Stimulating sustainable economic growth

Stimulating sustainable economic growth is a priority for all nations. Increasing productivity – the level of output achieved with a given level of inputs – is key to doing so consistently over time. This requires a cohesive package of measures that ensures businesses, individuals and other organisations can prosper. We have advised governments and businesses on the policies that encourage and contribute to lasting economic productivity growth.

Analysis for me by Frontier Economics has consistently been based on a solid understanding of the policy need, which has made it useful and impactful

Mark Franks, Chief Economist and Deputy Director, Office of Manpower Economics

We have worked on many areas that are key to improving long-term growth, including investment in infrastructure, skills, innovation and labour markets, and in creating institutions and conditions that support a healthy and vibrant commercial sector. Our teams understand the building blocks of economic growth and regularly advise stakeholders on how to achieve it.

We are experts in assessing the drivers of growth, the contribution of different sectors and sub-sectors to economic dynamism, and how best economic expansion can be supported. We work with clients to understand the barriers to growth – including regulatory, policy and market failures – and how policy reform can help to overcome them. As far as possible, we also account for the wider social issues related to growth – including knowledge spillovers, environment impacts and well-being – as part of a wider economic framework.

It is important that there are credible and effective means to monitor and assess growth and productivity. We have worked on developing and applying appropriate indicators and tracking models for the corporate and public sector to use.

 

Estimating the potential economic impact of the Internet of Things
Computer networking giant Cisco estimates that nearly 50 billion objects will be connected to the Internet by 2050, or almost seven “things” per person globally. This “Internet of Things” - an umbrella concept that describes the augmentation of traditionally non-digital objects with sensory and connectivity capabilities, allowing for autonomous and remote tracking, monitoring and control - has the potential to generate substantial economic value and enhance social welfare. However, the ability to capture the potential gains from IoT is not guaranteed. Frontier partnered with Accenture to estimate the impact that investments in IoT could have on economic growth in twenty countries. These twenty countries account for three-quarters of global output, as measured by GDP, and the bulk of early uptake of IoT technologies. Using historical data, forecasts, economic theory and a critical literature review we created a model that calculates the potential economic benefits from expected investments in IoT in each of these countries through to 2030. Critically, the model took into account each country’s ability to absorb the benefits - converting IoT investments into economic value - based on a range of key measures, such as digital infrastructure, innovative capacity, skills base and responsiveness to previous generations of digital technologies. As a result, one additional dollar of IoT investment in our model does not result in equivalent economic gains across the twenty countries. This “absorption capacity” framework also gives policymakers insight into what levers can be pulled to improve a country’s conditions to benefit from IoT investments. These include, investing in human capital, becoming more economically open, developing the science base, improving access to capital, raising government funding of R&D, and fostering technology clusters and collaboration. This model was adopted in three Accenture reports (here, here and here), and was presented at the World Economic Forum’s Annual Meeting in Davos in January 2015.

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