Government policies to promote innovation in the digital age,
In recent years, a growing number of governments have adopted policies aimed at supporting the transition towards a digital economy. The World Trade Report 2020 looks at these policy trends and at how trade and the WTO fit with them.
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 World Trade Report 2020 shows that international cooperation can play a significant role in making the pursuit of digital development and technological innovation more effective, while minimizing negative spill-overs from national policies. The WTO agreements, reached a quarter of a century ago, have proved to be remarkably forward-looking in providing a framework that has favoured the development of ICT-enabled economies across all levels of development. Further international cooperation at the WTO and elsewhere would enable continued innovation and reduce trade tensions, helping international markets function more predictably.