An inclusive digital future | Investigator’s opinion

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SEOUL – The COVID-19 pandemic has accelerated the transition to a digital economy, which will be the key to future growth and opportunities. That is why, as we prepare for the post-pandemic era, we must recognize that the potentially unlimited benefits of the digital economy will not be equitably distributed if we do not take the right steps now.

Mobile devices, the internet, cloud computing and other innovations have created a hyper-connected global space in which billions of people can work and pursue more dynamic lifestyles. Digital platforms have changed the way we consume, work, and create economic value, and digital assets such as computers, communications equipment, and software have helped businesses lower production costs and improve their performance. efficiency.

The digital transformation will continue to accelerate with the wider adoption of big data and the convergence of Fourth Industrial Revolution technologies such as 5G, artificial intelligence and the Internet of Things. Already, a global McKinsey survey reveals that the pandemic has led companies to accelerate “the digitization of their interactions with their customers and their supply chain and of their internal operations by three to four years.”

But the question is whether the benefits of this acceleration will extend beyond companies to workers and consumers. By making old technologies, processes and even entire industries obsolete, digitization will continue to lead to job losses. The World Economic Forum‘s 2020 ‘Future of Jobs Report’ predicts that many private companies will use machines and algorithms more extensively than ever before, hampering job prospects in all sectors and regions. AI, robots and other new technologies could threaten 15% of a company’s average workforce by 2025.

Given these effects, digital transformation could widen social and economic disparities and widen the pay gap between skilled and unskilled digital workers. There is already a deep divide between socio-economic groups and between regions when it comes to access to new digital technologies, and technological diffusion will also be uneven between businesses and industries. Smaller companies may have less ability to adopt new innovations than larger ones, which in turn may try to prevent new competitors from entering the market.

More generally, the digital revolution may take some time to stimulate productivity growth throughout the economy. Economists have long observed the “paradox” that the impact of information and communication technologies manifests itself “everywhere except in productivity statistics”. Now that the pandemic has widened the productivity gap between businesses and industries, traditional businesses and small businesses may be slow to recover as tech giants thrive in conditions of increased digital demand.

The digital revolution also raises political concerns, for example when governments and businesses abuse data and technology. During the COVID-19 outbreak, some countries in East Asia have used contact tracing apps, mobility data, cameras and other digital technologies to contain the virus, but this surveillance has grown. is often done at the expense of privacy. With tech giants wielding such power through their mastery of user data, consumers are increasingly aware of the importance of data security and privacy.

Answering these questions is essential to prepare for the post-pandemic era, when all countries will need to adopt new ways of working, producing and consuming. Digitization can make a huge contribution to public health, the environment, the well-being of consumers and the creation of wealth in society as a whole, but only if the public and private sectors work together to ensure the ‘inclusion.

Most countries will need policies to close the gaps in digital skills and access, as a growing share of jobs will require more technological know-how. Education systems need to do more to equip students with the knowledge and skills they will need in a digital future. And vocational training must keep all workers up to date with the latest digital technologies.

Governments have a critical role to play on all of these fronts. It is state support and commitments that have brought us groundbreaking innovations like the internet, antibiotics, renewable energy and mRNA technology behind the development of the most effective COVID-19 vaccines. To fulfill their role as market makers, governments must increase investments in physical infrastructure and human capital, and provide financial and fiscal incentives to ensure equitable access to essential technologies. They should also explore ways to provide more grants, grants and technical support to small and medium enterprises and start-ups, so that the benefits of the digital revolution do not remain limited to a few large companies.

When it comes to Big Techs, in particular, the rules and standards of the pre-digital economy no longer apply, which means that most countries will need to update their competition policies and regulatory frameworks to ensure competition. free and loyal. And along the way, they should establish clearer rules and standards for data security, digital property, and user privacy.

Ultimately, however, effective governance requires global consensus. Different national approaches will only fragment the digital economy and invite tax and regulatory arbitrations. The fierce competition between the United States and China over 5G hardware, social media platforms and semiconductors has led to nationalist and protectionist measures, underscoring the need for a more multilateral and cooperative approach. The aim must be to design a new system to manage the cross-border exchange of information and digital technologies, while creating stricter rules and standards for digital commerce.

The world is still recovering from an unprecedented shock. But the sooner we prepare for the “new normal” the better off we will be. And successful preparation will depend on our ability to ensure digital inclusion. Project union

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Lee Jong-wha, professor of economics at Korea University, was chief economist at the Asian Development Bank and senior adviser on international economic affairs to former South Korean president Lee Myung-bak.

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