Reflections: The potential impacts of digital technologies on the economy
DISCLAIMER
Policy Horizons Canada (Policy Horizons) is a strategic foresight organization within the Government of Canada with a mandate to help the Government develop future-oriented policy and programs that are more robust and resilient in the face of disruptive change on the horizon. The content of this document does not necessarily represent the views of the Government of Canada, or participating departments and agencies.
The content for this series was produced between November 2017 and June 2019.
Introduction
Canada has historically prospered despite economic turbulence brought on by technological change. This prosperity, however, is less certain in the transition to the Next Digital Economy. The scale and pace of change affecting the global economy exceeds previous experience.
This series of reflections on the potential impacts of digital technologies on the economy were developed in collaboration with Armine Yalnizyan, the Atkinson Foundation’s Fellow on the Future of Workers. These reflections complement insights in Policy Horizons’ previous reports The Next Digital Economy and The Future of Work: Five Game Changers.
These reflections are not predictions; they are possible scenarios that may arise in the transition to the digital economy.
Reflections
Two plausible global economic futures may emerge depending on how digital technologies impact wages, consumption, production, investment, and trade.
The current wave of technological innovations is changing how goods and services are produced and delivered.
Digital technology continues to advance at an unprecedented rate. The effect of the technological advances on consumption results in various scenarios.
The latest advances in digital technologies could impact trade flows and gross domestic product (GDP) by enabling a rise in both local and global production.
The way businesses and consumers share the value created from ownership of technology and data determines whether there is demand destruction or demand creation.
Digital technologies will motivate change in financial market behaviours across many channels and spark a range of activities that can affect market volatility.
Digital technology has weakened the interpretative power of the main macroeconomic indicators—gross domestic product (GDP), the unemployment rate, and the Consumer Price Index (CPI).
Reliable data is essential to economic forecasting. Digital technologies are challenging the certainty previously found in official statistics and macroeconomic models.
Acknowledgements
Policy Horizons produced these reflections in collaboration with Armine Yalnizyan, the principal researcher of this work. Ms. Yalnizyan is an economist and the Atkinson Foundation’s Fellow on the Future of Workers. She previously served as President of the Canadian Association for Business Economics, and Senior Economic Policy Advisor for the Deputy Minister at Employment and Social Development Canada.
We are deeply grateful for the expertise and input of a range of Canadian and international organizations and economists who were consulted in the development of this work, including but not limited to: Janine Berg, International Labour Organization; Stijn Broecke, Organization for Economic Cooperation and Development; Frances Donald, Manulife Investment Management; Rohinton Medhora, Centre for International Governance Innovation; Jonathan D. Ostry, International Monetary Fund; Eric Santor, Bank of Canada; Noah Smith, Bloomberg Opinion; and David West, the Financial Accountability Office of Ontario.
We would also like to acknowledge everyone at Policy Horizons who contributed to the publication of this work, especially: Maryam Alam, Marcus Ballinger, Steffen Christensen, Nelly Leonidis, Peter Padbury, Alain Piquette, Jessica Strauss, Kristel Van der Elst, and Nadia Zwierzchowska.
