Digital technologies have dazzled but not delivered the expected dividend in higher aggregate productivity growth. Inequality has been rising. The COVID-19 pandemic can reinforce these dynamics as it accelerates digital transformation. Today’s innovation economy must be broadened to disseminate new technologies and productive opportunities among smaller firms and wider segments of the labor force. Innovation must be democratized. There are three key areas for policy action:

1. Competition policy should be revamped for the digital age. Antitrust enforcement should be beefed up, supported by updated laws and guidelines. Funding for the Federal Trade Commission (FTC) and the Department of Justice Antitrust Division should be increased to offset years of decline. Issues revolving around data, digital platforms, and rising market domination by tech giants must be addressed. To tackle this new agenda, the regulatory framework led by the FTC should be strengthened.

2. The innovation ecosystem should promote wider diffusion of new technologies. The century-old patent system should be reviewed in light of today’s realities. Public investment in R&D should be revived to strengthen support for innovation that serves broader economic and social goals rather than the interests of narrow groups of investors. The Small Business Innovation Research and the Small Business Technology Transfer programs should be strengthened and their effectiveness enhanced by shifting more resources to early-stage awards to small and young firms.

3. Investment in up-skilling and re-skilling the workforce should be boosted. Scaling up the availability and quality of continuing education should receive increased support under the Higher Education Act and the Workforce Innovation and Opportunity Act. Workers’ access should be facilitated through mechanisms such as Lifelong Learning Accounts. The potential of technology-enabled solutions should be more fully exploited, supported by a stronger foundation of digital infrastructure and digital literacy. Support for universal connectivity should receive priority in congressional deliberations on an infrastructure bill.

Read the full article about democratizing innovation by Zia Qureshi at Brookings.