Policy for digital industrialisation in developing countries DIODE Research Network Workshop

1. Policy for digital industrialisation in developing countries DIODE Research Network Workshop Parminder Jeet Singh, IT for Change

2. Precursors to the digital economy • Software industry – 90s, process efficiencies, business process re-organization • Heroes – Microsoft, Oracle... • Internet industry – networking the software, Internet-centric applications • Age of Google and Facebook Impact on developing countries

3. What is digital economy? • Not software, not Internet – these are the infrastructures of digital economy • Together software and Internet form cloud computing, the key infrastructure and “brick and mortar” of digital economy • Data is digital economy’s main flow/element – blood or key resource • Not just business process efficiency like software industry, or just media and communication like Internet industry. Extends to ALL SECTORS.. • The tech infrastructure is global, but its key flow and resource is local. This distinction is key.

4. Focus beyond data – on digital intelligence • If data is the raw material, what is the finished product • It is data-based “digital intelligence”, the real basis of digital economy • AI has more of technical connotations; “digital intelligence” includes not just the underlying technologies but also the associated business, economic and social processes that together act and impact as the "digitally intelligent agent" • A new economic configuration re-organized with a centrality on digital intelligence is what is “digital economy” – focused on “intelligent services”

5. Platforms as the key institution of digital economy • Like factory was to industrialization, platforms is the key institution of digital economy • Platforms mine or vacuum sectoral data, which is converted into digital intelligence to re-organise and control the entire sector • They are intrinsically monopolistic • A post-market phenomenon: centralised (private)digital intelligence as much more efficient way to organise economy than decentralised (and rough) (but largely public) market signals

6. Paths to digital industrialization • Not industrial capital or IP capital, but digital capital on the top of global value chains • US – public funding of basic research and tech development, free market spirit, first mover advantage, now focus on “unregulated” “single” global digital economy • China – Internet protectionism, state-directed capitalism, now focus on big market, state-provided trust, and data advantage, using the huge cash reserves of its digital giants • Others?? EU, schizophrenic (focus now on industry 4.0), developing countries completely at sea, like birds caught in a storm…

7. Birds caught in a storm, 1987, Oil on board, by Yvonne Audette

8. What should developing countries do? • Neither the first mover path of US, nor conditions of China (generally), available • Left to itself, global digital economy forms tight-coupling based mono/bi- polar ecosystems, that are centrally controlled by a very few owners of “digital intelligence” • Option to become dependents of US/ China – take up lower end jobs in digital value chains controlled by them, coding, remote-controlled production, logistics, delivery, etc, while digital intelligence is controlled and exercised from outside • Or, invest in creating, owning and controlling “digital intelligence” that drives local economy. How? Owning and controlling local data is key, and matching it with high technologies, which are mostly global

9. AI based geo-politics “The Keynesian approach I have sketched out may be feasible in the United States and China, which will have enough successful A.I. businesses to fund welfare initiatives via taxes. But what about other countries?” “………. Unless they wish to plunge their people into poverty, they will be forced to negotiate with whichever country supplies most of their A.I. software — China or the United States — to essentially become that country’s economic dependent, taking in welfare subsidies in exchange for letting the “parent” nation’s A.I. companies continue to profit from the dependent country’s users. Such economic arrangements would reshape today’s geopolitical alliances.” – Kai-Fu Lee, Chinese venture capitalist, in New York Times

10. Policy for digital industrialization • Enabling legislation and frameworks • Supporting a start-up ecology and other digital businesses • Upgrading technology, skills and education These are the three recs from the dominant ecom discourse But other important steps are needed • Develop data ownership and use policies, not just for individual but also community rights and ownership • Developing digital infrastructures, chiefly data infrastructures • Regulating platforms, and developing public/ community platforms where needed and feasible

11. Data ownership and use policies • The relevant (including national) community has common rights to collective data – data policies. Beyond personal, aggregated/ collective data also very valuable • Such data can be licensed for limited commercial exploitation by data collectors, on given public interest conditions • Open access, efficient data markets, FRAND/ compulsory licensing, access for public interest use • Global trade regimes and data ownership • Data is a local resource, digital technologies are global – Global flow of digital technologies (cloud etc) with local ownership and appropriation of data • Differentiate between data kinds – organisational/ corporate data, outside/ community data

12. Digital and data infrastructures • Digital infrastructure are of three kinds – broadband connectivity, cloud computing, data infrastructure • Data infrastructures are most important • Important sectoral and society-wide data is enabling common infrastructure for sector-wide economic activity • Three kinds of data infrastructure – transanction-enabling, Personal Information Management, and core sectoral and general social data • Good emerging examples in EU, India etc – the very role of the state in a digital society is at stake • Rules-based mixed economy approach to digital economy (contrast to US and China)

13. Regulating platforms • Are “intelligence infrastructures” – cannot be outsourced. It is like a body outsourcing its mind. And they essentially tend to be monopolistic • Some most important platforms have to be public/ community • Others, at “commanding heights” of different sectors, can be privately run, but as regulated utilities • The key resource, local/ community data, is domestic, it must be leveraged for local/ national community’s benefit • If foreign investment is required to access technical and managerial expertise, do joint ventures for platforms with domestic control • Global value chains must be of distributed networked form, with local controls, rather than mono-bi polar, concentrated global eco-systems

14. Digital industrialization road-map has to be visionary, elaborate, and ambitious. But begin with small, firm, deliberate and pragmatic steps. Thank you!