Standardization, Economic Growth and Innovation

Standardization is a topic with many expansions. Nowadays globalization of economy has become as prominent as ever and standardization is a decisive and essential role in figures and numbers by which economy is defined. Standards are inextricably connected to market, industry, economic growth and innovation.

According to conducted researches a large percentage of the growth in labor productivity is due to standardization (13% in UK from 1948 – 2002 according to Blind, 2004) while the same survey showed that 1% of European GNP is attributed to standardization. DIN (Deutsches Institut für Normung) at 2000 stressed the impact of standards in exports and how they lead to international competitiveness and macroeconomic benefits. Furthermore, Bauer in 1980 expressed the opinion that researches, developers and engineers derive information about the state – of – the – art technology so they can focus more in innovation. 

Market is rapidly driven into a state in which it needs to be more and more liberal and open with minimum political interventions but nevertheless governed by fair, reasonable and non – discriminatory terms and rules. Standards form and provide the necessary conditions for market to grow up in this manner by setting technical regulations, distribute the technical “know how”, diminishing national influences and adjusting IPR (Intellectual Property Rights) issues. As already mentioned in a previous post (Standards – What, Where and Why) standards create economies of scale but furthermore they facilitate trade, establish transparency in its processes and ensure timely standardization. The latter prevents new technologies from being available to the market at improper times. The appearance of a new technology before it is quite mature can lead to prematurely lock of an industry or in the opposite case it will be ignored to a certain extent. In both cases the net result will be the economic inefficiency of the standard. The openness of market is one big issue but many times countries need to protect their own products. Standards can contribute by imposing barriers to the import of foreign products thus creating an artificial advantage for local products.