Aleksandra Kuzior

Silesian University of Technology,

Poland

aleksandra.kuzior@polsl.pl 

ORCID 0000-0001-9764-5320

Does government AI readiness strengthen digital urban governance? International evidence from smart cities

Sławomir Palicki

Department of Investment and Real Estate

Poznań University of Economics and Business,

Poland

ORCID 0000-0003-3410-8039

Małgorzata Mańka-Szulik

Silesian University of Technology,

Poland

malgorzata.manka-szulik@polsl.pl 

ORCID 0000-0002-5328-8736

Zoltán Bács

Faculty of Economics and Business, University of Debrecen,

Hungary

bacs.zoltan@econ.unideb.hu

ORCID 0000-0003-0612-658X

Abstract. Artificial intelligence readiness is increasingly important for public-sector digital transformation because it can shape transparency, citizen participation, service responsiveness and trust in urban governance. This study aims to examine whether national Government AI Readiness strengthens city-level digital urban governance and trust-related outcomes across an international sample of smart cities. The empirical analysis combines IMD Smart City Index data with the Government AI Re+adiness Index for 2020, 2021, 2023, 2024 and 2025, covering 641 city-year observations from 141 cities across 71 countries/economies, and applies two-way fixed effects models, country-clustered standard errors, lagged specifications, PCA-based robustness checks and component-level regressions. The results show that Government AI Readiness is positively and significantly associated with the Digital Urban Governance and Trust Index, with a coefficient of 0.0958, indicating that a 10-point increase in GAIRI corresponds to approximately a 0.96-point increase in the index. The lagged specification confirms this relationship, with a coefficient of 0.1156. PCA results show that the first principal component explains 72.66% of the variance, supporting the coherence of the constructed index. The moderation analysis indicates that internet speed and reliability have a strong positive effect. At the same time, the negative interaction coefficient (-0.0056 in the robustness model) suggests a diminishing-return effect rather than complementarity.

Received: May, 2025

1st Revision: April, 2026

Accepted: May, 2026

DOI: 10.14254/2071-8330.2026/19-2/3

JEL Classification: O33, H83, R58, D73

Keywords: government AI readiness, digital urban governance, smart cities, citizen participation, trust in authorities, public-sector digital transformation