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Why Technology Matters For Sustainable Development

In his book Zero to One, Silicon Valley entrepreneur Peter Thiel addresses the distinction between globalization and technology. Globalization constitutes “horizontal progress”, he writes, or “taking things that work somewhere and making them work everywhere”; and China is the “paradigmatic example” of growth through globalization.

Technology, on the other hand, enables “vertical progress”, which Thiel argues is harder to imagine because it means “doing something nobody has ever done”. Moreover, while technology has for many come to mean information technology, there’s no reason to restrict its definition in this way, since “any new and better way of doing things” can be called technology.

Since the 2008 financial crisis, there has been an explosion of entrepreneurship around the world. Asian countries, particularly India and China, have demonstrated their ability to create high-growth start-ups. Around the world, there are 70 or so private enterprises valued at above $1 billion, and Asia is home to 15 of them.

But most of these ventures are products of horizontal progress (going “from one to n”, to use Thiel’s expression) and not vertical progress (“from zero to one”). Strictly speaking, even internet giants such as China’s Alibaba Group and India’s Flipkart are not technology pioneers: their well-earned success has been in deploying and scaling a proven business model in their home market.

So far, China, India and other emerging markets have grown by adopting and adapting technologies and business models from advanced economies. But can economic growth be sustained and delivered through the globalization model alone? Large populations in Asia and Africa aspire to join the ranks of the middle class; bringing sustainability to so many people will take innovation across a wide range of industries, which have so far remained relatively untouched by the rapid pace of change affecting information and communications technologies.

There is an enormous amount of latent consumer demand across the developing world that will be difficult to meet without innovation. Consider the challenges in energy, healthcare and financial services, for example. Energy and power requirements are so enormous that meeting them with fossil fuel-based technologies would result in serious environmental degradation, as China’s experience is proving.

In healthcare, large sections of the poor are being priced out of the market for life-saving drugs, and the industry requires a more cost-effective drug development model, as well as new government welfare mechanisms to deliver medicines to the bottom of the pyramid without violating the intellectual property rights of drug innovators.

In finance, tens of millions of people remain without bank accounts and are cut off from the formal financial system. Rapidly evolving crypto-currency technologies such as the Bitcoin (combined with internet-enabled smartphones) can help widen financial access.

The scale of need across these and other industries is such that the globalization approach alone is not sufficient: new technology is urgently required. Entrepreneurs have to deliver innovations in multiple sectors, not just ICT-related industries, to be able to make a large-scale impact.

Finally, it is more difficult for entrepreneurs and investors in advanced economies to deliver such innovations because they are not close to the customer. Increasingly, entrepreneurs in emerging markets will need to take the initiative and attempt to do what nobody has done, because the problems in these markets will be problems that nobody has really solved before. Additionally, these will be problems that advanced economies don’t really have a stake in solving.

In other words, emerging-market entrepreneurs will need to think of how to go “from zero to one” in myriad industries if they are to deliver sustainable and equitable growth for their large domestic populations. It poses a serious risk for global economic growth, but also presents the entrepreneurial opportunity of the century. Innovators who square the circle will not only create substantial wealth; they will also have done a tremendous service to human society by helping millions transition out of poverty.

Originally Published: World Economic Forum