Since the industrial revolution, novel technologies have repeatedly reshaped how we work and do business. From the steam engine to electricity to computers and the internet, each wave of innovation has transformed our economy in fundamental ways. Currently, machine learning (ML) and artificial intelligence (AI) are reshaping the economy.
Breakthrough innovations affect three critical areas: firms’ productivity and innovative capacity; firms’ internal organization and the organization of their supply chains; and the implications for workers’ careers and wages. While the ML and AI transformation is still underway, the last major technological revolution—the rise of information and communication technologies (ICT), such as computers, internet, and software—can provide important insights into its likely impacts.
This project tackles a major gap in our understanding of the economic effects of ICT by asking three key questions: How does ICT adoption change the way firms organize themselves internally, and what does this mean for firm performance and employee outcomes? How does embracing digital technologies affect how firms integrate into global value chains, and what impact does this have on domestic workers, their employment prospects and wages? And how does ICT change the way firms source innovation from abroad, possibly affecting domestic innovation capacities?
Previous research has been limited by incomplete data—studies typically look at only one piece of the puzzle at a time. Our project breaks new ground by creating comprehensive datasets that combine detailed information about firms' technology use, their global value chains, financial performance, and patent activities, together with complete information about their employees' characteristics, tasks, and wages. Rather than just identifying what happens when firms adopt new technologies, we dig deeper to understand why and how these changes occur. This approach helps us uncover the economic mechanisms that drive technological transformation.
The insights from this research will help policymakers design better labour market, education, innovation, and trade policies. Firms will gain valuable guidance for developing strategies to navigate technological change effectively. By understanding exactly how digital technologies reshape firms and affect workers, we can better prepare for future technological waves while ensuring their benefits are broadly shared.
