Buenos Aires, the second largest city in South America, is a metropolis of more than 12 million people, comprising the Autonomous City of Buenos Aires plus 24 adjacent partidos (municipalities). Discovered in 1536 by Spanish explorer Pedro de Mendoza, it is a port city that sits on the banks of the Rio de la Plata River and is named after the patron saint of sailors responsible for good wind, or buen aire.

Buenos Aires is a cultural giant known for its European-style architecture, its pervasive cafes, the haunting and alluring tango, haute cuisine and a world-recognized theatre, music and literary scene. Today, like many cities in Latin America, it faces some of the common megacity challenges brought on by diseconomies of scale, including growing urban sprawl, pollution, traffic congestion and economic inequality. Solving these issues has been even more difficult given the drag on GDP as a result of slow growth in productivity.

Today, Buenos Aires has a plan in place to build a ciudad moderna (modern city). This plan aims to address key concerns like economic growth, government transparency, quality of life, mobility and the environment. A 2014 survey by the Inter-American Development Bank shows that residents of Buenos Aires rate safety, inequality, transportation, transparency and health as their top concerns.

Buenos Aires is taking some new approaches to help resolve these pressing challenges, and many of them involve the use of innovative technologies that deliver benefits for government, business and citizens. For example, to achieve more transparency in government, one area of intended reform, the city is pursuing an open data strategy that uses insights gathered through data analysis and visualization (big data) to provide real-time information, interactive applications and other services to its citizens. Through the connectivity provided by this “digital platform” the city is already offering service status notifications for the metro system, voter information guides, and a mobile app for submitting complaints to the city.

Other examples include the creation of online portals to help small and medium-size business interact more efficiently with city government; energy efficient buildings with monitoring via sensors; an innovation lab to facilitate the emergence of new ideas and companies, including a focus on building creative industries; digital classrooms and libraries; and free wi-fi.

Should the ciudad moderna become reality, the city will have taken significant steps to increase government transparency and improve citizen services, support the growth of small business, and promote a connected city that provides better quality of life and new opportunities for its residents. But Buenos Aires still has a long way to go to get its basics right: more efficient municipal government, solid public finances and business-friendly regulation, and hard connectivity.

Read the new Competitiveness of Cities report here.

Authors: Stephanie Heier is Director of Emerging Markets, Microsoft and Orlando Ayala is Chairman of Emerging Markets at Microsoft

Image: The Obelisk is lit up in Buenos Aires June 10, 2014. REUTERS/Enrique Marcarian