Investing in global infrastructure should include fast and secure digital connectivity
The idea of economic planning dominated the imagination of 20th-century economists. Unlike the classical liberal view, the planning concept supports clear government intervention in the spontaneous course of markets. By implementing one plan or another, the theory goes, governments can speed up a process or correct a wrong course. Plans are a “shortcut” for a set goal.
In the past 70 years, one of the most successful such strategies was the Marshall Plan, launched just after World War II. It helped transform countries defeated in the great conflict, like Germany or Japan, into competitive and prosperous economies.
Today, the phenomenon with the biggest potential for building cooperation bridges internationally, or, on the contrary, to further widen the development gap between countries, is the so-called “Economy 4.0”, a term that — even more perhaps than the designation “Fourth Industrial Revolution” — best describes the ecosystem of knowledge, technology, and entrepreneurship we are now entering.
And, if it’s true that talent, rather than capital, is the determining factor in this new “Age of Adaptation,” as suggested by Klaus Schwab, founder and executive chairman of the World Economic Forum, then it’s perhaps time to talk about a “Marshall Plan for Technology.”
The great gap separating countries is not only to be found in the traditional income-related notion of “haves and have-nots”, but rather between those that are “connected” and the ones that aren’t. The talent-technology fusion allows for “serial adaptations.” Thus the imperative is to generate productive activity that stretches beyond the traditional comparative advantages of Ricardian economics.
Realistically, it’s worth underlining that a new wave of international cooperation for the flourishing of the Economy 4.0 — a task that should be added to the UN’s Millennium Development Goals — would be filled with challenges. For instance: What are the implications of the term “infrastructure” for the Economy 4.0? What is the meaning for our time of a new Marshall Plan that would provide IT infrastructure for the developing world?
Conventional infrastructure in the industrial economy was usually represented by the logistics network: ports, airports, railways, roads, etc. Now, the idea of infrastructure should include fast and secure connectivity possibilities, as well as close and agile relations involving universities, research & development units and the translation of their work into market-oriented products.
In this context, rethinking development policies becomes even more complex. The speed at which airports or roads become obsolete is dramatically lower to the pace with which copper wires were surpassed by fiber optics – or fiber optics by the gradual use of satellite technology.
A good example of this premature obsolescence that will have an increasing mark on the Economy 4.0 was the program “One Laptop Per Child” created by Nicholas Negroponte, co-founder of the MIT Media Labo. Since the program began, laptops have been completely overtaken by the rise of tablets and smartphones.
This presents any contemporary concept of a Marshall Plan with a big dilemma. On top of requiring a higher level of international cooperation in a global context that is seeing the world’s main powers becoming particularly “individualistic” (the “America First” speech certainly comes to mind) there’s the risk of betting on certain technologies that are incapable of closing the gap between knowledge-based economies and those that still struggle through the early stages of industrial development.
Akio Morita, the legendary founder of Sony, once explained that Japan’s success was the result of “hard work and deep waters.” He was referring to Japan’s harbors, which favored the transit of big ships loaded with exports of manufactured goods.
The world clearly needs a Marshall Plan for technology, even if it means having to deal with the exponential rhythm — and risk — of innovation. But there’s no way out of it. In the Economy 4.0, development can only be the result of “hard work and deep knowledge.”
We should think of a Marshall Plan for technology not as a specific program to be designed, approved and implemented through a decision arising from the UN General Assembly. But we must understand it as a renewed call for international cooperation. In the end, if we fail to shorten digital distances, all countries will lose.