Productivity expansion will allow economies to maximize output without having growing inputs and is a vital driver of financial progress and of earnings for every capita. However, productivity progress has been slowing in current many years, depressing financial progress. This could possibly show up paradoxical offered the quick improvement in technological progress and the spread of digital technologies.
Firms’ various performances in the course of this interval of digital transformation assistance describe this puzzling paradox. When corporations at the worldwide frontier of productivity have continued to increase their productivity steadily, the relaxation of the organization populace has not saved speed.
The efficiency gap among frontier firms and the relaxation has improved (Figure 1). The hole has widened much more in sectors that depend additional heavily on the use of knowledge and electronic systems. These trends elevate issues for the inclusiveness of economic progress in the electronic era.
Technology DIFFUSION IS Very important FOR Financial Growth AND INCLUSIVENESS
As we examine in our chapter in “Shifting Paradigms,” analyzing the dynamics of technological innovation diffusion in the context of changes brought by electronic transformation is critical to detailing these productiveness traits.
Know-how diffusion can be a gradual and gradual process, uneven throughout international locations, areas, sectors, and firms—and even inside narrowly defined sectors in the same nation.
Although corporations at the global frontier of productiveness have ongoing to maximize their efficiency steadily, the rest of the business enterprise populace has not retained rate.
The latest OECD analyses exhibit that the expanding productivity hole concerning the most successful firms and the rest could be a reflection of a slowdown in technology diffusion. This is particularly the scenario in the most digital- and expertise-intensive sectors. Laggard firms in these sectors confront bigger hurdles and capture up at a slower pace.
Shifts to a digital and understanding economic climate pose 3 new issues for firms. First is a rising significance of intangible assets, these as investigation and growth (R&D), software program, and other intellectual property, in the generation processes. Second is an increasing role of tacit awareness. 3rd is increasing technological complexity requiring progressively advanced complementary investments in areas this kind of as employee techniques and organizational innovation.
The have to have for complementary investments in intangibles, the non-rivalry and very low-price tag scalability of digital systems, and the related scale economies and community externalities develop and boost winner-normally takes-most dynamics, in particular in electronic-intense sectors. These aspects may possibly permit superstar firms to prosper and achieve appreciable current market shares though acting as boundaries for other firms to adopt new systems and for new gamers to enter the market.
Weakening engineering diffusion is not only linked with rising efficiency divergence, but it also impacts other socioeconomic outcomes. It performs a purpose in conveying the modern declines in small business dynamism, the increase in focus and markups in a lot of industries and nations, and tendencies in labor money shares and wage inequality.
The polarization amongst main companies and laggards has been amplified even even further by the COVID-19 pandemic. Although there has been an acceleration of electronic adoption all through the pandemic, the charge of adoption of electronic technologies and their sophistication have been extremely heterogeneous: Tech-savvy companies, generally currently extra productive and more substantial, have adopted more and extra refined digital systems than scaled-down, significantly less tech-savvy companies. In the same way, while teleworking has been critical to sustaining creation all through the crisis, not all firms have been in a position to (re)arrange their pursuits remotely. The pandemic may possibly, in this way, incorporate to the benefits of ex-ante digitally state-of-the-art firms. These dynamics, jointly with shocks to organization registrations, may perhaps amplify declines in enterprise dynamism, boost field concentration, and weaken competitors.
Hence, the consequences of the pandemic have strengthened the need for insurance policies to strengthen know-how diffusion and foster circumstances for wide-centered growth of corporations.
Public Plan IS Vital TO BOOSTING Technology DIFFUSION
Governments can participate in an critical purpose in fostering know-how diffusion. Public policy can support take away obstacles to diffusion and increase firms’ absorptive capability by addressing ability and money constraints to technology adoption, utilizing effective analysis and innovation policies, regulating details accessibility and possession, and making certain a degree playing area and a aggressive natural environment.
No single plan can foster technologies diffusion alone. A in depth policy blend, thinking about each demand-facet and provide-facet measures, that bolsters firms’ incentives and abilities is desired.
Demand from customers-aspect measures would increase awareness about new systems, acquire absorptive capability, and decrease risks. Provide-facet measures would foster competition, broaden access to innovation financing, tackle the new regulatory issues of the electronic economy, strengthen know-how manufacturing and sharing (such as through sensible mental property insurance policies), and strengthen the basis of electronic infrastructure and competencies.
Supporting wider technological know-how diffusion, in individual for small and younger corporations, with each other with steps to boost business enterprise dynamism, equip personnel with new expertise, and foster truthful labor marketplaces would permit the achievement of economic progress that is stronger as nicely as extra inclusive and sustainable.
Synthetic INTELLIGENCE: THE Subsequent Stage
Searching in advance, consideration is now concentrating more and extra on the next section of the electronic revolution, led by artificial intelligence (AI), and how it may well effects efficiency. There is substantially discussion about the probable of AI to be the upcoming key standard-intent technological know-how, spawning complementary innovations in a vary of applications throughout sectors. These may perhaps be related to precise software package or components, huge knowledge analytics, device studying, cyber-actual physical units, or applications embodied in robots or other artifacts, with distinct technologies having distinctive properties and ability prerequisites.
Not too long ago, there has been a robust acceleration in the range of AI-connected publications—the expertise foundation of AI—combined with a substantial boost in the share of AI-linked inventions. This indicates an growing unfold of AI throughout countries, though knowledge and analyses about its diffusion throughout companies and sectors are continue to scant, specially over and above the United States.
Ongoing investigation at the OECD aims to fill this hole by analyzing the motorists and implications of AI adoption and diffusion. It ranges from measurement of AI developments, which includes patents and emblems, to the capabilities desired in AI-relevant work opportunities. This was talked about at a digital meeting held previous year, and the newest investigate will be offered in a forthcoming convention subsequent thirty day period the place a emphasis will be the implications of AI adoption and diffusion for efficiency and organization dynamics.
Authors’ be aware: the sights expressed here are these of the authors and should not be attributed to the OECD or its member countries.