Policy-makers are pulling out all the stops to measure and understand the impacts of digitization on the economy. Organizations like Statistics Canada and the Bank of Canada realize that traditional methods can only go so far.
Basic economic variables like gross domestic product (GDP), investment, supply, and demand require different measurement techniques if they are to be useful in setting policy and helping people thrive in the digital economy.
Statistics Canada hosted an online panel to discuss the topic on June 18 and acknowledged that the demand for instantaneous information from credible sources is pulling forward the role of national statistics offices.
“We need more detailed statistics and analysis to understand the nuance on what it means to well-being and productivity,” said OECD economist Daniel Ker.
He added that there are two sides to digitization—positive and negative. The benefits are connecting people via social networks and efficiencies like e-commerce, but the mental health of people who are always “connected” and often working can suffer.
More and more jobs have an information and communications technology (ICT) component to them, such as email, programming, and systems maintenance. The “gig economy” where people deliver food or drive for Uber is but one example.
Technological trends can blur the lines between businesses and consumers. One can envision 3D printing enabling a consumer to obtain a screwdriver without purchasing it from a retailer. As it relates to GDP, the online intellectual property (IP) of the blueprint to 3D-print the screwdriver needs to be captured, not just the end product.
“It’s easy to measure things you drop on your foot—harder to measure digital services,” said Eric Santor, adviser to the governor of the Bank of Canada. He heads the BoC’s initiatives to understand how digitization affects the economy.
Business investment is a major component of economic growth, and it’s not just taking place in plants and machinery. Now it is in IP, data, and software as a service.
Erich Strasser, associate director for national economic accounts at the U.S. Bureau of Economic Analysis, said the bureau is pursuing non-traditional data sources like never before to tackle the measurement challenges of the digital economy. The key is to try to track and understand global IP flows.
Human Skills Still Required
Sarah Lubik says digital skills mean a lot more than coding. While tech may automate a lot of tasks, abilities like compassion, non-linear thinking, and interdisciplinary problem solving will be crucial in what we do with the tech, says Simon Fraser University’s first director of entrepreneurship.
“The relative value of our judgment goes up,” Stasser added.
By adapting tech like artificial intelligence, machine learning, and big data, firms can make better decisions on what they will produce for customers. Such tech also reduces the cost of prediction for firms—and public policy-makers are also getting on board trying to develop more nuanced indicators, including ones to measure well-being.
The panel also touched on the environmental cost of the digital economy. Bitcoin mining uses more power than some countries. The concept of “e-waste” has emerged to cover electronic products for disposal. Ker said Canada produced 20 kg of e-waste per person in 2016.
The digitized economy is only getting bigger. Santor cited a startling statistic—job growth in the digital sector is up 40 percent since 2010, while other industries experienced 8 to 9 percent growth.
“When there are big transformations like this, over history … we’ve found that overall it’s been a net benefit, net increase in jobs, because those people doing the new technology are putting demand in the rest of the economy,” Santor said.
Follow Rahul on Twitter @RV_ETBiz