Towards a Digital CBD

Towards a Digital CBD

The COVID-19 pandemic is both a public health crisis, and a digital technology accelerant. Pre-pandemic, our economic and social activities were done predominantly in cities. We connected and we innovated in these centralised locations.

But then a global pandemic struck. We were forced to shop, study and socialise in a distributed way online. This shock had an immediate impact on our cities, with visceral images of closed businesses and silent streets.

Even after COVID-19 dissipates, the widespread digital adoption that the pandemic brought about means that we are not snapping back to pre-pandemic life.

The world we are entering is hybrid. It is both analogue and digital, existing in both regions and cities. Understanding the transition is critical because cities are one of our truly great inventions. They enable us to trade, to collaborate, and to innovate. In other words, cities aggregate economic activity.

The Digital CBD project is a large-scale research project that asks: what happens when that activity suddenly disaggregates? What happens to the city and its suburbs? What happens to the businesses that have clustered around the CBD? What infrastructure do we need for a hybrid digital city? What policy changes will be needed to enable firms and citizens to adapt?

Forced digital adoption

This global pandemic happened at a critical time. Many economies were already transitioning from an industrial to a digital economy. Communications technologies had touched almost every business. Digital platforms were commonly used to engage socially and commercially. But the use of these technologies was not yet at the core of our businesses, it sat on the sidelines. We were only on the cusp of a digital economy.

Then COVID-19 forced deep, coordinated, multi-sector and rapid adoption of digital technologies. The coordination failures and regulatory barriers that had previously held us back were wiped away. We swapped meeting rooms for conference calls, cash for credit cards, pens-and-paper for digital signatures. There had been a desire for these changes for a long time.

These changes make even more frontier technologies suddenly come into view. Blockchains, artificial intelligence, smart contracts, the internet of things and cybersecurity technologies are now more viable because of this base-level digital adoption.

Importantly, this suite of new technologies doesn’t just augment and improve the productivity of existing organisations, they make new organisational forms possible. It changes the structure of the economy itself.

"Then COVID-19 forced deep, coordinated, multi-sector and rapid adoption of digital technologies... We swapped meeting rooms for conference calls, cash for credit cards, pens-and-paper for digital signatures."    


Discovering our digital CBD

Post-pandemic, parts of our life and work will return to past practices. Some offices will reopen, requiring staff to return to rebuild morale and culture. And those people will also flood back into CBD shops, bars and restaurants. They will, as all flourishing cities encourage, meet and innovate.

But of course some businesses will relish their new-found productivity benefits – and some workers will guard the lifestyle benefits of working from home. Many firms will never fully reopen their offices and will brag about their remote-work dynamic culture.

The potential implications for cities, however, are more complex. Cities will fundamentally have different patterns of specialisation and trade than a pre-pandemic economy. Those new patterns are enabled by a suite of decentralised technologies, including blockchains and smart contracts, that were already disrupting how we organise our society.

We can now organise economic activity in new ways. CBDs have historically housed large, hierarchical industrial-era companies. As we have written elsewhere, decentralised infrastructure enables new types of organisational forms to emerge. Blockchains industrialise trust and shift economic activities towards decentralised networks.

How do these new types of industrial organisation change the way that we work, and the location of physical infrastructure? What are the policy changes necessary to enable these new organisations to flourish in particular jurisdictions?

Economies and cities are fundamentally networks of supply chains, and that infrastructure is turning digital too. The pandemic has accelerated the transition to digital trade infrastructure that provides more trusted and granulated information about goods as they move. How can we ensure that these digital supply chains are resilient to future shocks? What opportunity is there for regions to become a digital trade hub?

Another impact of digital technology is that labour markets just became more global. The acquisition of talented labour is no longer bounded by physical distance. Our collaborations are structured around timezones, rather than geography.

Labour market dynamism presents unique opportunities, but will also require secure infrastructure both to validate credentials and to facilitate ongoing productivity. How can Melbourne, a world-class cluster of universities, place itself for this new environment?

A research and a policy problem

Building a digital CBD is fundamentally an entrepreneurial problem—a problem of discovering what these new digital ways of coordinating and collaborating look like. Our Digital CBD research program contributes to this challenge with insights from economics, law, political science, finance, accounting and more. We aim to use this interdisciplinary research base to make policy recommendations that help our digital CBD to flourish.


Authors:

Dr Darcy Allen, Senior Research Fellow, RMIT Blockchain Innovation Hub

Associate Professor Chris Berg, Co-Director, RMIT Blockchain Innovation Hub

Distinguished Professor Jason Potts, Co-Director, RMIT Blockchain Innovation Hub    

22 June 2021

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22 June 2021

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