Can Government Regulation Stimulate Innovation?
The April 17, 2024 article from the Center for Data Innovation, "Why The EU Should Look To Estonia To Achieve Its Vision For A Digital Europe" by Ayesha Bhatti, describes Estonia as a model for digital innovation.
The central theme is that the EU's regulatory frameworks, as expressed through privacy-focused efforts such as the GDPR, are throttling innovation. According to Bhatti's article, Estonia's regulatory approach to digital communication does not put so many barriers in place.
While it is useful to discuss the relationship between regulation and innovation, my takeaway is a bit different from what is expressed in the article. That is, the EU's digital regulatory frameworks (such as the GDPR) are examples of how member states have attempted to overcome the barriers to unity imposed by different European countries' traditional cultural, economic, and political differences.
The internet and social media around the world sometimes enable people to ignore traditional political and geographic boundaries. Cooperation in digital regulations can be viewed as promoting unification by forcing different political systems to compromise and agree. The price, though, is the possible "throttling" of innovations—both good and bad—which makes the regulatory process, especially in complex situations such as Artificial Intelligence, so complicated. Technology always seems to advance faster than government regulations, which always seem to be playing catch-up.
Also, social behaviors and communication that easily cross national boundaries can sometimes be interpreted as competing with national priorities; see for example the disagreements in the US between fervent TikTok users and the US Government’s concerns about national security and TikTok-related data vulnerabilities.
Could Estonia's "looser" regulatory approach to digital communications be adopted more widely?
Having watched the way privacy, cybersecurity, and risk management regulations have evolved in the US, I have my doubts given the complexity of our economy. For example, I've witnessed how long it takes for cybersecurity regulations, such as vendor and contractor certification, to work through research and development to actual implementation in government procurement and industry operations.
Such complexity makes me wonder if regulation can ever keep up with technological innovation, given the number of "moving parts" our economy has. Perhaps a better question to ask is, can government regulations stimulate innovation?
One approach might be what the National Institutes of Health (NIH) is attempting with its Advanced Research Projects Agency for Health (ARPA-H) program. ARPA-H not only funds high-risk and innovative research but is also attempting to shepherd and accelerate how that research eventually reaches the marketplace.
Copyright (c) 2024 by Dennis D. McDonald. The image at the top of this article was generated by Microsoft Designer on 4/23/2024 in response to the prompt, “Create a simple black and white abstract image, using only lines and geometric shapes, that illustrates the conflict between government regulation and technological innovation.”
