Companies around the world are asking one question: how do we position ourselves to make the most of the upturn when it comes? Countries are asking much the same. In previous downturns, governments would turn to physical infrastructure (bridges and roads) to keep money flowing in the short term and to provide the infrastructure to compete in the future. This time many are turning to digital infrastructures.

In a report published today by the London School of Economics and the Washington-based Information Technology and Innovation Foundation, we identify the jobs potential of three infrastructures of the future: next generation broadband; intelligent transport systems; and smart power grids. We calculate that if the UK encourages investments of £15 billion in these digital infrastructures, it could retain or create 700,000 jobs, while at the same time laying the groundwork for long-term productivity growth, enhanced international competitiveness and significant improvements in quality of life.

Investing in these emerging IT networks offers superior job creation benefits because they act as the foundation for a multitude of innovative new technologies and services, which in turn create even more jobs. For example, next-generation broadband, with the seamless transmission of data including two-way voice and video, means that new services can be traded online globally. That could mean that an individual with professional skills who has been laid off could start selling their services without upfront costs or delays, effectively creating a microbusiness. Or new business models could emerge within existing sectors, such as retail, just as we saw with the first wave of the internet. Our report calculates that spurring £5 billion of investment in broadband would help to create or retain 280,000 jobs, of which almost 100,000 would be in small businesses.

Smart grids mean turning the power grid from “dumb”, one-way wires to a responsive system that can monitor and manage demand. Since electricity is generated to service peak demand, this has significant environmental benefits as well as cost savings. Building the smart power grid will spur a host of new products and services from hybrid plug-in electric vehicles to smart appliances to more investment in renewable energy. Spurring £5 billion of investment in smart grids, we conclude, would help to create or retain 231,000 jobs, of which more than 145,000 would be in small businesses.

Finally, intelligent transport systems (ITS) enable the country to get a second bite of efficiency and productivity out of its existing infrastructures for a fraction of their original cost. ITS would improve traffic flows through measures such as adaptive traffic signals and provide travellers with real-time traffic information. Encouraging £5 billion of investment in smart grids would help to create or retain 188,000 jobs, of which more than 120,000 would be in small businesses.

Spurring digital infrastructure development in the UK promises to be a wise investment in the short run, to create jobs, and in the long run, to create a more competitive, productive and green economy.

- Robert Atkinson is founder and president of the Information Technology and Innovation Foundation. Jonathan Liebenau is Reader in Technology at the London School of Economics and Political Science.

www.itif.org/files/digitalrecovery.pdf

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