Sep 30, 2019

Cities aren't ready for the AI revolution

Globally, no city is even close to being prepared for the challenges brought by AI and automation. Of those ranking highest in terms of readiness, nearly 70% are outside the U.S., according to a report by Oliver Wyman.

Data: Oliver Wyman Forum; Table: Axios Visuals

Why it matters: Cities are ground zero for the 4th industrial revolution. 68% of the world's population will live in cities by 2050, per UN estimates. During the same period, AI is expected to upend most aspects of how those people live and work.

The big picture: Many cities are focused on leveraging technology to improve their own economies — such as becoming more efficient and sustainable "smart cities" or attracting companies to compete with Silicon Valley.

  • But the majority of cities have ignored or downplayed the potential and significant downsides of the rise of automation, Oliver Wyman concluded after interviewing more than 50 business and city leaders and reviewing 250 city planning documents.
"What struck me most is just how many cities didn't have this on their radar screens. The thing about AI is that it's fundamentally opaque, and that makes it harder for cities to keep track of it. The overall focus on smart cities almost masks the broader trends."
— Timo Pervane, partner at Oliver Wyman, told Axios

What they found: No city or continent has a significant advantage when it comes to AI readiness, but some have parts of the recipe.

  • Size matters: Megacities have an advantage thanks to their well-developed business communities and high-skilled talent pools. But smaller cities win regarding the "vision" for the next few decades — 5 of the top 5 cities have populations under 5 million people, with Amsterdam and Stockholm seen as global leaders.
  • Urban realists: A global survey of 10,000 city dwellers found that, while they are optimistic about the opportunities provided by technologies in their cities, roughly 45% anticipate job loss resulting from AI or automation.
  • Small city confidence: In the U.S. there is an inverse relationship between city size and perception of job loss. Pittsburgh and Boston are the least concerned about job loss due to AI.

By the numbers: Here are the survey stats that stood out.

  • 46% of Chinese citizens see data privacy violations as the #1 risk from AI.
  • 95% of Shanghai residents believe technological change will make their lives better, compared with 47% in Berlin (the global average is 69%).
  • 89% of respondents in Dubai said they believe their city government has a strategy to respond to the rise of AI, compared with 45% in San Francisco (the global average is 58%).

Cities to watch:

  • Dubai scores high points in the vision category, having appointed a minister for artificial intelligence.
  • Moscow is developing its industrial and tech sectors by making it easier to do business there.
  • Berlin gets high marks for its "vision" and ranks first in the large city category for "activation," meaning its city leaders have a track record of executing forward-looking plans.

Reality check: Cities can't deal with the repercussions of AI on their own. National and regional governments will also have to step in with policy strategies in collaboration with businesses.

Go deeper: See how your city measures up

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