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Growth and Innovation in the Modern Data Economy

Orlando Gomes, Roxana Mihet and Kumar Rishabh

No 23-86, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: In this paper, we formulate a growth model of the data economy, highlighting data's dual role as a business optimization tool and a cybercrime target. We investigate the impact of cybercrime on firm innovation and economic growth, finding that it unequivocally leads to reduced knowledge stocks, decreased productivity, and slower overall economic growth for all firms. However, there is a silver lining: cybercrime risk prompts data-intensive companies to pursue digital innovation, enhancing productivity in other domains. We observe increased R&D, patenting, and patent diversity in response to higher cyber risk, especially among data-intensive firms. Non-data-intensive firms do not exhibit increased general innovation in response to cyber risk. Notably, in-house cybersecurity innovation sustains this cycle, while third-party cybersecurity delegation lacks the same innovation benefits.

Keywords: Data economy; data theft; data breaches; cyber-risk; growth; artificial intelligence; innovation (search for similar items in EconPapers)
JEL-codes: D8 G3 L1 L2 M1 O3 O4 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2023-09
New Economics Papers: this item is included in nep-bec, nep-cse, nep-gro, nep-ino, nep-knm, nep-sbm and nep-tid
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