Will the 2020s be the Decade of Digital Economic Opportunity?
If the 2010s saw tech climbing to economic dominance, will the 2020s witness the digital economy fulfil its potential to achieve more inclusive growth?
I visited San Francisco recently to see the region’s strengths - the innovation fostered by its firms, universities and global talent - as well as the byproduct of rapid growth: two million people, said a Brookings Institution report, struggle to afford rising costs of housing, transportation, and food.
For the Asia-Pacific Economic Cooperation, or APEC, the Bay Area is a test of how the digital economy can foster inclusion rather than disparity.
APEC’s 21 member economies, of which the United States is an integral part, are watching this region because we too want growth that is more inclusive.
The Asia-Pacific is becoming more digital, with 1.7 billion people, or 60 percent of the region’s population, having internet access. Yet online connectivity remains out of reach for more than a billion people here.
That translates to lower-earning capacity for communities and economies at large, as global flows of data contribute to higher GDP. And we are concerned that, without preemptive action, digitalization will leave behind those already struggling for access to opportunities.
We can do better.
A recent APEC report, entitled Structural Reform and the Digital Economy, shows how.
Yes, the interests and priorities of APEC’s 21 economies are far-ranging, as is expected in any multilateral partnerships. But we are committed to achieving economic progress that benefits all.
Structural reforms for competition law, ease of doing business, and public sector governance can remove the barriers that impede opportunities and foster more inclusive growth.
For example, increasing competition in the telecommunications sector brings down access costs and improve coverage. Connectivity costs in the regions have fallen but some economies still pay more than others. In 2017, eight APEC economies spent more than 2 percent of their gross national income per capita, the rate considered ‘affordable’ by the Broadband Commission, to stay connected.
Deeper structural reforms would also encourage new business models and innovation. Trimming regulatory bottlenecks and improving cross-border trade incentivize more e-commerce and entrepreneurship.
Reform implementation will have challenges. Policy gaps must be clearly identified before any planning. Execution must remain adaptive in this age of rapidly evolving technology. Rather than a one-time response, effective structural reforms should involve continual monitoring and updating of an economy’s needs.
Lastly, the enduring challenge of policy reform is inter-agency coordination, which can be difficult even with the best of intentions.
Yet perseverance towards an integrated approach pays. Consider Viet Nam, who became an e-commerce leader after coordinated structural reforms in both telecommunications and e-commerce. The reforms brought competition from the likes of Amazon and Alibaba, but they also spurred the market to almost triple in size.
What also works are reforms that focus on education, skills, infrastructure, and social security, and address barriers that prevent women, small businesses, and traditionally marginalized groups from fully participating in the digital economy.
I am encouraged that so many APEC economies strive to eliminate these barriers.
To reduce infrastructure gaps, economies are working to make connectivity more affordable. In the United States, the American Broadband Initiative, the BroadbandUSA Program, and the United States Department of Agriculture’s ReConnect Program, are connecting communities. Similar programs are thriving in New Zealand, Malaysia, and Japan.
To improve the adoption of technology, the United States Commodity Futures Trading Commission (CFTC) has established LabCFTC to promote responsible fintech development and fair competition for public benefit. Consumers, farmers, ranchers as well as investors have benefited as a result.
Skills training programs are proliferating from Australia to Singapore, with many initiatives encouraging more participation of women and girls in STEM.
Lastly, more economies are adopting the APEC Cross-Border Privacy Rules (CBPR) system - a voluntary certification scheme that safeguards the flow of personal information and a model that has been integrated into the USMCA trade agreement.
APEC is a forum for multi-stakeholder collaboration. Its strength lies in its unique approach toward private sector cooperation. Our tech-related initiatives, from the APEC Framework on Cross-Border E-Commerce Facilitation to the APEC Action Agenda for the Digital Economy, benefit from input and contributions from the business community.
It is this collaboration which will contribute towards better policies for the digital age, and in so doing facilitate the region’s inclusive economic growth.
Dr. Rebecca Sta Maria is the Executive Director of the APEC Secretariat.