We live in a world where ‘data-driven economic activities’—the production, distribution and use of digital information of all types—are the leading edge of economic growth.
Big data—the storage, manipulation, and analysis of huge data sets—is changing the way that businesses and governments make decisions. And torrents of data ceaselessly flow back and forth across national borders, keeping the global economy linked.
The problem is that data-driven economic activities do not fit naturally into the traditional economic categories. Since the modern concept of economic growth was developed in the 1930s, economists have been systematically trained to think of the economy as being divided into two big categories: ‘Goods’ and ‘services’.
But data is neither a good or service. Data is intangible, like a service, but can easily be stored and delivered far from its original production point, like a good. What’s more, the statistical techniques that have been traditionally used to track goods and services don’t work well for data-driven economic activities. The implication is that the key statistics watched by policymakers—economic growth, consumption, investment, and trade—dramatically understate the importance of data for the economy. In turn, these misleading statistics distort government policy.
… instead of breaking down the economy into goods and services, statisticians need to be thinking about goods, services, and data. Adding data as a primary economic category can give policymakers a much more accurate picture of economic growth, consumption, investment, employment, and trade.
… he impact of the data-driven economy on overall economic growth is being substantially underestimated…
… treating data as investment is not as far-fetched as it might sound.
The 20th century was about the industrial economy, followed by the service economy. So far, however, the 21st century is about the data-driven economy.
This study shows the importance of data-driven economic growth in today’s world. Data is low-cost, decentralized, and crosses national borders easily. As a result, the data-driven economy has the potential to deliver economic growth and raise global living standards.
European economies, with their core of highly educated workers, can become leaders in the 21st century data-driven world, just as they were once leaders in the industrial economy.
As technology develops new capabilities, new concerns arise that never mattered before. In this case, people have some very real worries about privacy and appropriate use of data by both large and small companies. What’s more, the list of potential problems gets longer every day.
… a key question is the location of data infrastructure.
… the increasing importance of data for growth may suggest that government policy should be oriented towards encouraging rather than discouraging data-driven activities.
Unless policies are developed thoughtfully and carefully, they could stifle innovation and economic growth.