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September 22, 2017

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September 22, 2017

What does Artificial Intelligence mean for the future of poor countries?

September 22, 2017
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What do the multiple overlapping new technologies currently breaking in tsunamis over the world’s economies and societies mean for the future of low and middle income countries (LMICs)? Last week I went along to a seminar (Chatham House Rule, so no names) on this topic, hoping for some interesting, preferably optimistic ideas and examples. I came away deeply, deeply worried. Houston we have a very substantial problem.

The conversation took place in a hipster warren (lot of beards per square metre) in London’s ‘silicon roundabout’ (yes, that’s British humour for you). The skype crashed during the first presentation from East Africa and we had to give up on it (but here’s what they probably would have said). Turned out to be an apt metaphor for what followed.

What technologies are we talking about? The OECD has kindly pulled them together on this mind boggling chart.

OECD-sti-outlook-2016

The tech revolution will affect LMICs on at least four levels:

  • Jobs and the productive economy
  • Private consumption of goods and services
  • Government service delivery
  • Rights and Voice

I found different balances of optimism/despair on the four. At the optimistic end, there are lots of apps and potential leapfrogging (eg diagnosing disease or mobile banking) which show real promise in bringing goods and services to hitherto excluded consumers. E-government could be a lot more responsive and less corrupt than the analogue variety.

So much for the upside, which was completely eclipsed (for me at least, we had a few techno-optimists in the room, exhibiting what one speaker called ‘the TED talk view of the world’) by the dark side. On Rights and Voice, state surveillance, private control of data, and general invasion/manipulation of our lives is becoming apparent much faster than the potential positives of cyber-activism.

But what really worried me was the economic impact of the new technologies. In particular, their impact on the way countries have historically moved from poverty to prosperity. An excellent paper by Shahid Yusuf of CGD and George Washington University sets out a gory prognosis that AI will kick away the ladder of development, under the striking subhead ‘will there be new jobs or no jobs?’:

‘There are those who believe that technological change will be a gradual process as in the past allowing institutions and labor markets ample time to adjust. The optimists are of the view that although automation, AI, and other technologies that are in the wings will in time eliminate a swathe of jobs, the pace of automation is likely to be slow and new occupations will appear to take the place of the ones that disappear as was the case in the past—assuming of course that economic growth is robust. Past industrial revolutions gave rise to similar fears that proved to be unfounded.

Could it be different this time around? Those who subscribe to the precautionary principle maintain that the pace of Monkey to robottechnological change has quickened making it harder for markets and institutions to make timely adjustments. The better-paid jobs that might materialize will require higher levels of cognitive, non-cognitive, and technical skills that are not plentiful in emerging economies and will accumulate slowly. Many emerging economies are currently coping with a large overhang of unemployed and underemployed workers and urgently need to ramp up employment in manufacturing and tradable services.’

His conclusion? ‘Export led growth of the sort that created the East Asian legend of the 20th century could be a thing of the past….. This includes industrialized economies that have relied on the exports of manufactures and participation in global value chains—i.e. the Malaysias, Polands, and Thailands—as well as other economies—the Pakistans, Egypts, and Honduras—that are at earlier stages of industrialization.’

So the most successful ladder of development of the last 70 years – low skill, labour intensive industrialization – looks like to be kicked away. 5 million women in Bangladesh currently working in the a garments industry that, for all its flaws, has transformed their lives (and accounts for 80% of Bangladesh’s exports), will probably be replaced by robots, located nearer the consumer markets (no need to make T shirts in Bangladesh if cheap labour is no longer necessary).

Indian production line.

Indian production line.

Yusuf thinks some countries can find alternative paths to development through natural resources, services, tourism or migrant remittances. For the rest, the outlook is grim.

The usual policy responses seem terribly inadequate to threats on this scale: A few cool apps really aren’t going to provide jobs for that number of people; trying to retrain huge populations of low skilled workers for high tech jobs, even if education systems are up to it, is running up a down escalator – robots and AI are likely to upskill faster than people.

Another commonly proffered response is a Universal Basic Income – crudely, the state taxes the robots, redistributes the income to the people, and we will all have to learn to enjoy our leisure. But it is easy to imagine other, more dystopian, political settlements between elites and robots. Jobless growth and rising inequality can lead to reforming governments, populist manipulators or repressive crackdowns (aided by new surveillance powers – according to last week’s Economist, China used facial-recognition technology to catch 25 criminal suspects at a beer festival, one of whom had been on the run for a decade).

Discussions about this topic usually divide between the optimists, who cite the Luddites and compare fears of technology to Malthusian anxiety about mass starvation through population growth, and people who say that, as with Climate Change, this time is different. After last week, I’m definitely closer to the second camp, even compared to this post from March. Thoughts from a slightly more optimistic angle here.

9 comments

  1. I’m reluctant to speculate about future trends. We don’t know what will happen, but we do need to track this and respond pro-actively.

    Your post mainly focuses on developing countries losing manufacturing jobs, but I think there’s another possibility.

    They might lose remittances. If robots can clean homes, care for the elderly, run errands in rich countries, the demand for care workers would reduce. That could have a big impact on places like the Philippines.

    1. Every time I look at future tech trends, there’s a lot to worry about: nanotech substituting commodities like copper or cotton; geoengineering escaping proper governance and dumping tons of iron filings in the sea off Africa; nukes, climate change. There’s upsides too of course – renewables, ICT (mostly). But the gloom does seem inconsistent with the ‘Getting Better’ narrative of recent decades, so I can see why many dismiss the fears as just 21st century Luddism. Hope they’re right.

  2. It is true that many jobs will disappear in the near future, and it is true that many of these are low skill and in developing countries. And certainly this will create difficulties. But it would be interesting to compare this with low skill jobs that were created in the past few years such as “facebook-likers”, people that have real facebook profiles who then like certain posts/companies (all you need is a cellphone), professional gamers, people who play a certain video game and then sell collected items to richer players (all you need is an interne café), etc. I think we sometimes underestimate the creativeness and flexibility of people only because they did not go to school. Plus we should think about possible job opportunities that might be created for people formerly not having a formal employment at all.

    1. But what I took from the seminar was that the numbers of such new jobs is tiny compared with those (eg garment workers, commercial drivers) likely to be destroyed. 5 million women in Bangladesh’s clothes factories are not all going to become facebook likers, or anything similar

  3. Thank you Duncan for – as always – very interesting reflections. Future is already here. Adidas is shifting production of some types of sneakers from Asia to Germany and the United States. Production, managed by robots, will be cheaper and closer to the main markets. This shift will have major consequences for developing countries.

    You can find more here… https://www.reuters.com/article/us-adidas-manufacturing/adidas-to-mass-produce-3d-printed-shoe-with-silicon-valley-start-up-idUSKBN1790F6

  4. Interesting post. As you said, whether a tech revolution will happen or not in ‘developing’ countries, most of these countries won’t progress the way other (European, Asian) countries have done. Tanya Li nicely explains how this ‘linear transition narrative’ doesn’t hold anymore, but that through processes of dispossesion of the last decades, huge ‘surplus’ popupations have been created. Your post nicely matches an essay I’ve wrote on this subject, exploring how policies of cash transfers and universal basic incomes (a mix of Furgeson’s book Give a Man a Fish and Van Parijs’ Universal Basic Income book) can and will offer a ‘solution’ for this mass unemployment. A basic income might in the end not be such a utopian idea, but a very concrete and pertinent one for which there is increasing attention.
    You can find the pdf here: http://docdro.id/asEmmgj. I can send it by email too!

  5. All we know is that our economic, financial and business models will need to adapt. And we as development practitioners seem to just hope to export our 20th century economic, financial and business institutions to the South. “Jobs” we say, but ignore what those jobs will look like in a decade (or other ways income can be generated). “Private sector investment” we say, but have zero initiatives that can think beyond shareholder capitalism (a model incapable of sharing power and value more broadly, or looking beyond growth-based solutions). The WEF can hold these debates, so can most political parties and even the financial sector thought-leaders. But development thinkers, fearing being labelled anti-business, cannot. For some reason, the development sector is more apologetic than any other in grappling with the economic transformations that must come about in the 21st century. I hope that changes soon!

  6. Long term I’m a massive optimist (it will be awesome), but short term very pessimistic for the poorest. I do see pathways to a genuinely post-scarcity society where the focus for humans is self-actualisation not paying the bills. However, we have a very tough 50-100 years to get there. There are some interesting opportunities – 3d printing offers huge leapfrog potential, and the technology moves fast enough that the cast offs of the rich will be genuinely useful – but progress will rely on those experiencing the fruits of such progress making it their mission to share them, and people aren’t generally good at that. Here’s a great video (https://www.youtube.com/watch?v=7Pq-S557XQU) explaining why this time it will be different to previous revolutions, and my conclusion from that is that we need radical policy shift aligning economies with serving people rather than vice-versa. After all, there is no shortage of interesting and rewarding work to do (counselling, analysis, research and caring for starters) but you need the support administration, education, tools and skills to do it and there is an urgent need to restructure economies to incentivise and recognise such work.

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