Three challenges for Asia’s next generation digital economy – UNESCAP
24 Dec 2020
Asia is likely to influence the development of the next phase of globalisation as the region is now at the centre of the global economy, and its national economies are becoming more and more integrated through regional cooperation processes.
UNESCAP Sustainable Business Network vice chair David Morris said it is worth observing that globalisation 1.0 was underpinned by three factors that are currently missing in globalisation 2.0.
Firstly, globalisation 1.0 generated bilateral agreements, regional arrangements and global rules, norms and standards for economic cooperation, including free trade agreements, the open regionalism of the Asia Pacific and culminated in the establishment of the World Trade Organisation in 1995.
“In globalisation 2.0 we have no agreed rules, norms or standards yet to regulate giant technology companies to ensure data privacy, to protect cyber security, or to govern the development of artificial intelligence,” Morris said at the World Chinese Economic Summit held on Dec 21.
The United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) is the Secretariat of the UN for the Asian and Pacific region, of which one of its main functions is to promote economic and social development through regional and subregional cooperation and integration.
Secondly, Morris said the global value chains built during globalisation 1.0 were based on trusted relationships between suppliers, distributors and customers, with reasonable expectations of mutual benefit.
“Supply chains were built on confidence that were acting responsibly, managing and mitigating risks. Food needed to be safe to consume, cars needed to be safe to drive. In globalisation 2.0, we expect reduced trust, including amongst customers, encouraged by populist leaders to distrust foreigners, with calls for shortened or nationalised supply chains.
“Even worse, we have weaponisation of supply chains, with governments using export controls to bolster their own industries and coercion to punish others, as well as increasing restrictions on investment and financial flows, often based on opaque national security grounds. Sometimes these actions are plainly protectionist,” he explained.
Thirdly, globalisation 1.0 took place during a remarkable period of peace, at a time when leaders invested in dialogue, cooperation and confidence building measures to avoid confrontation.
This was particularly important to the millions of people who benefitted from rapid development in the Asia Pacific region in recent decades.
“Is globalisation 2.0 destined to take place in a much more confrontational geopolitical contest between rival powers? Will this confrontation mean that we cannot agree on rules and norms for the new technologies that will underpin the future digital economy?,” he asked.
“The new technologies of the Fourth Industrial Revolution must provide us with the opportunity to embed sustainability into new industries as we design them, new supply chains as they evolve, into urban planning and transport, energy, agriculture, and fisheries of the future,” Morris added.