Part 4: The Digital Economy: There is more to it than trade

[Español]

The Digital Economy is a much broader spectrum and digital trade is just a part of it. Digital economy involves new technologies, faster infrastructure and a whole lot more skilled workers in technology and other significant areas.  

Just see the figure below:

Digital Technologies that are already here or coming real soon

1. Blockchain technologies Blockchain technologies are a form of distributed ledger technologies that allow multiple parties to engage in secure, trusted transactions without any intermediary. It is best known as the technology behind cryptocurrencies, but it is also of relevance for many other domains of importance to developing countries. These include digital identification, property rights and aid disbursement.  

2. Three-dimensional printing Three-dimensional (3D) printing, also known as additive manufacturing. But 3-D printing remains to be too expensive to actually replace traditional manufacturing.   It could be useful for specialized items such as hearing aids or prosthetics but not massive manufacturing such as cars and houses. The estimates of some that 3-D printing would replace a substantial amount of traditional manufacturing and therefore, traditional manufacturing jobs, is too far-fetched.   

3. Internet of things Internet of things (IoT) refers to the growing array of Internet-connected devices such as sensors, meters, radio frequency identification (RFID) chips and other gadgets that are embedded in various everyday objects enabling them to send and receive various kinds of data. It has wide applications, including in energy meters, for RFID tagging of goods for manufacturing, livestock and logistics, for monitoring soil and weather conditions in agriculture, and for wearables.  

4. 5G Mobile Broadband Fifth generation (5G) wireless technology is expected to be critical for IoT due to its greater ability to handle massive volumes of data. 5G networks can process around 1,000 times more data than today’s systems (Afolabi et al., 2018). In particular, it offers the possibility to connect many more devices (e.g. sensors and smart devices). Some companies have already launched this.   Again, though, as things go faster where there already is internet and connectivity, what about the places in the world that do NOT even have access to the internet? Half of the world’s population are still offline and if anything is to advance there, investments need to be made to install infrastructure, cables, wires, computers, smart phones and more importantly, sharing of knowledge to the population. Empowering the population with the access and the know-how.  

5. Cloud Computing Cloud computing is enabled by higher Internet speeds, which have drastically reduced latency between users and far away data centres. Data storage costs have also plummeted. The cloud is transforming business models, as it reduces the need for in-house IT expertise, offers flexibility for scaling, and consistent applications rollout and maintenance (UNCTAD, 2013). Some free cloud services provide of ce-like application tools that are useful for micro, small and medium-sized enterprises (MSMEs). This is particularly useful for countries where the cost of licensed software can be an obstacle to creating applications and providing services. However, in many developing countries, high costs of additional international bandwidth to access overseas servers and data centers still limit the uptake of cloud services.  

6. Automation and Robotics Automation and robotics technology are increasingly used in manufacturing, which could have significant impacts on employment. There are concerns that such technologies may constrain the scope for developing countries to adopt export-led manufacturing as a path to industrialization (UNCTAD, 2017c), and that the more developed economies may increasingly use robots to “reshore” manufacturing jobs. According to the International Federation of Robotics (2018), global sales of industrial robots doubled between 2013 and 2017. The top ve markets (China, followed by Japan, the Republic of Korea, the United States and Germany) represented 73 per cent of the total sales volume of robots in 2017. Robots are mainly used in the automotive, electrical/electronics and metal industries.   This development poses the greatest threat to employment. As corporations continue to find tasks that can be given to robots, human employees are then deemed redundant and or fired. Robots after all, cannot form unions and demand decent work and living wages.   

7. Artificial intelligence and data analytics Developments in AI, including machine learning, are enabled by the large amounts of digital data that can be analyzed to generate insights and predict behavior using algorithms, as well as by advanced computer processing power. AI is already in use in areas such as voice recognition and commercial products (such as IBM’s Watson). It has been estimated that this general-purpose technology has the potential to generate additional global economic output of around $13 trillion by 2030, contributing an additional 1.2 per cent to annual GDP growth (ITU, 2018b). At the same time, it may widen the technology gap between those that have and those that do not have the capabilities to take advantage of this technology. China and the United States are set to reap the largest economic gains from AI, while Africa and Latin America are likely to see the lowest gains.   This is probably not the paper to delve into this deeper but the dangers of Artificial Intelligence lay not in the replacement of human employees or analysts, but rather the risks of AI being used for security purposes. If a music application can follow and listen to every single song you listen to, how easy would it be for an AI security program to follow your every move online, data analyze and conclude you are a security threat, terrorist or danger to society. This could be helpful in finding nefarious hackers or thieves or serial killers, however, does an AI really have the human capacity to make the difference between a real threat to a child playing war games. Worse, it could also be used to monitor activists or what government would label dissidents. Will there be more freedom lost in the name of efficiency and security?    

Note: comments not in italics were made by author. Text in italics are definitions listed by the UNCTAD.

Digital trade is the tip of the iceberg of Digital Economy. And although this paper has just focused on digital trade and has given an understanding on how significant a potential agreed definition and scope of digital trade would be, as it would determine the global trade rules that will govern digital trade. Potentially unfair global trade rules on digital trade may deepen the already very wide digital gap between the haves and have nots. The exponential growth as well of super platforms, technology corporations and the digital services sector may further leave behind small enterprises and economies.

The arrival as well of upcoming technology should be looked into deeper to see both the possible benefits but also the negative consequences. Already, there is fear of loss of jobs, loss of privacy, the use of new technology to track people, and so much more. However, there are also examples of new technology that had not taken off as quickly as was predicted such as 3-D printing. It was predicted to replace manufacturing at some point, however, because of the cost and other factors, it has remained a specialized additive manufacturing used in small operations such as printing hearing aids, prosthetics and others. There is a plethora of debates on the development of Artificial Intelligence as this has the potential to be designed to generate insights and predict behavior using algorithms, to identify supposed security threats, in some places, that includes activists or staunch critics of their governments.

Read the entire publication in PDF here