Growth and Innovation in the Digital Era Fifth Ministerial - - PowerPoint PPT Presentation

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Growth and Innovation in the Digital Era Fifth Ministerial - - PowerPoint PPT Presentation

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August 6, 2015 Growth and Innovation in the Digital Era Fifth Ministerial Conference on the Information Society in Latin America and the Caribbean Dr. Robert D. Atkinson, President, ITIF @RobAtkinsonITIF 1 ITIF: Who We Are The Information

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Growth and Innovation in the Digital Era Fifth Ministerial Conference on the Information

Society in Latin America and the Caribbean

August 6, 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

3 2

“Silicon Valley” or ICT-Enabled Economy? ICT and Growth

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ICT Policy: Fairness or Growth?

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Productivity Grows the “Pie”

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20,000 40,000 60,000 80,000 100,000 120,000 140,000

Productivity Differs by Nation

Productivity Per Person Employed, 2015 (PPP, US$) (Conference Board, Total Economy Data Base)

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Where Does Productivity Come From?: Better Tools

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Today’s Better Tools Are ICT Tools

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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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1) $35.20 2) $352 3) $3,520

4) $35,200

5 GBs cost $1.5 billion in 1960

?: Today’s Cost of 32GB of Storage Using 1995 Technology

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1) $35.20 2) $352 3) $3,520

4) $35,200 ?: Today’s Cost of 32GB of Storage Using 1995 Technology

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?: Monthly Cost of 1 Gig. Broadband in U.S. With 1999 Technology (in 2015$)

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A) $95 B) $950 C) $9,560 D) $95,600

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?: Monthly Cost of 1 Gig. Broadband in U.S. With 1999 Technology (in 2015$)

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A) $95 B) $950 C) $9,560

D) $95,600

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Past-Current Current-Future

  • Slow copper Fast fiber/DOCSIS3.1

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Past-Current Current-Future

  • Slow copper Fast fiber/DOCSIS3.1
  • 2G-3G wireless LTE-Advanced

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Past-Current Current-Future

  • Slow copper Fast fiber/DOCSIS3.1
  • 2G-3G wireless LTE-Advanced
  • Hardware defined Software defined

networks networks

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Past-Current Current-Future

  • Slow copper Fast fiber/DOCSIS3.1
  • 2G-3G wireless LTE-Advanced
  • Hardware defined Software defined

networks networks

  • Desktops/laptops Tablets, smartphones, etc

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Past-Current Current-Future

  • Slow copper Fast fiber/DOCSIS3.1
  • 2G-3G wireless LTE-Advanced
  • Hardware defined Software defined

networks networks

  • Desktops/laptops Tablets, smartphones, etc
  • Client-server Cloud

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Past-Current Current-Future

  • Slow copper Fast fiber/DOCSIS3.1
  • 2G-3G wireless LTE-Advanced
  • Hardware defined Software defined

networks networks

  • Desktops/laptops Tablets, smartphones, etc
  • Client-server Cloud
  • Few sensors Internet of Things

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Past-Current Current-Future

  • Slow copper Fast fiber/DOCSIS3.1
  • 2G-3G wireless LTE-Advanced
  • Hardware defined Software defined

networks networks

  • Desktops/laptops Tablets, smartphones, etc
  • Client-server Cloud
  • Few sensors Internet of Things
  • Limited data Big data/powerful

analytics

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Current/Future System Enables Software To “Eat the World”

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Using ICT Tools is Much More Important Than Making Them

  • Over 80% of benefits from ICT in the

U.S. are related to its use by

  • rganizations, rather than its production

by the ICT industry.

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  • In large U.S. firms, $1 dollar of IT capital is associated with $25
  • f market value. $1 of non-IT capital associated with $1 of value.
  • Between 2006 and 2010, U.S. corporations that invested more in

IT increased productivity three times faster.

  • IT has 3 to 7 times more impact on productivity.
  • IT was responsible for 75% of U.S. productivity growth from

1995 to 2002, and 44% from 2000 to 2006.

  • A 10% increase in a country’s IT capital stock adds approximately

0.45 percentage points to GDP.

ICT Drives Enterprise Growth

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Today’s Presentation

3 2

“Silicon Valley” or ICT-Enabled Economy?

ICT and Growth 1

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ICT Policy: Fairness or Growth?

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ICT Development vs. Deployment Policy Matrix

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Supports “Silicon Valley” Hurts “Silicon Valley”

Supports ICT Economy

  • Tax incentives for ICT adoption
  • ICT skills development
  • Open data policies
  • Tax incentives for ICT adoption
  • Broadband deployment support
  • More spectrum
  • Digital literacy policies
  • E-government, including e-procurment
  • Digital transformation strategies (transportation, health care, etc.)
  • Support ICT platforms (mobile payments, digital signatures, etc.)
  • Latin American Digital Single Market

Hurts ICT Economy

  • ICT Tariffs
  • Data center localization requirements
  • Local content requirements
  • Procurement preferences for domestic companies
  • ICT Taxes
  • Cross Border Data Flow Limits
  • Labor market regulations
  • Product market regulations (e.g.,

ban on Uber)

  • Strict privacy regulations
  • Limits on FDI
  • Small business preferences
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ICT Development vs. Deployment Policy Matrix

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Supports “Silicon Valley” Supports ICT Economy

  • Tax incentives for ICT adoption
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ICT Development vs. Deployment Policy Matrix

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Supports “Silicon Valley” Supports ICT Economy

  • Tax incentives for ICT adoption
  • ICT skills development
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MOOCs as an Opportunity

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ICT Development vs. Deployment Policy Matrix

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Supports “Silicon Valley” Supports ICT Economy

  • Tax incentives for ICT adoption
  • ICT skills development
  • Digital transformation strategies (transportation,

health care, agriculture, etc.)

  • Support ICT platforms (mobile payments, digital

signatures, etc.)

  • E-government, including e-procurement
  • Open data policies
  • Digital literacy policies
  • More spectrum and more efficient spectrum use
  • Broadband deployment support
  • Latin American Digital Single Market
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ICT Development vs. Deployment Policy Matrix

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Supports “Silicon Valley” Hurts ICT Economy

  • ICT Tariffs
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Lower ICT Tariffs Drive ICT Exports

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% Philippines Malaysia China Thailand Indonesia India Vietnam Brazil Argentina Chile

ICT Goods Exports as Percentage of Total Goods Exports, 2009

ITA Member Non-ITA Member

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ICT Development vs. Deployment Policy Matrix

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Supports “Silicon Valley” Hurts ICT Economy

  • ICT Tariffs
  • Data center localization requirements
  • Local content requirements
  • Procurement preferences for domestic

companies

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ICT Development vs. Deployment Policy Matrix

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Hurts “Silicon Valley” Hurts ICT Economy

  • ICT Taxes
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Keeping IT Prices Low is Key to Growth

  • IT tariffs and discriminatory taxes sectors mean consumers/firms have to

pay more while often receiving inferior products/services.

  • This makes downstream IT-using firms/sectors less competitive.
  • Diminishes productivity of financial, transportation, etc. sectors.
  • For every $1 of tariffs India applied to imported computers, the country

lost $1.30 due to lost spillover effects. (Kaushik and Singh, 2004).

  • For every 1 percent drop in price in ICT products, there is a 1.5 percent

increase in demand. (Gurbaxani, 2003).

  • Tariffs on IT products do not create a competitive domestic hardware

industry, but they do limit adoption of ICT by keeping prices high.

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Taxes and Tariffs for Consumer ICT Products and Services

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Ben Miller and Robert D. Atkinson, “Digital Drag: Ranking 125 Nations on Taxes and Tariffs on ICT Goods and Services,” (Information Technology and Innovation Foundation, October 2014), http://www.itif.org/publications/2014/10/24/digital-drag- ranking-125-nations-taxes-and-tariffs-ict-goods-and-services.

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Taxes and Tariffs for Business-Use ICT Products and Services

Ben Miller and Robert D. Atkinson, “Digital Drag.”

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Latin America and Caribbean Nations Impose Higher ICT Taxes/Tariffs Than N. America

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Ben Miller and Robert D. Atkinson, “Digital Drag.”

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%

East Asia Europe and Central Asia Latin America and the Caribbean Middle East and North Africa North America Southeast Asia Sub-Saharan Africa

Extra Taxes Tariffs

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ICT Development vs. Deployment Policy Matrix

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Hurts “Silicon Valley” Hurts ICT Economy

  • ICT Taxes
  • Limits on cross border data flows
  • Labor market regulations
  • Product market regulations (e.g., ban on Uber)
  • Strict privacy regulations
  • Limits on FDI
  • Small business preferences
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Today’s Presentation

3 2

“Silicon Valley” or ICT-Enabled Economy? IT and Growth

1

41

ICT Policy: Fairness or Growth?

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Competing Visions for ICT Policy: Fairness or Growth?

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Digital Fairness…

  • Internet is principally a tool for communications

by individuals

  • Priority on digital adoption by individuals
  • Regulation to protect consumers
  • Weak content protection to make it more affordable
  • To extent focus is on enterprises, it’s on SMEs
  • Telecom competition to keep prices low

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Digital Growth…

  • Internet is principally a tool for commerce by

enterprises

  • Priority on digital adoption by enterprises,
  • Policies to support enterprise innovation
  • Stronger content protection for incentive to produce
  • Support ICT use by the most productive enterprises,

regardless of size

  • Focus on enabling telecom capital investment

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Won’t Fewer SME’s and More Productivity Cost Jobs?

  • Higher productivity leads to more, not fewer jobs
  • United National Industrial Development

Organization finds “productivity is the key to employment growth”1

  • World Bank finds businesses in low-middle income

countries using more IT have higher productivity but also faster sales and employment growth.

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1 Anders Isaksson, Thiam Hee Ng, and Ghislain Robyn, Productivity in Developing Countries: Trends and Policies (Vienna: UNIDO, 2005), 139

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www.globalinnovationrace.com

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Rob Atkinson

ratkinson@itif.org

Thank You

Rob Atkinson

ratkinson@itif.org

@robatkinsonitif facebook.com/innovationpolicy www.innovationpolicy.org www.itif.org Follow ITIF:

Thank You