Why government must boost the information economy

Distinguished professor of technology and economics Carlota Perez on why the government needs to boost the 'information economy’

Distinguished professor of technology and economics Carlota Perez talks to Computer Weekly about why the UK government needs to help boost the information economy and why the sector is key to our next golden age of growth.

Perez is an expert in technological revolutions, working as a visiting scholar, researcher and honorary professor at three UK universities, as well as holding the post of professor of technology and socio-economic development at Tallinn University of Technology, Estonia.

Government is not only crucial to facilitating ICT-led growth, but is now at a pivotal point in implementing the right policy to do so, she says.

“The first thing that we all have to understand, including the government, is that the information economy is not just about computers and mobile phones, but about an enormous new potential for innovation and wealth creation, using ICT,” says Perez.

“Finding a new growth path for the country, capable of providing a good life for all, is dependent upon understanding that potential and on how well we manage to take advantage of it,” she says.

Perez believes we are living through the fifth technological revolution to occur since the Industrial Revolution, one that is fundamentally reshaping our lives.

“It’s a different paradigm that affects everything for four or six decades [after the revolution first occurs]," she says. "But it is not a smooth process. Each time there are two different periods with a bubble and recession between them,” she says.

“Now we are in a different moment from the bubble times. What we could call the ‘ICT paradigm’ is fully installed. We all know what can be done with ICT and the capabilities are widespread.

“As in the 1930s, the recession required bold and imaginative solutions, taking into account the new innovative possibilities for production and growth and for institutional change. And, as in the 1940s, we could have a golden age ahead. But we have to provide a policy framework," she says.

The policies for ICT, at this stage of the game, are actually at the centre of what we could call a vision for the country and its economy

Carlota Perez, professor of technology and economics

“The policies for ICT at this stage of the game are actually at the centre of what we could call a ‘vision for the country and its economy’. We now have the possibility of using all those capabilities and our imagination to define a successful growth path for the UK as a whole.

“This means that the ICT industries and the ICT experts need to look at their role in this transformation as being much wider than having a bit of Silicon Valley here or there, with more venture capital to support it. The task is much wider and much more powerful.

“In 1953, Charlie Wilson, the CEO of General Motors declared that 'what was good for the US was good for General Motors and vice versa'. I suggest that ICT today plays a role as pivotal for the future of each country as the automobile industry and mass production played in unleashing and sustaining the post-War golden age."

Technology should be seen a broad catalyst for societal change. 

“My main views on ICT policy today are not so much about funding start-ups and promoting Silicon-Valley-type innovation hubs. Those will always be important, but at this particular moment in history, ICT has to been seen as the fuel that moves the economic engine and the source of an employment-creating transformation,” she says.

“We need to stimulate a wave of innovation geared to transforming lifestyles in the direction of green growth, which includes facing global warming, limits to natural resources and increasing the quality of life through more creative services and more intangibles. The most powerful tools to achieve that are the applications of ICT,” says Perez.

“Industries too need to redesign their products to drastically reduce the materials content and energy consumption, as well as to prepare them for durability, recycling and zero waste, while transforming their processes to be closed-loop and more energy efficient."

All that requires innovation in ICT and software, says Perez.

“Those changes will only happen if they become profitable so what the government has to do is to tilt the playing field strongly so that the market will naturally move in those directions. That will probably be a combination of carrot and stick, of funding and tax reform, of incentives and regulation, of R&D expenditure, public procurement, price guarantees and whatever imaginative and bold measures can be taken to awaken the economy to the immense innovation potential available, thanks to ICT.

Universal low-cost access to fast internet by the great majorities is an underlying condition to make the information society fructify fully

Carlota Perez

“Of course, in order to promote such changes, the infrastructure has to be part of the incentive and of the capability building process. Universal low-cost access to fast internet by the great majorities is an underlying condition to make the information society fructify fully,” she says.

Perez believes the government must also remodel the way it works to work with industry to create growth. 

Of course, many companies are also lagging behind and need to modernise their structures and working methods, but while competition will put pressure on business to make the changes, governments will only do so if they become fully aware of the new potential and take explicit measures to move in that direction," she says.

“One of the problems is the fact that the first uses of computers and e-government just took the legacy bureaucratic forms and methods and computerised them or put them on-line. That was doomed to be cumbersome, costly and unsatisfactory. The whole thing has to be rethought and redesigned with the app mentality and the social media approach.”

Photo courtesy of Edward Reeves

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