Transforming the Economic Landscape

In nearly every corner of the world, from Mumbai to Madrid, one cannot enter a café or walk down the street without seeing someone talking, texting, or surfing the Internet on their cell phones, laptops or tablet PCs. Information Technology (IT) has become ubiquitous and is changing every aspect of how people live their lives.

IT is a driving factor in the process of globalization. Improvements in the early 1990s in computer hardware, software, and telecommunications significantly increased people’s ability to access information and economic potential. These developments have facilitated efficiency gains in all sectors of the economy. IT drives the innovative use of resources to promote new products and ideas across nations and cultures, regardless of geographic location. Creating efficient and effective channels to exchange information, IT has been the catalyst for global integration.

Globalization accelerates the change in technology. Every day it seems that new technological innovation is being created. The pace of change occurs so rapidly many people are always playing catch up, trying to purchase or update their new devices. Technology is now the forefront of the modern world, creating new jobs, innovations, and networking sites to allow individuals to connect globally.

The First Industrial Revolution used water and steam power to mechanize production. The Second used electric power to create mass production. The Third used electronics and information technology to automate production. Now a Fourth Industrial Revolution is building on the Third, the digital revolution that has been occurring since the middle of the last century. It is characterized by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres.

Many argue that the Fourth Industrial Revolution has the potential to raise global income levels and improve the quality of life for populations around the world. To date, those who have gained the most from it have been consumers able to afford and access the digital world; technology has made possible new products and services that increase the efficiency and pleasure of our personal lives. Ordering a cab, booking a flight, buying a product, making a payment, listening to music, watching a film, or playing a game – any of these can now be done remotely.

The digital economy permeates all aspects of society, including the way people interact, the economic landscape, the skills needed to get a good job, and even political decision-making. Our emerging digital economy has the potential to generate new scientific research and breakthroughs, fueling job opportunities, economic growth, and improving how people live their lives.

These changes are happening all around us. In Kenya, mobile data is being used to identify malaria infection patterns and identify hotspots that guide government eradication efforts. Vehicle sensor data from delivery trucks, combined from mapping data analytics, has enabled companies to save millions of gallons of fuel and reduce emissions by the equivalent of taking thousands of cars off the road for a year. Farmers from Iowa to India are using data from seeds, satellites, and sensors to make better decisions about what to grow and how to adapt to changing climates.

How people connect with others, with information, and with the world is being transformed through a combination of technologies. These technologies will help us solve increasingly sophisticated problems, while big data will assist us in complex decision-making.

The sharing economy is a model in which people and organizations connect online to share goods and services. It is also known as collaborative consumption or peer-to-peer exchange. Two of the best-known examples of the sharing economy are Uber (transportation) and Airbnb (housing).

The blockchain is a digital “ledger” technology that allows for keeping track of transactions in a distributed and trusted fashion. It replaces the need for third-party institutions to provide trust for financial, contract, and voting activities. Bitcoin and other digital currencies are some of the most well-known examples of applications of blockchain technology.

In the future, technological innovation could lead to long-term gains in efficiency and productivity. Transportation and communication costs are predicted to drop, with logistics and global supply chains becoming more effective, the cost of trade will diminish, which should open new markets and drive economic growth. At the same time, as the economists Erik Brynjolfsson and Andrew McAfee have pointed out, the revolution could yield greater inequality, particularly in its potential to disrupt labor markets. As automation substitutes for labor across the entire economy, the net displacement of workers by machines might exacerbate the gap between returns on capital and returns to labor. We cannot foresee at this point, which scenario is likely to emerge, and history suggests that the outcome is likely to be some combination of the two.

In addition to being a key economic concern, inequality represents the most significant societal concern associated with the Fourth Industrial Revolution. The largest beneficiaries of innovation tend to be the providers of intellectual and physical capital – the innovators, shareholders, and investors – which explains the rising gap in wealth between those dependent on capital versus labor. Technology is, therefore, one of the main reasons why incomes have stagnated, or even decreased, for a majority of the population in high-income countries: the demand for highly skilled workers has increased while the demand for workers with less education and lower skills has decreased. The result is a job market with a strong demand at the high and low ends, but a hollowing out of the middle.

It is also important to remember that development is not evenly distributed over time and space. There are still many people around the world who have not yet realized the benefits delivered by previous industrial revolutions. Around 1.2 billion people do not have reliable access to energy. Another 2.3 billion do not have clean water and sanitation. More than 4 billion do not have access to the internet. Here, the Fourth Industrial Revolution could serve as a formidable accelerator of social and economic inclusion, particularly for the developing world. Recently the World Economic Forum identified five innovations which have the potential to impact the lives of smallholder farmers positively:

Improved access to electricity to increase efficiency and reduce food loss

Electricity is hardly an innovation, but there are still many people – almost two-thirds of sub-Saharan Africa, for example – who lack access. Even where energy infrastructure exists, the cost can often be a barrier. Access to affordable, reliable, and sustainable energy enables smallholders to improve efficiencies in land preparation, planting, irrigation, and harvesting. It also allows using specific methods for storing, cooling, and preserving goods. The ability of smallholder farmers to participate in global food systems depends on their access to electricity.

Increased internet connectivity to access information and knowledge to improve productivity on their farms

For many of us, the internet is a fundamental part of everyday life. However, over 4 billion people – more than 55 percent of the world’s population – remain unconnected to the web.

The vast majority of smallholder farmers live in remote areas, where good, fast internet connectivity reaches less than 30 percent of the population. Women constitute almost half of the agricultural labor force in developing countries, yet they are less likely to access the internet than men in the same communities.

If this “digital divide” were closed, smallholder farmers could access information and knowledge related to weather, rainfall, or market demand, allowing them to grow and harvest food more efficiently. Timing has increasingly become a key source of competitiveness, and access to real-time information is crucial. To be genuinely transformational, internet access must be reliable, affordable, and secure.

Mobile devices and platforms connect smallholder farmers to markets

Connectivity is not only about access to information – it is also about access to services. For example, mobile banking can give smallholder farmers access to formal financial services such as banking and loans, which they all too often lack. Take the example of Trringo: this smartphone app is being hailed as the Uber for tractors thanks to how it has disrupted India’s farm equipment renting process.

Investing in a mobile phone as an agricultural tool has perhaps become the single most strategic decision by a smallholder farmer, and we need to make sure we are doing everything we can to facilitate such smart investments.

Unique identifiers improve data about farmers, for farmers

Unique identifiers are commonly used in the developed world. When you log on to Amazon or Netflix, the site knows who you are and makes personalized recommendations based on what you have purchased or viewed before. However, data about smallholder farmers in developing economies are primarily based on samples and extrapolations and is thus unreliable or incomplete.

With unique identifiers, businesses could offer tailored services, policy-makers could make more informed decisions, and knowledge institutions could make better assessments of farmers’ circumstances.

For example, the eWallet system in Nigeria has allowed the government to identify and deliver input subsidies directly to farmers based on personal and biometric information provided by smallholder farmers. As with all innovations, this technology is not a silver bullet. For unique identifiers to improve farmers’ lives, data systems must be able to guarantee that data remains anonymous for the privacy and security of individuals.

Geospatial analysis to help farmers make informed decisions

Geospatial technologies can help both policy-makers, and individual farmers assess, monitor, and plan the use of their natural resources. If smallholder farmers had access to foundational technologies – like electricity, the internet, and mobile phones – then they too could use geospatial analysis to make decisions about the management of their farms and other assets. In this realm, FAO and Google are partnering to make geospatial tracking and mapping products more accessible.

If geospatial technologies were easy to download and use, a smallholder in Colombia could discover the distance to the nearest river, or a farmer in Malawi could use sensors to more efficiently manage their farm.

Some of the technologies we have discussed here are hardly new, so it might seem odd to see them on a list of innovations that could transform the lives of smallholders. However, for these farmers, access and adoption of technology are not automatic.

It is, therefore, our duty to ensure smallholder farmers are not left behind in the Fourth Industrial Revolution. A robust digital infrastructure is crucial for smallholders to access and create tools that empower them to make decisions about their farms and businesses. As innovation evolves, let us continue to question how the benefits of technology are being shared and how these benefits can nurture the smallholder farmers who feed the world.

United Nations Millennium Development Goals

There is broad global support for addressing extreme poverty because of its implications in regards to global and local economics, environmental protection, geopolitical stability of governments, and humanitarian efforts. In 2002, the United Nations created the Millennium Development Goals (MDGs) to reduce extreme poverty in half by 2015 proactively. The MDGs are broken down into eight smaller goals, each with a specific target or mission to accomplish.

Click on each of the links below to learn more about each goal.

• Goal 1: Eradicate Extreme Poverty and Hunger
• Goal 2: Achieve Universal Primary Education
• Goal 3: Promote Gender Equality and Empower Women
• Goal 4: Reduce Child Mortality
• Goal 5: Improve Maternal Health
• Goal 6: Combat HIV/AIDS, Malaria, and Other Diseases
• Goal 7: Ensure Environmental Sustainability
• Goal 8: Global Partnership for Development

The following is the TED Talk abstract for Bono’s TED Talk on global poverty. “Human beings have been campaigning against inequality and poverty for 3,000 years, but this journey is accelerating. Bono ’embraces his inner nerd’ and shares inspiring data that shows the end of poverty is in sight … if we can harness the momentum.  Bono, the lead singer of U2, uses his celebrity to fight for social justice worldwide: to end hunger, poverty, and disease, especially in Africa. His nonprofit ONE raises awareness via media, policy, and calls to action.” Some may ask, why Bono? He is just a millionaire “rock star” who does not know a thing about poverty issues. It turns out that Bono is extremely active in humanitarian issues and one of the most significant philanthropists in the world. He started the ONE Campaign to help inform, educate, and advocate about extreme poverty. He has also studied under one of the economic leaders on global poverty, Dr. Jeffrey Sachs, the Director of the Earth Institute at Columbia University and one of the original leaders of the MDGs.

Sustainable Development Goals

Sustainable Development Goals

The ideas behind sustainable development can be traced back to early works of scholars such as Rachel Carson’s Silent Spring (1962), Garret Hardin’s Tragedy of the Commons (1968), and Paul Ehrlich’s Population Bomb (1971). Despite different focuses of these classic works related to population and environment, all raised public concerns over environmental problems from human activities and highlighted the importance of systems thinking.

Some tremendous efforts and notable achievements have been made towards sustainable development, but human civilization is currently unsustainable. The basic idea of unsustainable development is that there are some lifestyles and human activities we are doing today that are not sustainable long-term. Much of our development depends on natural resources that either cannot be replaced or that are not being replaced as fast as we are depleting them. Some major examples are:

• Fossil fuels (oil, coal, and natural gas) used for energy
• Freshwater supplies used for irrigation and drinking
• Minerals used for manufacturing
• Trees used for construction and fuel
• Fish used for food

Each of these resources is becoming increasingly scarce. We cannot continue using them as we do today. Either we will need to shift away from them on our own, or shortages will force us to change our ways.

There are other reasons why some aspects of contemporary development may be considered unsustainable. Development is changing the global climate system and affecting biodiversity in ways that could have very perilous consequences. We will learn about these topics towards the end of the course, but, for now, just note that if we try to continue with development as we have been, then the ensuing changes to climate and biodiversity could eventually prevent us from maintaining our state of development. Finally, as we saw on the previous page, development even today is not necessarily something to be desired. On the other hand, development involves much of what is important to us and thus is not something we can easily walk away from. Achieving development that is both desirable and sustainable is an important goal for our lives and our society.