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No. 194 New Economics for the New Networked World

David Nordfors

IIIJ

IGF 2014 sub theme that this workshop fall under

Internet as an Engine for Growth & Development

Description

When making decisions, policy makers, business leaders, and others often depend heavily upon economic assessments and models. But traditional economics is often unable to reflect the dynamic innovation enabled by the Internet. For example, old economic models assume that individuals and companies are motivated primarily by profit and can’t adequately explain innovation by collaborative, non-profit efforts such as open source software communities or the volunteer effort that created and maintains Wikipedia. The "sharing economy" and other, new economic paradigms are emerging fast and economists need new techniques and better data in order to track and understand them. New innovations such as the iPhone, which was launched in 2007, has enabled benefits that no economic model could have predicted. While new Internet and smartphone apps can be adopted by tens of millions of users in a few months, it often takes governments many years to adapt economic models and policies to new realities. New paradigms for economics and governance that can collect and analyze data in real time are called for. How can economists help develop new governance mechanisms that leverage Big Data and analytics? Policy makers and others who participate in this panel will learn more about leading-edge economic research that could help them better understand the impact and evolution of technology. Economists who attend will learn more about how policy makers are grappling with challenges related to Internet governance, Internet policy, and the evolution of the Internet and how they could benefit from better economic analysis.

Name(s) and stakeholder and organizational affiliation(s) of institutional co-organizer(s)

Elliot Maxwell
Civil Society
e-Maxwell & Associates

Has the proposer, or any of the co-organizers, organized an IGF workshop before?

no

Type of session

Panel

Duration of proposed session

90 minutes

Subject matter #tags that describe the workshop

#internet #growth #policy #economics #governance

Names and affiliations (stakeholder group, organization) of speakers the proposer is planning to invite

1. Michael R. Nelson, Business & Academic, Microsoft, Confirmed.
2. Helani Galpaya, Civil Society, LIRNEasia, Confirmed
3. Rudolf van der Berg, Intergovernmental Organization, OECD, Confirmed
4. Svetlana Maltseva, National Research University Higher School of Economics Faculty of Business Informatics IT Business and Innovation department
5. Mikhail Komarov, National Research University Higher School of Economics Faculty of Business Informatics IT Business and Innovation department

Bios are available in the attached document.

Name of Moderator(s)

David Nordfors

Name of Remote Moderator(s)

No information provided

Description of how the proposer plan to facilitate discussion amongst speakers, audience members and remote participants

The panel will be energetic, profound and entertaining.
It will aim at provoking the traditional discourses of economics and the Internet, It will bridge multiple disciplines and stakeholder groups.
It will be inclusive, encouraging audience members to share thoughts.

1. Moderator presentats panel and panelists.
2. *Short* introductory statements by panelists.
3. Moderator weaves together statements in dialogue with panelists.
4. Members of the audience engage in the dialoge
5. Panelists deliver final thoughts *short*

The moderator will see to that the discussion stays inclusive, translating professional jargon to simple language.

Description of the proposer's plans for remote participation

No information provided

Background paper

background paper

Brief substantive summary of the workshop and presentation of the main issues that were raised during the discussions

The workshop discussed how economics will look like in the future networked economy – how to measure it and how to construct new models for understanding it.

Issues raised:
• Business informatics: Internet information is a part of decision making now. Big data, Open data change models of making decisions in the enterprise activity.
o There are integration challenges: Enterprise taxonomy, portal intranet database integration, data fusion and linking for knowledge base
o linked open data provides the following benefits: Open standards based on and vocabularies. Search and semantic content extraction. Lightweight data integration and several research projects.

• we still don't have clear models for profit sharing, for cloud based projects, because the transactions have the transnational characteristics of the Internet.

• Open government data is reliable data that opens up for the creation of new businesses that are quickly developing now.

• Businesses may be quicker than governments in adopting new economics tools, which can affect the split between applied micro- and macroeconomics.

• There is much worse availability to data about the Networked Economy, for example App development for cell phones, than there is for the traditional industrial economy.
o This can be critical, since we need to understand what happens when small organizations in the Networked economy disrupt sectors in the traditional industrial economy. One example is WhatsApp, a company with 300 employees, acquired by Facebook for 19 billion dollars. It disrupted the whole segment of the telecom industry employing many people. We need metrics that conveys the winner take all aspect of the networked economy, that we haven't used in manufacturing and other areas where there's some equality inequality within the company but still a decent baseline. In the networked economy we don't know where the bottom is and if anyone is making any profits.
o An interimistic indicator for the networked economy can be job ads. Something more substantial is needed in the long run.

• A lot of measurable traditional business is disintermediated by Internet businesses that we don’t know how to measure.
o It’s difficult to measure the full impact of the Internet economy on GDP growth. There is an Internet paradox: computers are visible everywhere except in productivity statistics.
o Macroeconomists need numbers that show the link between policies and outcomes. Such numbers can be constructed by research. One example is how OECD collected data on in which countries websites were hosted and were able to link that to the ease of doing business in those countries.

• The digital trace from people’s cell phone usage, e.g. calling patterns, offers a wealth of data an possibilities for constructing new metrics and models.
o This source of information might replace surveys over time.
o This brings up issues of property rights, who owns the data? Who can sell the data that is cogenerated at best by users and network operators. It is fundamentally changing the factors of production in addition to land, labour and capital, days the data data and how do we quantify that and a value that are going to be challenges.
o Cell phone providers are sitting on a lot of data and are beginning to do business with it.

• Telecom regulation becomes important for the development of economics when the telecom providers sit on massive amounts of data of interest to economists.

• Economics is almost discrediting itself, because we are seeing the same problem addressed by different economists coming up with very different results. And the reason you can pick so many different models in this digital economy is because there are so many different things that aren't really right about the classic economic models.
o For example, a lot of classic economic models assume you're at equilibrium. Yet we're talking about disruptive technologies that in many cases are cutting costs by 50 percent a year.
o Traditional economics assumes individuals are motivated by making money or saving money. But with social media we're finding that those kind of economics don't explain what's going on. People are spending a huge amount of their time just because they get psychic rewards or because they're part of a team on a game or because they like to be part of a community. New economics models need to take broader psychological aspects of reward into account.

• National Statistics Organizations need new roles in the new networked economy.

• Much of the data of emerging importance is controlled by private big data companies, such as Google or Facebook. It is of growing interest of governments to get access to that data for economics, but the companies can have incentives to not want to share the data.

Conclusions drawn from the workshop and possible follow up actions

It seems that companies are going to sit very much on the numbers that are of use for the OECD and governments for measuring and understanding national economies. There may therefore be a need for more public private partnerships around in how to share the numbers. Such partnerships will need to address situations where companies offer successful services because the comparable public service has low quality. The companies may then be reluctant to share the data with governments because improved public services may hurt their business.

There may be a power struggle around the data resources.

Maybe we can measure directly if people are happy or sad by looking at their dialogue because all the words are out there. Language analysis may become more important in comparison to numeric metrics.

Estimation of the overall number of participants present at the workshop

30

Estimation of the overall number of women present at the workshop

about half of the participants were women

Extent to that the workshop discuss gender equality and/or women’s empowerment

it was not seen as related to the workshop’s theme and was not raised

A brief summary of the discussions in case that the workshop addressed issues related to gender equality and/or women’s empowerment

-

Reported by

David Nordfors

Workshop transcript

transcript

Youtube video

video

Attachments

No attachments provided

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