Following Foster and Rosenzweig, technology is defined as “the relationship between inputs and outputs,” and technology adoption as “the use of new mappings between input and outputs and the corresponding allocations of inputs that exploit the new mappings.” The review focuses on studies that include direct evidence on technology adoption, broadly defined, as an outcome. This review systematically identifies and summarizes the evidence on the effects of interventions that shape the incentives of firms to adopt new technologies. Interventions in market processes may be necessary to promote the adoption of beneficial technologies. Despite its desirable effects, the process of technology adoption can be quite slow and market failures and other frictions may impede adoption. The adoption of improved technologies is generally associated with better economic performance and development. With countries worldwide struggling to find an optimal institutional environment for the new services sectors, a good option for South Asia is to experiment with regulatory sandboxes. Governments in South Asia are addressing these new realities, but they face major challenges. To unleash the potential of the new services economy, policy makers should rethink regulations and establish new institutions to enable 1) competition and innovation 2) increased labor mobility and up-skilling, through education and on-the job training 3) the absorption of new services by firms and households. 2) Services firms can drive productivity growth because of innovations that make their own products and other industries more efficient 3) The services sector also generates jobs and helps upgrading skills through on-the-job training. The chapter shows that new services can become the driver of development in South Asia because 1) Services are increasingly tradable and also represent a large part of value added incorporated in the exports of goods. This new services economy comprises not just the ICT sector, but also business and professional services that are increasingly critical inputs into manufacturing and other sectors, and digital platforms that are creating new markets. The importance of services has been increasing over time and got a further boost during the response to the COVID pandemic, when digital technologies became critical. The emergence of a new services economy creates an opportunity for South Asiato shift gears and to move towards a services-led development model.
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