Technology is transforming both the way we live and the policies that guide government decisions. Panelists will discuss the difficult balancing act that policymakers face between unlocking this potential to revolutionize fiscal policy formulation and implementation on the one hand, and societies’ privacy concerns and public sector capacity constraints on the other. They will also reflect on the implications of digitalization for countries at different stages of development and seek to identify ways in which countries can embark on the digital reform path.
Martin Sandbu, Economics Writer, Financial Times
Martin Sandbu has been writing about economics for the Financial Times since 2009, when he joined the paper as Economics Leader Writer. He now writes the FT’s Free Lunch. Before joining the FT, he worked in academia and policy consulting. He has taught and carried out research at Harvard, Columbia and the Wharton School, and has advised governments and NGOs on natural resources and economic development. He is the author of two books, one on business ethics and one on the eurozone, and has degrees from Oxford and Harvard.
David Lipton, First Deputy Managing Director, IMF
David Lipton has been First Deputy Managing Director of the International Monetary Fund since 2011. Before coming to the Fund, he was Special Assistant to the President and Senior Director for International Economic Affairs at the White House. Previously, he served as Under Secretary for International Affairs at the U.S. Treasury.
Caroline Atkinson, Head of Global Public Policy, Google, Inc.
Caroline Atkinson is the head of global policy at Google, where she advises Google’s leadership on policy issues and leads the company’s work with policy makers, government officials, and key political stakeholders. Prior to joining Google, Caroline served as U.S. President Barack Obama’s Deputy National Security Advisor for International Economics. She has held senior roles at the IMF, the U.S. Treasury, and the Bank of England, and worked as a journalist for The Washington Post, The Economist, and The Times of London. She holds a B.A. from Oxford University.
Andrew McAfee, Co-Director, MIT Initiative on the Digital Economy
Andrew McAfee is co-Director of the MIT Initiative on the Digital Economy. He studies how digital technologies are changing business, the economy, and society. His 2014 book on these topics, The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies (co-authored with Erik Brynjolfsson) was a New York Times bestseller. He writes academic papers, a blog for the Financial Times, and articles for publications, including Harvard Business Review, The Economist, The Wall St. Journal, and The New York Times. He was educated at Harvard and MIT.
Arvind Subramanian, Chief Economic Advisor to the Government of India
Arvind Subramanian serves as the chief economic advisor to the Government of India. Before, he was a Senior Fellow at the Peterson Institute for International Economics and the Center for Global Development, and Senior Research Professor, Johns Hopkins University. He was previously Assistant Director in the Research Department of the IMF. He studied at St. Stephens College, Delhi, received an MBA from the Indian Institute of Management at Ahmedabad, and received an M.Phil. and D.Phil. from Oxford University. He has taught at Harvard’s Kennedy School of Government.
Panelists discussed the efficiency gains that digitalization can bring to economic policy formulation and implementation, the risks perceived by the public related to data protection and privacy, and shared their views on how to best prioritize policies going forward.
Key Points:
- Efficiency gains. McAfee noted that technological development is happening at an increasingly rapid pace. Atkinson highlighted that increased digitalization improves transparency and decreases the costs of financial transactions. An important result is that digitalization can be used to address corruption. However, she underlined that the diffusion of technology remains slow, and that this will be an important bottleneck to address for policy makers.
- Fiscal policy. Lipton noted that tax policy and administration could benefit significantly from digitalization. On the expenditure side, technological advancement and access to data, could help target, and improve the efficiency of spending decisions. Subramanian agreed and noted that digitalization has been used in India to improve the targeting of welfare programs.
- Monitoring and surveys. McAfee and Atkinson noted that enhanced air survey capacity could improve the ability to monitor economic development, for example by overseeing the building of physical infrastructure. Lipton added that this technology could be used to shorten the time to set up property tax systems in developing countries. Subramanian highlighted that invoice tax data in India has helped measure how much trade is taking place within the country.
- Strengthening financial inclusion. For developing countries, digitalization could allow for a more rapid catch-up with advanced economies. Atkinson pointed out that openness to financial technology, such as mobile payments, broadens financial inclusion. In India, implementing a biometric identification system has helped to improve tax compliance, which has allowed banks to deepen financial inclusion by extending credit to new customers based on their tax records.
- Data protection and privacy. Panelists highlighted the importance of having secure systems around technological development, to prevent these new tools from being abused. Atkinson noted that when it comes to privacy, public expectations vary significantly among regions and countries. Subramanian agreed, and said that countries themselves should be able to decide on the modalities of privacy laws and protection. McAfee pointed out that when authorities have full access to personal data, maintaining checks and balances on the government become critically important.
- Prioritization. Atkinson considered openness to innovation as critical and McAfeehighlighted that governments need to make digitalization a key policy objective. From the Fund’s perspective, Lipton encouraged openness to new technological solutions, and for governments to work closely with the Fund to understand the opportunities that new technologies can bring. Subramanian highlighted the need for policy makers to respond to public concerns in an open and transparent way. Atkinson agreed and emphasized that maintaining the public’s trust is critically important for both the public and private sector.
Quotes:
“With the kind of information that digitalization will permit, tax policies can be better calibrated for redistributive effects” David Lipton, IMF First Deputy Managing Director
“Governments need to carry the people along in this process of digitalization by responding to their concerns in an open, transparent, and trust-inspiring manner” Arvind Subramanian, Chief economic advisor, Government of India
“If you want to know the state of your infrastructure, there is at least one start-up that is putting mini-satellites in the sky that will do a publicly available fly-over of the entire globe, in pretty good resolution, once a day ” Andrew McAfee, author and co-Director of MIT Initiative on Digital Economy