, licence: CC BY-NC 2.0 Iron Dome intercepts rockets from the Gaza Strip. Source: https://, author: Israel Defense Forces, licence: CC BY-NC 2.0 Security cameras are recording all steps of the passers-by. Source: Shutterstock A New Era of Healthcare MHealth—a cardiograph app running on a smart phone. Source:, author: African Nutrition Matters, licence: CC BY-SA 2.0 Wearables open up new perspectives in health data collection and analysis. Source: Shutterstock A glimpse into the not-so-distant future: a robotic surgery training program at the US Air Force. Source: Images/MHS/Photos/surgical-robotics.ashx?h=428&la=en&mw= 720&w=720&hash=C4C6856E9BAD77A65F3175578EBE45BF486 C1BE0, licence: public domain

9 NEXT ISSUE IN FOCUS: NATO 70/20 The upcoming Hungarian-language issue of In Focus magazine is about the North Atlantic Treaty Organization and European defence. The alliance is celebrating multiple anniversaries this year: it has been seventy years since the Treaty of Washington was signed, and twenty years since the first three former Eastern bloc countries were admitted to its rank. Since then, the issue of European defence has undergone serious changes, though some aspects remained basically the same. What are the traditional and nontraditional threats that now cast their shadow on the continent? Is a military alliance able to successfully deter and combat essentially nontraditional threats? Is there still a divide between East and West, between old Europe and New Europe? The second issue of In Focus (2019) examines the problems of European defence from both political and military viewpoints, from global and Hungarian angles, review the major debates within the alliance, and discuss further possible ways to develop. The Antall József Knowledge Centre considers it an honour to commemorate the founding of the alliance and the admittance of our country to its ranks, as well as to contribute to a profound discussion on topics that are sometimes considered too technical but deserve the attention of all of us.

Additional issues of In Focus are available on the webpage of the Knowledge Centre, Please kindly note that In Focus can be downloaded free of charge after registration.



Antall József Knowledge Centre Address: 2 Czuczor Street, H-1093 Budapest Web: Telephone: +36 20 310 8776 E-mail:

Publisher: Péter Antall, Director, AJKC Editor-in-Chief: Tamás Péter Baranyi Editor: Zsombor Szabolcs Pál Translator: Zsolt Pálmai Language Editor: Mónika Horváth Proof-reader: Zsolt Pálmai Layout: Gergely Kiss Graphic Design and Pre-press Preparation: Adrienn Mérész Printed and Bound: Prime Rate Kft. Managing Director: Dr Péter Tomcsányi



Smart Homes|Cities|Nations



Smart Homes|Cities|Nations


2019. 1st Issue Free of Charge

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InFocus Smart Cities 2019/1.  

InFocus Smart Cities 2019/1.