The Economics of Data: Implications for the Data-Driven Economy

Chapter 2 in "Data Governance in the Digital Age," Centre for International Governance Innovation, 5 March 2018

9 Pages Posted: 13 Feb 2018 Last revised: 13 Jun 2018

See all articles by Dan Ciuriak

Dan Ciuriak

Ciuriak Consulting Inc.; C.D. Howe Institute; Centre for International Governance Innovation (CIGI); BKP Development Research & Consulting GmbH; Asia Pacific Foundation of Canada

Date Written: February 4, 2018

Abstract

The economics of the emerging data-driven economy can be situated in theoretical models of endogenous growth which introduce research and development, human capital formation, and Schumpeterian creative destruction as drivers of economic growth, together with positive externalities related to local knowledge spillovers. This theoretical framework allows for differential rates of growth in different countries based on their policies to support innovation and for innovation to generate market power and monopoly rents. However, the data-driven economy has several structural features that make it at least a special case of the general endogenous growth model, if not a new model altogether. These include pervasive information asymmetry, the industrialization of learning through artificial intelligence, the proliferation of superstar firms due to "winner take most" market dynamics, new forms of trade and exchange, the value of which is not captured by traditional economic accounting systems, and systemic risks due to vulnerabilities in the information infrastructure. This note explores these issues.

Keywords: data, data-driven economy, knowledge-based economy, endogenous growth, human capital, machine knowledge capital, superstar firms, artificial intelligence

JEL Classification: O40

Suggested Citation

Ciuriak, Dan, The Economics of Data: Implications for the Data-Driven Economy (February 4, 2018). Chapter 2 in "Data Governance in the Digital Age," Centre for International Governance Innovation, 5 March 2018. Available at SSRN: https://ssrn.com/abstract=3118022 or http://dx.doi.org/10.2139/ssrn.3118022

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