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The Annual Meeting of the New Champions 2017, also known as “Summer Davos,” organized by the World Economic Forum, was held in Dalian, China, from June 27 to 29. Under the theme of “Achieving Inclusive Growth in the Fourth Industrial Revolution,” the meeting examined the potential for innovation, science and technology to create economies that serve all sectors of society.

The backbone of the Fourth Industrial Revolution lies in the exponential growth in digitization, which is championed for broadening choices and dwindling transaction costs in social and economic interactions, paving the way to bolster growth and social wellbeing. Digitization is transforming business models, spurring trade, entrepreneurship, and competitiveness, opening up niche sectors or new markets, such as digital applications adapted to specific local conditions and expanding access to overseas markets. It is propelling societies forward and improving our lives in countless ways by, for example, allowing users to create, utilize and share information, and get better access to basic services, such as health and education, and collective engagement through social media. It can optimize the policy landscape, foster government transparency and accountability, and help governments better interact with citizens, respond to societal trends and deliver services.

However, digitalization is fraught with uncertainty. Opportunities offered by digitization are often accompanied by some thorny challenges, from the global digital divide to potential negative social and development impacts, and complex and internet-specific regulatory issues. For example, even in wealthy countries, some poor and uneducated people are still shut out of the new economy by a lack of internet access. Nearly half of existing jobs are expected to be stolen by robots in the next 20 years.

Digitization per se cannot ensure that all people, especially the poor and the vulnerable, benefit equally from economic progress. It will backfire if we fail to narrow the gap between haves and have-nots and ensure innovations in manufacturing, medicine and agriculture reach poor people. It will threaten economic growth and social stability if we fail to help the unemployed impinged on by automation. In fact, if left to market forces, digitization can bypass those who are the most vulnerable, giving rise to an increased gap in income and wealth among people. In many OECD countries, the majority of households have seen little income growth for over 20 years, and the middle class is being hollowed out.

In an ever more digitalized and interlinked world, social inclusiveness is a prerequisite for ensuring sustainable growth

In an ever more digitalized and interlinked world, social inclusiveness is a prerequisite for ensuring sustainable growth. Inclusive growth neatly advocates that growth benefits be shared by people from all walks of life. In other words, regardless of gender, ethnicity and religion, people from all social sectors should be able to contribute to, and benefit from, economic development. Also, more inclusive societies enjoy better economic and political performance than unequal ones.

At the cusp of a new wave of industrial revolution, the inclusive digital development strategy, an inclusive growth strategy in digitally enabled economies and societies, should be proffered to cultivate a shared and trusted digital environment that drives economic development and social cohesion. It aims to develop broadband infrastructure and disseminate general ICT skills and competencies, nurture digital firms, and cement e-government. The priorities generally depend on the level of digital adoption in that country.

Such a strategy places people and their living standards at the center of economic policies and entails a fundamental societal transformation, a set of basic public policy changes and considerable resources.

First, investment is essential. Despite the growing awareness of the necessity of such a strategy, many firms and households simply lack sufficient resources and capacity to accommodate digital transformation. According to the World Investment Report 2017, a comprehensive strategy should cover investment in digital infrastructure, inter alia in local digital content and services, and in digital firms that buttress equal access by all people to job opportunities. It also highlights capital infusion into basic science research, as the most emerging lucrative technologies are highly scientific in nature. Entrepreneurs are induced to invest in new organizational models and approaches that generate broad-based opportunity, not just wealth.

Second, openness is a sine qua non. Openness has technical, economic and social dimensions, from open standards for core technologies and protocols to the respect for freedom of expression and privacy. In essence, openness enhances digital innovation in a number of ways, by underpinning the internet as a platform on which entrepreneurs have equal opportunities to construct new businesses, develop disruptive technologies and raise capital, while people can express opinions, share knowledge and ideas, improve skills, conduct research, interact with government, etc.

The third is a renewed regulatory framework that shapes inclusive innovation. That framework covers data security, privacy, intellectual property protection, consumer protection, and serves as a platform for regulators and entrepreneurs to share perceptions on the abstruse technicalities and the law at stake.

The final is the global partnership in promoting an inclusive society. Digitalization is increasingly interwoven with the global economy, with the value of B2C transactions reaching 1.5% of global GDP heretofore. Digitalization is affecting all countries, even if they are not roaring players. However, there is a significant digital divide between developed and developing countries, where the share of people using the internet in developing economies is less than half that of developed economies. Some developing countries, and especially the least developed ones, are increasingly reliant on a few global digital multinational enterprises. Efforts should be made to boost global partnership that uplifts the availability and affordability of internet access as part of the sustainable development goals, harmonize the needs of developing countries, stimulate the coherence of all national policies with international development and extend international collective action to tackle development challenges such as inequality and poverty.

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Yongfu Huang

Yongfu Huang is a macroeconomist, educated in China and the UK. After working at the University of Cambridge, he moved on to the UN system. His research interests lie in global development including sustainable development, finance, trade and poverty. He can be reached via yfhcambridge at hotmail.com.