Rediscovering industrial policy for the twenty-first century

By Romesh Vaitilingam   Day 2 of ERF’s 25 th annual conference began with a plenary discussion of the role of knowledge in the process of innovation in the new global economy. Keynote speaker Rohinton Medhora, president of the Centre for International Governance Innovation began by describing in broad terms the growing dominance of ‘the intangible economy’ and its implications for the labour market, economic and social policy, and global interactions between individuals, organisations, nations and regions.     Referring to a recent book by Jonathan Haskel and Stian Westlake called Capitalism Without Capital, he explained that the intangible economy is characterised by high upfront costs and very low reproduction costs. As the taxonomy of intangibles below suggests, it is driven by proprietary ideas (that is, intellectual property), which is concentrated within a few countries and a small group of individuals and firms. Medhora - 1 The intangible economy requires a rethinking of government policy in the application of technological developments to real-world problems and the distribution of the economic gains of innovation.   This has implications for the conduct of government policy in many areas, ranging from the support of innovation (including intellectual property, patents, public procurement and funding for scientific research) to macroeconomic and trade policy (including exchange rates, foreign investment and monetary policy), and social policy (including higher education, savings and pensions schemes, and the public provision of public goods).   Focusing specifically on the challenges for the MENA region, Dr Medhora compared innovation and R&D spending by MENA countries with those of advanced countries as an indicator of investment in the intangible economy. For example, the GIobal Innovation Index, which has been developed by the World Intellectual Property Organization, ranks 126 economies based on 80 indicators, ranging from intellectual property filing rates to mobile-application creation, education spending and scientific and technical publications. Medhora - 2 Medhora - 3 Dr Medhora concluded with a remark about why the region needs ERF: without it, he said, MENA would be poorer in every way in the analysis and comprehension of how to promote economic development and growth.   The Economic Research Forum’s 25th Annual Conference is held in Kuwait City, on 10-12 March, 2019, under the theme of Knowledge, Research Networks, and Development Policy. Visit the conference website to find out more about the event and access papers, videos and blogs.
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