A Conversation with IMD Economist Fabian Grimm

As an adjunct to Site Selection’s showcasing of the 2026 Smart City Index (SCI) published by the World Competitiveness Center at Switzerland-based IMD, Editor in Chief Adam Bruns conducted the following e-mail Q&A with IMD World Competitiveness Center Economist Fabian Grimm.

Site Selection: We serve an audience engaged in evaluating regions for all types of corporate facility investment (headquarters, manufacturing, logistics, data centers, back office). How should they incorporate the SCI’s rankings or particular aspects of the index into their matrix of decision factors?

Fabian Grimm: Although this question falls slightly outside the scope of our Smart City Index (SCI), which attempts to measure how satisfied citizens are with their urban experience and the integration of technology into their daily lives to improve processes, livability and quality of life, we strongly believe that the SCI offers a unique perspective that executives can incorporate in their decision-making processes.

Evaluating a location for corporate facility investments, whether to implement new headquarters, data centers or back-office operations, increasingly depends on attracting talent, which is in turn shaped by where people want to live and relocate. The SCI makes that dynamic measurable. By capturing how residents truly experience their city across factors such as governance, health and education, it gives executives a structured way to assess whether a location can attract and retain the people their operations depend on.

In practical terms, the “structures” pillar of the SCI, which captures the quality of existing systems, services, infrastructure and institutional processes of a city, is the most directly relevant component for facility investment decisions. Our 2026 data shows that average structures scores are a more consistent predictor of overall urban performance than technology scores. A city with strong institutional foundations and reliable infrastructure is one where business operations are predictable, regulatory frameworks are coherent and public services support workforce well-being.

For data centers specifically, the SCI’s digital infrastructure and connectivity indicators provide useful comparative benchmarks, but they should be read alongside governance scores. A city can have impressive broadband penetration while lacking the institutional credibility to handle data sovereignty concerns, an increasingly material risk for multinationals operating across jurisdictions. Bangkok and Seoul illustrate this well: Both record high technology scores, yet institutional indicators paint a more nuanced picture of the operating environment.

For manufacturing and logistics, the mobility and health sub-indices within the structures pillar offer a useful proxy for infrastructure reliability and workforce availability. For any facility requiring deep local talent pipelines, the SCI’s human capital dimension, which includes how residents feel about the quality and availability of education and skilled employment in their city, is directly applicable.

The report this year comes amid a tumultuous global conversation about data centers in communities and AI in our lives. How do you see this debate influencing city residents’ perceptions and responses?

Fabian Grimm: This is a great question that touches on a fundamental element of what we try to measure through our Index: whether technology is working for citizens and whether it helps them address the challenges they face in everyday urban life.

In that respect, our 2026 data reveal a very interesting, albeit slightly counterintuitive, pattern. On average, residents in cities with a higher human development index (HDI), where public services are generally more efficient and baseline expectations on quality are higher, tend to express greater skepticism about the impact of technology on their lives compared to what their structural environment already provides. Conversely, residents in cities with lower HDI baselines consistently view technology as a more meaningful enabler of quality of life.

Essentially, in places where governance and institutions are considered less transparent, or where public service delivery is deemed unreliable, the arrival of data-driven tools and new technologies for tracking public finances, monitoring traffic or accessing civic information generates significant trust gains. Technology in this context functions as a transparency mechanism to which citizens respond.

The AI and data center conversation plays directly into this dynamic. In high-income, high-expectation cities (particularly in northern Europe and parts of North America) residents are increasingly asking not just whether a technology works, but whether it is fair, who controls it and what happens to the data it generates. The proximity of large data centers to urban communities, and the visible energy demands they place on local grids, has made these previously abstract concerns tangible. In such contexts, trust cannot be manufactured through communication campaigns. It must be earned through transparent governance practices and the meaningful participation of citizens in the decision process to implement such technologies in the first place.

So, the question now becomes the following: Which cities are building strong levels of citizen trust regarding their use of technologies such as AI? Are these the same cities that have better data ethics frameworks, algorithmic accountability and data protection laws? Though we do not have the definite answers to all these questions, the SCI cities that score highest on trust are not necessarily those with the most advanced AI deployments but those where technology is seen as a way to promote better quality of life outcomes for its residents.

Top 20 Cities Where Residents Feel the Availability of Online Information Has Increased Their Trust in Authorities

“Interestingly,” says Fabian Grimm, “the geographical spread of these economies is confined to Southeast Asia and the Gulf.”

The SCI ranks cities. But there is always the backdrop of state or national policy. In which countries do you see effective national policy positively influencing smart city performance? (Vietnam? Germany? Saudi Arabia?)

Fabian Grimm: National policy indeed plays a crucial role in the success of smart city implementation. Clear national strategies for digital development as well as well-defined country frameworks relating to the ethical use of technologies, data protection and privacy hugely facilitate a city’s ability to develop its own smart vision.

In Vietnam, the government has favored a state-directed model of digital investment that has prioritized access to e-government services, mobile connectivity and digital literacy simultaneously. Importantly, Vietnam’s authorities have not separated digital investment from human capital development; the two are advancing together, which is what distinguishes its main cities (Hanoi and Ho Chi Minh City) from others in Southeast Asia that have often deployed technology without the required workforce agility to adopt it effectively. In both cities mentioned above, scores in the technology pillar are above 0.725, comparable to many European capitals, and register some of the highest citizen trust in online government in our dataset. A clear enabling sign for Smart City strategies to develop there in the coming years.

Fabian Grimm, Economist, IMD World Competitiveness Center

Saudi Arabia is another very interesting example. Under the leadership of Crown Prince Mohammed bin Salman, a national vision for the country’s development until 2030 has hugely facilitated investment in the underlying infrastructure required to allow technology to be widespread. Many cities in the Kingdom now have a smart city strategy that encompasses each one’s strengths: AlUla focuses on tourism based around infrastructure that values its cultural heritage and unique oasis environment. Hafar al Batin has become a regional medical hub for the northeast as well as a major food processing location. Dammam and Al Khobar have become high-tech logistical and trade hubs whilst other major cities like Riyadh, Jeddah or Madinah have all experienced major quality of life gains over the last decade.

In short, Saudi Arabia, through a top-down approach to development, has created the necessary conditions for smart development: stability, a clear path and, most importantly, the institutional backing needed to facilitate implementation. Similarly, Dubai and Abu Dhabi, while part of a different national context, reflect a Gulf model of state-directed digital investment that generates measurable civic confidence when service quality is high and consistent. The open question for Gulf cities remains long-term: whether the trust being built is primarily transactional, based on service convenience, or whether it is deepening into the kind of civic trust that survives institutional stress.

Germany is worth flagging as a cautionary counterpoint. Despite exceptional infrastructure quality and strong institutional credibility, German cities continue to underperform relative to their structural endowments on digital adoption metrics. This may reflect a national cultural disposition toward data privacy and regulatory caution that shapes resident attitudes toward digital government services. It is not a failing per se, but it illustrates that national policy must work with, rather than against, resident values. It also highlights that technology adoption cannot always be mandated from above, and that public resistance to new technologies often tends to be higher in cities where the baseline quality of life is already high, which implies that the marginal return of additional technology in people’s lives is lower, sometimes to the extent that some individuals feel like more technology becomes a nuisance.

I would perhaps add two more examples: Singapore and the United Kingdom. Singapore’s national framework remains a benchmark. Its Smart Nation programme has produced a city where structures and technology scores are the most balanced of any city in the top 10, and where nearly nine in 10 residents report that online information has increased their trust in government. The coherence between national policy intent and local implementation is difficult to replicate, but the lesson it offers — that digital infrastructure functions best when embedded in credible institutions — is universally applicable. As for the U.K., the move toward a fully cashless economy and the extensive prior use of technology in domains like policing and safety have led to a society that is, on average, confident in the benefits of technological implementation. This plays an important role in the ability of a city to implement new ideas and respond in an agile and innovative way to new urban challenges.

What are your own personal observations in some of the cities that perform well in the SCI? How do the cities that find balance between structures and technology manifest this in concrete ways in daily life?

Fabian Grimm: I was recently in Manchester visiting a friend, and the first thing I did when I came back was check the city’s SCI profile! I was so struck by the quality of public infrastructure, the vibrant cultural scene on offer and the cleanliness of the city center that I wanted to know how residents themselves felt about it. My hunch was correct: Manchester is the second highest improver in our 2026 Index, climbing 18 positions to 46th. A closer look at its profile reveals why: Recycling services and public transport are rated above average for cities of similar HDI, residents feel well-served by schools and employment opportunities, minorities feel welcome and, perhaps most importantly, residents express satisfaction with their city’s governance, both in its structural quality and its use of digital tools to encourage participation. Manchester has invested heavily in recent years to promote employment and consolidate its position as an economic hub for northern England. When those efforts succeed, the Index tends to reflect it through greater levels of resident satisfaction and well-being.

As a resident of Lausanne, it was tempting for me to use it as an example of a very well-functioning city. However, I will mention Zurich instead, which I think is an even more striking example of how a city, despite having very technology-averse residents (we love our physical cash and in-person bureaucracy here in Switzerland), has managed to create enough institutional trust that systems work for everyone. Decisions about mobility, land use and service provision are made visibly and with clear lines of accountability. Residents know where to engage, and that engagement produces results. The SCI data reflect this: Zurich has the highest citizen participation score of any city in the top 20 in 2026, and more than three-quarters of surveyed residents agree that local government decision information is easily accessible.

A cyclist pedals alongside a moored canal boat in central Manchester, England, a city that was the second-highest improver in the 2026 Smart City Index.

Photo courtesy of Marketing Manchester

Copenhagen presents a similar pattern, but the environmental dimension is more prominently felt in everyday life. Cycling infrastructure is not an add-on to the city; it is the organizing logic of its mobility system, and it reflects a long-term policy commitment that residents have internalized and actively reinforce. The city’s climate ambitions do not feel like external targets imposed on residents but rather feel like expressions of what the city already values. This is reflected in very high scores in basic sanitation, recycling services, good air quality and high perceptions of public safety.

In Boston, the city’s smart strategy has always been defined less by technological ambition than by institutional design. Through initiatives such as MONUM, one of the first municipal innovation offices in the world, and its City Score dashboard, which aggregates key performance metrics into a single publicly accessible tool, Boston has built a governance architecture that is transparent, data-driven and oriented around citizen participation. Its Imagine Boston 2030 plan, developed through direct input from more than 15,000 residents, reflects a city that treats inclusive growth as the metric by which smart success should ultimately be measured.

What these cities share is something harder to quantify, a sense that the systems surrounding residents are genuinely designed with them in mind, and that if they fail, there is a credible mechanism for addressing that failure. Such confidence in local urban systems, facilitated through technologies and implemented by credible institutions, is precisely what the SCI is trying to capture.

Employers are hungry for talent. How do you see the SCI as a useful measure of places that will attract talent and, therefore, attract companies?

Fabian Grimm: The relationship between smart city performance and talent attraction has become more direct and more measurable than it was even a decade ago. Remote and hybrid work has given knowledge workers a genuine choice of city, which means that cities are now competing for residents in ways they previously were not. For companies, this dynamic has led to a dual and self-reinforcing effect. The quality of the urban environment doesn’t just shape where employees want to live, but also where companies can realistically have the highest chances to recruit and retain them.

The SCI is useful here because it captures dimensions of urban quality that traditional liveability indices tend to downplay. Governance transparency, citizen participation and trust in digital services are not peripheral concerns for a mobile workforce; they become proxies for how well a city functions under pressure and how much voice residents have in shaping it. These are things that matter to the kinds of highly mobile, highly skilled people that companies in technology, finance and professional services are competing for.

The structures pillar is particularly relevant in this context. Cities that score strongly on mobility, health services, education and connectivity are cities where the daily experience of living and working is manageable and predictable. That predictability lowers the friction of relocation and favours long-term retention. Our data consistently show that the cities where residents report the highest satisfaction are not necessarily those with the most experimental technology deployments, but those where basic services are accessible and delivered competently and equitably, where commute is reliable and opportunities exist.

For companies specifically, the SCI also provides a useful signal about institutional risk. A city with strong governance scores and high resident trust is one where the regulatory environment is likely to be more stable, where disputes are resolved through credible processes, and where public-private partnerships are more likely to function as intended. These are not abstract qualities but important background information to investment decisions and operating costs. The SCI does not replace existing HR tools, but it adds a dimension that many may miss: understanding whether residents in a location believe it is working for them.