Whole economies and societies are being reshaped by rapid technological change. As with earlier waves of technological revolution, the full picture will be slow to emerge. But it is safe to say that the long-term changes will be more far-reaching than we imagine – along all dimensions of development. To address these, governments and the other development actors will need to prepare fast.
Developing countries, particularly the least developed countries, cannot afford to miss this new wave of rapid technological change. Governments cannot know how technologies will develop but they can help shape the paths that such technologies take in their own economies and societies.
Each country will need STI policies appropriate to its stage of development. For some this will mean promoting frontier technologies while renewing efforts to take full advantage of existing technologies to diversify their economies and upgrade traditional sectors such as agriculture. Others can engage more deeply with the development of frontier technologies. But all countries need to prepare people and firms for a period of rapid change. For developing countries, success in the twenty-first century will require a balanced approach – building a robust industrial base and promoting frontier technologies that will help deliver the 2030 Agenda and its global vision of people-centred, inclusive, and sustainable societies.
1 Mazzucato, 2015
2 Banerjee and Duflo, 2019
3 Perez, 2002, 2010
4 UNCTAD, 2018a, 2019e
5 UNCTAD, 2018a
6 UNCTAD, 2018a, 2019a
7 Dimaggio et al., 2004
8 https://sustainabledevelopment.un.org/tfm
FRONTIER TECHNOLOGY TRENDS
ANNEX B
HOW TECHNOLOGIES AFFECT INEQUALITIES IN THE USER’S PERSPECTIVE
ANNEX C
AI ETHICS FRAMEWORKS,
GUIDELINES, AND STATEMENTS
ANNEX D
STATISTICAL APPENDIX
READINESS FOR FRONTIER
TECHNOLOGIES INDEX
ANNEX A. CONCEPTUAL FRAMEWORK
This report uses a conceptual framework for linking technologies to inequalities (Figure 01). People’s well-being is a central part of this framework because inequality is ultimately felt at a personal level.
Even when dealing with divergences at aggregate levels such as countries, regions, sectors, firms and social groups, the analysis focuses on how inequality operates between people. As per the
‘capability’ approach developed by the economist Amartya Sen, individual well-being relates to the real opportunities that people have to do and be what they have reason to value – their “capabilities”.
These include being able to avoid such deprivations as premature death, preventable illnesses, hunger and undernourishment, as well as having the necessary skills and education to engage in productive work, enjoy political participation, be part of a community, and be respected. At the individual level, development is the expansion of the set of capabilities that a person has, while poverty is the deprivation of capabilities.1 Inequalities are the manifestation of the disparities in the set of capabilities that people have.
Goods and services (provided by nature, charity, governments or markets) are the means necessary for expanding people’s well-being. For example, a mobile phone device combined with a mobile phone service is the means to instantaneously communicate with people in other places while moving around a wide geographic area, which enables the capability to communicate more freely. But the relation between goods and services and the capability set is influenced by the individual, social and environmental context. This affects how a person can convert goods and services into capabilities.2 For example, if a person has a disability that prevents her from hearing someone over the phone, or if the person lives in a mountainous area where the mobile service is not reliable, or if the person is not allowed to use a mobile phone for socially-imposed reasons, then the mobile phone will be of limited use in enabling the functioning of freer communication. The government provides some of the goods and services as public goods, such as national security, street lighting, flood control systems, epidemic control, and so on. Others are provided privately but with characteristics of public goods such as broadcast radio and television, or other sorts of information goods and knowledge. Still others are freely provided by nature, such as solar energy, clean air, water and biodiversity. However, a considerable share of goods and services is not freely distributed in the economy through public goods, charity or some system of automatic sharing. Most goods and services have to be bought in the market. From the vantage point of the person, what is important is not the supply of goods and services in the economy but the set of goods and services over which the person can establish ownership and command.3
Figure 01
Conceptual framework: Technologies affect inequalities through jobs, and goods and services.
Source: UNCTAD.
Governments
National Innovation System
Firms Policies
Technologies Goods / Services
Jobs Jobs
Inequality Capability set
The entitlements that a person has over goods and services are very much determined by how he or she makes a living. In turn, how a person makes a living depends on two factors. First, the ownership of productive resources, such as her own knowledge and labour-power, as well as capital such as a productive plot of land or livestock. Second, the production possibilities that exist in the economy. In other words, a person may acquire the ability to buy goods and services by getting a wage income or by organizing productive factors held by her or others, but this will depend on the employment and entrepreneurial opportunities, which rely on the production possibilities of the local economy.
This is where technologies come in: available technologies determine the production possibilities.
These technologies can be either capital-embodied technologies, such as machines and infrastructure, or labour-embodied technologies, such as procedures followed by workers to produce goods and services, or business models and management practices.4 Therefore, the complete set of technologies in the country determines the country’s productive capacity. Some technologies are required by many economic activities; clear examples being ICT infrastructure, the power grid or transport infrastructures such as roads, ports, airports or railways. The combination of the different technologies results in distinct economic activities, represented by the goods and services they produce.5 This report follows UNCTAD’s tradition and theoretical foundation that understands economic development as a process of structural transformation.6 This may be hindered by factors that limit the capacity and willingness of private firms in developing countries to innovate and upgrade their productive and technological capacities.
A national system of innovation (NIS) is the broad network of actors required to develop new technologies and combine them with existing ones into new products and processes of production.
Private firms have a unique role in technological change, being the place where new technologies are usually conceived, developed, and eventually commercialized, but they typically do not innovate in isolation. Firms are part of a system which also comprises universities, research centres, civil society organizations, financial institutions and governments, among others, whose interactions allow the flow of ideas and resources required for innovations. The market provides firms with incentives to develop new technologies, through either new processes or new products. The government has the primary responsibility for policies, rules and regulations that provide an environment that can enable technological change.
Based on this framework, technologies affect inequalities through jobs and through goods and services. In that connection, we need to consider how people use technologies both as consumers and as providers of labour in the economy.7
The forces surrounding new technologies are not confined to national boundaries. The connections often extend internationally, with firms as parts of global industries. New firms are part of new industries, and enter into variety of competitive and complementary roles in various countries. Globalization of both manufacturing and services in the late 20th century created influential networks of such relationships in the form of global value chains (GVCs). Firms in one industry develop connections with supplier industries and with both businesses and consumers in other countries. These networks also include universities, research centres, and civil society organizations which are part of a country’s NIS.
They promote international technology transfer, learning and cooperation. Each country’s economy then consists of its unique array of firms, some with only local markets and others drawing from and selling into the “traded” or global economy. For firms, each country in which it operates provides a different human resources environment, as well as a different financial, competition, and policy and regulatory environment. At the same time international institutions work to establish shared standards on some of these variables, aiming to level the playing field and help the global economy grow.
Through trade, GVC and changes in production patterns, technological change could critically affect jobs in developing countries (Figure 02). Inequality between countries stems from the particular array of industries a country can grow or attract, which in turn depends on its investments in people and infrastructure as well as its business and regulatory environments. If a country houses only firms in
industries that are being displaced through new technologies in the global economy, its people will suffer. If a country is able to establish a role in an industry emerging through rapid technological change, its people may improve their living standards. Multinational firms, however, make their own decisions about where they operate. They may establish facilities and abandon them at will. Smaller countries, and those dependent on firms in a particular industry, are always vulnerable to these external decision processes unless they can encourage local firms to innovate and stay.
Figure 02
Through trade and changes in production patterns, technological change affects jobs in developing countries
Source: UNCTAD.
The adoption of frontier technologies could reduce the labour-cost competitiveness of less industrialized economies. This process may also delay or slow the shift of more traditional industries such as garments, footwear, and low-tech electronics from countries such as China to less-industrialized countries in Asia and Africa. Moreover, while frontier technologies could offer a window of opportunity for developing countries to accelerate economic growth, technological change could also increase the technological gaps between countries and make it even more difficult for less industrialized countries to catch up, reducing the prospects for diversifying their economies and job creation. Given that most people are suppliers of labour, if they are pushed or kept out of labour markets, they will not be able to consume the benefits of most of these technologies.
Governments
NIS
Firms Policies
Technologies
Goods / Services
Jobs Jobs
Inequality within countries
Governments
NIS
Firms
Policies
Technologies
Goods / Services
Jobs Jobs
Inequality within countries International
institutions
Technological transfer, learning
and cooperation
Imports Exports Global Value Chains
Inequality between countries
1 Sen, 2000
2 Robeyns, 2005
3 Sen, 2000
4 Arthur, 2010
5 Metcalfe et al., 2006
6 UNCTAD, 2012b
7 Inequality also reflects other processes not only production and consumption, but this simplification helps to give focus to the discussion of the relationship between frontier technologies and
inequalities in this Report.
ANNEX B. FRONTIER TECHNOLOGY TRENDS
This annex details the status of key frontier technologies, to help analyse the impact of these technologies on sustainable development. Frontier technologies present economic and social opportunities as well as challenges, thus the key features and status of these technologies need to be well understood. This annex covers relevant technical and commercial aspects such as R&D, prices and market structure. The developments in frontier technologies have been so rapid that this attempt can only serve as a snapshot, but it could still offer a good starting point to discuss the potential effects of these technologies on society. Among various frontier technologies, 11 are covered in this annex: AI, IoT, big data, blockchain, 5G, 3D printing, robotics, drones, gene editing, nanotechnology and solar PV.
While discussed independently in the following sections, frontier technologies are increasingly interrelated, and they often expand each other’s functionalities. For instance, AI uses big data securely stored in blockchains to improve predictions using machine learning.8 An increasing number of devices connected within an IoT network are data collection tools that contribute to building up big data.9 3D printing can create more complex items that require more data by leveraging big data, and items can be printed remotely through IoT10 with AI-enabled defect detection functions.11 Industrial robots assist 3D printing at various production stages such as replacing a printer’s build plate, and washing, curing, and final finishing of additively manufactured parts.12 5G has the potential to allow near-instantaneous response for robots by dramatically shortening response times.13