The rise of the robots – friend or foe for developing countries?

High school students design a robot in Ghana
High school students design a robot in Ghana

Johannes Jütting, Manager of The Partnership in Statistics for Development in the 21st Century (PARIS21), and Christopher Garroway, Economic Affairs Officer at the United Nations Conference on Trade and Development (UNCTAD)

In January, the World Economic Forum meeting in Davos, Switzerland saw members of the global elite extolling the virtues of the so-called “4th industrial revolution”. The catch-all term, also known as “Industry 4.0,” ties together a wide range of cutting-edge digital technologies – such as 3-D printing, machine intelligence, the internet of things, cloud computing, and big data – into a vision of a future world of work. In this brave new world, smart factories will operate by automation with machines exchanging data seamlessly. The consequences for the work force in both developing and developed countries will be huge.

To start with, the hoped-for productivity gains from the 4th industrial revolution will have a global impact on the amount, type and quality of jobs available and on worker competitiveness. Most of the worries expressed so far about the rise of the robots have focused on job losses in developed economies. But there will be consequences, too, for those developing countries that depend for their competitive advantage on low-cost, low-skilled labour. For example, we could see the re-localisation of low-skill jobs (and even many medium-skill jobs) back to developed countries that possess robots. That could turn global value chains on their head, potentially spelling their demise as a development strategy, as mentioned in some of the targets and commitments of the new United Nations 2030 Agenda for Sustainable Development and in the Addis Ababa Action Agenda.

So how can developing countries confront this possible widening of the digital divide, and its potential threat to their development strategies? One thing they need to do is turn the possibly liberating power of open data and big data to their own advantage. If data are the lifeblood of the robot revolution, then they must also be used to defend and compensate those who might lose out from these disruptive technologies.

Open data and big data can be important tools for helping entrepreneurs in developing countries maintain a stake in global value chains. Take the example of business-2-business web marketplaces like China’s Alibaba, which connects small- and medium-sized businesses to global markets. The more these businesses in developing countries can get online and engage in e-commerce, the greater chance they will have of following the changing patterns of global value chains. Another promising example is the US data-driven trade-analysis solutions company, Panjiva, which uses machine learning and data visualization tools to mine publicly available customs data. This allows entrepreneurs to identify and source new suppliers and new importers. While today a European importer might be using such tools to find a supplier in Asia, as the 4th industrial revolution kicks in, these tools may soon be connecting entrepreneurs from the developing world to robot factories in Germany, for example. But for this to work in everyone’s interest, open data standards and big data analysis skills need to be more widely embraced and prioritized in developing countries. This also means putting in place the right institutions that can allow their use to spread – and empower – citizens.

Outside factories and boardrooms, the technologies of the 4th industrial revolution can be used to enable a wide range of new services to help guarantee and protect citizen rights. The impact of these technologies is also already being felt through the expansion of public “smart” services: Smart cards and RFID technology, for example, are being used to create unique identification numbers for citizens in many developing countries, not only to improve civil registration, but also to enable financial inclusion and payment of government benefits as countries expand social protection. Agricultural productivity can also be improved: In East Africa, for example, cell-phone services are offering real-time price data to farmers.

One of the biggest challenges to embracing these new technologies in developing countries may be that the relevant policies and legal frameworks are in their infancy or non-existent, as UNCTAD’s Global Cyberlaw Tracker reveals. Data literacy, official statistical capacity and investment in 4th industrial revolution technologies are particularly low in these countries. Legal standards and frameworks are outdated or non-existent, and individual rights with respect to data collection and privacy almost unheard of.

To realize a “digital dividend” from Industry 4.0, the World Bank’s recent 2016 World Development Report says countries need to put in place “analogue components”. This means providing a level playing field for healthy competition between tech companies; raising the tech skills of all workers; and holding brick-and-mortar government accountable to citizen’s online rights. These “analogue components” are at play in the ongoing dispute in India over Facebook’s Free Basics service, which rolls out limited online services on mobile phones to underserved markets. Some see it as a promising idea for expanding the digital citizenry, helping improve poor people’s skills and use of new technology. However the telecoms regulator in India has just come out against the service because it provides free access only to some websites, rather than to the internet as a whole.

By its very nature, technology can be both liberating and disruptive. Attempting to resist it can also be futile or counterproductive. But the promise of the 4th industrial revolution suggests that disruptiveness does not have to mean divisiveness. Open data, big data and smart services, working hand in hand with the right policies, can go a long way to counterbalancing the disruption caused by robots, machine intelligence and the internet of things.

Useful links

Public-Private Partnerships for Statistics: Lessons Learned, Future Steps

Continue the conversation on twitter with Johannes (@Jo_Jutting), Chris (@chelnikov) and PARIS21 (@ContactPARIS21)

The future is not what it used to be

They all laughed when Katie tried to explain her broadband idea

1961, what a year, eh? The OECD, George Clooney and Barack Obama were born. And of course, Yuri Gagarin proved Joseph de Lalande wrong, yet again.

In 1782, a year before the first manned balloon flight took off from the site that would become OECD headquarters [insert your own hot air joke here], the eminent expert from the Académie française declared that: “It is entirely impossible for man to rise into the air and float there. For this you would need wings of tremendous dimensions and they would have to be moved at a speed of three feet per second. Only a fool would expect such a thing to be realised.”

Of course, it’s easy to get it wrong, but it takes a rare form of genius to fail to predict what has actually happened. So a special mention goes to the Engineering Editor of The Times, who, three years after the Wright brothers’ first flight, informed the cream of British society that:  “All attempts at artificial aviation are not only dangerous to human life, but foredoomed to failure from the engineering standpoint.”

Britain’s outstanding record in technology forecasting was maintained by Astronomer Royal Richard Van Der Riet Woolley, who in 1956 declared that “space travel is utter bilge”. The following year, his predecessor, Sir Harold Spencer Jones, showed that timing is everything when he upgraded the rating to “Space travel is bunk” two weeks before the first Sputnik.

Four years later, Gagarin orbited the Earth, and only eight years after that Neil Armstrong walked on the Moon. Astronautics was the most spectacular proof that the pace of change in science and technology had accelerated dramatically, but major breakthroughs were occurring in every domain in the 1960s.

One Brit who got it right was Harold Wilson, the future prime minister, who said that that the type of country being “forged in the white heat” of the scientific and technical revolution would need different ways of dealing with the potentials and problems of the new discoveries.

However, policymaking often lags behind the pace of change in science and technology, and we’re no exception: the OECD’s Committee for Scientific and Technological Policy wouldn’t be created until 1972, long after Committees overseeing other areas such as agriculture or tourism.

Then as now, scientific discoveries that would prove crucial often appeared unimportant to all but a few specialists. For instance, putting E. coli cells in a cold calcium chloride solution doesn’t sound exciting, but they then become permeable to nucleic acid fragments, allowing scientists to carry out numerous genetic engineering operations.

This illustrates a dilemma for science and technology policy makers. They are faced with demands to finance “useful” research, but it’s practically impossible to predict where science will lead, and which technologies will ultimately make the most money.

A funding strategy that relies on spotting winners ignores the role that unforeseen connections and insights play in science and technology.

The OECD has been a major influence in changing how governments approach science, technology and innovation, and how economics as a discipline tries to understand these phenomena. In 1963 already, Science, economic growth and government policy convinced governments of something that seems obvious now: that science policy should be linked to economic policy. In 1971, Science, growth and society anticipated many of today’s concerns by emphasising the need to involve citizens in assessing the consequences of developing and using new technologies.

For many experts though, the OECD’s major contribution was the concept of national innovation systems, presented in 1992 in a landmark publication, Technology and the Economy: The Key Relationships. Economists working at the OECD pioneered a new approach that saw innovation not as something linear, but as a kind of ecosystem involving interactions among existing knowledge, research, invention; potential markets; and the production process.

Since then, the way science is done has been changed radically by the connectivity offered by the Internet and other communication tools. This allows scientists and technologists to interact better with each other, and it also allows scientists and technologists to take advantage of other types of expertise to develop the tools and foster the innovation  required to meet emerging economic, sustainability and even social challenges.

This means that what has been called the science of science policy will have to change too. The OECD will have a role to play in this. As in the past, the OECD will be expected to spot emerging issues; provide the data, analyses, and policy recommendations needed to make the most of them; and to provide a forum where problems, contradictions and differing aspirations can be debated in an objective, productive fashion.

Useful links

OECD work on science and technology

The OECD Innovation Strategy

Looking back at looking forward – great forecasting mistakes