By Simon Chan, Head of Technology, APAC at Edelman
Over the last two decades, the global market for frontier technologies has seen tremendous growth with no end in sight. Such technologies can significantly benefit developing economies, but present indicators show that the gap between developing and developed nations is growing.
However, the game is changing as the world becomes increasingly multilateral, and the Global South’s influence rises, with Southeast Asia poised to play an important role. We are likely to see frontier technologies become more accessible to developing economies across this region. Although this presents significant opportunities for nations to leapfrog economically and socially, policymakers and business decision-makers must be conscious that this comes at a time when public trust in these technologies is at stake.
The great divide in technological impact
According to the World Intellectual Property Organization, frontier technologies already represent a US$350 billion market, and one that could swell to over US$3.2 trillion by 2025. Technologies such as Artificial Intelligence (AI), Internet of Things (IoT), Web3, and renewables are among those poised to reshape economic and social structures, holding immense potential for developing economies to uplift their citizens’ quality of life. However, research and development (R&D) and intellectual property in frontier technologies are concentrated in the United States and China, with the latter filing nearly half of all international patent applications.
There is also an imbalance in the providers of frontier technologies. According to the United Nations Conference on Trade and Development (UNCTAD), the top providers across all 17 technologies covered in its Technology and Innovation Report 2023, only two are from developing economies (excluding China). These indicators are consistent with historical trends. For example, mobile phone development and deployment have been uneven and do not benefit everyone immediately.
New technologies are expensive to develop, and it takes companies time to recoup their investment before costs can come down. Until they do so, it is difficult for developing economies to invest and acquire technology. Another challenge is when such technologies first arrive, the impact can be constrained. For example, in the case of mobile technology, the first effects often involve setting up infrastructure and distribution networks. Consumer usage then follows, with the adoption of readily available applications like payment and eCommerce occurring well before considering locally developed solutions or advanced applications like the Internet of Things (IoT). This situation highlights that developed economies tend to seize most economic benefits from these technologies, leaving developing counterparts lagging behind.
Frontier Technologies set to become more accessible for developing economies
Frontier technologies present a ripe opportunity for developing economies at this moment, as we are stepping into a multilateral world economically, politically, and technologically. The influence of the Global South is rising, and developing and developed nations are forming new economic ties. We can expect greater collaboration, knowledge transfer, and other areas of cooperation.
The influence of largely Western economies over technology is not going away anytime soon. However, at the same time, economies such as China and India are also developing their own technologies at an impressive pace. For example, while the topic du jour in the U.S. is the development of generative AI, some companies in China have instead focused on developing “industrial AI” approaches, presenting unique opportunities for developing economies to embrace the technology.
AI models are generally produced individually, which is inefficient and expensive. Long-tail scenarios are those that are infrequent with little data available to train an AI model. Examples might include an object falling from a building, leak detection, or crop disease detection. Developing AI models for these scenarios is typically unprofitable, so companies usually do not pursue them. However, the “industrial AI” approach enables the cost-efficient mass production of AI models to address long-tail scenarios even with limited data, making the technology potentially more relevant and accessible to lower-income economies. Meanwhile, India is pursuing a customised approach to its AI strategy in response to the large skew in data originating from the Global North to benefit developing nations in the Global South.
Renewable technologies have also become cheaper. Economies of scale and state subsidies have helped Chinese solar manufacturers significantly reduce the market price of photovoltaic modules, thereby reducing solar energy prices by 85% since 2010. The International Energy Agency points out that this cost-competitiveness has resulted in substantial renewable energy expansion in the Middle East and North Africa.
Similarly, as Southeast Asian economies such as Vietnam, Indonesia, and the Philippines further invest in their manufacturing capacity, the declining cost of IoT presents an opportunity to leapfrog in their economic productivity. Estimates show that the average price of IoT sensors has declined from US$1.30 in 2004 to US$0.38 in 2020, a figure which is likely to be much lower today.
Public trust in innovation is critical to economic development
Public trust in innovation plays a pivotal role in fostering economic development, especially in Southeast Asia and the broader Global South, where trust serves as a crucial prerequisite for the adoption of transformative technologies. The Tech for Good Institute‘s research underscores the importance of integrity in technology service providers, revealing it as one of the most consistent predictors of trust across Southeast Asian economies, encompassing aspects such as integrity in strategies, systems, and services.
The 2024 Edelman Trust Barometer echoes global concerns surrounding the adverse impact of the rapid pace of innovation, with AI technology finding itself at a trust crossroads Among those surveyed, 35% reject this innovation compared to 30% who accept it. Simultaneously, as policymakers and regulators navigate the complexities of frontier technologies, attempting to balance broader economic growth with national goals such as stability and security, there is a growing apprehension that these technologies may become poorly managed. This is significant because individuals are twice as likely to distrust an innovation if they perceive it to be poorly managed. Distrust leads to resistance in adoption, undermining the potential benefits and impeding progress.
Encouragingly, in Southeast Asia (including Singapore, Malaysia, Indonesia, and Thailand), the current sentiment regarding innovation mismanagement (30%) is below the global average of 39% and significantly lower than Western democracies like the U.S. (56%). The reasons behind this are wide and complex.
Many Asian economies have experienced rapid growth, regarding technology as a pivotal facilitator in enhancing the quality of life. Consequently, there is often a higher level of tolerance for issues like data privacy. The region’s governmental policies frequently adopt a permission-based approach to regulate innovation. This implies that innovation is introduced within specific parameters aligned with national priorities, economic goals, and societal considerations. This contrasts with economies practicing permissionless innovation, where companies have the freedom to innovate without constraints. While this can result in quicker innovation, it may also lead to deployments with ethical, economic, or social implications. Recent years have seen several U.S. technology companies facing accusations of not acting in the public’s best interests, sparking debates on their influence and societal role.
Furthermore, Western democracies, being more technologically mature and having integrated technology into their societal fabric for a more extended period, often harbor a degree of distrust. This skepticism arises as the negative effects of technology become increasingly apparent.
Additionally, the Southeast Asian public expresses higher trust in Chinese-headquartered companies (58%) compared to those from Europe (16%) or the U.S. (32%). Given China’s expanding leadership in frontier technologies and efforts to enhance accessibility, this suggests a positive inclination among the public to adopt and potentially accelerate the realisation of associated benefits.
However, this favorable position should not be taken for granted. In Asia’s predominantly permission-based environment, there is an urgent need for even closer collaboration between governments and businesses to earn trust in innovation. In Southeast Asia, an average of 76% of those surveyed for the Edelman Trust Barometer stated they would trust businesses more if they partnered with the government on technology-led changes. For example, regulatory sandboxes are instruments that enable regulators to foster innovation in a safe and responsible way, while creating a safe space for closer dialogue between regulators and businesses in various industries. Sandboxes can create opportunities for deeper regulatory learning and empower regulators to take a more adaptive and anticipatory approach to regulation. Due to the diverse nature of political, regulatory, and economic systems across Asia, the approach to building this trust will vary from jurisdiction to jurisdiction.
As critical as pursuing and adopting such technologies is, policymakers and business leaders must prioritise effective communication to earn trust. Otherwise, an inequality gap will persist—not due to a lack of accessibility, but because of distrust.
The views and recommendations expressed in this article are solely of the author/s and do not necessarily reflect the views and position of the Tech for Good Institute.
About the writer:
Simon Chan is the head of technology for APAC and global lead of Emerge at Edelman. He advises technology companies from start-ups to multinational companies, as well as public sector organisations on their communications, risk management and market expansion strategies. He is based in Hong Kong.
