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Seven Countries Emerging as Frontrunners in the Fourth Industrial Revolution

MD Staff

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Finland, Switzerland, Sweden, Israel, Singapore, the Netherlands and the United States are leading the world when it comes to generating economic impact from investments in information and communications technologies (ICT), according to the World Economic Forum’s Global Information Technology Report 2016.

 

On average, this group of high-achieving economies at the pinnacle of the report’s Networked Readiness Index (NRI) economic impact pillar scores 33% higher than other advanced economies and 100% more than emerging and developing economies. The seven are all known for being early and enthusiastic adopters of ICT and their emergence is significant as it demonstrates that adoption of ICTs – coupled with a supportive enabling environment characterized by sound regulation, quality infrastructure and ready skills supply among other factors – can pave the way to wider benefits.

The breakaway of these seven economies is significant for other nations given the role that networked readiness is likely to play as the world transitions to the Fourth Industrial Revolution. The Global Information Technology Report 2016 finds high levels of confidence among business leaders that capacity to innovate is increasing, which suggests that other nations, too, could start to see more economic and social impact from ICT. However, on a cautionary note, the NRI data also suggest that individuals are driving ICT adoption much more enthusiastically than either governments or business, where no clear trends are discernible across regions since 2012.

Who leads the Networked Readiness Index in 2016?

The 2016 edition of the NRI finds Singapore as the highest-placed country in the world when it comes to networked readiness. Finland, which topped the ranking in 2014, remains in second place for a second year in a row, followed by Sweden (3rd), Norway (4th) and the United States (5th), which climbed two places. Making up the rest of the top 10 are the Netherlands, Switzerland, the United Kingdom, Luxembourg and Japan.

While the upper echelons of the NRI continue to reflect a strong correlation between networked readiness and per capita income, roughly 75% of the countries included in this year’s index show a score improvement in 2016. However, convergence both at the global and regional level remains elusive, with four regions – Eurasia, Emerging Europe, the Middle East, North Africa and Pakistan (MENAP) group, and sub-Saharan Africa – having widened the gap between the most and least networked-ready since 2012.

Elsewhere in the NRI, of the large emerging markets, Russia remains unchanged at 41st position. China comes next, moving up 3 places to 59th. South Africa improves markedly, climbing 10 places to 65th, while Brazil partially recovers from a previous downward trend to 72nd this year and India drops two places to 91st.

Europe remains at the technology frontier; seven of the top 10 NRI countries are European. Yet the performance range is wide, with Greece dropping four places to 70th position and Bosnia and Herzegovina closing the group at 97. Several Eastern European countries, notably the Slovak Republic, Poland and the Czech Republic, are making big strides, landing spots in the NRI top 50. Better affordability and large improvements in economic and social impacts are making major contributions to this success. Italy is another notable mover this year, improving 10 places to 45th position as the economic and social impacts of ICT are starting to be realized (up 18 in the global impact ranking).

The Eurasia region continues its upward trajectory, with the average NRI for the region increasing significantly since 2012. In particular, it is notable that the improvement is observed across all four elements that make up the index: environment, readiness, usage and impact. The region is led by Kazakhstan, which continues on its positive trajectory of recent years to land in 39th position.

Malaysia leads the Emerging Asian economies in 2016 and moves up one spot to 31st position overall. The country continues to perform strongly, supported by a government which is fully committed to the digital agenda. The top five in the region in terms of overall ICT readiness remain Malaysia, Mongolia, Thailand, China and Sri Lanka as in 2015. The group of Emerging Asian countries has been moving up and converging since 2012. Individual usage in the region is still one of the lowest in the world, but has been growing strongly in recent years.

The performance range by countries in the Latin America and Caribbean region remains widely dispersed with almost 100 places between Chile (38th) and Haiti (137th). There was no clear trend from 2015 to 2016 in terms of relative performance, with Chile and Haiti staying put and, of the remaining group, half of the countries improving their ranking and the other half dropping. Considering the absolute NRI score, however, the region has been moving up and converging since 2012. In order to foster the innovation forces that are key for thriving in the digitized world and the emerging Fourth Industrial Revolution, many governments in the region will urgently need to reinforce efforts to improve their regulatory and innovation environments.

The United Arab Emirates (26th) and Qatar (27th) continue to lead the Arab world in networked-readiness. In addition, the MENAP region (Middle East, North Africa and Pakistan) is home to two of the biggest movers in this year’s ranking: Kuwait (61st, up 11) and Lebanon (88th, up 11). In both cases, individuals are leading the charge, with the business sector catching up and strongly contributing to the successful performance. While governments are lagging behind in terms of digital adoption (Kuwait, 81st; Lebanon, 124th), the business community in both countries is registering an increased weight on ICT in government vision and efforts to improve the regulatory environment.

The NRI also sees several sub-Saharan African countries among the top upward movers, including South Africa (65th, up 10), Ethiopia (120th, up 10) and Côte d’Ivoire (106th, up 9). Leadership, in terms of digital adoption, is coming from different groups of stakeholders. While efforts are very much government-driven in Ethiopia and Côte d’Ivoire, the business sector is providing the most momentum in South Africa. The largest barriers to tackle for Côte d’Ivoire will be infrastructure and affordability; reversing the trend of a deteriorating business and innovation environment for South Africa; and boosting individual usage and skills for Ethiopia.

“The digital economy is an essential part of the architecture of the Fourth Industrial Revolution. In order for digital technology to continue contributing economic and social impact, societies need to anticipate its effects on markets and to ensure a fair deal for workers in digitized market environments. New models of governance will be key in this,” said Richard Samans, Head of the Centre for the Global Agenda, Member of the Managing Board, World Economic Forum Geneva.

“Cross-border data flows drive innovation and growth,” says Pastora Valero, Vice President of Government Affairs, Cisco. “The countries and companies innovating most prominently know that it is the free flow of ideas and information, which leads to improvements in processes and products. Initiatives to foster the free flow of data are crucial to supporting the global nature of the data economy.”

“Measuring the economic and social impact of the digital economy is important for making appropriate policy decisions in both developed and developing economies. The Networked Readiness Index is a valuable tool for helping public and private sector leaders in leveraging the potential of technology.” – Soumitra Dutta, Cornell University.

‘ “Digital” is not just about technology. It is a state of mind, and the source of new business models, new consumption patterns, new ways for business and individuals to organize, produce, trade and innovate. In the global game of digital innovation, the performance and progress made by emerging economies such as Singapore, the United Arab Emirates or South Africa for example are remarkable: they may hold the promise of even more spectacular improvements in the ways digital technologies will be harnessed to competitiveness, growth and social progress in the coming years.’ – Bruno Lanvin, INSEAD.

In addition to providing insights into countries’ performance in the unfolding digital revolution, the report notes a number of trends across ICT adoption in 2016:

How much innovation is “digital”? As the global economy becomes increasingly digitized so, it would seem, innovation is becoming much less defined in a narrow technological sense. For example, while the report finds business model innovation on the rise in more than 100 countries, it also finds stagnation in the Business Usage pillar. This would suggest that while innovation is a top priority for many businesses, they are still missing out on opportunities for greater impact through ICT adoption.

Patents are declining as a measure of innovative capacity: While the minds of business executives around the world are increasingly focused on innovation, traditional measures for innovation such as the number of patents registered are telling a smaller and smaller part of the story. This may be related to the fact that the current transformation is nurtured by a different type of innovation, increasingly based on digital technologies and on the new business models it allows.

The ICT infrastructure gap remains a chronic challenge and is getting wider: Of the 12 pillars of the report, infrastructure is the one where improvement is least pronounced. Worse, since 2012 the lowest-ranked countries have been reporting a deterioration in their infrastructure in absolute terms. Infrastructure is a key determinant of a nation’s ICT-readiness alongside affordability and skills, acting as a gateway to increased usage and ultimately economic and social impact.

Social impact needs new momentum in important areas but is picking up overall: While the social impact pillar of the NRI has seen positive change overall since 2012, most regions register a decline in one of its important components, the impact of ICT on government efficiency. Another important social impact indicator, ICTs and access to basic services, is starting to recover in 2016 after years of decline. This suggests that more people are feeling the benefits of online access to healthcare, finance, insurance and other services. Social impacts on the whole rose most strongly in the group of high-income countries over the year.

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Busting the Blockchain Hype: How to Tell if Distributed Ledger Technology is Right for You

MD Staff

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Blockchain has been hailed as the solution for everything, from resolving global financial inequality, providing IDs for refugees, to enabling people to sell their houses without an estate agent. However, the overwhelming hype surrounding this technology over the past year is misleading and untrue.

“We have been up and down on the blockchain roller coaster this past year,” said Sheila Warren, head of the Blockchain and Distributed Ledger Technology project at the World Economic Forum Center for the Fourth Industrial Revolution. “Blockchain is an innovative solution, but it is not the solution to all problems. Blockchain has to be the right solution for the right business problem. Busting the blockchain hype is necessary to make sure businesses are using it in the right way and not damaging the long-term prospects of the technology.”

Through research and analysis of the technology’s capabilities and the ways it is used around the world, the team found there were 11 questions (at most) to answer to determine if blockchain can be the solution.

“To bust some of the blockchain hype, we had to design a practical framework for people who knew nothing about the technology. We started with the premise that blockchain is like any other technology – a tool in a company’s toolbox,” said Cathy Mulligan, Visiting Researcher at Imperial College London and member of the Forum’s Global Future Council on Blockchain. “If you break down the kinds of problems blockchain technology is solving and its potential, clear paths emerge.”

The paths were incorporated into a framework of “yes” and “no” questions, which guide a business leader once a specific problem is articulated. “This framework cuts through the noise about blockchain and refocuses the technology into the way business leaders think,” said Jennifer Zhu Scott, Founding Partner of Radian and member of the Global Futures Council on Blockchain.

“These 11 questions were developed and then trialled with chief executive officers at a workshop at the World Economic Forum Annual Meeting 2018. The test group included C-suite executives from large corporations, most of whom said they were actively considering adopting blockchain technology in some manner,” said JP Rangaswami, Chief Data Officer, Deutsche Bank.

During the workshop, one publicly listed energy company discussed its plans for an initial coin offering (ICO) and a large bank shared how it was considering using blockchain-based crypto-tokens for transferring remittances. Even in the much-debated cryptocurrency space, 100% of the participants believed that even after the cryptocurrency bubble burst, the token economy would be here to stay.

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The Artificial Intelligence Race: U.S. China and Russia

Ecatarina Garcia

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Artificial intelligence (AI), a subset of machine learning, has the potential to drastically impact a nation’s national security in various ways. Coined as the next space race, the race for AI dominance is both intense and necessary for nations to remain primary in an evolving global environment. As technology develops so does the amount of virtual information and the ability to operate at optimal levels when taking advantage of this data. Furthermore, the proper use and implementation of AI can facilitate a nation in the achievement of information, economic, and military superiority – all ingredients to maintaining a prominent place on the global stage. According to Paul Scharre, “AI today is a very powerful technology. Many people compare it to a new industrial revolution in its capacity to change things. It is poised to change not only the way we think about productivity but also elements of national power.”AI is not only the future for economic and commercial power, but also has various military applications with regard to national security for each and every aspiring global power.

While the U.S. is the birthplace of AI, other states have taken a serious approach to research and development considering the potential global gains. Three of the world’s biggest players, U.S., Russia, and China, are entrenched in non-kinetic battle to out-pace the other in AI development and implementation. Moreover, due to the considerable advantages artificial intelligence can provide it is now a race between these players to master AI and integrate this capability into military applications in order to assert power and influence globally. As AI becomes more ubiquitous, it is no longer a next-generation design of science fiction. Its potential to provide strategic advantage is clear. Thus, to capitalize on this potential strategic advantage, the U.S. is seeking to develop a deliberate strategy to position itself as the permanent top-tier of AI implementation.

Problem

The current AI reality is near-peer competitors are leading or closing the gap with the U.S. Of note, Allen and Husain indicate the problem is exacerbated by a lack of AI in the national agenda, diminishing funds for science and technology funding, and the public availability of AI research. The U.S. has enjoyed a technological edge that, at times, enabled military superiority against near-peers. However, there is argument that the U.S. is losing grasp of that advantage. As Flournoy and Lyons indicate, China and Russia are investing massively in research and development efforts to produce technologies and capabilities “specifically designed to blunt U.S. strengths and exploit U.S. vulnerabilities.”

The technological capabilities once unique to the U.S. are now proliferated across both nation-states and other non-state actors. As Allen and Chan indicate, “initially, technological progress will deliver the greatest advantages to large, well-funded, and technologically sophisticated militaries. As prices fall, states with budget-constrained and less technologically-advanced militaries will adopt the technology, as will non-state actors.” As an example, the American use of unmanned aerial vehicles in Iraq and Afghanistan provided a technological advantage in the battle space. But as prices for this technology drop, non-state actors like the Islamic State is making noteworthy use of remotely-controlled aerial drones in its military operations. While the aforementioned is part of the issue, more concerning is the fact that the Department of Defense (DoD) and U.S. defense industry are no longer the epicenter for the development of next-generation advancements. Rather, the most innovative development is occurring more with private commercial companies. Unlike China and Russia, the U.S. government cannot completely direct the activities of industry for purely governmental/military purposes. This has certainly been a major factor in closing the gap in the AI race.

Furthermore, the U.S. is falling short to China in the quantity of studies produced regarding AI, deep-learning, and big data. For example, the number of AI-related papers submitted to the International Joint Conferences on Artificial Intelligence (IJCAI) in 2017 indicated China totaled a majority 37 percent, whereas the U.S. took third position at only 18 percent. While quantity is not everything (U.S. researchers were awarded the most awards at IJCAI 2017, for example), China’s industry innovations were formally marked as “astonishing.”For these reasons, there are various strategic challenges the U.S. must seek to overcome to maintain its lead in the AI race.

Perspectives

Each of the three nations have taken divergent perspectives on how to approach and define this problem. However, one common theme among them is the understanding of AI’s importance as an instrument of international competitiveness as well as a matter of national security. Sadler writes, “failure to adapt and lead in this new reality risks the U.S. ability to effectively respond and control the future battlefield.” However, the U.S. can longer “spend its way ahead of these challenges.” The U.S. has developed what is termed the third offset, which Louth and Taylor defined as a policy shift that is a radical strategy to reform the way the U.S. delivers defense capabilities to meet the perceived challenges of a fundamentally changed threat environment. The continuous development and improvement of AI requires a comprehensive plan and partnership with industry and academia. To cage this issue two DOD-directed studies, the Defense Science Board Summer Study on Autonomy and the Long-Range Research and Development Planning Program, highlighted five critical areas for improvement: (1) autonomous deep-learning systems,(2) human-machine collaboration, (3) assisted human operations, (4) advanced human-machine combat teaming, and (5) network-enabled semi-autonomous weapons.

Similar to the U.S., Russian leadership has stated the importance of AI on the modern battlefield. Russian President Vladimir Putin commented, “Whoever becomes the leader in this sphere (AI) will become the ruler of the world.” Not merely rhetoric, Russia’s Chief of General Staff, General Valery Gerasimov, also predicted “a future battlefield populated with learning machines.” As a result of the Russian-Georgian war, Russia developed a comprehensive military modernization plan. Of note, a main staple in the 2008 modernization plan was the development of autonomous military technology and weapon systems. According to Renz, “The achievements of the 2008 modernization program have been well-documented and were demonstrated during the conflicts in Ukraine and Syria.”

China, understanding the global impact of this issue, has dedicated research, money, and education to a comprehensive state-sponsored plan.  China’s State Council published a document in July of 2017 entitled, “New Generation Artificial Intelligence Development Plan.” It laid out a plan that takes a top-down approach to explicitly mapout the nation’s development of AI, including goals reaching all the way to 2030.  Chinese leadership also highlights this priority as they indicate the necessity for AI development:

AI has become a new focus of international competition. AI is a strategic technology that will lead in the future; the world’s major developed countries are taking the development of AI as a major strategy to enhance national competitiveness and protect national security; intensifying the introduction of plans and strategies for this core technology, top talent, standards and regulations, etc.; and trying to seize the initiative in the new round of international science and technology competition. (China’s State Council 2017).

The plan addresses everything from building basic AI theory to partnerships with industry to fostering educational programs and building an AI-savvy society.

Recommendations

Recommendations to foster the U.S.’s AI advancement include focusing efforts on further proliferating Science, Technology, Engineering and Math (STEM)programs to develop the next generation of developers. This is similar to China’s AI development plan which calls to “accelerate the training and gathering of high-end AI talent.” This lofty goal creates sub-steps, one of which is to construct an AI academic discipline. While there are STEM programs in the U.S., according to the U.S. Department of Education, “The United States is falling behind internationally, ranking 29th in math and 22nd in science among industrialized nations.” To maintain the top position in AI, the U.S. must continue to develop and attract the top engineers and scientists. This requires both a deliberate plan for academic programs as well as funding and incentives to develop and maintain these programs across U.S. institutions. Perhaps most importantly, the United States needs to figure out a strategy to entice more top American students to invest their time and attention to this proposed new discipline. Chinese and Russian students easily outpace American students in this area, especially in terms of pure numbers.

Additionally, the U.S. must research and capitalize on the dual-use capabilities of AI. Leading companies such as Google and IBM have made enormous headway in the development of algorithms and machine-learning. The Department of Defense should levy these commercial advances to determine relevant defense applications. However, part of this partnership with industry must also consider the inherent national security risks that AI development can present, thus introducing a regulatory role for commercial AI development. Thus, the role of the U.S. government with AI industry cannot be merely as a consumer, but also as a regulatory agent. The dangerous risk, of course, is this effort to honor the principles of ethical and transparent development will not be mirrored in the competitor nations of Russia and China.

Due to the population of China and lax data protection laws, the U.S. has to develop innovative ways to overcome this challenge in terms of machine-learning and artificial intelligence. China’s large population creates a larger pool of people to develop as engineers as well as generates a massive volume of data to glean from its internet users. Part of this solution is investment. A White House report on AI indicated, “the entire U.S. government spent roughly $1.1 billion on unclassified AI research and development in 2015, while annual U.S. government spending on mathematics and computer science R&D is $3 billion.” If the U.S. government considers AI an instrument of national security, then it requires financial backing comparable to other fifth-generation weapon systems. Furthermore, innovative programs such as the DOD’s Project Maven must become a mainstay.

Project Maven, a pilot program implemented in April 2017, was mandated to produce algorithms to combat big data and provide machine-learning to eliminate the manual human burden of watching full-motion video feeds. The project was expected to provide algorithms to the battlefield by December of 2018 and required partnership with four unnamed startup companies. The U.S. must implement more programs like this that incite partnership with industry to develop or re-design current technology for military applications. To maintain its technological advantage far into the future the U.S. must facilitate expansive STEM programs, seek to capitalize on the dual-use of some AI technologies, provide fiscal support for AI research and development, and implement expansive, innovative partnership programs between industry and the defense sector. Unfortunately, at the moment, all of these aspects are being engaged and invested in only partially. Meanwhile, countries like Russia and China seem to be more successful in developing their own versions, unencumbered by ‘obstacles’ like democracy, the rule of law, and the unfettered free-market competition. The AI Race is upon us. And the future seems to be a wild one indeed.

References

Allen, Greg, and Taniel Chan. “Artificial Intelligence and National Security.” Publication. Belfer Center for Science and International Affairs, Harvard University. July 2017. Accessed April 9, 2018. https://www.belfercenter.org/sites/default/files/files/publication/AI%20NatSec%20-%20final.pdf

Allen, John R., and Amir Husain. “The Next Space Race is Artificial Intelligence.” Foreign Policy. November 03, 2017. Accessed April 09, 2018. http://foreignpolicy.com/2017/11/03/the-next-space-race-is-artificial-intelligence-and-america-is-losing-to-china/.

China. State Council. Council Notice on the Issuance of the Next Generation Artificial Intelligence Development Plan. July 20, 2017. Translated by RogierCreemers, Graham Webster, Paul, Paul Triolo and Elsa Kania.

Doubleday, Justin. 2017. “Project Maven’ Sending First FMV Algorithms to Warfighters in December.” Inside the Pentagon’s Inside the Army 29 (44). Accessed April 1, 2018.https://search-proquest-com.ezproxy2.apus.edu/docview/1960494552?accountid=8289.

Flournoy, Michèle A., and Robert P. Lyons. “Sustaining and Enhancing the US Military’s Technology Edge.” Strategic Studies Quarterly 10, no. 2 (2016): 3-13. Accessed April 12, 2018. http://www.jstor.org/stable/26271502.

Gams, Matjaz. 2017. “Editor-in-chief’s Introduction to the Special Issue on “Superintelligence”, AI and an Overview of IJCAI 2017.” Accessed April 14, 2018. Informatica 41 (4): 383-386.

Louth, John, and Trevor Taylor. 2016. “The US Third Offset Strategy.” RUSI Journal 161 (3): 66-71. DOI: 10.1080/03071847.2016.1193360.

Sadler, Brent D. 2016. “Fast Followers, Learning Machines, and the Third Offset Strategy.” JFQ: Joint Force Quarterly no. 83: 13-18. Accessed April 13, 2018. Academic Search Premier, EBSCOhost.

Scharre, Paul, and SSQ. “Highlighting Artificial Intelligence: An Interview with Paul Scharre Director, Technology and National Security Program Center for a New American Security Conducted 26 September 2017.” Strategic Studies Quarterly 11, no. 4 (2017): 15-22. Accessed April 10, 2018.http://www.jstor.org/stable/26271632.

“Science, Technology, Engineering and Math: Education for Global Leadership.” Science, Technology, Engineering and Math: Education for Global Leadership. U.S. Department of Education. Accessed April 15, 2018. https://www.ed.gov/stem.

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Global anxiety deepens over online data and privacy protection

MD Staff

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Internet users worldwide are becoming more worried about their privacy online and many question the protections offered by Internet and social media companies, a new United Nations survey has found.

This waning of confidence could imperil the spread of online shopping even as newcomers to the Internet may be especially vulnerable to abuses because they are unaware of the risks.

Trust is essential for the successful expansion and use of e-commerce platforms and mobile payment systems in developing nations,” said Fen Osler Hampson, Director of Global Security and Politics at Centre for International Governance Innovation (CIGI), a think tank that helped conduct the study.

The survey was carried out by CIGI and Ipsos, in collaboration with the UN Conference for Trade and Development (UNCTAD) and the Internet Society.

Users in large emerging economies expressed the most “trust” in Internet firms with nine in ten expressing such faith in China, India and Indonesia and more than eight in ten doing so in Pakistan and Mexico.

To the contrary, fewer than 60 percent of consumers in Japan and Tunisia expressed such “trust.”

Privacy concerns

The evidence of mounting privacy concerns coincides with sharper public scrutiny of the protection policies of major Internet firms – over concerns fuelled by the revelation that a political data firm gained access to millions of Facebook users’ personal data without their consent.

“The survey underlines the importance of adopting and adapting policies to cope with the evolving digital economy” said Shamika Sirimanne, the Director of Technology and Logistics Division at the UN agency, which deals with the economics of globalization.

“The challenge for policymakers is to deal holistically with a number of areas – from connectivity and payment solutions to skills and regulations,” she explained.

Is technology worth the cost? Yes and No

As e-commerce soars, there is also a general increase in the number of people using mobile payments and non-traditional means of paying for services, such as tapping one’s smart phone to board trains or scanning it to pay for a cup of coffee.

The use of smart phones to make cashless purchases is in fact far higher in many developing countries than it is in the United States and much of Europe, the study noted.

In addition, many people, especially in the developing world, expressed the view that new technology is “worth what it costs.”

At the same time, some users in developed countries expressed views to the contrary. Their main worry, the survey found, is that technology will result in the loss of employment.

The launch of the survey coincides with UNCTAD’s E-Commerce Week – the leading forum for Governments, private sector, development banks, academia and the civil society to discuss development opportunities and challenges before the evolving digital economy.

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