Industrial Policy 4.0: Promoting Transformation in the Digital Economy

GDAE Working Paper Series, Tufts University, Forthcoming.

25 Pages Posted: 18 Dec 2018

See all articles by Padmashree Gehl Sampath

Padmashree Gehl Sampath

Harvard University-Berkman Klein Center for Internet & Society; Department of Social Sciences

Date Written: November 20, 2018

Abstract

The rise of the fourth industrial revolution (IR) is deeply embedded in a wider context of privatization of knowledge, rising costs of innovation and uneven distribution of capacity between countries. But debates on a ‘balanced’ policy framework to tackle these issues have until now floundered to address some of the fundamental dilemmas of our times. Will the fourth IR render the manufacturing-led model of economic development a thing of the past? Are there new boundaries for innovation and industry in the fourth IR? What should policy do in such an uncertain technological era? This paper addresses these crucial questions and makes a case for comprehensive digital industrial policies that are differentiated and rooted in the broader reality of development and globalization in the fourth IR. The paper maps the new boundaries for innovation and industrialization, after which, it elaborates in detail the market and institution failures in the platform economy that arise from the highly complex nature of technological change and a lack of effective policy oversight. It offers evidence to the effect that although manufacturing as we knew it – with its effects on low and unskilled labour and employment creation – might not continue to exist, it will continue to thrive using high technology skills and R&D, within a new model of industrialization where the knowledge-component of all sectors – agriculture, manufacturing, and services – will be on the rise. Countries, therefore, need a more nuanced and differentiated industrial policy 4.0 framework that can: (a) sustain overall industrial performance, (b) in a way that helps close the gap to the frontier in a constantly evolving technological landscape, (c) while mitigating the adverse consequences for society, in terms of employment, privacy and latent social fabric. The paper proposes the components of such an industrial policy 4.0 in detail in its concluding section.

Keywords: fourth industrial revolution, platform economy, business models, innovation, development, data, industrialisation, digital industrial policies

JEL Classification: L11, L23, L25, L41, L51, L81, L86, O19, O31, O33, O34, O38

Suggested Citation

Gehl Sampath, Padmashree, Industrial Policy 4.0: Promoting Transformation in the Digital Economy (November 20, 2018). GDAE Working Paper Series, Tufts University, Forthcoming., Available at SSRN: https://ssrn.com/abstract=3292171 or http://dx.doi.org/10.2139/ssrn.3292171

Padmashree Gehl Sampath (Contact Author)

Harvard University-Berkman Klein Center for Internet & Society ( email )

23 Everett Street
Cambridge, MA 02139
United States

Department of Social Sciences ( email )

Fredrik Bajers Vej 7E
Aalborg, DK-9220
Denmark

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