Responding to Industry 4.0: A Global Policy Look

The Paris-based Organization for Economic Cooperation and Development is out with a useful compendium of what’s happening in innovation policy across OECD member economies.  This is a look at what’s next in innovation policy, i.e. how are policies evolving to account for the massive changes underway as part of Industry 4.0.   The policy brief offers a quick introduction to the history of industrial policy, noting that we are in the midst of a major shift in focus.   In the 1990s and early 2000s, these policies focused on improving collaboration between government and business, and in creating improved conditions (e.g. via regulatory shifts and investment programs) for business start-up and growth. The “new” approaches are more focused on transformation as opposed to supporting incremental improvements in policy regimes and business support.  What does this mean in practice?   I see a few common trends in this OECD review.  First, many countries, but not the US, are creating programs that offer a steady and stable funding/support stream for business customers.  Instead of receiving a grant or a one-time intervention, firms are engaged in a multi-year collaborative process focused on business development and process improvements.  Germany’s Central Innovation Program (ZIM) is an example.  Second, industry cluster strategies are becoming more ambitious, focused on transforming an entire industry or tackling big societal problems like climate change.  Examples include Austria’s Virtual Vehicle program and the US’s Manufacturing USA programs.  Finally, governments are creating large-scale national platforms to manage multiple initiatives, such training and R&D, and to help firms respond to the challenges of Industry 4.0.  Examples include Denmark’s MADE program and Germany’s Industrie 4.0 programs.   With the exception of Manufacturing USA, efforts here in the US are still pretty limited and not yet providing the depth and range of investments needed to address the big industrial transformations now underway.

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