Peter F. Cowhey (University of California, San Diego),
Jonathan D. Aronson (University of Southern California)
Digital technologies are becoming critical to every facet of the world economy. These digital technologies are the “digital DNA” that unleashes dazzling changes in the information, communication, and production capabilities that are transforming how the world works. We call this the information and production disruption. The IPD is rapidly altering the dynamics of firms, how markets perform, and the potential for stronger economic growth and social prosperity. Government policy makers with an eye to the future are searching for policies to leverage the best potential of these disruptions, but have yet to determine how to reconcile seemingly contradictory policy challenges. We offer recommendations for global economic governance that provide a new foundation for problem solving to cope with messy problems that inevitably accompany large-scale change. Despite the current political headwinds we show how trade policy can be the key platform for enabling an extensive complementary set of regulatory and nongovernmental actions to govern the IPD productively.
Scholars, government officials, and corporate executives have acknowledged to us that the disruption is occurring but that it is difficult to grasp because it is so multifaceted. This diffuseness makes it hard to distill the first priorities necessary for governance reform. We respond to this challenge by clarifying the fundamentals on how the IPD is altering national and global patterns of innovation. We choose this leverage point because economists agree that innovation—which we define as the commercialization of new knowledge—is central to global growth and prosperity.