DIGITAL TRANSFORMATION OF SOCIAL GOVERNANCE: ECONOMIC CHALLENGES AND OPPORTUNITIES OF SMART CITIES

Abstract

The increasing integration of digital technologies into public administration has led to a reconfiguration of how social services are managed in urban environments. This study focuses on the economic dimensions of digital transformation in the social sector within the framework of smart cities. The relevance of the topic stems from the growing demand for cost-efficient, transparent, and inclusive public service delivery in the face of rapid technological advancement and societal expectations for digital equity. The research aims to explore the extent to which these innovations contribute to efficiency improvements and what challenges hinder their successful implementation in the governance of education, healthcare, and social protection. The study employed an empirical methodology based on structured sociological surveying, utilizing remote digital tools for data collection. A representative sample of respondents was selected according to demographic, educational, and territorial criteria, enabling an inclusive and statistically relevant dataset. Data were processed through statistical and content analysis methods, allowing both quantitative and interpretive insights into the dynamics of digital service adoption, accessibility, and institutional readiness. The results reveal several critical trends. First, digital services in the social sector are perceived as beneficial, especially in terms of convenience and speed, but they are not yet universally accessible. Infrastructure limitations and disparities in digital literacy remain persistent barriers to equitable service delivery. Second, public trust in artificial intelligence, particularly in automated decision-making related to welfare and benefits, is cautious and highly dependent on context. Many individuals express concerns over transparency, data security, and the ethical dimensions of automation. Third, financial constraints and organizational inertia within local administrations significantly hinder the rollout of smart city technologies, despite their potential for long-term economic benefits. At the same time, the emergence of new models of budgeting, public-private partnerships, and performance-based planning shows promise in bridging the gap between innovation and sustainability. Ultimately, the study demonstrates that while the digital transformation of social governance offers substantial economic opportunities, its success depends on inclusive policy design, public engagement, and the capacity of institutions to adapt to change.