Stimulating Digital Innovation for Growth and Inclusiveness the Role of Policies for the Successful Diffusion of Ict

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Stimulating Digital Innovation for Growth and Inclusiveness the Role of Policies for the Successful Diffusion of Ict OECD DIGITAL ECONOMY PAPERS No. 256 STIMULATING DIGITAL INNOVATION FOR GROWTH AND INCLUSIVENESS THE ROLE OF POLICIES FOR THE SUCCESSFUL DIFFUSION OF ICT 2016 MINISTERIAL MEETING ON THE DIGITAL ECONOMY BACKGROUND REPORT STIMULATING DIGITAL INNOVATION FOR GROWTH AND INCLUSIVENESS FOREWORD This report was prepared as part of the documentation for Panel 1.2 of the OECD Ministerial Meeting on the Digital Economy, “Stimulating Digital Innovation across the Economy”. It provides information and discussion on policies for the successful adoption and use of information and communication technologies (ICTs) across the economy. Preparation of the document was undertaken by Christian Reimsbach-Kounatze, OECD, based on key work in science, technology and innovation across the OECD since 2013 and case studies provided by a group of volunteer countries including: Canada, China, Colombia, Germany, Japan, Korea, Mexico, Norway and Sweden. These case studies are made available in the Annex of the report. This report was approved and declassified by the Committee on Digital Economy Policy on 13 May 2016 and prepared for publication by the OECD Secretariat. Note to Delegations: This document is also available on OLIS under reference code: DSTI/ICCP(2015)18/FINAL This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. © OECD 2016 You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases and multimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitable acknowledgment of OECD as source and copyright owner is given. All requests for commercial use and translation rights should be submitted to [email protected] 2 OECD DIGITAL ECONOMY POLICY PAPERS STIMULATING DIGITAL INNOVATION FOR GROWTH AND INCLUSIVENESS TABLE OF CONTENTS FOREWORD ................................................................................................................................................... 2 EXECUTIVE SUMMARY ............................................................................................................................. 4 INTRODUCTION ........................................................................................................................................... 6 The role of digitalisation for growth ........................................................................................................ 6 Complementarities beyond ICTs ............................................................................................................ 10 The role of digitalisation for well-being ................................................................................................. 12 Objectives and structure ......................................................................................................................... 13 Understanding digital innovation ............................................................................................................... 13 ICT-product innovation spilling over across the economy .................................................................... 15 Trends in ICT adoption and the enabled innovation .............................................................................. 17 The disruptive effects of digital innovation ........................................................................................... 22 Barriers to digital innovation and possible policy levers ........................................................................... 25 Access to cost effective and interoperable digital infrastructures .......................................................... 27 Trust in the digital economy ................................................................................................................... 34 Investments in complementary knowledge-based capital ...................................................................... 38 Other regulatory framework and market conditions .............................................................................. 44 The role of national strategies for leveraging digital innovation ............................................................... 51 National digital economy strategies ....................................................................................................... 51 National strategies for science, technology and innovation ................................................................... 57 Conclusion ................................................................................................................................................. 65 NOTES .......................................................................................................................................................... 66 REFERENCES .............................................................................................................................................. 76 ANNEX: COUNTRY SPECIFIC CASE STUDIES ..................................................................................... 88 Canada – Business development bank of Canada – Smart Tech ............................................................... 88 China – Digital innovation for rural China ................................................................................................ 91 Colombia – Plan Vive Digital .................................................................................................................... 94 Germany – Initiative on Smart Networks ................................................................................................ 101 Germany – “Mittelstand-Digital” ............................................................................................................ 105 Japan – Platinum Society ......................................................................................................................... 112 Korea – Creative Economy & innovation centre ..................................................................................... 116 Mexico – Creative Digital City ................................................................................................................ 121 Norway – Telecare: streamlining the Norwegian health and care service ............................................... 129 Sweden – Smart Grids, Gotland ............................................................................................................... 131 Sweden – Connected vehicles at Scania .................................................................................................. 136 Sweden – Smart and Sustainable City Development ............................................................................... 141 ANNEX NOTES ......................................................................................................................................... 151 OECD DIGITAL ECONOMY POLICY PAPERS 3 STIMULATING DIGITAL INNOVATION FOR GROWTH AND INCLUSIVENESS EXECUTIVE SUMMARY Adoption and use of Information and Communication Technology (ICT) foster productivity, green and inclusive growth through digital innovation. Digital innovation refers to: (i) in a narrow sense, the implementation of a new or significantly improved ICT product (good or service), i.e. ICT product innovation; and (ii) in a broader sense, to the use of ICTs to implement a new or significantly improved product, process, marketing method, or organisational method, i.e. ICT-enabled innovation. ICT product innovation is a major factor for the progressive decrease in ICT prices which remains a key driving force for ICT adoption, and thus for ICT-enabled innovation, across the economy. Data and its analysis have become a fundamental input to innovation, akin to research and development (R&D). Data are an infrastructural resource – a form of capital that cannot be depleted and that can be used for a theoretically unlimited range of productive purposes. Available evidence suggests that firms using data-driven innovation (DDI) have raised productivity faster than non-users by around 5-10%. Greater access to data also has beneficial spill-overs, whereby data can be used and re-used to open up significant growth opportunities, or to generate benefits across society in ways that could not be foreseen when the data were created. In this sense, data are the new “R&D” for 21st century innovation systems. The adoption and use of ICTs including data analytics are associated with higher innovation performance. The share of businesses adopting ICTs is (20% to up to 70%) higher among innovators, depending on the year, the type of ICTs and the type of innovation considered. While differences between innovators and non-innovators are diminishing over time with regard to adoption and use of basic ICTs (such as broadband), they persist and even grow with respect to the use of more advanced ICTs (such as cloud computing). Evidence also shows that firms using data and analytics are more likely to innovate. Furthermore, ICT investments have relatively
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