A growing number of governments have adopted policies aimed at promoting innovation and technological progress for their economies, a trend that has repercussions on trade flows and the rules governing global commerce, according to a report by the World Trade Organization (WTO).
La 2020 edition of the WTO World Trade Report describes the use of government policies in the digital age and Underlines the importance of countries working together to foster positive global outcomes while minimizing negative side effects.
“Historically, governments have often sought to use policies to enhance long-term economic growth and social well-being,” he said. Deputy General Manager Yi Xiaozhun on Monday 23 November at the launch. “In recent decades, these policies have become increasingly outward-oriented, in recognition that openness and access to larger markets and greater competition lead companies to innovate. Therefore, Trade and trade policies have contributed to innovation ".
“In very recent years, Stimulating innovation in the digital field is at the heart of many new government policies, which have been adopted in countries at all levels of development.“Yi said.
"Just as the WTO fostered broadly open, predictable and competitive markets in the broader global economy, it can play an important role in reducing uncertainty in markets for digital goods and services in the future. But this will require updating the WTO framework to address new challenges and demands. «.
Since the 2008-09 financial crisis, some 115 countries have instituted «new industrial policies» and other industrial and digital development strategies aimed at advancing their economies towards digitally enabled production processes and services, generally by supporting the transition to the digital economy through technological upgrading and innovation.
The report concludes that some of the policy instruments The tools used for this purpose are relatively new. They include policies aimed at addressing access to data, support for research and development, such as tax breaks to aid digital innovation, the diffusion of knowledge through the agglomeration of talent and skills, and technology hubs to maximise the spread of knowledge.
Other policy instruments are more conventional, such as tariffs on infrastructure equipment, tax and investment incentives to develop local technologies, innovation-oriented procurement to shift markets towards innovative products, and incentives to encourage the creation of patents and other intellectual property. The report notes that government policies retain “defensive” aspects, particularly in mature non-digital sectors subject to intense competition and technological transition.
The Covid-19 pandemic has also accelerated the adoption of e-commerce and digital innovation and, with it, the introduction of government support measures for capacity building and the improvement of information and communications technology.
Developing countries are showing a clear interest in the transition to the digital economy. While the report points out some challenges, such as developing the necessary infrastructure, it also identifies opportunities related to the digitalisation of manufacturing production, inclusion in the new digital services supply chain (for example, in the coding and e-commerce industries) and lower costs of reaching international markets via the Internet.
The report examines the rationale for innovation policies and analyses their cross-border effects, noting that while there is no one-size-fits-all approach, an important element is nonetheless that government interventions must be based on sound expectations of what progress can be achieved and must be aligned with countries’ comparative advantage. Because of both the positive and negative impact that government policies can have on other countries, there may be scope for international cooperation, the report adds.
WTO agreements and the principles of non-discrimination, transparency, reciprocity and the prohibition of unnecessarily trade-restrictive measures, combined with policy space that allows governments to address important societal concerns, have long promoted liberalization and innovation, the report notes, adding that open trade can make innovation policies more effective in achieving their stated objectives.
Going forward, the WTO will continue to have an important role to play in reducing uncertainty in markets for digital goods and services. Members will need to consider how to encourage the sharing of benefits from innovation policies, what measures will be needed to facilitate investment, and whether new flexibilities can be extended for governments to support domestic digital innovation. The mobility of skilled workers, data flows and privacy concerns, and anti-competitive behaviour in the digital industry will also be of major concern, the report adds.
International cooperation to foster a shared understanding of these policies would help prevent trade tensions. and thus lay a stronger foundation for innovation, investment and cross-border activity to flourish.
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