Three ways the Fourth Industrial Revolution is shaping geopolitics

This article is brought to you thanks to the strategic cooperation of The European Sting with the World Economic Forum.

Author: Peter Engelke, Senior Fellow, Strategy, Foresight, and Risks Initiative, Brent Scowcroft C(…), The Atlantic Council

The unprecedented technological transformation taking place today — a period of exponential change labelled the Fourth Industrial Revolution — is not isolated from geopolitical affairs. Indeed, geopolitical competition, especially among the world’s powers, is a major driver of technological disruption; in turn, this disruption is affecting the geopolitical landscape.

Technology has long been an ingredient in how states gain, use or lose power. But today, three interconnected elements — innovation, talent and resilience — increasingly determine whether states are well-positioned to advance their own security and wellbeing.

States understand that leadership in tech-driven innovation translates into economic and military power and, therefore, into geopolitical power. As such, global competition for tech-sector leadership is intense, not just because of the clear economic benefits but also because of the potential security payoff it can bring. Fierce competition drives states to invest in innovation and continues to play a critical role in the production and scaling of breakthrough technologies.

Fears of being left behind on the (literal) battlefield are a major reason why the world’s great powers spend heavily on emerging technologies. They hope that doing so will provide security and power in an insecure world. For decades after World War II, for example, the US government spent billions of dollars on its scientific-technical research apparatus (with Silicon Valley a clear beneficiary), largely out of fear that not doing so would cause it to lose the Cold War. This apparatus, which combined scientific research and entrepreneurial aplomb, allowed the US to enjoy a first-mover advantage throughout the Cold War and long after.

Technological development has played an obvious role in warfare. The Maxim gun, rifled cannon, the airplane, poison gas, napalm and nuclear weapons are but a tiny fraction of the multitude of modern battlefield inventions. Looking forward, inventions arising through advances in nanotechnology, biotechnology, artificial intelligence and more will upend warfare from logistics to weaponry. Like their predecessors, the most important of these inventions will give the first movers a (temporary) geopolitical advantage. And, like their predecessors, once invented they cannot be un-invented — humankind will have to live with them forever.

As chronicled annually by organizations such as the World Intellectual Property Organization (WIPO) and very recently by this author and colleagues at the Atlantic Council, the bulk of the world’s new and disruptive technologies are produced in a relatively small handful of countries. Societies that manage to create or attract critical masses of talented people (inventors, entrepreneurs, scientists, engineers, researchers) and give them the tools and environments to be creative have, in the long run, come out ahead.

Although there is no single template for a successful tech environment, all examples have some combination of vibrant public investment in scientific research and development (R&D), high-quality educational systems, relatively easy access to investment and venture capital, a strong startup culture, and the protection of intellectual property.

Understanding the intense global competition in this space, policy-makers in various countries have both copied and, in some cases, improved upon the American template for their own purposes. High-quality scientific research is by no means confined to the US; all innovation leaders invest a substantial share of their GDP in R&D. Israel and South Korea are currently the world’s leaders, with each investing more than 4% annually.

Nearly all serious contenders for innovation leadership are improving their university tech transfer systems, a long-standing strength of the American system. Many, if not most, are devising creative ways to create and import talented people from abroad. Start-up Chile, created in 2010, is a public accelerator that offers entrepreneurs from anywhere in the world a one-year working visa, seed funding, training, mentorship and more. This model has since been copied by many other countries.

The US remains the world leader in tech-driven innovation, but other countries are gaining quickly. In a report published last year, this author and colleagues at the Atlantic Council argued that while other countries are rising, the US must share the blame for its own relative decline. American policy-makers have allowed several irreplaceable drivers of innovation to erode. The quality of American infrastructure, for example, has declined considerably with little serious attention paid to upgrading it to 21st-century standards.

Other public investments have also fallen; most critically, the funding for higher education and public research and development — the basic science that underpins all technological development. It also goes without saying that the current political climate in the US surrounding immigration is an anathema to the goal of attracting and retaining top global talent.

Innovative systems create productivity-enhancing technologies that, in the long run at least, benefit society. However, many people are left on the outside looking in, because they live in regions that are adversely affected by technological disruption and/or because they don’t have the skills to participate. Ignoring this reality will create neither a robust economy nor a healthy society.

Some societies are in a better position than others to both benefit from disruptive technology and to limit its negative impacts. The world’s leading innovators have often invested the most in resilience-based strategies designed to maximize the odds of their citizens prospering from disruptive change. Yet in the face of the Fourth Industrial Revolution, the question is whether these societies are sufficiently well prepared.

The likely answer is no, which means we can expect more upheavals in the future. If inventive mechanisms designed to tackle the economic and political challenges that follow from technological disruption are absent, societies risk becoming less rather than more stable.

As technologies disrupt industries and alter or even eliminate entire categories of work altogether, states will need to adapt their educational, workforce and social welfare systems. The bad news is that the (fairly) comfortable systems that were built for the high industrial era are no longer templates for the future.

The good news, however, is that there is considerable space for policy innovation and experimentation. Governments that treat their workforce as their greatest asset will benefit in the long term. Investing in high-quality education, life-long skills training and upgrading, and a flexible but robust social safety net, will pay off for those countries willing to make such investments. This is one area where the US, as the world’s leading innovator, risks falling behind: university education is increasingly expensive for its citizens, its system of skills training lags well behind leaders such as Germany, and its social safety net is wafer-thin.

Policy-makers the world over must find ways to bring more people into the tech sector. Unfortunately, it’s an exclusive club: regardless of country, workers are disproportionately male and drawn from the wealthier strata of society. Governments need to do a better job of equipping women, racial and ethnic minorities, and people from lower socioeconomic strata with the tools needed to compete in this sector and the opportunities to do so.

As with previous revolutions, the technologies emerging from the Fourth Industrial Revolution are arriving well ahead of the rules and standards needed to govern them. There is little global consensus about how to regulate the impact of technologies or indeed whether they should be regulated at all.

To craft a robust, enforceable, global tech regulation regime there must be sufficient evidence that a specific technology has enough of a downside to require oversight. There is very little chance that such evidence will exist at the time of the technology’s invention. It took decades for scientists to discover that chlorofluorocarbons (CFCs) were destroying the ozone layer, for instance. Even when a technology has clearly negative repercussions, as is often the case with new battlefield technology (think nuclear weapons), global agreements to constrain their use require states’ political willingness to enter into them. Most critically, that requires the participation of the great powers, who, not coincidentally, are often the least incentivized to play along.

The result is a global system wherein the incentives align with the creation and spread of new technologies — including lethal technologies — but not with the oversight of them. While every generation faces this reality, the risks become greater because technologies become more powerful over time. In the military realm, greater power means greater lethality: the musket and the hydrogen bomb are two very different things. And even when new technologies deliver economic or social benefits, as with the CFCs example, they can, and frequently do, deliver some nasty surprises.

This is why the intelligent governance of technology at a global level is among the most important tasks we will face this century. Despite the difficulties in crafting robust, international tech governance regimes, it is imperative that governments do just that.

Bilateral negotiations between the major powers on a host of tech-related issues can have a real and productive effect on governance, given their importance to the global economy and to technological production. So too can multilateral forums such as the World Trade Organization, the Group of Twenty(G20), WIPO, the International Telecommunication Union (ITU) and many more.

Although global politics makes it very difficult and sometimes impossible for such organizations to lead the creation of robust and enforceable global rules, states can and do turn to them for the development of new standards and norms for thorny tech governance questions in areas such as genetic engineering or artificial intelligence.