Sector Engagement: General Purpose Technologies
Rationale for Promoting New GPTs
55. The government should also remain open to identifying and promoting new GPTs because of their potential impact on productivity across sectors. The rationale for this promotion is based on:
- realising productivity improvements from a GPT may require a substantial reallocation and reorganisation of resources within firms and across the economy. The same co-ordination imperatives that justify vertical sector engagement may be even more acute in these circumstances;
- not all firms will be aware of opportunities and best practice in adopting and adapting GPTs; and
- new GPTs often complement existing technologies, research systems and economic structures, generating spill-over benefits that are greater than any individual firm, or even sector, may be able to capture.
Role for Government in Promoting GPTs
56. It is unlikely that government will ever be certain that an emerging technology is, in fact, a GPT until it is starting to become pervasive. New Zealand is also unlikely to have the necessary comparative advantages to be successful in developing or applying an evolving technology that will become the next GPT.
57. This means that New Zealand is likely to a "follower" in adopting GPTs. Despite being a follower, government can promote rapid diffusion of GPTs through business policies that encourage firms to adopt and adapt new technologies at the same time as their international competitors. To this end, policies to facilitate general innovation in the economy will also encourage rapid diffusion of a GPT, including policies to:
- strengthen competition and provide the right regulatory frameworks that, for example, guard against anti-competitive behaviour and ensure regulatory frameworks are technology neutral; and
- foster a business environment for effective use of new technologies, for example, by strengthening education and training systems, facilitating firm entry and exit, and reducing barriers to organisational change.
58. As new technologies emerge and show potential scale and size effects on productivity growth, government should also pursue facilitative policies, on a case-by-case basis, to:
- spread the benefits of the GPT across the economy (for example, by helping small businesses assess the opportunities of e-business); and
- overcome information asymmetries by co-ordinating and disseminating information about the benefits of the GPT.
GIF Sectors: Lessons Learned
59. Government selected the GIF sectors both because of their ability to have a horizontal impact on many parts of the economy ("GPT-type characteristics"), and to realise each sector's own ("vertical") growth potential. These distinctions will not always be clear-cut. For example, ICT is both a GPT and composed of vertical sectors. Government needs to be clear whether the objective of engagement is to facilitate vertical sector growth or to promote technology diffusion. If the objective is twofold, then the role for government should include a mix of policies designed to address both.
Biotechnology and Design
60. Both biotechnology and design have some GPT characteristics, even though biotechnology is currently not pervasive across many or all vertical sectors, and design can be regarded as an input into production, rather than a organisational technology. Given these GPT characteristics, the government has a role to play in promoting the uptake of design and biotechnology by other vertical sectors.
61. The Design Taskforce focused entirely on the horizontal impact of design, and its use by firms to create sustainable competitive advantage. On the other hand, the Biotechnology Taskforce principally focussed on vertical growth of the sector. In response, Cabinet directed the Ministry of Research, Science and Technology (MoRST) and MED to address the horizontal uptake of biotechnology across the economy, and report to the Biotechnology Ministers on policy options [CAB Min (03) 31/4 refers].
ICT
62. The main focus of the ICT Taskforce Report was also on vertical growth of the ICT sector - despite ICT being the only recent GPT.7MED is now, therefore, developing a strategy to provide a co-ordinated approach to ICT related activities across government and establish a holistic approach to the uptake and smart use of ICTs [CAB Min (03) 31/4B refers].
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