Technology, Productivity and Job Creation: Best Policy Practices Highlights

Technological change drives long-term economic growth, productivity and improvement in living standards. At the same time, the emergence and diffusion of new ideas, products and production techniques throughout the economy entails a process of " creative destruction ". New technologies destroy jobs in some industries, especially among the low-skilled, while creating jobs which are often in different industries and require different skills. Historically, this process has led to net job creation, as new industries replace old ones and workers adapt their skills to changing and expanding demand. Today's rapid technological change coupled with the extensive restructuring underway in OECD economies leads some to associate technology with unemployment and social distress. However, technology per se is not the culprit. Its economy-wide employment impact is likely to be positive provided that the mechanisms for translating technology into jobs are not impaired by deficiencies in training and innovation systems and rigidities in product, labour and financial markets. To realise the full potential of technological change in improving economy-wide productivity, growth and job creation, governments need to make innovation and technology diffusion policies an integral part of overall economic policy. Knowledge-based economies raise new policy challenges The report Technology, Productivity and Job Creation – Best Policy Practices assesses innovation and technology diffusion policies, identifies " best policy practices " and makes country-specific recommendations. It presents evidence on the extent to which new technologies are transforming the structure of OECD economies and enhancing their ability to grow and create wealth and jobs. Economic activity is becoming increasingly knowledge-based: jobs are shifting from low-to high-skilled workers; productivity and employment growth depend on the conditions for economy-wide diffusion of new products and processes. While aggregate productivity and employment growth remain modest in most countries, those firms that combine technological change, organisational change and upskilling display strong economic performance. With globalisation, the innovation and production systems of different countries are becoming increasingly interdependent; opening up new opportunities while at the same time accentuating the need for restructuring and adaptation. Countries differ with respect to where they stand in this process of structural adjustment, because of different starting points, technological and industrial specialisations, institutions, policies and attitudes to change. Technology policy: an integral part of the broader structural policy agenda While a number of countries have undertaken impressive reforms in innovation and technology diffusion policies, current approaches are insufficiently adapted to the characteristics and problems of knowledge-based economies, and …