Emerg­ing na­tions can­not af­ford to hold back tech­no­log­i­cal changes

The National - News - - BUSINESS IN DEPTH - SRI MULYANI Sri Mulyani is Fi­nance Min­is­ter of In­done­sia

Over the past 25 years, de­vel­op­ing na­tions have made huge gains in the fight against poverty. But con­tin­ued progress is hardly in­evitable. In­deed, if such coun­tries do not re­think their ap­proach to rapid dig­i­tal trans­for­ma­tion now, the gap that sep­a­rates them from de­vel­oped coun­tries could well be­come un­bridge­able.

The good news is that tech­nol­ogy is not only a threat. The dig­i­tal rev­o­lu­tion presents poorer na­tions with a huge op­por­tu­nity to fast-track their eco­nomic de­vel­op­ment, de­liver bet­ter pub­lic ser­vices, and cre­ate an in­clu­sive econ­omy and so­ci­ety. For these coun­tries, there has not been a mo­ment as fraught with pos­si­bil­ity since the post-war man­u­fac­tur­ing boom that pro­pelled the so-called Asian Tigers to pros­per­ity.

But emerg­ing economies must be proac­tive. They can­not sim­ply al­low tech­no­log­i­cal changes to wash over them as more de­vel­oped na­tions might, leav­ing cit­i­zens to ad­just on their own. The ben­e­fits of tech­nol­ogy tend to flow dis­pro­por­tion­ately to early adopters and growth is of­ten con­fined to small sec­tors of the econ­omy. With­out care­ful plan­ning, far too many others will con­front job losses from au­to­ma­tion, grow­ing in­equal­ity and en­trenched poverty.

What is needed is a shared na­tional vi­sion for dig­i­tal change and co-or­di­na­tion be­tween gov­ern­ments, com­pa­nies and civil so­ci­ety. It all be­gins with en­sur­ing ac­cess. In In­done­sia, we’ve re­cently com­pleted the Palapa Ring pro­ject to bring fast broadband in­ter­net in­fra­struc­ture to both ur­ban and ru­ral cit­i­zens. While this is a mo­men­tous – and nec­es­sary – achieve­ment, we must do even more. Some 80 per cent of peo­ple in de­vel­op­ing coun­tries al­ready live within the ra­dius of mo­bile phone cov­er­age, yet less than 30 per cent have ever ac­cessed the in­ter­net.

The main ob­sta­cle is cost: new, in­no­va­tive busi­ness mod­els are needed to en­sure that ev­ery­one can af­ford to get on­line. For ex­am­ple, in the moun­tains of Ge­or­gia, a small com­mu­nity co-op­er­a­tive has built their own net­work and, in Kenya, tele­coms provider BRCK is stor­ing use­ful con­tent off­line and giv­ing peo­ple ac­cess through free Wi-Fi hotspots.

Com­pa­nies also need to keep the needs of marginalis­ed groups in mind when de­vel­op­ing dig­i­tal tools, prod­ucts and ser­vices. In many places, for in­stance, women are dis­cour­aged from ac­cess­ing dig­i­tal tech­nol­ogy. One study showed that across Africa, Asia and South Amer­ica, women are be­tween 30 per cent and 50 per cent less likely to use the in­ter­net to par­tic­i­pate in pub­lic life. While chang­ing so­cial norms is a task for ev­ery­one, dig­i­tal com­pa­nies can help by de­sign­ing prod­ucts not just for men or the mid­dle class.

The sec­ond pri­or­ity has to be en­sur­ing that cit­i­zens have the skills they need to nav­i­gate this new dig­i­tal world. This will re­quire a much greater em­pha­sis on teach­ing non-au­tomat­able soft skills as part of a stan­dard school ed­u­ca­tion. More­over, the pri­vate sec­tor must take on in­creased re­spon­si­bil­ity for pro­vid­ing on-the-job tech­ni­cal train­ing.

Gov­ern­ments and civil so­ci­ety can con­trib­ute to reskilling pro­grammes, too, both di­rectly and in­di­rectly. Next year, for ex­am­ple, In­done­sia plans to launch a train­ing pro­gramme for two mil­lion work­ers with the co-op­er­a­tion of dig­i­tal com­pa­nies, teach­ing them cod­ing and other skills. The gov­ern­ment has also of­fered tax de­duc­tions to en­cour­age com­pa­nies to de­velop their own re-skilling pro­grammes.

Third, pol­i­cy­mak­ers must set the right conditions for in­no­va­tion to thrive. A big part of this in­volves cre­at­ing a pos­i­tive en­abling en­vi­ron­ment. In­done­sia is proud to have spawned more tech “uni­corns” such as ride-hail­ing pi­o­neer Go­jek than any other South-East Asian coun­try. Yet, here as in other emerg­ing mar­kets, start-ups still face all too many bar­ri­ers, not least ac­cess to cap­i­tal. Gov­ern­ments need to lower those hur­dles where they can, while pri­vate in­vestors and donors can help to de-risk these en­vi­ron­ments by putting for­ward first-loss cap­i­tal, or play­ing the role of “ag­gre­ga­tors” to bring in other in­vestors.

At the same time, we can­not as­sume that ex­ist­ing laws will re­main fit for pur­pose in a dig­i­tal age. Flex­i­ble new reg­u­la­tions will be needed to keep up with the rapid pace of change. Many coun­tries – in­clud­ing Kenya, Brazil and Philip­pines – are adopt­ing the Euro­pean Union’s gen­eral data pro­tec­tion rules.

But while it is tempt­ing to im­port global tech­nol­ogy poli­cies whole­sale, de­vel­op­ing na­tions should be sure to tai­lor leg­is­la­tion to their spe­cific na­tional con­texts. Global norms are form­ing around many dig­i­tal is­sues, not just data pro­tec­tion, and co-or­di­na­tion be­tween re­gional or like-minded groups of coun­tries will help to in­te­grate de­vel­op­ing-coun­try pri­or­i­ties into global stan­dards.

Fi­nally, gov­ern­ments must take great care to build se­cure, ac­count­able sys­tems, so that cit­i­zens can trust that their data is pro­tected and that the data pro­vided by the gov­ern­ment is trans­par­ent. Only then can they hold gov­ern­ments ac­count­able and make their voices heard.

These are all huge tasks, es­pe­cially for emerg­ing economies al­ready un­der pres­sure from trade ten­sions and slow­ing growth. They won’t get any eas­ier over time, how­ever – or any less nec­es­sary.

The dig­i­tal rev­o­lu­tion presents poorer na­tions with a huge op­por­tu­nity to fast-track their eco­nomic de­vel­op­ment

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