ICT infrastructures and ICT policies for innovation

Rationale and objectives

Successful development and application of information and communication technologies (ICTs) can boost innovation productivity and output. At firm level ICTs feed into many types of innovation processes and create efficiency gains that free up scarce resources for use elsewhere. Existing empirical studies, including ongoing OECD work, point to a positive link between increased adoption and use of ICTs and economic performance at the firm and macroeconomic level (OECD, 2012).
Over the past two years, cloud computing has emerged as one of the most important platforms for innovative services. In particular, it significantly reduces information technology (IT) barriers for small and medium-sized enterprises (SMEs), thereby allowing them to expand faster and innovate. Instead of making significant, up-front investments in IT infrastructure and software, they can adopt a pay-as-you-go model for computing resources. Cloud computing providers also have much lower operating costs than companies with their own IT infrastructure because of their global scale and ability to aggregate the demand of many users, especially in public clouds. They can provide computing resources rapidly and flexibly in response to changing needs (OECD, 2011).

Major aspects

One consequence of the recognition of the transformational character of ICT is the general economic dimension of ICT-related policies. Indeed, ICT-related policies have become mainstream economic policies for underpinning growth and jobs, increasing productivity, enhancing delivery of public and private services, and achieving broader socioeconomic objectives.
Survey results show that governments see ICTs and the Internet as a major platform for research and innovation across all economic sectors (OECD, 2012). Policy makers recognise that policies to promote development of ICTs are important for innovation processes and economic growth. The main policy areas of concern are: broadband deployment, support for ICT research and development (R&D), provision of venture finance to innovative entrepreneurs, and technology diffusion to businesses.

Recent policy trends

As recovery from the financial crisis is still very tentative and budget deficits and unemployment rates are at historically high levels, governments have raised the priority of measures that promote ICT-based innovation, diffusion and uptake of Internet technologies.
OECD countries' top ICT policy priorities in 2012 are: broadband deployment, ICT skills and employment, government online, and the security of information systems and networks. R&D programmes, technology diffusion to business, electronic settlement/payment and digital content also rank highly.
Broadband infrastructure is a policy area that is considered very significant for innovation. Available high-speed broadband is viewed as a driver of innovation, growth and jobs in the ICT industry and beyond. High-quality broadband infrastructures must reach a critical mass of potential users to enable the development and uptake of broadband applications in sectors such as health care, education, and entertainment.
The past few years have seen the development and implementation of national broadband plans. Many governments help fund, or provide targeted interventions for, the geographic expansion of broadband access networks, the upgrading of existing networks to higher speeds, and the adoption of broadband by specific social and economic groups. As governments wind down stimulus spending, they emphasise the role of private-sector investment in high-speed broadband networks. Many have reviewed their legal and regulatory frameworks to ensure they are appropriate for the levels of investment necessary to achieve their policy goals.
National plans differ in terms of their approaches to and funding of technology. In Belgium, the Netherlands and Switzerland they are technology-neutral, while Australia, Japan, Luxembourg and Singapore focus on deployment of fibre. For funding, Spain has adopted public-private partnerships, whereas Australia has chosen a largely public funding model.

Figure 7.1 Fixed (wired) broadband penetration, historically leading OECD countries, June 2001-June 2011
Number of subscriptions per 100 inhabitants

Source: OECD broadband statistics, 2012, www.oecd.org/sti/ict/broadband.

References and further reading
OECD (2011), “Cloud Computing” , internal working document.
OECD (2012), OECD Internet Economy Outlook 2012, OECD, Paris.