World Trade Report 2020: Government Policies to Promote Innovation in the Digital Age

Tuesday, April 20

Mr. Marc Auboin, Counselor, World Trade Organization
Ms. Ankai Xu, Research Economist, World Trade Organization

Mr. Holger Flörkemeier, Deputy Director, Joint Vienna Institute

On April 20, JVI hosted its first webinar in cooperation with the World Trade Organization (WTO). Mr. Marc Auboin, the WTO counsellor responsible for the institution’s trade and finance agenda, and Ms. Ankai Xu, WTO research economist, presented the WTO’s 2020 World Trade Report. This latest edition of the WTO’s flagship publication focuses on government policies to promote innovation in the digital age. Ms. Xu and Mr. Auboin explained that international cooperation, including in trade policies and through the WTO, could play a significant role in making the pursuit of digital development more effective, while minimizing negative spillovers from national policies.

Trade and trade policies have historically been important engines for innovation. In particular, the multilateral trading system has contributed significantly to the global diffusion of innovation and technology by fostering predictable global market conditions and by underpinning the development of global value chains. As data become an essential input in the digital economy, firms rely more on intangible assets than on physical ones, and digital firms are able to reach global markets faster without the amount of physical investment previously necessary in other sectors. Success in the digital economy will depend on openness, access to information and communication technology (ICT) goods and services, collaboration on research projects, and the diffusion of knowledge and new technology.

The presenters outlined how in the decade since the global financial crisis, government intervention in the economy has come back into fashion. Over 100 countries have articulated “new industrial policies,” “Industry 4.0,” “digital transformation” plans. While policies have always offered a mix of support to mature industries and rising sectors, an overriding theme in this new wave of measures is the goal of encouraging technological upgrading, digitalized production and digital innovation. Countries at all levels of development have policies geared to support innovation and the digital transition.

Ms. Xu and Mr. Auboin discussed how the specific characteristics of the digital economy lead to a re-thinking of government policies, notably in their design and the tools they use to spur innovation. They reviewed the economic rationale for innovation policies as well as the determinants of innovation. In this context, they explained the role of trade in supporting and diffusing innovation and showed that there is a significant role for international cooperation, including in the WTO, to make the pursuit of digital development and technological innovation more effective, while limiting negative spill-overs from national policies.

Hervé Joly, Director (JVI)


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