NEW DIGITAL TECHNOLOGIES: SOCIOECONOMIC EFFECTS AND POTENTIAL FOR INNOVATION

Dr. José Ramón López-Portillo R.Q ELEMENT

We are entering the most disruptive era in human history, driven by exponential technological change. It entails:

• Extraordinary opportunities• Huge challenges

• the very competitive forces of capitalism compel accelerated technological change

• So far, technological progress has generally played a positive role,

BUT…• Unlike other periods of great transformation,

today the effects are global, immediate, deep and increasingly irreversible

Humanity is at a turning pointThe future will be very different from the present

For the first time in history, thinking and skilful machines are surpassing our physical abilities, and also our cognitive ones

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Dr. José Ramón López-Portillo R.Q ELEMENT

Accelerating Technological Change andEras of Technological Progress

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-ArtificialGeneralIntelligence-Robotics-Hyperconnectivity-GenomicsandSyntheticLife-CleanTech-Sustainability-RenewableEnergy-GreenNanotechnology-RadicalResourceProductivity-Whole-system-DesignandClosed-LoopManufacturing-Green-Chemistry-IndustrialEcology-NeurotechnologyandNeurobiology-AdvancedMedicine-VirtualandAugmentedTechnology

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The fulfilment of the Sustainable Development Goals (SDG) of Agenda 2030 will reside within a world of exponential technological change

Growing synergy among emerging technologies has created a vastly expanding arborescence of scientific research, knowledge and emerging technologies

Accelerating technological change will continue past the next decade

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Dr. José Ramón López-Portillo R.

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This could represent a colossal advantage for humanity, but the irrational, abusive, belligerent or

negligent application of these technologies could also lead to social tragedies and even global catastrophes

These challenges are probably more urgent to address, and the consequences of not doing so more imminent and devastating, than predictions of climate change

Dr. José Ramón López-Portillo R.Q ELEMENT

On the bright sideWe could find solutions to • meeting all SDGs• unleashing creative and collaborative

forces of all humanity• freeing people from repetitive,

undignified and dangerous jobs• overcoming scarcity

It could also lead to

• mass-unemployment

• greater inequality

• structural deflation

• loss of privacy and freedom

• collapse of governance systems

On the challenging side

What to Expect?

It all depends on what we do today

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Dr. José Ramón López-Portillo R.Q ELEMENT

Digitalisation, AI and other exponential technologies can contribute to:

• drastically boost productivity and growth

• reduce marginal costs of producing additional units of anything

• achieve renewable energy capacity• lower prices for consumers• increase returns• more administrative efficiency• transparency• planning and evaluation capacity• optimise consumption and welfare

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Dr. José Ramón López-Portillo R.Q ELEMENT

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SOURCE:WORLDBANK(DEVELOPMENTREPORT,2016)

On the challenging sideExponential technological change could lead to:

• rapid automation• intelligent robotic evolution• 3D and 4D printing • change in international trade flows• loss of comparative advantages based on cheap labour

and resourcescould lead to • migration of industry in the form of fully automated

activities• technological unemployment • greater inequality• sudden deindustrialization of developing economies

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Dr. José Ramón López-Portillo R.Q ELEMENT

• Government and business leaders have little awareness of the speed and implications of the tsunami that is coming and

• how it will affect, for good and for bad, economies and companies

There is a gap between

• people’s perception of their socioeconomic problems and • the powerful and rapidly growing solutions and challenges that

new technologies can bring

Ignorance is not bliss

State of Affairs:Latin American countries have poor technology absorption and innovation capabilities

Private innovation and technology absorption is mainly inhibited because of:• lack of financing, access to capital and financial conditions• insufficient information, climate of distrust, high risks and

low returns

• poor planning and organizational skills• insufficient public incentives and infrastructure• use of the Internet, digital platforms, artificial intelligence

systems and protection against cyber attacks is very low

State of Affairs:technically able population and S&T reading is very low in LAC

All countries need to seriously invest in • boosting their technological capabilities and • intensify their education and training programmes to take full advantage of the opportunities created by accelerated technological change and to overcome its challenges

There is a positive correlation between innovation, productivity and growth of public and private companies:

ECLAC: “…the lack of a structural change strategy towards more technology-intensive activities underlies the slow and unstable economic growth and is a limit to the advance of the digital economy”

However, R&D strategy and spending must be long term and directed correctly because not all innovations lead to economy-wide growth

State of Affairs:Technological and innovation capabilities are key to fast and sustainable growth

State of Affairs:S&T knowledge and patent generation is very low in LAC:

technology will come from abroadBut must be careful with blunt measures because:• not all investments are equal, and • there is strong evidence to show

that the relationship between R&D and innovation, and in turn innovation and growth is not linear

Complementary institutions (low-tech) and right conditions are essential • to allow innovation• circulation of knowledge throughout

the economy• and at the company level Examples: Japan (2.5% of GDP) and Russia (4% of GDP) in 1970s:• Japan grew faster because

knowledge flowed horizontally

A case in EuropeIn Europe, countries that suffered the most from the Eurozone crisis were

those spending the least on R&D:

It is government, not the private sector that invests in high-risk but essential basic research that is uncertain but produces real innovation

Big Question:How to socialize the benefits, and not just the risks of technological advance

It is difficult for institutions, and for society, to adapt effectively and in a timely manner

• Institutions move linearly

• Technological change does so exponentially

Challenges:the problem of governance

Entrepreneurial and innovative State (Mariana Mazzucato):strengthening governance system, adaptive regulations, rule of law and raising educational

standards

3. All countries need to • seriously invest in boosting their technological capabilities and infrastructure, for example:

• 4G Internet affordable to all • strategic support for innovation • accessible spaces for testing engineering and digital solutions

• Intensify education and training programmes to • take full advantage of the opportunities created by accelerated technological change and to • overcome its challenges

1. Within a multilateral dialogue, all States must • urgently establish national and local open forums• with participation of civil society, academia, and the private sector• based on a bottom-up process and • a vigorous debate

What to do?

2. Effectiveness will depend on • gathering • analysing and • disseminating• all relevant information and best practices from around the world on • how new technologies can have a positive impact toward achieving SDG