Indonesian finance minister
Rapid technological transformation is one of the defining factors in shaping the future of our economy — at the national, regional and global levels. Frontier technologies bring new opportunities, as well as wide-ranging impacts and policy implications.
This transformation has affected economic performance, fostered production efficiency, revolutionized society and accelerated globalization. This trend is a key issue of our time and should spur renewed momentum for policy cooperation.
The current wave of technological change is unique in terms of the breadth of its scope and the pace of change. It affects how goods, services and ideas are exchanged. The fast-declining costs of these technologies make them more affordable and accessible. Therefore they are radically transforming people’s lives and livelihoods.
However, will the digital age benefit the world’s poorest people? With 3 billion people predicted to be offline still in 2023 and with many more failing to reap the internet’s full potential, the time to address digital exclusion is now.
According to the Pathways for Prosperity Commission on Technology and Inclusive Development, which I cochair with Melinda Gates, developing countries have a chance to harness the new wave of frontier technologies and chart their own new pathways for prosperity by wiring nations to be digital, connected and inclusive.
There are five possible pathways for prosperity being unlocked by technological innovations. Namely through raising value from agriculture, establishing new global value chains in manufacturing, creating new global trade in services, linking the informal sector to the formal economy and fostering diverse and connected domestic economies.
With new digital technologies, there are opportunities in low- and middle-income countries to build new industries, deliver better services and improve peoples’ lives. But digital technologies can also entrench exclusion, create new ways for the powerful to abuse the weak and disrupt peoples’ livelihoods and jobs.
Developing countries are starting from a challenging position, often grappling with some combination of low human capital, ineffective institutions, or a difficult business environment. But this does not mean they should be paralyzed by change, resigning themselves to be passive observers of this technological revolution. On the contrary, now is the time for countries to take control of their technological future.
The commission highlights possible policy priorities for inclusive growth. Capturing the opportunities from new technology is possible, but requires appropriate business models and policies. There is little reason why all developing countries and emerging economies should not be able to capture at least some of these opportunities.
Local context does matter and technology alone does not guarantee success. Countries need the right social, political and economic ecosystem for technology to bring jobs and inclusive growth. In order to be competitive, governments around the globe must create digital-ready countries, maximize inclusiveness and guide markets toward innovation.
Inclusion is a key element in the process, thus marginalized groups will need to be built into the design of digitalization from the outset and the wants, needs and priorities of the poorest must be at its heart.
At the national level, governments and societies, particularly in developing countries, should not simply step back and let the wave of digital transformation wash over them.
Nations should plan well for what it takes to be digitally ready across four pillars: infrastructure, human capital, policy and regulation and finance. These are the technical elements of the digital future.
At the regional level, we need to build a strong momentum for policy cooperation among Asia-Pacific economies to harness these frontier technologies for the greater good.
At the global level, cross-border issues and global public goods, including of frontier technologies and its wide-ranging impacts, need to be addressed in a multilateral framework.
Multilateral forums and organizations need to have effective antennas for tackling the new breed of development challenges. This includes addressing impacts of technological disruptions, making human capital investments ready for the age of the Fourth Industrial Revolution and ensuring fair taxation in the new digital economy.
We should not underestimate the power of multilateralism, as a collective forum where nations have been coming together in pursuit of global public good, such as the impacts of frontier technologies.
Thus, the architecture of the multilateral organization needs to reflect these changing needs.
We also need to strengthen public-private partnerships and reform our economy to be more efficient and flexible, amidst rapid technological changes and Industry 4.0. When the global population reaches 10 billion, global governance will be more complex than what we see today.
Indonesia is cognizant of the need to address the impacts of technological disruptions, making human capital investments ready for the age of Industry 4.0 and ensuring fair taxation in the new digital economy.
In order for nations to prevail and thrive with the growth of the digital economy and frontier technologies, we need to put people at the center of the digital future. This includes equipping them with the right skills to manage economic disruptions and adapt to new technologies.
We need to create a safe digital world where people have a voice and also to support those who do not benefit from technological change. Furthermore, digital and frontier technologies have the potential to transform government administration and service delivery for the better.
It is time to have a new kind of conversation — one that involves governments, business leaders and innovators, civil society and citizens. Developing countries need to take control of technologies, harness their power for change and act now to chart their own pathways for prosperity.
Disclaimer: The opinions expressed in this article are those of the author and do not reflect the official stance of The Jakarta Post.