Research
The economics of proximity
“Space and knowledge spillovers in Europeanregions: the impact of different forms of proximity on spatial knowledge diffusion”, Journal of Economic Geography, online first (joint with Peter Nijkamp). DOI: 10.1093/jeg/lbv042
Abstract: Usually, knowledge spillovers (KS) are related to geographic proximity. In the present study, we measure KS on the basis of different proximity matrices, focusing on the relational, social, cognitive and technological preconditions for knowledge diffusion. In the light of previous studies on KS, we examine: (i) which types of proximity enhance or hamper knowledge flows, and (ii) whether local absorptive capacity favour such flows. Our results indicate that KS across European NUTS2 regions measured through geographic, relational, social, cognitive and technological proximity channels increase with local absorptive capacity. This finding points towards the emergence of large clusters of regions (absorptive capacity clubs) where relational, cognitive, social and technological proximity lock-in maximizes the returns to local investment in R&D.
“Proximities and the intensity of scientific relations: synergies and non-linearities”, International Regional Science Review, online first (joint with Roberta Capello). DOI: 10.1177/0160017615626985
Abstract: Several types of proximity affect knowledge flows with different strength. Insufficient attention has been paid to the interrelations between such forms of proximity at the same time, each one assumed to facilitate the flow of goods, ideas, and spillovers on its own but not in relation to one another. Moreover, if decreasing returns have been conceptually attributed to proximity effects on the intensity of scientific cooperation and learning processes, empirical evidence about nonlinearities in different proximity effects has never been demonstrated. This article aims to fill these gaps. Results on all Nomenclature of Territorial Units for Statistics (NUTS2) regions of the 27 Countries of the European Union (EU27) point toward the existence and relevance of synergic effects between different types of proximity. In particular, while social proximity has a positive impacton scientific cooperation,with decreasing magnitude as spatial distance increases, results on cognitive and technological proximity suggest that some form of complementarity seems to existwith spatial distance. In fact,when spatial distance increases, in order to cooperate, regions must also be cognitively and technologically close.
Abstract: The potential welfare benefits from free movement of people are large. Especially in Europe, actual flows are lower than one would expect on the basis of economic differences between regions and countries. This paper empirically investigates the importance of cultural barriers in explaining the limited migration flows in Europe. We show that cultural and institutional barriers are indeed important in explaining variation in observed migration flows.
“Cognitive capital and islands of innovation: the Lucas growth model from a regional perspective”, Regional Studies, 48 (4): 624-645 (2014) (joint with Peter Nijkamp).
Abstract: Knowledge triggers regional growth. Evidence suggests that skilled labour force concentrates in islands of innovation, providing an advantage for innovative regions and a challenge for lagging ones. We present a growth model explaining the effect of human capital on regional wealth. Estimates are based on EVS and EUROSTAT regional data. The externality driving growth in the model is cognitive capital. Empirical tests show that a higher endowment of cognitive capital generates increasing returns to knowledge, favouring the emergence of islands of innovation; also, regions with a high endowment of cognitive capital attract knowledge spillovers from neighbours.
“Technological interdependence and regional growth in Europe: Proximity and synergy in knowledge spillovers”, Papers in Regional Science, 91 (4): 697-722 (2012) (joint with Roberto Basile and Roberta Capello).
Abstract: The economic growth literature suggests that knowledge spillovers are subject to distance decay effects. In this paper the main aim is to provide a theoretical framework and empirical evidence on the role played by other kinds of proximities, namely relational, social and technological proximity, in explaining productivity growth. Using a sample of 249 EU 27 NUTS 2 regions in the period 1990–2004, semiparametric spatial autoregressive models are estimated. Results provide evidence of a positive role of social and relational proximities as important channels of knowledge spillovers, and on the fact that, when simultaneously present, different kinds of proximities generate synergic effects on growth.
“Interregional knowledge spillovers and economic growth: the role of relational proximity”, in K. Kourtit et al. (eds.), Drivers of innovation, entrepreneurship and regional dynamics, (pp. 21-43) Berlin: Springer Verlag (2011) (with Roberto Basile and Roberta Capello).
Abstract: Recent contributions to the economic growth literature suggest that knowledge generated in a region may spill over into other regions with an intensity which decreases with geographical distance. In this paper, we claim that geographical proximity is not the only dimension to be considered in order to capture the mechanisms governing knowledge spillovers. In particular, we argue that social proximity, intended as the closeness between pairs of regions in the capacity to generate collective learning processes, is at least as important as geographical proximity. Using a sample of 249 NUTS2 regions of the EU27 over the period 1990-2004, we estimate semiparametric spatial autoregressive regression models and find strong evidence of a positive role of social proximity as a source of knowledge spillovers. We also produce clear evidence on the fact that the positive external spillover effects of pairs of regions characterized by geographical proximity are enhanced when regions are also endowed with similar levels of social capital.
Regional econometric growth modeling
Abstract: Although the crisis is a world phenomenon, its impact is not at all spatially invariant. The aim of the article is to analyse the spatial effects of the crisis, doing so through a scenario-building exercise in which policies are kept constant, and economic growth is mainly driven by macroeconomic and supply side trends on the assumption that the crisis will end in 2015. The final goal is to raise awareness of policy makers on the costs of the present economic crisis and on their spatial impacts, so as to direct growth policies towards more targeted interventions. Our results show that the crisis produces structural breaks in local economy growth patterns; after years of convergence, regional disparities will rise due to an increase in intra-regional disparities, only partially limited by international convergence, strongly reduced in the years of crisis. The scenario is developed thanks to the MASST3 model, a regional growth forecasting model recently updated and enlarged to be able to forecast the impact of the crisis.
Abstract: This article measures the spatial heterogeneity of the costs of the economic crisis and assesses the role of cities as sources of regional resilience in Europe. Cities hosting financial activities have been severely hit during the crisis; however, they also host hard and soft territorial capital elements—high physical accessibility, access to information and knowledge, advanced functions, agglomeration economies—generating inter-sectoral productivity growth and the ability to adjust to the crisis. A scenario approach is used to capture the long term costs of the crisis, applying a new version of a macroeconometric regional growth forecasting model (MASST), recently updated to take account of the crisis. Results show that cities play a role in the resilience of regions; the quality of production factors hosted, the density of external linkages and cooperation networks and the quality of urban infrastructure give greater economic resilience to cities, and to the regions hosting them.
Abstract: This article deals with the implementation of a new version of a macroeconometric regional growth model called MAcroeconomic, Sectoral, Social, Territorial Model (MASST). The new version presents interesting novelties with respect to the past, since it is able to embrace the two main supranational regulations with which the European Union binds decision-making processes in national economies, that is, public budget limitations and austerity measures on the one hand, and competitiveness/growth measures on the other hand. The novelties lie both in the tech- nical way the economic crisis and its measures are formalized in a regional growth model and in the potentialities that the model achieves, namely: (i) measuring the costs of short-term austerity rules vis-a-vis long-term growth aims and their interactions and feedbacks; (ii) pointing out the regional heterogeneity in the effects generated by macroeconomic trends and conditions.
Abstract: In front of fiercer competition from outside (especially from emerging countries), of the contraction of the internal demand, following the crisis and the problems with public finances, and of the process of European integration that fostered increases in wages and inflation in its Eastern countries, Europe can no longer prosper without a clear long-run development strategy as it used to do before 2007. This paper aims at describing the long-run outcomes emerging from possible alternative growth strategies, differentiated between CEECs and EU15 countries, that had historically grown on the basis of two different development strategies. The analysis involves the development of scenarios over a time span of 18 years, from 2012, the latest year with actual data, up to 2030. Results show that the effects of Eastern countries' development strategies are highly influenced by the strategies chosen by the Western ones, while the opposite does not hold. Moreover, a scenario in which both groups of countries increase the quality of their original strategies, but remain in their actual productive specialization trajectories, is the least expansionary. In all cases, a strategy of modernization of CEECs economies leads to a more expansionary scenario; this strategy pays the most for Eastern countries if Western countries also move towards an industrial strategy. Finally, the most expansionary scenario is one of an advanced industrial Europe, and interestingly enough, this is also associated to lower increases in regional disparities.
Abstract: Structural adjustment in the European Union emerged as the result of the 7-year crisis, providing risks and opportunities to national and regional economies. The effects that these structural changes will generate are difficult to be foreseen. This article builds after-crisis scenarios for Europe on the basis of alternative evolutions of these structural changes. On the basis of a regional forecasting model (MASST3), the article presents two opposite scenarios: the ‘place-based’ competitiveness’ and the ‘social cohesion’ one. Results unexpectedly show that the place-based competitiveness scenario achieves both the highest Gross Domestic Product (GDP) growth rates and the lowest increase in regional disparities.
Non-material growth and knowledge spillovers determinants
Abstract: This paper offers a statistical analysis of the regional contextual drivers and aspects of innovative firms in the high-tech sector in the Netherlands. Data are collected by means of 244 interviews among actors working for 61 Dutch high-tech firms. This individual micro data set is next merged with regional attributes and characteristics, collected at the COROP (NUTS3 level) in the Netherlands in order to analyse the relationship between the economic performance of individual firms and the broader regional economic environment.
Abstract: We design a conceptual framework for linking two approaches: absorptive capacity and spatial Knowledge Spillovers (KSs). Regions produce new knowledge, but only part of it is efficiently adopted in the economy; the share of efficiently adopted technology depends on cognitive capital. Our dataset is based on a panel of European regions over the period 1999 to 2006, combining data from EUROSTAT and the European Values Study (EVS). We test the hypothesis that insufficient levels of cognitive capital hamper the capability of regions to fully exploit new knowledge. Results show that a lower regional absorptive capacity increases KS towards surrounding areas, hampering the regions’ capability to decode and efficiently exploit new knowledge, both locally produced and originating from outside.
Abstract. Statistical evidence suggests that the relevance of knowledge spillovers has increased over time. In this paper we focus on regional knowledge spillovers and adopt a new econometric transformation that allows inference on potential inter-regional knowledge spillovers, accounting for spatial interdependencies.
Determinants of inter-regional knowledge spillovers are explained with a sample of 103 Italian provinces. We find that a region’s absorptive capacity, measured by local R&D expenditure and social capital, implies a reduction of outward knowledge spillovers. Identification is based on the use of Two Stages Least Squares and Fixed Effects estimates.
Abstract: Knowledge drives the growth of nations and regions in a competitive space-economy. Hence, we would expect a strong correlation between investments in R&D, knowledge and learning processes, on the one hand, and productivity increases, on the other. However, the empirical evidence shows consistent discrepancies between knowledge inputs and economic performance across geographical units. This paper addresses this intriguing issue at the regional level, by highlighting theoretically and empirically the strategic importance played by intangible elements as part of “territorial capital” in mediating between knowledge production and regional growth. The main proposition of the paper, subject to empirical testing, is that intangible elements as part of territorial capital magnify the contribution of knowledge by determining the formation of increasing returns to knowledge exploitation.
“Structural elements and dynamics in territorial patterns of innovation: A perspective through European case studies”, Regional Science Policy and Practice, 5 (4): 369-383 (with Camilla Lenzi).
Abstract: This paper sets out the conceptual approach that orients all the empirical works selected for this special issue, namely, the notion of territorial patterns of innovation. Recently proposed as a more appropriate conceptual framework in which to understand spatial innovation patterns, territorial patterns of innovation are defined as the combination of territorial specificities (context conditions) and the different modes of performing the different phases of the innovation process. Importantly, the paper reinforces this framework in two directions by discussing some common findings emerging from the set of case studies presented in this issue. First, the analysis of the same sector in different regions of three EU 27 countries shows that territorial elements have a more fundamental effect on the emergence of specific patterns of innovation with respect to sector characteristics. Second, regions can engage into upgrading as well as downgrading trajectories in their knowledge and innovation acquisition and creation processes, witnessing the adaptability and usefulness of the territorial patterns of innovation framework to read regional innovation dynamics.
“Dynamics of knowledge diffusion: the ICT sector in Lombardy”, Regional Science Policy and Practice, 5 (4): 453-473.
Abstract: This paper analyses the evolution of the information and communication technology (ICT) industry in Lombardy, with a specific focus on the Milan metropolitan area, where most major ICT firms are located. Until the early 1990s, Lombardy's firms enjoyed a technological advantage, which led to relevant profits, innovative products on the markets, and the emergence of a competitive ICT district. Since the early 1990s, however, this positive trend inverted; local companies lost their competitive edge, and several firms restructured or closed. The restructuring process affecting this industry determined an evolution of the type of knowledge generated in the local district, which gradually moved production from full-fledged computing machinery to marginally-innovative software. Finally, the availability of financial capital originated by the 2000–2001 ICT frenzy stimulated the emergence of new companies, which sought a third, intermediate mode of innovation. Qualitative evidence collected by interviewing local ICT key representatives suggests that indeed ICT firms in Lombardy developed over time a specific mode of innovation, whereby externally-manufactured ICT products are complemented, and improved for the Italian market, with local innovations. The recovery of Lombardy ICT firms in the second half of the 1990s suggests a likely shift from a fully endogenous, to a creative application pattern of innovation.
Agglomeration economies and urban growth
"Both Marshall and Jacobs were right!", Economic Geography (2016) (joint with Henri de Groot and Laura de Dominicis ), 92 (1): 87-111.
Abstract: This article adds to the empirical evidence on the impact of agglomeration externalities on regional growth along three main dimensions. On the basis of data on 259 Europe NUTS2 (Nomenclature of Territorial Units for Statistics) regions and 15 NACE (Nomenclature statistique des Activités économiques dans la Communauté Européenne) 1.1 2-digit industries for the period 1990–2007, we show that agglomeration externalities are stronger in technology-intensive industries, also after controlling for sorting; that specialization externalities are stronger for low density regions, while diversity matters more for denser urban areas; and, finally, that Jacobs externalities comprise a pure diversification effect (related variety) and a portfolio effect (unrelated variety), although evidence of positive effects on regional growth is only found for the latter. An additional contribution of this article is to extend the analysis on the basis of a full geographical coverage of European NUTS2 regions, with the aim to generalize the empirical identification of the impacts of specialization and diversification externalities with respect to the existing literature. Our results are robust to a rich set of consistency checks, including the use of spatial autoregressive models with autoregressive disturbances, used to assess to what extent the effects of agglomeration externalities are localized.
"Static vs. dynamic agglomeration economies: Spatial context and structural evolution behind urban growth", Papers in Regional Science, (joint with Roberto Camagni and Roberta Capello), online first. DOI: 10.1111/pirs.12182.
Abstract: Critically assessing and integrating the existing literature on static agglomeration economies, this paper overcomes the agglomeration-growth shortcut actually present in the literature by underlying the role of dynamic agglomeration economies and by empirically identifying their determinants. These latter consist in the quality of the activities hosted, the quality of production factors, the density of external linkages and co-operation networks, and the characteristics of the overall urban system in which the city is located. These factors are expected to increase productivity and long-term ‘structural dynamics’ processes of urban transformation. Theoretical expectations are validated through an econometric analysis on 136 European large urban zones.
Abstract: In the last 15 years, empirical evidence has emerged about the fact that European first-rank cities have not always led national economic performance, and when they did, the difference between first- and second-rank cities in explaining national growth has not been significant. A recent work [Dijkstra, L., Garcilazo, E. & McCann, P. (2013) The economic performance of European cities and city regions: Myths and realities, European Planning Studies, 21(3), pp. 334–354] claims that second-rank cities have in fact outperformed first-rank cities, becoming the main driving forces in national economic performance. In the debate that emphasizes the role of second-rank cities in national growth, a simplified view of the role of agglomeration economies is provided; they are taken for granted in small- and medium-sized cities and only in large cities will the problem of a downturn in urban returns to scale emerge. In this paper, a more complex view is assumed, claiming that the oversimplified interpretation that urban economic performance simply depends on the exploitation of agglomeration economies and that these agglomeration economies merely depend on urban size alone should be abandoned. Some already existing theoretical frameworks in urban economics can help in recalling the role of possible bifurcations in the development path of cities, linked to the capability to attract or develop new and higher-order functions, increase internal efficiency and reach scale economies through cooperation networks with other cities (the city-network theory). All these elements work as conditions for fully exploiting agglomeration economies and ways to overcome urban decreasing returns.
Abstract: In this paper, the stylized assumption that one single “optimal” city size exists for all cities—achieved when marginal location costs equal marginal location benefits—is abandoned, as well as the opposite view that each city operates on its own cost and production curves, defining a specific optimal size. Instead, this work maintains the comparability among cities and demonstrates that urban specificities in functions performed, quality of life, industrial diversity and social conflicts shift up and down the benefits and costs linked to pure physical size, leading to different “equilibrium” sizes for cities. In order to achieve this result, a model of equilibrium urban size is set up, based on urban costs and urban benefits, merging elements suggested both by the traditional urban economics literature as well as by updated approaches considering also environmental quality, urban form and inter-urban cooperation networks. The model is then estimated on a sample of 59 European cities with data at FUA level. Empirical results allow the identification of city-specific “equilibrium” sizes. The error term, that is, the difference between actual urban population and the “equilibrium” one predicted by the model can be explained, beyond a measure of our ignorance, by good or bad governance, thereby suggesting future strategies for more efficient urban planning.
Abstract: The presence of large cities in a region represents a potential for regional innovation capacity: cities are in fact expected to generate dynamic agglomeration economies and knowledge spillovers. The paper adds to previous analyses on this topic by investigating whether the linkage between the presence of cities in the region and the innovative performance is mediated by the urban industrial structure. In fact, a positive correlation is likely to exist between the presence of large cities in a region and its innovative performance. Such a relationship could also depend on the presence of knowledge-intensive service, rather than on advanced manufacturing activities. In order to verify this statement, we classify European NUTS2 regions both from an industrial perspective, as well as by spatial typologies. We integrate this classification with a novel data set on regional innovation, based on the Community Innovation Survey. On this basis, geographical and descriptive analyses of regional innovation patterns are developed and explained. The descriptive results support our expectations. Regions hosting large urban areas are the most innovative, and this statement is reinforced in regions characterized by specialization in knowledge-intensive services. The simultaneous presence of advanced manufacturing and knowledge-intensive service activities generates synergic effects, fostering innovative performance.
Abstract: Our modern world is moving towards a ‘New Urban World’. More people than ever before are living in urban areas and modern cities are becoming powerhouses of creative ideas, innovative technologies, sustainable developments and socioeconomic wealth in an open and globalizing economy. And most likely this trend will continue. Cities will also play a pivotal role in the future of an urbanized Europe, although they are certainly confronted with grand challenges. Emerging threats to urban environments may, however, be turned into new opportunities. Thus, urban areas may act as spearheads of sustainable economic growth for European countries. This paper will offer a novel contribution to the assessment of the socio-economic performance of 9 selected European cities in the North Sea basin over two time periods. The exploration of the socio-economic benefits of these cities leads to the definition of a ‘democratic beauty’, whereas urban performance is measured along multiple dimensions. We will evaluate their performance and rank their relative efficiency performance using a new variant of Data Envelopment Analysis (DEA), through which we are also able to further discriminate between the class of efficient Decision Making Units by introducing the notion of super-efficiency. The ‘winners’ in this competitive assessment of highly efficiently cites are labeled here as incredible cities. The paper will be concluded with some policy recommendations.
Abstract: In this paper, the stylised assumption that one single ‘optimal’ city size exists for all cities – achieved when marginal location costs equal marginal location benefits – is abandoned, as well as the opposite view that each city operates on its own cost and production curves, defining a specific optimal size. Instead, this work maintains the comparability among cities and demonstrates that urban specificities in functions performed, quality of life, industrial diversity and social conflicts shift up and down the benefits and costs linked to pure physical size, leading to different ‘equilibrium’ sizes for cities. A model of equilibrium urban size is set up, and empirically estimated on a sample of 103 Italian cities with data at NUTS3 level. Empirical results verify the empirical model on the analysed sample; results hold both with standard OLS estimates as well as with the use of instrumental variables in order to correct for the possible endogeneity of some of the variables in the model. Differences between predicted and real city size are interpreted with good or bad governance, thereby suggesting future strategies for more efficient urban planning.
Smart urban development
Abstract: Urban performance currently depends not only on a city’s endowment of hard infrastructure (physical capital), but also, and increasingly so, on the availability and quality of knowledge communication and social infrastructure (human and social capital). The latter form of capital is decisive for urban competitiveness. Against this background, the concept of the “smart city” has recently been introduced as a strategic device to encompass modern urban production factors in a common framework and, in particular, to highlight the importance of Information and Communication Technologies (ICTs) in the last 20 years for enhancing the competitive profile of a city. The present paper aims to shed light on the often elusive definition of the concept of the “smart city.” We provide a focused and operational definition of this construct and present consistent evidence on the geography of smart cities in the EU27. Our statistical and graphical analyses exploit in depth, for the first time to our knowledge, the most recent version of the Urban Audit data set in order to analyze the factors determining the performance of smart cities. We find that the presence of a creative class, the quality of and dedicated attention to the urban environment, the level of education, and the accessibility to and use of ICTs for public administration are all positively correlated with urban wealth. This result prompts the formulation of a new strategic agenda for European cities that will allow them to achieve sustainable urban development and a better urban landscape.
Abstract: In this paper we adopt a comprehensive definition of Smart City and examine whether and how the main characteristics of urban smartness are growth-enhancing. With a sample of cities from the European Union we assess the city-specific impacts on urban performance of a complex “urban smartness” indicator by applying a Spatial Autoregressive Local Estimate to an urban production function. The results of this econometric analysis point in the direction of the importance of space-specific characteristics in shaping the economic effect of smart urban qualities, providing grounding to place-based public policies that account for local characteristics. We also identify different clusters with respect to the impacts of smartness on urban performance and wealth, highlighting the need for geographically differentiated policy actions.
Abstract: Research on Smart Cities has come of age. Intense discussion on this topic has been ongoing for years, and the academic prominence of this concept has also engendered several policy initiatives inspired by this label at different administrative levels. However, to date, no large-scale evaluation of the relationship between urban smartness and smart urban policies has been attempted. This article aims at filling this gap. By building on a solid definition of Smart Cities, the article tests the empirical relationship between urban smartness and the intensity of Smart City policies. A novel data set on four different types of policies and smart urban characteristics is assembled for 314 European Union cities. Empirical results suggest that Smart City policies are more likely to be designed and implemented in cities that are already endowed with smart characteristics. Our findings also point to a higher probability that Smart City policies are implemented in denser and wealthier urban areas. These empirical results call for further research on the real effects of actual implemented Smart City policies, with the aim to verify the potential of this policy concept as an overall urban development model encompassing the main drivers of endogenous urban growth.
Abstract: Remarkable academic interest and substantial funding from national and supranational bodies have been concentrating on the topic of smart cities; consequently, smart city policies have attracted large amounts of funding. However, no empirical evidence is to date available on the economic rationale of these policies. In particular, while few studies deal with the impact of smart urban characteristics and policies on urban performance, to date the link between smart features and policies, on the one hand, and urban performance on the other, has never been explored. In this paper we address this gap by empirically verifying whether smart urban policies foster urban economic growth. We assume that, although smart urban characteristics are growth-enhancing in the long run, they have only an indirect effect on urban performance. This assumption is tested by means of an Instrumental Variables approach whereby urban performance is explained by Smart Urban Policies, along with a set of control variables. The model is tested on a database of 309 European metropolitan areas, collected for this analysis and containing information on both smart urban characteristics and the intensity of smart policies. Our empirical results suggest that smart city policy intensity is associated with a better urban economic performance. Moreover, instrumenting smart policies with smart urban characteristics suggests that the causality direction goes from policy intensity to growth, and not vice versa (thus ruling out reverse causality). Policy suggestions based on these findings are finally provided.
Abstract: Smart City policies have attracted relevant attention and funding over the last few years. While the time seems now ripe to conclude that such policies have a positive impact on urban economic growth, the picture is much less clear when looking at the microfoundations of this effect.
In this paper we look at the urban innovation impact of Smart City policies. In fact, typical Smart City project simply the involvement not only of major multinational corporations, along with local public authorities, but also of local companies, typically with the aim to translate general technological solutions to the local needs.
A new data set collected for these analyses comprises data on Smart City features for 309 European metropolitan areas, Smart City policy intensity, and urban innovation outputs. The latter are proxied by calculating total patent applications to the European Patent Office between 2008 and 2013. Patent counts also include technologically narrower classes, namely high-tech, ICT, and specific Smart City technologies patent applications.
Propensity Score Matching estimates suggest that cities engaging in Smart City policies above the EU average also tend to patent more intensively. This effect is stronger for high-tech patents, while decreases for more narrowly defined technological classes. This last result suggests possible technological spillovers from technologies directly involved in Smart City policies.
Border effects
Abstract: Urban performance currently depends not only on a city’s endowment of hard infrastructure (physical capital), but also, and increasingly so, on the availability and quality of knowledge communication and social infrastructure (human and social capital). The latter form of capital is decisive for urban competitiveness. Against this background, the concept of the “smart city” has recently been introduced as a strategic device to encompass modern urban production factors in a common framework and, in particular, to highlight the importance of Information and Communication Technologies (ICTs) in the last 20 years for enhancing the competitive profile of a city. The present paper aims to shed light on the often elusive definition of the concept of the “smart city.” We provide a focused and operational definition of this construct and present consistent evidence on the geography of smart cities in the EU27. Our statistical and graphical analyses exploit in depth, for the first time to our knowledge, the most recent version of the Urban Audit data set in order to analyze the factors determining the performance of smart cities. We find that the presence of a creative class, the quality of and dedicated attention to the urban environment, the level of education, and the accessibility to and use of ICTs for public administration are all positively correlated with urban wealth. This result prompts the formulation of a new strategic agenda for European cities that will allow them to achieve sustainable urban development and a better urban landscape.