Dr Pangloss and Mr Ludd: Stefan Dercon revisits Technology and Development

Stefan Dercon of the Blavatnik School of Government introduces two new reports. This post first appeared on From Poverty to Power.

Am I alone? Was I the only one who could not believe it when the World Development Report 2016 said that 85 per cent of jobs in Ethiopia could disappear due to automation? Am I also the only one who sighs when a young entrepreneur claims the app he has invented will “re-imagine health care provision” across in Africa?

I am very confident that there will still be jobs in Ethiopia in the future.  In fact, I am confident there will still be lots of small scale farmers in 30 years. And people working in factories. And women and men working in jobs whose job titles I cannot know yet. I am also confident that development will not happen one app at a time.

In discussions on technology and international development, it appears one has to take sides: we have to be either techno-pessimists or techno-optimists. Nothing in between. Dr Panglossand Ned Ludd would have been pleased. Of course, they are fictional characters, the straw men of the debate. In recent months, I have been involved, with Benno Ndulu, as academic directors of the Pathways for Prosperity  Commission on Technology for Inclusive Development.  It hopes to turn the conversation towards developing countries conspicuous in their absence in prevailing narratives. Today, we bring out two reports, one on the impact of technology on jobs and livelihoods, and one on digital connectivity in developing countries. We hope we have added some sense, some hope and some realism to the conversation.

I have little time for Mr Ludd: a narrative like the Luddites’, that technology will destroy all, and should be resisted at all costs is not helpful. One of the weaknesses of much of the automation discourse is that it seems to assume that the only place for productivity gains and growth for a developing country must be through entering global manufacturing value chains: no shirts, no jobs. Of course, there is a very strong correlation between countries engaging in manufacturing exports and growth, as well as inclusion, not least from East Asia or Bangladesh. It was an incredibly successful route for job creation and even female empowerment. We argue that this had less to do with the intrinsic magical quality of manufacturing, but it was more about what could be produced remotely, given the state of connectivity. It became easy to send a sewing pattern by fax, but co-designing with remote teams was not possible.

Digital technologies, such as ever-higher-quality communications and remote management with virtual reality or telepresence, will make countries less reliant on simple products for exports: higher quality interactions will become easier over vast distances. They  open up scope for growth strategies that involve more complicated goods and especially services: not just call centres, but integrated design, or accountancy services, and even remote health or personal care. In the report, we identify five emerging tech-based pathways for prosperity, including some with more domestically driven growth engines, that go beyond past successful strategies.

Dr Pangloss may think he should be pleased. All will be for the best in this best of all possible future worlds. Actually, not at all. Just as Vietnam and not Kenya took advantage of global value chain opportunities in the 1990s, we will have early movers and those who lag behind in this next stage of global value chains. What happens locally, in terms of the politics and economics of development, matters a great deal, and will make the difference between further marginalisation and progress. In our report on jobs and livelihoods we give a sense what ought to be done. While global governance will have to be favourable (a topic our Commission will be addressing in the next 12 months), there is real agency for developing country policymakers here, working with business leaders and civil society to try to take advantage.  As discussed in more detail in the report, just as in richer economies, emerging technologies need work on taxation, competition and regulation – and there is scope for help with this by donors and others. There is possible world of progress – but it is by no means certain.

We also cannot take for granted that this world of emerging technology is necessarily inclusive – watch your back Dr 

Pangloss. One key enabler of these newer economic pathways is digital technology, in particular the internet. As is well known, access is still very unequal.  Simple calculations show us that three billion will not have access to the internet in 2020. They are often poor people, with low education, and women especially. This is not really linked to the lack of big mobile phone networks – 80 per cent even in low income countries live near masts. Instead, devices and data are still really expensive with prices not falling fast, and social norms biased against women and other marginal groups.

Our report on digital technologiesarticulates a concern that current business models and the nature of government action in most countries will not lead to a route to including these three billion. We will need new business models as well as better government action, including sensible regulation of tax and data. The market alone will not deliver inclusion: a libertarian view of the world as favoured by some in tech will not reach the poorest or unlock opportunities for the marginalised. Tech shouldn’t be scared of governance rules; it should definitely not behave as if the only alternative to a libertarian world of totally free markets, including for data, is a model identified with China in which the state controls all, including the on-off switch. India is interesting here. Despite its enormous potential, there has been a backlash on its digital identity system Aadhar. Recent rulings of the Supreme Court have rightly brought digital technologies where they should be: under the control of the rule of law. All developing countries will have to work out their governance of technologies – finding a local balance that favours innovation but protects citizens and promotes inclusion.  This is the time for government, business and civil society to work together.

Our main advice to policy makers is don’t panic but prepare. There will be jobs in the future, but don’t waste this opportunity, find ways to take advantage, as otherwise others will. Jobs and better lives depend on it.  Neither Dr Pangloss nor Mr Ludd can help here. Time for sensible people to step in.

We will be happy to debate more. Please read both reports and get in touch with us via pathwayscommission@bsg.ox.ac.uk

Stefan Dercon is Professor of Economic Policy at the Blavatnik School of Government and the Economics Department, and a Fellow of Jesus College. He is also Director of the Centre for the Study of African Economies.

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Image credit: Alan Levine via Flickr (CC BY 2.0)