Forum 2016 Issues: Innovation & the digital economy

 

© Shutterstock / LightspringThe digital economy, Big Data, the Internet of Things and the convergence of biotechnology, nanotechnology and cognitive science have great potential for finding solutions to address climate change, facilitate affordable healthcare and help ageing populations.


Algorithms and Big Data analytics are already key in medical diagnosis and treatment, urban traffic and parking management, and “smart” utility grids. Algorithms increasingly run our lives; they find books, movies, jobs, and dates for us, and manage our investments. They enable efficiency in targeting and tracking individuals, and will be used increasingly in developing new products and services, searching for the right employees, and checking people’s eligibility for loans. But algorithms can be discriminatory, such as in determining the stories available on social media, targeting job advertisements at men (not women), and the products which appear in Internet search results.


How is regulation adapting to this new reality? Are innovations in sensitive domains such as financial services, HR practices and remotely controlling medical devices being designed with privacy and security in mind? Is enough being done to protect against breaches in cybersecurity and from cybercrime? Incidents in these areas have an enormous impact on productivity and may potentially erode the public’s trust in the benefits of these innovations, and the companies and governments that promote them. Trust is even more critical at times when the capture of regulatory and political processes by elites tends to benefit incumbents, at the expense of newcomers and innovators.


It is also of concern that only a small selection of “frontier firms” is able to scale innovation, attracting the best international talent, but often making use of employment and other practices that are disrupting social, corporate, and tax practices, and potentially increasing inequality further. These companies also tend to be attracted to the talent pool and infrastructure available in large cities and metropolitan areas, further increasing differences in productivity, access to opportunity and levels of inequality between regions within and between countries. What needs to be done to ensure larger sectors of the economy benefit from innovation? What policies are available to support change and competition, yet provide fair social safety nets?

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