Sharing the Benefits of Innovation-Digitization : A Summary of Market Processes and Policy Suggestions
Governments play a very important role in supporting innovation, managing the disruptive effects of innovation, and ensuring that the benefits of innovation are broadly shared in the long run. This paper reviews the literature on market mechanisms...
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| Format: | Working Paper |
| Language: | English |
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World Bank, Washington, DC
2018
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| Online Access: | http://documents.worldbank.org/curated/en/971341523906776382/Sharing-the-benefits-of-innovation-digitization-a-summary-of-market-processes-and-policy-suggestions http://hdl.handle.net/10986/29708 |
| Summary: | Governments play a very important role
in supporting innovation, managing the disruptive effects of
innovation, and ensuring that the benefits of innovation are
broadly shared in the long run. This paper reviews the
literature on market mechanisms that translate innovation
into jobs and policies that are needed to improve outcomes.
Although many countries now recognize the importance of
modifying fiscal redistribution and insurance mechanisms to
deal with the challenges of the digitization age, no country
has yet done so feasibly. Developing country governments,
having lower institutional capacity and usually fewer
resources, will likely find it even more difficult to manage
these changes. Global production patterns are likely to
continue shifting. These shifts will depend on a combination
of factors: the direction of technological change, trade
agreements, global demand patterns, policies, and endowment
shifts. Developing countries may not follow the same
structural route of the past, through manufacturing, to
higher income, but with appropriate investments, they can
develop high-productivity service sectors. The policies that
are needed to harness the benefits of digitization span a
wide range of sectors: finance, competition policy, public
support to innovation, fiscal and regulatory incentives for
innovation, macroeconomic frameworks supporting demand
growth, public support to education and reskilling,
infrastructure provision for the digitization age, and
sustainable fiscal insurance and redistribution systems.
Finally, a lot more research needs to be done to understand
how the gig economy affects the welfare of workers of
different types, its macro effects, and how digitization
interacts with an aging or shrinking labor force in the
growth process. |
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