The Digital Revolution and the State: Venture Capital, Industrial Policy, and Global Transformations

At a macro level, the digital revolution has transcended national borders, transforming the global economy and disrupting political processes. The "second globalization," enabled by IT, facilitated an unprecedented free movement of goods, services, and capital, but also reduced the robustness of global supply chains, as starkly revealed by the coronavirus pandemic. Financialization, the third dimension, saw an unsustainable increase in leverage within the banking system, where the pursuit of efficiency directly compromised robustness, culminating in the 2008 credit crisis. This interplay of globalization and financialization, coupled with the digital revolution's impact on political integrity, highlights Danny Rodrik's political trilemma, forcing states to grapple with deep economic integration, national autonomy, and responsive government, while simultaneously preparing for future challenges like the green revolution in response to climate change.

the foundations of the digital revolution were all sponsored and funded by the united states department of defense

we must step outside of the framework of neoclassical economics to grasp the dynamics of the ict revolution

federal financing of i.t as a public good had enormous implications for intellectual property and accelerated the diffusion of new knowledge

the antitrust interventions opened up the it sector to competitive entry by new companies

the result is the flood of software defined web-delivered services indeed a darwinian explosion of innovative applications

the digital revolution has evolved to attack the authority of the state at the micro level enabling assaults on the regulatory ecosystems of established markets and at the macro level enabling a new wave of automation globalization and financialization that challenge the state's ability to buffer its constituents from disruptive change

productivity growth has slowed markedly across the developed world generating an intense academic and policy debate

intangible capital reduces marginal costs and increases fixed costs it confers competitive advantage on the first movers whose lower costs in turn chill competition from potential new entrants and cut aggregate productivity growth in the longer term

the pursuit of efficiency in the construction and management of global supply chains directly and necessarily reduced their robustness as we have learned in the under the impact of the coronavirus pandemic

you can have deep economic integration you can function as an autonomous nation state and you can have representative responsive government two out of three