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Planning for the new World – III

Globalisation is getting even more global, in the sense that it is involving sectors, includiing governance, trade and investment, workforce and employment, international security, health, risks. It affects global leadership, geopolitics and the future of economic progress. Image credit: WEF

Revitalising Global Cooperation

We live in a competitive world. The increased effectiveness of communications and logistic infrastructures, the former transporting thoughts, knowledge and ideas the latter goods, components and products has made the world even more competitive than in the past creating a single huge marketplace steering demand and a multitude (in the hundreds of millions) of providers shaping the offer.

The acceleration of the Digital Transformation is just going to increase competition level and effectiveness in a spiral leading to much more dynamic markets and competing providers. This goes both for tangible (atoms) and intangible (data, knowledge, skills…).

In this landscape talking of Global Cooperation may seen outdated. And this is why WEF, and several other international organisations like the UN, are calling for a revitalising of Global Cooperation.

Although the pandemic is making a clear point in the need for global cooperation, it is not the only one. Think about the recent swarms of locusts affecting a broad area from Iran to Sudan and all countries in between, think about climate, water, energy, rare earths, …

Also think about terrorisms, societal instability, money laundering, human rights deprivation, …

It is clear that as physical barriers are fading away as the world business and knowledge move to the cyberspace there is no longer the possibility for a single Country to contain the impact of something endogenous nor to defend from exogenous impact.

Global Collaboration is needed and there is a need to reinvent it since the collaboration processes tailored to a world of atoms, customs and borders no longer apply.

The WEF, as shown in the diagram, is proposing a multi prongs approach looking at specific revisitation, or set up of new agreements in:

  1. International Trade and Investment
    The many quarrels in these last few years of one Country against another are proof that the old trade agreements based on exchange of goods (that over time have led to a decrease in custom taxes/barriers) are getting more and more unsuitable to the new world of digital goods. The unbalance in digital goods trade has reached a point that was simply impossible in a world of trade based on atoms. Today’s big players in the digital space are either in the US (read Amazon, Apple, Facebook, Google, IBM, Microsoft, Netflix,…) or in China (Alibaba, Baidu, Tencent). The rest of the world is feeding these big guns (in the best scenario) or just using their services. It is not just about trade. it is also about investment, particularly the one in innovation. In 2019 North America (with US having the lion’s share) invested some 40% of venture capital funds in early stage of innovation versus a 60% in the rest of the world. That is a huge share but even more impressive of the total venture capital funding of 2019 invested in late stage innovation (that part that is getting ready to hit the market) saw the share of North America close to 60% leaving 40% to the rest of the world. The asymmetry is clear and it is a direct consequence of having the big guns residing in the US and playing the role of ecosystem attractors.
  2. Global Governance
    The Global Governance is a must in several areas, like assessment, monitoring and prevention of epidemics, as the recent Covid-19 made clear. Weakness in this global governance have dramatic impact on epidemics and there is no way a single Country can solve the problem, although each Country has to contribute to the solution (and this basically has been the core of the discussion in the pandemic, the lack of reactivity in spreading the information so that a global coordinated action can be established). If on the health domain it has proven difficult just imagine establishing a Global Governance where there are clear divergent interest among Countries, like in trade. Yet, according to the WEF and basically all others international organisations there is no alternative to a Global Governance as the Planet has shrunk to the village square.
  3. Geo-economics Geo-Politics
    Although the world economy has shifted towards globalisation and supply chains area now enveloping the whole world (producing a single product like a Playstation may involve companies located in some 20 Countries) there are still strong (political) pressures to create rules to favour one geographic area against another. Reasons are varying from ideology to protecting local workforce to attract investment. Although the shift to digital economy makes geo-economics more difficult there are still plenty of regulations that protect (or aim at protecting) local market. There are also plenty of quarrels because they -usually- don’t. On the other hand, companies try to leverage differences to move their production/earnings where the revenues are maximised and taxation minimised.
  4. Agreement of Future of Economic Progress
    A common agenda on what means “economic progress” is needed to level the competition field and steer evolution in the desired direction. As an example, the use of energy needs to be framed in the fall-out of this use, like the generation of CO2. Moving to renewable is good for the sustainability of resources but its effect is appreciated in the long term. If fossil fuel cost is lower than other energy sources companies will use fossil fuel. A single Country imposing taxes on fossil fuel to make it less appealing than other sources is actually decreasing the competitive power of its economy. Hence the need for a global agreement on what economic progress means and should be.
  5. Leadership in the Fourth Industrial Revolution
    Adoption of measures to foster the Fourth Industrial Revolution have impact on supply chains and I already pointed out that these are global. Hence, as discussed in the previous post, harnessing of this revolution should involve a global cooperation.
  6. Workforce and Employment
    The use of global workforce by companies, through immigration and through outsourcing/offshoring, is nothing new. What is new is the fact that shifting to the knowledge economy the location of workforce becomes more and more irrelevant. Leveraging on distributed knowledge will create a competitive edge in the coming years. In some sectors it has already started (consider the growing importance of call centres that will probably fade away as chatbots will be replacing the humans in call centre activities…). Creating top brains requires significant planning and investment for Countries (education) and if today the brain drain is an issue tomorrow it is will a nightmare. This will be compounded by the increasing capability of extracting knowledge from people and consolidating it into AI. Global Cooperation/agreements are essential to navigate this open, unexplored ocean. This is also an area where “neutral” organisations like the IEEE can play a role and steer evolution.
  7. International Security
    International security in border control took several years to consolidate (think about agreeing on biometric passports). As we are moving value using the cyberspace those same efforts shall be put into creating an international security framework for the Digital Transformation and its effect. There are already plenty of frauds, hacking, data violation on the web and this is just going to increase as more and more value shifts to the cyberspace. For a scaring overview of current security breaches and malicious attempts take a look at these statistics. Global Cooperation is essential.
  8. Global Health
    There is both a lot to say and very little to say about global health. If the pandemic did something it was to raise awareness that no border exist to contain an epidemic. Viruses do not need passport and stopping them at custom is not feasible. The exchange of data, a standardised set of rules on measurement making data comparable is a urgent need. Health Digital Records have been adopted in many Countries but often they are not interoperable. Even where a standard exist, like in Europe, the concrete application is missing. As there is now in place a worldwide tsunami alert system with sensors-buoys in all oceans, there is a need for epidemic alert worldwide that is not depending on a single Country/institution willingness to share. It took hundreds of thousands of victims from the Boxing day tsunami to push towards the implementation of the world-wide tsunami alert system. Let’s hope one of the positive outcome of this pandemic will be a world-wide epidemic alert system.
  9. Global Risks – Agile Governance
    The WEF Global Risks 2020 Report was published in January 2020 and, curiously, among the several risks it mentioned it did not include the pandemic. The risks considered are the ones that have an impact on world, and local, economies. The risks addressed included economic stagnation, accelerating climate change, cyberspace fragmentation, political unrest and inequality exacerbated in some areas. These are all challenges that require a common response, through Global Cooperation.
    The fact that this report did not include the risk of pandemic, that was already upon us all, is a clear indication of the difficulty in making concrete predictions and therefore of the need to have an agile governance that can respond quickly to any unexpected challenge. This is a need that was sorely made clear by the slow and mostly uncoordinated response to the pandemic, with some Countries locking -down, other waiting for a while before taking restrictive measures other (a few) deciding than doing nothing was as goods as doing something and would not impact the economy.
    Having an agile, coordinated response would have save life and decreased the economic impact. At least a lesson to lear for the future.

About Roberto Saracco

Roberto Saracco fell in love with technology and its implications long time ago. His background is in math and computer science. Until April 2017 he led the EIT Digital Italian Node and then was head of the Industrial Doctoral School of EIT Digital up to September 2018. Previously, up to December 2011 he was the Director of the Telecom Italia Future Centre in Venice, looking at the interplay of technology evolution, economics and society. At the turn of the century he led a World Bank-Infodev project to stimulate entrepreneurship in Latin America. He is a senior member of IEEE where he leads the Industry Advisory Board within the Future Directions Committee and co-chairs the Digital Reality Initiative. He teaches a Master course on Technology Forecasting and Market impact at the University of Trento. He has published over 100 papers in journals and magazines and 14 books.