The rapid transformation of industry and society on the back of the digital revolution will bring with it a number of dillemas for developing and emerging economies. How can the Global South stay afloat?
“The nation that leads in artificial intelligence (AI) will be the ruler of the world”.
Last year, Russian President Vladimir Putin made this provocative statement during ‘Knowledge Day’, the start of the school year in Russia. It prompted reactions from around the world, among them, the famous Tesla and SpaceX CEO Elon Musk, who warned against a “competition for AI superiority [that] could most likely cause…a third world war”.
In a nutshell, artificial intelligence refers to machines conceived to simulate intelligence usually displayed by humans, but capable of achieving better results in various fields through learning and problem-solving capacities implemented by complex algorithms.
Its various applications have already started to transform economic sectors in many countries. In the long term, it could completely reshape how the world works, for the Global North as well as, in a potentially more hazardous way, for the Global South.
A new Industrial Revolution?
The public discourse on the transformative nature of technology is often subject to apocalyptic exaggerations. To be well understood, it should be placed in a broader conceptual framework that some academics and journalists often call a new Industrial Revolution.
Last year’s annual gathering of world political, economic and industrial elites brought together by the World Economic Forum in Davos was held within this context. For the second year in a row, the “Fourth Industrial Revolution” (4IR) was at the center of the stage. The founder of the Forum, Klaus Schwab, is responsible for conceptualizing this idea in a book two years ago.
An “Industrial Revolution” is a set of disruptive changes in production processes, i.e. in the way wealth is created, leading to a radical transformation of global economic and social structures in the long run.
The First IR, beginning at the end of the 18th century, was the era of mechanized production owing to steam machines and railroads. The Second IR, starting at the end of the 19th century, allowed mass production through the invention of electricity and assembly lines. The Third IR – also called the computer revolution – arose from the 1960s with digital electronics and was prolonged by the spread of the internet in the 1990s.
Many academics and scientists consider the technological disruptions we observe today, like breakthroughs in AI, are just an extension of the third IR. However, K. Schwab regards it in a comprehensive perspective, underlining how we are witnessing multidimensional transformations with a dramatic impact on economy and society.
According to him, it is the merging of technologies and their interaction in the physical, digital and biological realms that constitute a Fourth Industrial Revolution, as it provokes a deep and systemic change at a large scale, and at an exponential speed.
Inevitability of global transformation
It is undeniable that many societies, in the North and in the South, are being disrupted by an increasingly coherent set of scientific and technological mutations. We have a few examples with the applications of AI for advanced robotics – which are replacing human jobs in several sectors – and autonomous vehicles; the expanding use of 3D printing; the Internet of Things; Big Data; the boom in peer-to-peer economy through digital platforms; the technology of Blockchain; progress in nanotech, genetic sequencing, synthesis biology (impact on medicine, agriculture and the production of biofuels), and so on.
A cursory look at these advancements shows just how crucial the issue of the 4IR is to our means of production and the subsequent impact on people and society. It has already begun to affect our way of life and is starting to redefine many countries’ paradigms of development.
In an article written in the New York Times last year on AI, the American-Taiwanese computer scientist Kai-Fu Lee warns that it could “lead to unprecedented inequalities and even altering the global balance of power”.
As the 4IR is reshaping how wealth is produced, there is currently fierce competition between the USA and China in Science, Technology and Innovation (STI) policies. The two countries are investing hundreds of billions of dollars each year in Research and Development. The same goes for the private sector. US information technology giants, the so-called GAFAM (Google, Apple, Amazon, Facebook, Microsoft), spend at least 60 billion of dollars per year in R&D on AI; while the Chinese giants (Baidu, Alibaba, Tencent, Xiaomi) are following the same path.
This intense activity from these two world superpowers poses a geopolitical risk in the long-term. It can result in a dramatic asymmetry of power: those will own the technology and information will hold power and have a disproportionate amount of control over the rest of the world.
The challenge for the Global South
As such, the 4IR brings into question the very concept of power, national sovereignty and strategic independence, especially for emerging and other developing countries. Why?
As K. Schwab, K-F. Lee and many other analysts have stressed, it will most probably cause a major wave of “relocation” of production to the industrialized economies of the North, as automation becomes the main driver in business competitiveness - not cheap labour.
Yet this mobilization of cheap labour is the main comparative advantage of many developing countries of the South to accumulate capital and obtain (a few) technology transfers. In his book, Schwab concludes that “if this [development] path disappears, many countries will be forced to rethink their model”.
Compounding the threat of a concentration of capital in a few hands at the expense of labour, which presents a philosophical and ethical challenge for all nations, there is also the threat of countries in the Global South plunging into an uncertain future of economic reliance and dependence on one of the two technological hegemons: the USA or China.
Thus, the so-called emerging and other developing countries of the South are at a crossroads and must make decisive choices to protect their sovereignty and economic independence.
In a context where states are losing more and more direct tools of control such as the localisation of production and distribution of wealth, it is vital to redefine the concept of comparative advantage and thus establish strong and ambitious industrial strategies.
In this perspective, governments of the Global South should consider the pursuit of a knowledge economy through a push on STI policies as the best way to harness an effective and long-term growth strategy.
The orientation of energies and efforts towards the building of a virtuous and inclusive growth model – a Knowledge Economy – whose pillars are education and R&D, will require the Global South to mobilise a human-focused framework and to develop high-technology-based production industries. This means avoiding brain-drain by appropriately investing to enhance local capacity and raising the quality of the public education sector. An early emphasis on a strong education is vital.
But it will also imply establishing strongly integrated regional cooperation systems, at least to complement development plans, not forgetting the fact that funding is the major obstacle for many countries of the South.
These are essential conditions, necessary but not sufficient of course, for strategic independence in a very unpredictable and rapidly transforming global economy.
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