Digitalisation and Its Impact on Innovation

Innovation is generally seen as good. Promoting innovation especially in the digital economy is often deemed vital. Increasing the level of innovation, after all, can promote sustainable development, economic growth, prosperity, and citizens’ overall welfare. So how can policy makers spur innovation in the digital economy? While there is no simple recipe, this study explores the interplay between innovation and the digital economy from the following seven angles: 1. Theoretical economic literature; 2. Macro view of current innovation levels; 3. Emerging trends in the digital economy; 4. Implications of sub-optimal innovation levels; 5. Variables that affect the supply of innovation; 6. Variables that affect user adoption of innovation. 7. Nature of innovation: positive, negative, and mixed.

By Ariel Ezrachi (University of Oxford) and Maurice E. Stucke (The University of Tennessee)