Information society: Which way now?

The future will be inherently knowledge-based. Are we moving in the right direction? What must we know to be able to get there? Understanding knowledge-based capital is an important first step.

As the economy emerges from the financial crisis and the lingering period of slow growth, four trends in science, technology and innovation are emerging. First, a slowdown in innovation due to heightened risk aversion and a paucity of risk capital; second, widespread structural change as the information revolution goes mobile and e-commerce reaches a level where it is the dominant force in retailing, enabled in part by the power to mine vast quantities of data; third, developments in information technology and other forces are leading to greater specialisation and the growth of complex global value chains; and fourth, the growing recognition that the key to sustained competitive advantage lies in the exploitation of knowledge-based capital, such as research and development (R&D), skills, brands and organisational structure. It’s about largely tacit knowledge that is hard to replicate and tends to be “sticky”, or rooted in a particular locale.

These four trends are interconnected and self re-enforcing. Combined, they will require us to redefine and update our thinking about the economy and about appropriate policies in a wide range of areas that themselves are changing, such as global taxation, competition, finance, skills, trade, technology, and types of structural policies. They also offer new opportunities, provided that these tech trends can be harnessed.

While scientific and R&D activity has been reduced by the crush of the crisis, there are exceptions in specific sectors like information and communication technology (ICT), and in Asia, where innovative activity remains strong. In fact, they were barely affected by the downturn Information society: Which way now? of the last five years. The increased use of the Internet has forced business models to change, causing significant restructuring in a number of sectors, including news and publishing, advertising, travel, banking and the retail sector.

The combination of smartphones and wireless broadband connections with “cloud” computing promises to unleash even more structural changes. The advent of the ability to draw on vast amounts of data to optimise logistics, customer relations and make real-time decisions could have a significant impact, particularly on jobs of a “transactional” nature.

ICTs have helped drive the rise of global value chains, which surpass old notions of national borders, and will change what economies produce and how they are steered and managed. With global value chains, stages and interconnections matter more than places or sectors. Competitiveness can no longer be solely assessed in terms of gross export performance: imports count too. The GVC concept will affect a wide range of other policy domains, including industrial policy, skills, access to markets, the role of capital and the use and protection of intellectual property.

In a world where stages and tasks matter more than the final products being produced, global value chains also challenge our orthodox notions of where economies find themselves on the valueadded curve. Whether in smartphones or airplanes, most of the value of goods is typically created upstream where product design, R&D or production of core components occur, or in the tail-end of downstream activities where marketing, branding and distribution occurs. The same applies to services, such as insurance claims, clinical trials for drugs and air travel. A policy priority in most economies is to jockey for position in higher valueadded activities and market segments. Knowledge-based capital, such as software, R&D, branding and intellectual property are keys to competitiveness and employment. In many countries, investment in such capital may well exceed traditional investments in machinery, equipment and structures, although corporate reporting and national accounts do not yet fully consider these assets.

Like any deep structural shift, building a knowledge-based strategy and finding a foothold in global value chains will require effort, and it may initially exacerbate employment and inequality problems. But the prize will be the opening up of huge opportunities that not only boost productivity, but also address many social and environmental challenges of our time, from ageing to climate change to development.

Visit www.oecd.org/internet/ and www.oecd.org/innovation/

Visit also www.oecd.org/sti

©OECD Observer No 293, Q4 2012




Economic data

GDP : +0.5%, Q4 2014
Employment rate: 65.9%, Q4 2014
Annual inflation : 0.60% Mar 2015
Trade : -3.0% exp, -3.7 imp, Q4 2014
Unemployment : 6.993% Feb 2015
More moderate expansion ahead? Composite leading indicators
Updated: 12 May 2015

E-Newsletter

Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Suscribe now

<b>Subscribe now!</b>

To receive your exclusive print editions delivered to you directly


Online edition
Previous editions

Don't miss

  • More than 35 million young people, aged 16-29, across OECD countries are neither employed nor in education or training according to the newly released OECD Skills Outlook.
  • Have a look at these posters representing a world without fundamental rights at work – including child labour, forced labour and inequality. Read more about this ILO image competition here.
  • Rising inequality threatens social cohesion and growth. Income inequality has reached historical highs in most OECD countries and is still rising.
  • Time to vote! As the dust settles after the UK general election, let’s remember that voting at the ballot box is not an innate right enjoyed by everyone. Indeed, although the number of democracies across the world has spiked from 48 in 1989 up to 95 today, billions of people are still living in non-democratic, authoritarian regimes.
  • How can we achieve a zero-carbon future? A new World Bank report provides a few insights.
  • Today alcohol causes more deaths worldwide than HIV/AIDS, violence and tuberculosis combined. In order to reduce damages to health, the OECD recommends that regular drinkers reduce their consumption by one unit a week, that is, a small glass of wine for example. In addition, increasing prices, regulating advertising, effectively treating drinking problems together with stricter police enforcement would greatly contribute to reducing damages done to individuals and society.
  • video alcohol
  • Africa vs profit shifting African countries heavily rely on the income generated by multinationals’ taxation, which can represent as much as 88% of a country’s tax base. Little wonder Africa is involved in the OECD’s initiative to address tax base erosion caused by profit shifting, known as BEPS. The need to strengthen inter-governmental co-operation to curb cross-border tax losses was reaffirmed at the Africa Tax Administration Forum (ATAF) in Sandton on 21 April 2015.
  • Africa v. profit shifting
  • Rana Plaza
  • Wal-Mart, Other Retailers Sued over Bangladesh Factory Collapse Two years after the April 24, 2013, Bangladeshi factory collapse in the capital of Dhaka, the victims' families filed a lawsuit in U.S. federal court in Washington against Wal-Mart Stores Inc and other U.S.-based companies that sourced out their products from the Rana factory. Read more on Telesur's website.
  • Today, after three years of drought, California is in the midst of a full-blown political and environmental crisis, with restrictions imposed across the state, reports the Financial Times.
  • Lack of water holding back Asian growth In Asia, the world’s most dynamic region with the fastest economic growth, 75% of countries face serious water shortages.
  • ADB water
  • Why is the gap between rich and poor growing despite rises in GDP? Do benefits help? Does aid work? (The Guardian)
  • Greek finance minister Yanis Varoufakis expressed its scepticism towards the Eurozone’s institutions and gave ideas for ways forward. "Greece must become reformable again", Yanis Varoufakis said.
  • Business brief: Israel's water
  • #OECD360: Your country in figures.
  • How to ensure transparency in public procurement? Read Cobus de Swardt's article on OECD Insights.
  • Asia to maintain a strong 6.3% growth rate in 2015 and 2016, according to the Asian Development Bank
  • After three decades of extraordinary economic development, China is shifting to a slower and more sustainable growth path, according to the OECD's latest Economic Survey of China.
  • In pursuit of the American Dream
  • Iceland's strong recovery stems from the good use of its natural resources, the energy sector and tourism according to Peter Dohlman, IMF Mission Chief for Iceland.
  • cyclone
  • Government representatives and experts from around the world are gathering in Japan this week to develop a post-2015 framework for global disaster risk reduction. The World Bank and the Global Facility for Disaster Reduction and Recovery (GFDRR) will share expertise at the conference.
  • Switzerland’s recent moves towards greater tax transparency were welcomed by the Global Forum on Transparency and Exchange of Information for Tax Purposes, based at the OECD, as a boost to international efforts to end tax evasion. Work will continue with Switzerland, notably on implementation, in 2015.
  • Help bridge the gap between business integrity policies & practices:participate in this new OECD survey by clicking on the image.
  • What can we do to promote better literacy skills for all? Read Andreas Schleicher's latest blog on oecdeducationtoday.
  • pisa
  • Secretary General Angel Gurría describes the Programme for International Student Assessment (PISA) as a useful tool to enhance educational systems but states that improving a country's ranking should not be a goal per se. Article in Spanish by El País.
  • [VIDEO] Although many countries have made great progress in narrowing gender gaps in education, new challenges are looming.
  • Tim Harcourt Video
  • G20 and Australia: Bestselling economist Tim Harcourt speaks to the BBC about how Australia has gone from "Down Under to Down Wonder".

Most Popular Articles

Poll

What issue are you most concerned about in 2015?

Euro crisis
Unemployment
Global warming
International conflict
Other

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2015