6 ways least developed countries can participate in the 4IR

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum. Author: Ratnakar Adhikari, Executive Director, Enhanced Integrated Framework Executive Secretariat, World Trade Organization

---

The Fourth Industrial Revolution (4IR) is upon us.

Drones, artificial intelligence, virtual reality, 3D printing, robotics and blockchain are all shaking up the world as we know it. Some believe that this will lead to machines and robots replacing human beings, rendering large swaths of the population jobless. Others see enormous potential for least developed countries (LDCs) to leapfrog along their development trajectories.

However, technology-specific analysis informed by realities on the ground shows a more nuanced picture. That is, if the world’s LDCs want to take advantage of the opportunities presented by the 4IR, they will need to put in place certain measures to tackle issues around accessibility, affordability and the application of technologies.

Here’s how:

LDCs face challenges in acquiring relevant technologies because they are protected by patents, which are highly concentrated in a handful of countries. But they can still use open-source technologies such as blockchain.

The government of Ethiopia has recently started working with the Swiss-based Cardano Foundation to use blockchain technology to enhance trade in Ethiopia’s biggest export item – coffee beans. By using blockchain to record, track and trace coffee beans from local farmers, the initiative is expected to provide consumer confidence about their source and purity. Producers can receive an increased return on their labor, as consumers will then be ready to pay a premium for the end product.

LDCs also often lack the necessary electricity and internet infrastructure to enable the use of advanced technologies. By the end of 2017, only 172 million of the slightly more than 1 billion people living in LDCs had access to the internet. Bhutan is one success story: 100% of the population has electricity access, achieved by harnessing the potential of hydro-electricity in collaboration with its neighbor, India.

Even if technologies are accessible, the cost of using them is often prohibitive. Monopolies or oligopolies among internet service providers, patent protection costs and high tariffs on computers, tablets and smartphones are the main barriers. According to the Alliance for Affordable Internet, 2.3 billion people live in a country where a 1GB mobile broadband plan is unaffordable for individuals earning an average income. Most of these people live in LDCs, where the average cost of 1GB of internet access is 14.8% of Gross National Income (GNI) per capita, with users in countries such as the Democratic Republic of the Congo, the Central African Republic and Haiti obliged to pay almost half of their monthly income.

Affordability is much better in some LDCs like Cambodia, with 1GB of internet access costing less than 2% of GNI per capita. The major driver behind this is Cambodia’s highly competitive internet markets, bolstered by a largely unregulated market with no vested interest to protect. Elsewhere, prices globally of technologies like drones and 3D printing have fallen drastically in the recent past, making them more affordable, even for LDCs.

Since the future is digital, it is going to be critical to develop “future-proof” skills. While investing in science, technology, engineering and mathematics areas is critical, soft skills such as creativity, collaboration and time management cannot be ignored. But most LDCs do not even have resources to provide basic education, and so will only be able to meet this requirement through external assistance or by engaging the private sector. With flexibility and adaptability key to developing skills fit for the future, rigid and inflexible education systems in many LDCs can only be tackled through strong political determination.

In Rwanda, Digital Opportunity Trust has launched a massive digital skills development programme in cooperation with the World Economic Forum to employ 5,000 young Rwandans to provide hands-on basic digital literacy training to 5 million citizens. Not only will this help rural Rwandans who have low or no experience using the internet, but it will also help digitally literate citizens to use e-gov and e-business services.

Some technologies work based on the classic “slicing up the value chain” approach. For example, artificial intelligence relies on big data for its applications. Since data cannot be captured by machines and the bulk of it is generated from documents, images, audio and video, human resources are required at scale to input and process. While the higher end of the AI chain like idea generation and eventual application mostly takes place in developed countries, the other end such as data inputs, scrubbing and processing is done in countries with lower wages. These activities can provide employment opportunities to mostly young, relatively well‑trained people in LDCs.

Cloud Factory, for example, has offices in the United Kingdom and the US as well as Nepal, where some of their data input, quality control and processing for AI is done. In the Nepal office, the company provides employment opportunities to approximately 2,800 18-30-year-olds.

The 4IR requires good policy and regulation, and will only be possible through coordinated action from various ministries. For example, introducing an information and communications policy that imposes universal service obligations on internet providers to ensure connection of even the “last-mile” users to the internet would benefit from a trade policy that reduces tariffs on the import of smartphones and tablets and an investment policy that removes the cap on foreign ownership of internet services.

Rwanda is ahead of the curve here, particularly in its regulation surrounding drones, which are being used to deliver critical supplies to inaccessible areas such as blood to hospitals in the remote parts of the country. The regulation allows airspaces to be accessed by any pilotless aircraft on a mission-specific basis. The government specifies the safety standard of the mission, and the drone operators specify how they are going to meet it. This intentionally agile regulation is a way for the government to keep up with the rapid development of drone technology. This model is worth replicating in other LDCs.

Since LDCs lack resources, skills and expertise in many of the areas discussed above, they need to harness the potential of partnership at the national and international levels. At the national level, public-private partnerships can be a powerful model for financing infrastructure and skills development. In some cases, strengthening the necessary frameworks for attracting private investment could help to mobilize resources to meet increased financial needs.

At the regional and international levels, mechanisms such as aid for trade, South-South cooperation and the support of international organizations could be instrumental in overcoming the challenges discussed above. Organizations such as the Enhanced Integrated Framework, the International Trade Centre, the World Bank Group, the World Trade Organization and the World Economic Forum can provide software as well as hardware support to LDCs.

Time is of the essence here – the world is moving toward a knowledge-based society, with the 4IR further hastening the process. The previous three industrial revolutions have largely bypassed LDCs, and it would be a missed opportunity if they were to be excluded from the current one.