Policy choices in the 21st century – where to start?

ABSTRACT

Based on the author’s keynote talk at the ERF’s 25th anniversary conference in Kuwait City (March 10–12, 2019), this paper outlines the research and policy dimensions of the fast-rising intangibles economy. The key features of such economic structures are – the centrality of (mostly proprietary) intellectual property; high upfront fronts for firms but near-zero marginal costs of production if successful; first-mover advantage especially if backed up by standard-setting; and handsome rewards for strategic behavior. There is no single route to success in such a world; in fact many successful countries have had ex ante daunting challenges not unknown among ERF countries. The ethos that drives the ERF has never been more essential than it is today.

KEYWORDS:

• intangibles economy
• intellectual property
• innovation
• technology

JEL Classification:

• O4 – innovation
• research and development
• technological change
• intellectual property rights

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1 Chenery and Syrquin (1975) describe this as “a systematic variation in any significant aspect of the economic or social structure associated with a rising level of income or other index of development” [p. 4].

2 Although they are not, strictly speaking, entirely equivalent concepts, this paper variously uses the terms “intangibles economy”, “digital economy”, “IP-based economy” and “economy of the future” to portray the same broad set of features described in this section.

3 Girard (2019) p. 4.

4 Girard (2019) p. 11.

5 For an account of the combination of clustering and national purpose in Ireland, Israel and Taiwan see Breznitz (2007). For an account of the role of the State in innovation see Mazzucato (2014) from where this quote is drawn (p. 193).

6 For fuller accounts of policy-making in a digital or intangibles-driven economy see Ciuriak (2018), Haskel and Westlake (2018a) Chapter 10, and Medhora (2018).

7 Bawa (2017) and Clarke (2017).

8 The Marshall -Lerner condition is a mathematical statement that an exchange rate depreciation/devaluation will only improve the balance of trade if the absolute value of the sum of the elasticities of demand for imports and exports exceeds one. The J-curve is a special case of this verity. It refers to the phenomenon wherein under fixed-price contracts (which is how much trade occurs), the initial effect of a depreciation/devaluation on the balance of trade will be perverse, only improving in the medium to long term as these contracts come to an end and their successors reflect the new price structure of imports and exports caused by the exchange rate change.

9 Haskel and Westlake (2018b).

10 the digital era equivalent of which is a “cash blast” to every individual’s bank account or e-payer.

11 Delaney (2017).

12 OECD (2019).

13 WEF (2016).

14 Cornell University, INSEAD and WIPO (2018).

15 World Bank (2019).

16 Kaufmann, Kraay, and Mastruzzi (2010).

17 Spence (2017), p. x.