Disruptive Technologies and their Implications for Economic Policy: Some Preliminary Observations

Working Paper No. 10

Disruptive Technologies and their Implications for Economic Policy: Some Preliminary Observations

Authors: Danny Leipziger and Victoria Dodev

It is generally accepted that technological innovation has been at the core of firm level productivity gains and the economic growth of countries. As a catalyst for economic growth, technological progress provides much potential upside, but it can also be a disruptive force for labor markets and established business models. Disruptive innovation refers to an innovation that creates a new market by applying a different set of values, and which ultimately (and unexpectedly) overtakes an existing market. Disruptive technologies have the potential to impact growth, employment, and inequality by creating new markets and business practices, needs for new product infrastructure, and different labor skills. This paper examines the different implications that disruptive technologies have for firms, employment, consumers, and nations.