Measuring Digital Innovation

Measuring Digital Innovation

Measuring Digital Innovation

Topic:

Digital Economy

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Summary

Digitalisation is a fundamental feature of today’s economy. To understand the digital economy we need new measurement methods. This project builds on and extends other ESCoE research to further explore the implications of digitalisation for measuring productivity. We focus on: business reorganisation and outsourcing; the use of artificial intelligence (AI); data as an intangible asset; and the breadth of contemporary digital infrastructure.

Overview

This project is investigating four main interconnecting strands: longer production chains, the impact of AI, measurement of the role of data, and internet infrastructure.

Longer production chains

We explore the implications for productivity measurement of longer production chains due to business reorganisation and outsourcing associated with digitalisation. The project aims to specify as fully as possible the range of capitals, as well as material inputs (raw and processed) used in production. The ambition is to fully integrate ‘missing capitals’ into a growth accounting framework, to consider prices for some digital inputs and how longer production chains relate to trade statistics.

The impact of AI

The mismatch between expected and measured productivity growth in relation to the use of AI can arise for a number of reasons (including implementation lags, mismeasurement or simply false hopes). The UK’s Industrial Strategy has made AI and data one of its ‘Grand Challenges’ in terms of both innovation and adoption. We are examining uptake more closely, looking at the adoption cycle of cloud technologies and firm-level productivity, based on interviews with businesses and information gathered from business websites

Measurement of the role of data

There is growing recognition of the importance of intangibles in the economy. We focus on data as an intangible asset, building on existing work by ONS, OECD and ESCoE. We aim to develop and apply methods for estimating the value of different types of data.

Internet infrastructure

Digital technology is fundamental to the economy, making digital infrastructure of vital importance as an enabler of economic growth and development. It consists of a mixture of fixed and mobile communication network assets, private and public Wi-Fi provision, data centres, internet exchange points, as well as equipment owned by households and businesses. Yet relatively little is known about the totality of or access to digital infrastructure. This project considers the definition of digital infrastructure, collates available data, identifies gaps and aims to map access around the UK.

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