While the whole world was looking upward, to space, to the cloud, to the invisible expanses of technology, a profound change was taking place right beneath our feet. A geographic change, and no less, an economic one: the city stopped being merely a place of residence or local government, and became an arena. An economic, strategic and cognitive arena.
It went back to being what it always was at its core: the heart of human history. Cities are where the first languages were written, where money was invented, where systems of government were born, including the idea of private property. The city was once a center of faith, of law, of trade and of military power.
Then, in the 20th century, it was pushed into the background. The state took the reins: it conscripted, regulated, taxed, invested. But now something is changing again. In a reverse movement, fascinating and almost evolutionary, the city is coming back. Only this time it returns not as an ethnic or religious collective, but as a strategic platform. As an engine of international competition. As a new arena.
SIGNAL · 01The City as Arena
McKinsey's report The Next Big Arenas of Competition, published in March 2025, draws a clear picture: fields such as artificial intelligence, robotics, cybersecurity, modular construction and future air mobility will become centers of growth, profit and global influence by 2040. But within each of these arenas there is also a geographic question. Not only who will invent, but where it will happen.
And the answer no longer always sits at the national level. States, with all their bureaucratic, political and budgetary weight, often become too slow, too constrained. Cities, by contrast, are nimble, direct, and sometimes bolder. They can adopt new technologies, advance innovative regulation and allow experiments in public space or the built environment long before the state wakes up.
Cities that have grasped this, such as Singapore, Tel Aviv, Tallinn, Austin, Barcelona or Seoul, are no longer waiting. They take the initiative. They invest in startup ecosystems, set aside test zones for new forms of mobility, promote urban artificial intelligence, and in some cases even issue digital currencies or establish institutions of higher education that rival national universities.
SIGNAL · 02The City as an Economic Laboratory: The Sandbox Model
The modern city now serves as a living laboratory. Not only for architecture or transport, but for regulation, consumer culture, technology and social structure. The term "regulatory sandbox," born in the world of fintech, has now been adopted in every field: from digital governance to experimental models of housing.
Berlin, for example, has become a global testing ground for cooperative housing. Los Angeles is an active arena for air mobility trials. Toronto experimented with the "smart city" concept with the involvement of giants such as Alphabet. Tel Aviv has become a global incubator for cyber and AI, through a rare combination of human capital, proximity to universities and an urban entrepreneurial spirit.
Each city has its own experiment. This differentiation is not just branding; it is an economic structure. It is how a city attracts capital, talent, entrepreneurs and investors. Not as a stopover, but as an arena in its own right.
SIGNAL · 03An Arena Is Not Just Technology, It Is Infrastructure for Life
Economic arenas do not exist in a vacuum. They touch the ground in the form of the city. What is a city that embraces modular construction? A city where a new neighborhood can be built within months, where spaces can be taken apart and reassembled, and where change happens at a pace suited to a changing world.
And what is a city that embraces personalized medicine? It is a city in which community health stations function like smart laboratories, where preventive care replaces waiting for an ambulance. A city that promotes air mobility? It will have to reinvent the urban ceiling, vehicle insurance and traffic law. The city is the place where technological utopia must meet the moral, political and planning constraints of life itself.
SIGNAL · 04The Leading Cities of 2040 Will Not Be the Largest, but the Boldest
Not size, not history, and not GDP per capita will determine which city leads, but its ability to dare, to think outside the box. To dare to eliminate parking lots in favor of artificial intelligence labs. To dare to turn a school into an interdisciplinary innovation center. To dare to challenge national regulation in the name of an urban breakthrough.
The bold cities are those that set up innovation directorates, work in partnership with the nonprofit sector, run community platforms for real-time experimentation, and understand that every square meter within their boundaries is not just real estate, but an opportunity to shape the future.
SIGNAL · 05When Cities Break Away from the State: Economic and Cognitive Independence
Already today, large cities are blurring the line between a municipal authority and a quasi-sovereign entity. They sign direct agreements with multinational corporations, run budgets on the scale of small countries, and sometimes even grant incentives to foreign entrepreneurs without waiting for government approval. This is a profound reversal: no longer a city that receives targets from the state, but a city that sets them.
Dubai embodies the most radical example. New York has functioned as a de facto city-state for years. And Tel Aviv, with its innovative ecosystem and its independent environmental policy, illustrates well how a city can become an economic and strategic force that drives the state, rather than the other way around.
The implication is clear: to secure growth, relevance and resilience, every city in Israel must define an identity for itself. No longer a "central city" or "periphery," but a city with a clear mission, a focused field of specialization and a strategy built on its comparative advantages. Instead of every city trying to be the same thing, the urban identity map seeks to offer a new concept: not city versus city, but the city as a story. The city as an arena. The city as an engine.
SIGNAL · 06The Urban Identity Map: Israel 2040
Tel Aviv-Jaffa: The City as a Platform
Tel Aviv is not just another tech hub; it is the city that is becoming a platform in its own right. With an open ecosystem, open source and civic digital innovation, Tel Aviv offers a model of a city that runs itself like a smart operating system. This is where municipalities share data, regulation becomes open, and urban life becomes infrastructure for experimentation. A city that competes not over a field, but over an approach.
As a hub of civic action, entrepreneurship, culture and critical thinking, Tel Aviv can serve as a laboratory for changing urban life. A city that shapes flexible urban policy and adopts new technologies not merely for efficiency, but as a model of partnership between the city and those who live in it.
Jerusalem: Conflict Resolution and Social Innovation
Jerusalem, with all its complexities, can become an international city, a city focused on conflict resolution, social innovation and civic diplomacy. Rather than fighting its identity, it can turn that identity into an anchor: interfaith incubators, mediation centers and institutions for dialogue between communities. This is not a city of technology, but of consciousness.
The Jerusalem fault line, religious, ethnic and class-based, can become an international laboratory for reconciliation. Jerusalem can be a place of heritage-based innovation: not disruptive technology, but ideas that build bridges between people.
Haifa: Industrial Intelligence and Green Engineering
Haifa, a city with a rich industrial and academic heritage, can lead and manage the arena of industrial intelligence and green engineering. The Technion and the port, together with a unique ethnic diversity, allow it to become a global center of environmental innovation: pollution treatment, smart industrial recycling and advanced water solutions.
The meeting of higher education and heavy industry creates a foundation for developments in renewable energy, smart transportation and smart industrial maintenance. Haifa can establish technology incubators around the port of the future, and forge an identity as a city that knows how to combine a technological tradition with environmental solutions.
Beersheba: Cyber, Climate Resilience and Desert Innovation
Beersheba is taking shape as the national cyber capital, but it can broaden its mission into a city of desert innovation, climate resilience and extreme scenarios. The combination of Ben-Gurion University, a security and civilian presence and extreme environmental conditions makes it possible to turn it into a global center of adaptation technologies, from physical survival to smart data management.
Beersheba is also a physical and cognitive gateway to the Negev. Investment in infrastructure, cross-sector partnerships and experiments in autonomous transport and green energy can turn it into an international model of a city that balances security with civilian life, and extreme climate with sustainable innovation.
Rehovot: Advanced Biology
Rehovot, home to the Weizmann Institute and the Faculty of Agriculture, holds a rare starting position to become the beating heart of advanced biology in Israel. It is suited to bio-convergence precisely because it is quiet, scientific and connected to academia. This is a city that does not need to be large in order to lead: research parks, incubators for advanced medical technologies, and an ecosystem in which synthetic biology, personalized medicine and food technologies develop in synergy. A small city with global impact.
Kfar Saba: Empathic Technology
Kfar Saba offers a different urban model: a city of empathic technology. Technology designed not only to optimize, but to understand, listen and adapt. With a strong community, educational infrastructure and a sense of belonging, it can become a laboratory for emotional interfaces, attention-based services and human-scale social platforms. Technology in Kfar Saba will be judged by a simple question: does it listen? Does it do good? And does it build trust between the city and its residents?
Petah Tikva: A Smart Health City
Petah Tikva, with its concentration of hospitals, health funds and medical data, can be a smart health city. Not just a city of hospitals, but of preventive medicine, personal data and remote medical management. Partnerships between existing institutions and the tech industry can turn it into a national center for personalized health, and a model for managing a healthy community: not as a response to illness, but as the creation of continuous quality of life.
Rishon LeZion: A Learning City
Rishon LeZion, with a young population and cultural infrastructure, can be a test city for digital education and interactive culture. Connections between the education system, the gaming and entertainment sector and community institutions can produce a new model of a learning city: a city where culture, learning and technology live within one another, and where children do not only learn, but create knowledge.
Ashdod: Robotic Logistics and Smart Trade
Ashdod, as a major port with technological potential, can lead the arena of robotic logistics and smart trade. Its combination of geographic location, operational experience and industrial capital allows it to become the port of the future, and a living laboratory for advanced port technologies: robots for sorting and unloading, AI systems for forecasting congestion, and autonomous transport across the logistics hinterland.
Netanya: Technological Wellbeing
Netanya, with its beachfront and international community, is well placed to lead in technological Wellbeing. A city that combines a healthy lifestyle, smart nutrition and emotional and digital balance: a model of preventive health, health education and AI systems that monitor habits, not out of fear but out of well-being.
Bnei Brak: Decentralized Democracy and Community Economy
Bnei Brak, with a high level of community organization and an internal normative system, can become an innovative center for decentralized democracy. Community economics, alternative regulation and community fintech can create a model of governance that grows from the bottom up, one that does not replace the state but refines it.
Holon: Urban User Experience
Holon, with a strong background in education and design, can lead the arena of urban UX: a city that thinks about user experience not only on screen, but in public space. The Design Museum, the artists' community and municipal education create the foundation for a city that designs not only products, but life itself.
Herzliya: Marine Technology and the Coastal Digital Economy
Herzliya, with its coastline and a sophisticated industrial zone, can lead in marine technology and the coastal digital economy. No longer a bedroom city next to Tel Aviv, but a laboratory for the interfaces between sea, maritime security, smart tourism and Blue Tech, with a multidisciplinary marine campus that connects science, sustainability and civil security.
Ra'anana: Accessible and Equitable Technology
Ra'anana, with an aging population and a family-oriented community, is suited to developing accessible and equitable technology: digital services adapted to age, language and ability, and a community that leaves no one behind. This is not only about technology, but about care embedded in code.
Hod HaSharon: Urban AgriTech
Hod HaSharon, with its agricultural roots and young community, can become the capital of urban AgriTech: smart greenhouses, urban nutrition, modern agricultural education, and a laboratory where food, climate and technology meet anew.
SIGNAL · 07Conclusion
A city that knows how to define its mission will lead. A city that understands its power will shape its spaces, its residents and its future.