The digital era, marked by a shift toward intangibles, requires a rethinking of government policy in the application of technological developments to real-world problems and the distribution of the economic gains of innovation. The intangibles economy, characterized by high upfront costs and very low reproduction costs, is driven by proprietary ideas, i.e., intellectual property, which is concentrated within a few countries and a small group of individuals and firms. This has implications for the conduct of government policy in many areas ranging from the support of innovation to macroeconomic and social policy. It will need to be creative, but should draw on the experience with technological change and economic growth throughout modern history.
Rohinton P. Medhora is president of the Centre for International Governance Innovation and a member of the Commission on Global Economic Transformation, an initiative co-chaired by Nobel economics laureates Michael Spence and Joseph Stiglitz.