In recent years, technological advancements made throughout society have had a monumental impact on all aspects of life. They have changed the way we work, communicate, travel, and essentially do everything around us. We must learn how to live with these "disruptive technologies", whether in the form of autonomous systems, blockchain, 5G or Artificial Intelligence (AI).
These changes, however, also significantly alter the larger geopolitical landscape, a theme of discussion at the recent Lee Kuan Yew School of Public Policy's 16th anniversary panel, titled "Governance of Disruptive Technologies" centred around how governments and policymakers can tackle the rise of digital and disruptive technologies, and what impacts they will have on the world around us.
We can already witness how these adaptations in technology are bringing changes to the way governments operate, whether in the form of smart cities, e-governance, or the use of Fintech, all of which are harnessing new technologies to bring changes to the world around us.
Easier transactions
Speaking at the event, Associate Professor Eduardo Araral, Co-Director of the Institute of Water Policy at LKYSPP, said that one of the benefits of increased digitisation in terms of global trade agreements was that it could help to lower transaction costs between buyers and sellers in different countries.
These advancements include automated customs systems, electronic single windows and other measures to enable cross-border paperless trade. A 2018 study by the United Nations ESCAP found that the full implementation of digital trade facilitation is projected to decrease trade costs by more than 26%, cutting international transaction costs in Asia and the Pacific by about $1.2 trillion annually.
"Transaction costs refer to the costs of searching — for a product, buyer, seller, information — the cost of agreeing, the costs of monitoring and the costs of enforcement," Prof Araral said. "We can now cut out the middlemen, brokers and intermediaries. The net effect is that it is possible to develop trust among a large number of anonymous buyers and sellers than would have been possible without these digital technologies."
Other benefits include the ease of access granted to global knowledge, as well as the ability to share what we know with people over the world, which has created an incredible supply and demand globally for learning and innovation. As a result, this improved interaction has enhanced long-term development by allowing for greater transparency, accountability, and integrity of leadership.
One instance is how people from all walks of life are collaborating and crowdsourcing designs of masks, gowns, and ventilators, as it has become scarce due to the pandemic. This is achieved through applications like Slack, GitHub, and open source projects.
However, the COVID-19 pandemic, which has entirely altered the global ecosystem, has also created uncertainty about the future impact digitisation will have as the world adapts to whatever the "new normal" will look like once the pandemic has ended, said Assistant Professor Araz Taeihagh, who moderated the event.
Yet there have been positives from COVID-19 too, the panellists said. For example, because of the financial impacts of the pandemic, governments had to disperse money quickly to large amounts of people, meaning that they had to find models to achieve this quicker than they would have otherwise done.
Updating trade agreements
In terms of what future trade agreements might look like, panellists at the event recommended governments to follow the Digital Economy Partnership Agreement [DEPA], which was formed between Singapore, Chile and New Zealand. The agreement facilitates the exchange of digital information between the countries, establishes new approaches to digital trade issues, and addresses the issues of industrialisation.
"[The DEPA] is a very good model for the digital world," said Professor Araral. "Hopefully more countries can look at this. The more they produce digital goods and services in their countries, the more they can trade this to other countries, and [the agreement] will address issues about privacy, data security, custom clearance, fair treatment and so on and so forth."
He added that it is time the WTO be upgraded to deal with these new developments. In addition to new issues such as the cross-border taxation of digital goods and services, data portability and security to name a few, "the WTO was designed for the industrial era and now needs to be updated for the digital era," he said.
There is a clear benefit to updating these agreements. Digitalisation is linked to greater trade openness, selling more products to more markets and in less concentrated export baskets. A 10% increase in "bilateral digital connectivity" raises goods trade by nearly 2% and trade in services by over 3%. However, it's crucial to have local laws that support cross-border digital trade with ease. One example is the ability to pay electronically and easing logistical procedures. If delivering an item is restricted by local laws, it can be a cumbersome and expensive process. In turn, digital trade may not materialise.
Dealing with the dark side
Despite the clear positive implications of technological advancements, panellists also highlighted the "double-edged sword" of technology being used by those seeking to create more harm than good.
Examples highlighted by Professor Araral included digital tech being used to facilitate the dark web for illicit goods and services, such as money laundering, drugs, human and wildlife trafficking, and other organised crimes.
In addition, Professor Araral said that algorithms, which are often specifically designed to promote items that generate strong reactions from users and viewers, can be manipulated by state and non-state actors through things such as persistent misinformation.
This can also "give rise to echo chambers, heightened biases, prejudices and permanently divided societies that can lead to polarisation and conflict," he said. "It is a difficult problem to solve because digital tech companies' business models are designed to promote virality."
Professor Araral added that potential ways of dealing with these include improving digital literacy, introducing regulations against misinformation, as well as self-regulation by technology companies.
"Like how Twitter banned Donald Trump [and] like how Facebook created an independent panel of lawyers to adjudicate what is permissible on its platforms, whistleblowers within tech companies, use of technology such as machine learning to help clean up the filth in social media and so on," he said.
(photo: Julius Silver)