september 7, 2015 productivity, innovation and...
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Productivity, Innovation and Digitalization:
Which Global Policy Challenges?
10th Anniversary Event, Bruegel
September 7, 2015
Dr. Robert D. Atkinson, President, ITIF
@RobAtkinsonITIF
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ITIF: Who We Are
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The Information Technology and Innovation Foundation is a think tank at the cutting edge of designing innovation policies and exploring how innovation drives boost growth and competitiveness. ITIF focuses on:
• Innovation processes, policy, and metrics, • Internet, big data and ICT policy, • ICT and economic productivity, • Science and tech policy, and • Innovation and trade policy.
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ITIF Global Engagement
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Today’s Presentation
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2 Challenges to ICT Development
ICT as Driver of Growth 1
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Challenges to ICT Adoption 4
Policy Solutions 5
EU ICT Adoption Performance
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The Global Productivity Challenge
Figure 2, growth in labor productivity
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EU’s Productivity Challenge is Even More Severe
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Annual Labor Productivity Growth; Source: The Conference Board, Total Economy Database
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EU’s Productivity Challenge is Even More Severe
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
EU-15 EU-13 EU-28 U.S.
Annual Labor Productivity Growth, 2000-2013, Source: The Conference Board, Total Economy Database
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“General Purpose Technologies” Drive Productivity Growth
Approximately every half-century, a new technology system emerges that changes everything.
• Railroad and Iron: 1840’s
• Electricity and Steel: 1890’s
• Electro-Mechanical Systems: 1950’s
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These new technology systems impact virtually everything:
• what we produce • how we produce it • how we organize production • the location of productive
activity • the infrastructure needed • the laws and regulations required
ICT as Today’s GPT
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Today’s Presentation
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2 Challenges to ICT Development
ICT as Driver of Growth 1
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Challenges to ICT Adoption 4
Policy Solutions
EU ICT Adoption Performance
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Moore’s Law Drives ICT Tool Progress
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• 1,215,500,000,000,000,000,000 transistors in 2014
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?: Transistor Growth Since 2000
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A. 14.3 times
B. 143 times
C. 1,430 times
D. 14,300 times
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?: Transistor Growth Since 2000
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A. 14.3 times
B. 143 times
C. 1,430 times
D. 14,300 times
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“Moore’s Law” Progress Depends on Schumpeterian Profits
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• Policy-induced global overcapacity, led by China
Policy Challenges to “Moore’s Law” Progress
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• Policy-induced global overcapacity, led by China
• Fragmented global markets
Policy Challenges to “Moore’s Law” Progress
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• Policy-induced global overcapacity, led by China
• Fragmented global markets
• Weak IP protection
Policy Challenges to Moore’s Law Progress
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• Policy-induced global overcapacity, led by China
• Fragmented global markets
• Weak IP protection
• Overly aggressive anti-trust policy
Policy Challenges to Moore’s Law Progress
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Today’s Presentation
3
2 Challenges to ICT Development
ICT as Driver of Growth 1
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EU ICT Adoption Performance
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Policy Solutions 5
Challenges to ICT Adoption
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U.S. Businesses Invest More in ICT
Share of GDP, 2010; Source: National Science Foundation, Science and Engineering Indicators 2014
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U.S. Exceeds EU in ICT Investment (1)
Gross fixed capital formation as a percentage of GDP (EUR-W is weighted average of major European countries Source: “ICT Capital and Productivity Growth,” EIB Papers 16, no. 2 (2011)
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ICT contribution to annual GDP growth, 1985-2010; Source: OECD StatExtracts, Country Statistical Profile 2012
U.S. Gets More Growth From ICT
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US. Exceeds EU in ICT Investment (2)
ICT assets as percentage gross fixed capital formation, 2011. OECD, Science Technology and Industry Scoreboard 2013
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A Bigger Share of U.S. Investment Goes to ICT
Shares of ICT investment as percent of nonresidential investment. Source: OECD StatExtracts, Country Statistical Profiles 2012
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Today’s Presentation
3
2 Challenges to ICT Development
ICT as Driver of Growth 1
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EU ICT Adoption Performance
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Policy Solutions 5
Challenges to ICT Adoption
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• Favoring development over adoption
Policy Challenges to ICT Adoption
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Is it Better to Cook the Tech, or Eat it?
• Over 80% of benefits from ICT in the U.S. are related to its use by organizations, rather than its production by the ICT industry.
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Most U.S. Advantage Comes From ICT Use
2000 to latest year, percentage points per annum. Source: Economic Modelling 29, no. 5 (2012)
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But “Cooking” Policies Can Hurt “Eating”
• ICT Tariffs
• Data center and data localization requirements
• Local content requirements
• Procurement preferences for domestic companies
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• Favoring development over adoption
• Resistance to ICT-enabled creative destruction
Policy Challenges to ICT Adoption
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• Ignoring adoption in favor of development • Resistance to ICT-enabled creative destruction
• Social policy driving ICT policy
Policy Challenges to ICT Adoption
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• Privacy
ICT as Social Policy
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• Privacy
• Favor small businesses
ICT as Social Policy
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EU Firms Are Smaller Than U.S. Firms (and Less Productive)
Percent of total workforce employed at enterprises by size, 2010. Source: OECD, Entrepreneurship at a Glance 2013
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The Gap Between the Most Productive Firms and the Rest is Growing
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• Privacy
• Favor small businesses
• Restrictive labor market regulations
ICT as Social Policy
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• Privacy
• Favor small businesses
• Restrictive labor market regulations
• Chicken or egg issues: (mobile payments, ITS, health IT, digital signatures, smart cities)
Policy Challenges to ICT Adoption
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Today’s Presentation
3
2 Challenges to ICT Development
ICT as Driver of Growth 1
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Challenges to ICT Adoption 4
Policy Solutions 5
EU ICT Adoption Performance
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Policy Principles to Drive ICT-Enabled Growth • Avoid prisoner’s dilemma policies (e.g., advance
your growth at global expense)
• Put the pedal to metal for growth and disruption
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Selected ITIF Resources
• Raising European Productivity Growth Through ICT: http://www2.itif.org/2014-raising-eu-productivity-growth-ict.pdf
• The False Promise of Data Nationalism: http://www2.itif.org/2013-false-promise-data-nationalism.pdf
• Resolving Cross-Border Internet Policy Conflicts: http://www.itif.org/events/resolving-cross-border-internet-policy-conflicts
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www.globalinnovationrace.com
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Rob Atkinson [email protected]
Thank You Rob Atkinson [email protected]
@robatkinsonitif facebook.com/innovationpolicy www.innovationpolicy.org www.itif.org
Follow ITIF:
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