A new study from the Economist Intelligence Unit (EIU) has revealed that the speed of technological disruption is making it difficult for regulators to keep pace, and there is a need for more balanced regulation of technology to protect innovation and societal benefits.
The research report, ‘A fine balance: Regulations and the societal benefits of disruptive technologies' is sponsored by Philip Morris International (PMI).
It examines how best to balance the introduction of new regulation with the societal benefits of new technology and includes two case studies, one on the development and impact of regulation on electric scooters and the other on the introduction and use of blockchain technology in rural finance.
The report finds that disruption typically results from friction caused by the introduction of a new technology that makes accepted ways of doing things obsolete. This change can cause fear among segments of society around issues like job security and the loss of tradition.
Disruption is not a new thing, and technology that creates more efficient ways of doing things has helped the world progress for hundreds of years. However the pace of such change has become much faster, and regulators have found it difficult to balance societal concerns with societal benefits given the greater speed and the increased scale and scope of the impact from new technology, according to the report.
Starting with electric scooters, the report examines the impact and regulatory response following the introduction of the technology in developed nations like the UK and the US. It also investigates how regulators are approaching fears around the application of blockchain technology in rural finance.
Both case studies illustrate how realising the full benefits of these new technologies requires regulators to listen to stakeholder concerns, as well as the arguments for change from industry, and carefully examine the actual impact of such a technology before making any decisions that could have a long-term, negative impact.
The Economist Intelligence Unit managing editor in thought leadership and editor of the report, Chris Clague says, “Disruption is here to stay and it is important that regulators are able to keep pace, but also balance that speed with decisions that are based on consideration of stakeholder concerns and empirical evidence as opposed to a knee-jerk reaction.
“Regulations that result in an outright ban on technologies can stifle innovation, financial growth and societal benefit. Any regulatory change in response to disruption from a new technology should be based on a wide range of information and perspectives, as well the experience of others, to be both constructive and effective.