Like past periods of rapid,
far-reaching technological change, today's digital revolution represents
both a challenge and an opportunity for countries at all levels of
development. But for the developing world in particular, now is the time
to start preparing an economy- and society-wide strategy for managing
the coming disruption.
Developing Countries Must Seize the Tech Frontier
Sri Mulyani Indrawati
Project Syndicate, Dec 26, 2019
The march of technological innovation has long boosted economic performance, improved efficiency, accelerated the pace of globalization, and transformed human society in the process. But as the defining issue of our time, the digital revolution demands renewed policy cooperation at all levels of governance. After all, the latest wave of technological change is especially broad, and it is coming fast. It is fundamentally altering how goods, services, and ideas are exchanged. And as rapidly declining costs make digital technologies even more affordable and accessible, they will continue to transform people’s lives and livelihoods. And yet, there is a danger that these gains will not reach the world’s poorest people. An estimated three billion people could still lack Internet access by 2023, and many more will have little or no opportunity to reap the benefits of digital technologies. That means there can be no delay in addressing the problem of digital exclusion.
Fortunately, the Pathways for Prosperity Commission on Technology and Inclusive Development, which I co-chair with Melinda Gates, has shown that developing countries can still harness the new wave of frontier technologies for the benefit of all. Digital technologies have unlocked new routes to prosperity through agriculture, manufacturing, trade in services, the linking of informal and formal sectors, and domestic inter-connectivity. Low- and middle-income countries around the world now have an opportunity to build new industries, deliver better services, and improve peoples’ lives.
But digital technologies can also entrench existing forms of exclusion, disrupt livelihoods, and provide new tools for the powerful to abuse and exploit the weak. Developing countries, in particular, are starting from a difficult position, because they are already grappling with the challenges of low human capital, ineffective institutions, and a difficult business environment. Still, policymakers must not allow themselves to be paralyzed in the face of change. Rather than becoming passive observers of the tech revolution, they must take control of their countries’ economic futures. All developing countries and emerging economies should be able to capture at least some of the new opportunities on offer. As the Commission has shown, governments have several policy options for achieving more inclusive growth. But technology alone will not guarantee success. Policymakers must also account for local contexts and conditions, so that they can create social, political, and economic eco-systems in which technology creates jobs and drives inclusive growth.
To compete globally, all countries will need to prepare themselves for new and upcoming technologies by maximizing inclusiveness and guiding markets toward the right types of innovation. Governments should start by recognizing that the challenge is not just about “digital policy.” Rather, it calls for a “whole-of-economy” – indeed, a “most-of-society” – approach. And because inclusion is the key to success, support for marginalized groups will need to be built into the policy process from the outset. To that end, national governments should start planning for digital readiness in four areas: infrastructure, human capital, policy and regulation, and finance. These are the technical pillars of the future economy.
At the same time, regional-level policymakers – particularly in the Asia-Pacific region – need to start building momentum on policy cooperation, which will be necessary for harnessing frontier technologies for the greater good. Likewise, at the global level, cross-border issues associated with frontier technologies will need to be addressed multilaterally. That means multilateral organizations themselves should be developing an antenna for identifying new technological and development challenges.
It is already clear that more must be done to mitigate technological disruptions to employment, boost investment in human capital, and ensure fair taxation in the new digital economy. We should not underestimate the power of multi-lateralism. For decades, countries have been coming together in global fora to safeguard public goods and pursue collective prosperity. Nonetheless, the existing architecture for multi-lateralism will need to be adapted to reflect changing needs.
To capture the benefits of the Fourth Industrial Revolution, we also will need to strengthen public-private partnerships and make our economies more efficient and flexible. With the world’s population projected to reach ten billion by mid-century, global governance will become even more complex than it is today.
For its part, Indonesia recognizes the need for policies to manage the new digital economy. In addition to addressing the impact of technological disruption and ensuring fair taxation, the key will be to put people at the center of the agenda. Beyond furnishing workers with the right skills, we must create a digital world where all people have a voice, and where those who are not benefiting from change have the support they need.
As is usually the case, the challenge we face is also an opportunity. Digital and frontier technologies have enormous potential to improve government administration and the delivery of public services.It is time for a new kind of conversation, one that involves governments, business leaders, innovators, civil-society organizations, and citizens alike. For developing countries, the task is clear: we must ride the wave of technological change, rather than wait for it to crash down on us.
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Sri Mulyani Indrawati is Finance Minister of Indonesia and former Chair of the World Bank Group’s Development Committee.
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