How can tech diplomacy help smaller economies advance into the next decade?

In the rapidly evolving digital age, the influence of tech giants such as OpenAI, Nvidia, and Apple is growing exponentially. These companies, valued in the billions and trillions, are becoming global powerhouses, with OpenAI potentially valued at $100 billion, Nvidia at $1.21 trillion, and Apple at $2.8 trillion. This places them among the "richest" countries in the world (71st, 17th and 8th richest respectively when comparing their valuation against nominal GDP [ref]), highlighting the growing power and global influence of the tech industry.

Cathie Wood, in her recent TedTalk, emphasized that AI will spark exponential economic growth, along with other technologies like Blockchain, Genome Sequencing, Robotics, and Energy Storage. She highlighted the potential of these technologies to transform economies and societies, adding as much as $200 trillion to the global economy.

Screenshots from TedTalk

For instance, PwC identified that AI and related technologies are expected to contribute significantly to global GDP growth. AI could boost the GDP of China by over 26% by 2030, and of North America by 14.5%. Another analysis by PwC indicated that blockchain technologies could boost the global economy by US $1.76 trillion by 2030.

The World Economic Forum [ref] predicts that while AI will displace 85 million jobs, it will also create 97 million new jobs by 2025. Countries not investing in these technologies will miss out on this growth, and will not benefit from these new job markets and could experience higher unemployment rates as traditional jobs are automated.

Countries that primarily consume technology, rather than produce it, are at risk of becoming victims of their own inaction. Their inability to participate in the research and development cycle not only stifles the growth of local talent in the field, but also makes it increasingly challenging to catch up with the pace of global advancements. This situation can lead to a dependency on other nations for technology, which can have significant economic and strategic implications.

The United Nations lists 45 economies as the least developed countries (LDCs), which include nations in Africa, Asia, the Caribbean, and the Pacific. These countries often face structural limitations and have marked gaps in areas such as science and technology compared to more developed nations [ref]. They may rely on obsolete technologies and have limited capacity to invest in new technologies, making them primarily consumers rather than producers of technology [ref].

While these economies are making significant progress in aspects such as mobile device ownership and social media use [ref], they continue to grapple with the lack of a robust digital payment infrastructure. For the digital payment ecosystem to grow in emerging markets, it needs regulators that can balance growth with security. Large scale infrastructure investment is hard to justify in a low margin business like payments, where each individual transaction yields only a couple of cents as profits [ref].

Yet this critical infrastructure is proven to spur the e-commerce industry through simplification of the checkout process and enablement of cross-border transactions. The technology sector will have to respond to this and be compelled to invest in and develop innovative technologies and platforms to support the needs of the digital consumer. Amazon serves as a clear illustration of this mutual dependency and coexistence where Amazon Web Services came into fruition as a byproduct of scaling their own e-commerce business.

Some of these economies also have inherently smaller populations which limit the access to human capital, a crucial component in the development and growth of the tech workforce.

As these economies confront escalating obstacles, in what ways can tech diplomacy help to counterbalance and potentially tip the scales in their favour?

Tech diplomacy is an emerging field in international relations and diplomacy that involves the strategic engagement of a nation with technological centers of influence, usually non-state actors. It is a diplomatic approach which ensures the fruits of global technological progress are enjoyed by their home state and also the rest of the nations, regardless of their size or socioeconomic conditions.

Amidst the rise of powerful non-state actors that shape foreign policy and geopolitics in new ways, a government cannot rely solely on traditional diplomatic relations to bring home knowledge, promote its interests and safeguard their values abroad [ref]. Particularly of importance are nations that experience gaps in:

In addition to laying the foundation to tackle those gaps, a tech diplomat needs to stay abreast of the tough and key issues driving technological change in this generation:

The smaller economies, having cultivated strategic relationships in advance, will be better positioned to leverage these alliances, rather than resorting to hasty, last-minute arrangements.

Denmark appointed an ambassador to the tech industry in 2017, where he spent nearly 3 years representing his nation’s interest in Silicon Valley, where tech giants like Meta and Google are situated. A line of communication is established between the US Tech companies and the Danish government [ref]. This gave them early access to information on upcoming services that will impact society.

A large number of countries have followed suit, either by appointing diplomats to liaise with tech companies or by reimagining their foreign policy strategies for an era where technology has vast implications for geopolitics. According to Associate Professor of Diplomatic Studies at Oxford University Corneliu Bjola, there are more than 20 tech ambassadors around the world [ref]. Among lower-income countries dipping a toe in tech diplomacy are Pakistan, Brazil and Senegal [ref].

The Tech Diplomacy Network was established in February 2023 [ref]. The network was founded to foster collaboration and dialogue between the diplomatic community, civil society, and the tech industry, particularly in the San Francisco Bay Area and beyond.

These are the currently identifiable tech ambassadors/diplomat [ref][ref]:

In conclusion, Tech diplomacy can empower smaller economies in manifold ways.

Do you think smaller economies are ready to embrace tech diplomacy and if so, why?