Multifaceted inequalities: Is tech outpacing countries’ ability to adapt?
Published 17 March 2021
Increased usage of technologies, resulting in widening inequality always seem to be good tango partners.
New-shaped inequalities caused by the frontier technology boom are among the hottest debates over the last decade. Some of which are automation taking jobs, polarisation between high- and low- wage jobs, gig economy – promoting insecure on-demand workers and heightening gender inequality, market and profit concentration into a few “Big Tech” businesses, Artificial Intelligence’s dependence on dominant data economies, and global technical gaps that reduce labour-cost competitiveness of less industrialised nations. UNCTAD’s recent Technology and Innovation Report 2021 addressed these and other pertinent issues as a result of a blow out in tech adoption, due to the pandemic.
Readiness for the frontier technology boom
Even as the market value of industries such as manufacturing declined in 2020, due to the COVID-19 pandemic, the frontier technology industry still expects to upsurge from $350 billion in 2018 to $3.2 trillion by 2025. It estimates that 5G and blockchain technologies will grow fastest among all.
“Frontier technologies are redefining our world, especially our post-pandemic future,” said Shamika N. Sirimanne, director of UNCTAD’s division on technology and logistics.
To assess the progress of 158 countries in utilising those frontier technologies, UNCTAD has first developed a ‘readiness index’ ranking. The index comprises five building blocks, including ICT deployment, skills, R&D activity, industry activity, and finance access.
The result highlights some overperforming nations, with India, the Philippines, Ukraine, Vietnam and China staying in the top five. Compared to the Human Development Index (HDI) provided by the United Nations Development Programme (UNDP), most overperformers are developing countries.
The report attributes the over performance to various factors. For example, while China and India perform well with R&D and investment attraction from multinational enterprises due to their large local markets, the Philippines and Vietnam show strengths in their fast-growing high-technology industries and FDI inflows encouragements.
The rest are still suffering from income poverty, digital divide, and shortage of skills. Among five building blocks of the index, lower rankings for ICT connectivity and skills happen even at the top overperforming developing nations. This urges those countries to universalise internet access and strengthen frontier technology-ready skills for citizens, the report noted.
“Almost none of the developing countries we studied is prepared for the consequences,” said Sirimanne.
Lack of preparation for the consequences
Though new technologies are essential for sustainable development, the report warns of the severe downsides if they outpace a society’s ability to adapt. It can widen existing multifaceted inequalities and create new ones with impacts on jobs, wages, and profits.
This reality has happened from 1820 to 2002, when the contribution of between-country inequality to global inequality rose from 28 per cent to 85 per cent, a staggering increase from the age of steam and railways to the age of ICT and Industry 4.0.
“It is time to ask how we can take full profit from the current technological revolution to reduce gaps that hold back truly inclusive and sustainable development,” said António Guterres, Secretary-General of United Nations.
Sub-Saharan Africa remains the least-ready region globally for frontier technologies, while Northern America and Europe, with countries like the United States, Switzerland and the United Kingdom, lead the ranking as the best-prepared regions for frontier technologies.
“Very few countries create the technologies that drive this revolution – most of them are created in China and the U.S. – but all countries will be affected by it,” said Sirimanne.
Based on the UNESCO data, UNCTAD informed that in 2017, high-income countries had 4,256 researchers per million inhabitants, while lower-middle-income countries had 262 and the low-income countries had only 154. The African Union also established a target for R&D expenditure of one per cent of GDP, but on average sub-Saharan African countries are still lagging behind at 0.38 per cent.
High-income and upper-middle-income countries also dominate the automotive and electronics sectors, which witnessed a significant enlargement of robot density between 2005 and 2014.
Meanwhile, most impoverished countries depend primarily on agriculture which offers less technological innovation incentives. Also, the private sector in the region does not provide enough funding to develop industrial technologies for production, placing weak financing mechanism another main barrier of the region.
When expanding and younger populations in sub-Saharan Africa and South Asia seem to be their largest advantage, UNCTAD underlined that it could depress wages, reducing the incentives for automation in those regions.
“Low- and middle-income developing countries and the least developing countries cannot afford to miss the new wave of rapid technological change,” said Mukhisa Kituyi, Secretary-General of United Nations Conference on Trade and Development, pointing to the fact that the inequalities can be minimised only by accessing and catching up with technologies.
“It is up to policies to reduce this risk and make frontier technologies contribute to increasing equality,” she added.
Though the risks of accentuating inequalities are still approaching, countries can mitigate them with a social protection system to provide safety nets for workers who might lose their livelihoods, the report noted. Easing workforce transitions is another solution with policies offering a combination of skills development, personal counselling, improved job matching, and placement services.
In recent years, to prepare for those radical changes, providing human resources with digital skills and competencies to adopt and adapt frontier technologies is a critical move in various developing countries, such as India, Thailand, Vietnam, and Malaysia.
Another recommendation is to guide frontier technologies by setting strategic directions using UN’s Sustainable Development Goals, extending frontier technologies to the poor, exploiting frontier technologies in the public sector, and supporting inclusive innovation systems.
While adopting frontier technologies is the tempting target, it is also essential to diversify the production bases by mastering existing technologies, UNCTAD advises.
The anticipation for a brighter future may last for decades ahead. It requires international cooperation in tandem with effective internal collaboration among states, industries and labour unions to optimise the potential of frontier technologies for faster productivity and smaller inequalities.
“A key takeaway from the report is that technologies are not deterministic. We can harness their potential for the common good, and we have an obligation to do so,” stressed Guterres. “Let us use them wisely, for the benefit of all.”