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Category: Digital Economy

13 Oct 2020
Digitalization of MSMEs needs broad support package

Digitalization of MSMEs needs broad support package

Micro, small and medium enterprises (MSMEs) in Europe and Central Asia need an integrated package of financial and non-financial instruments to help them adapt to the twin challenges of COVID-19 and accelerated digitalization, according to the panel for the recent GMIS Digital Series webinar, “Industrial Recovery in Europe and Central Asia: Accelerating Digital Transformation for MSMEs”.

Taras Kachka, Deputy Minister for Economic Development, Trade and Agriculture – Trade Representative of Ukraine, stressed the need for “better balance” in mitigating the pandemic while preserving the economy, particularly the MSME sector. He noted the need to improve skills, and the certification of products and services, and to increase transparency. “MSMEs are the key drivers of regional economic growth but the lockdown measures put in place in every country have impacted their ability to produce, trade and serve their communities as supply chains were disrupted,” lamented Kachka.

Naira Margaryan, Armenia’s Deputy Minister of Economy, noted the imperative of building capacity for women and youth, given the paucity of leadership positions they occupy. She said, “Although the crisis has been devastating for some, for other businesses it creates new employment and self-employment opportunities. In Armenia, we are seeing women embrace this as an opportunity to step up, so, to support their efforts, we in the government are working to provide better access for women to enter business networks and are supporting capacity and skill-building, particularly in the manufacturing sector.”

Milena Angelova, Vice-President of the EU’s European Economic and Social Committee, focused on the need for targeted investments to specific sectors, for digitalization of MSMEs, digital skills and financial support to MSMEs, particularly through enhanced partnerships. “The main challenge is to prevent any loss of industrial production but to do this, we need to map out the impact of the pandemic on individual sectors and countries to identify where support is needed the most. Until now, much of the business community’s response to the crisis has been on a local level. This approach will not deliver a sustainable recovery. To do so, we need to draw these efforts together, to form a network across Europe and Asia to build cohesion and a multiplier effect,” said Angelova.

Maja Tomanic-Vidovic, Director, Slovene Enterprise Fund, noted that since the outbreak of COVID-19, 75 per cent of MSMEs had lost employees, 70 per cent had falling revenues, while 40 per cent suffer from liquidity issues. In the long-run, she noted, MSEMs will have to adapt to the accelerated paradigm of digitalization. She warned, “We have to accept that nothing will be the same as before…companies that don’t accept this will have problems in the future.” Concluding, Jacek Cukrowski, Chief of UNIDO’s Regional Programme, Europe and Central Asia, noted that the MSME sector is the backbone of any national economy, and that innovation is “at the core of modern business”. He listed UNIDO’s interventions in this area, including tailored programmes for the digitalization of MSMEs, enhancing digital resilience and competitiveness, digital upskilling and training. Cukrowski stressed, “Ensuring [MSMEs’] resilience is key to creating a more inclusive and resilient, human-centered future and a thriving global economy.”

Source: https://moderndiplomacy.eu/2020/10/11/digitalization-of-msmes-needs-broad-support-package/

12 Oct 2020
Asia's digital economy needs a clear global tax framework

Asia’s digital economy needs a clear global tax framework

Jeff Paine is managing director of the Asia Internet Coalition, an industry association comprising leading internet and technology companies including Google, Facebook, Apple and Amazon.

Over 135 countries, led by the Organization for Economic Cooperation and Development, are working hard to build a multilateral consensus around international tax issues arising from the growth of the digital economy. This consensus is sought through the OECD-Group of 20 Inclusive Framework on base erosion and profit shifting.

The evolving debate around international taxation seeks to address two primary concerns. The first is profit shifting, which relates to differences in countries’ tax laws existing in the present system. The second concern is that the present system may require a more comprehensive overhaul to suit today’s globalized and digitalized economy.

 

The framework applies to all consumer-facing businesses. Many people assume it is aimed at technology companies. On the contrary, it is a broad framework that recognizes that digitalization has transformed businesses and economies around the world.

A large part of the current tax system was designed after World War I and includes approximately 3,000 bilateral treaties. Simplifying this complex framework is crucial. In addition, a modern global tax framework needs to reflect the interconnected and complex trade patterns that drive our globalized world. The original framework was built around single-source products and doesn’t reflect the international nature of the way goods and services are created and sold today. Global commerce has evolved, and so must our tax system.

The OECD has recognized the need for progress and has indicated that a partial framework could be presented in October 2020 for discussion. However, there remain a few obstacles to getting this deal done. A global system that is fair and simple needs consensus. A lack of consensus and potential delays means that government revenues are impacted, and increased uncertainty for businesses.

The adverse economic impact of COVID-19 has led to an acceleration in unilateral digital taxation measures by some governments, creating double-taxation and administrative hurdles for companies, and prompting the U.S. to threaten sanctions. This regressive unilateral thinking and protestations from countries large and small are threatening to undo the OECD’s global efforts and could do more harm than good.

Against this backdrop, the world is facing a digital tax deadlock that could adversely impact economic growth, innovation, and jobs unless government leaders return to the negotiating table to find a simple and equitable solution. The lack of coordination means that companies are holding back on plans to establish operations in new markets which have resulted in fewer jobs.

The digital economy has played a transformative role in the world’s response to the challenges faced during COVID-19. Emerging technologies have been developed and deployed at an extraordinary pace. Artificial intelligence and big data analytics have enabled innovative, rapid, and wide-ranging responses to public health and essential service delivery.

In addition, COVID-19 has accelerated existing trends. With the traditional shop front temporarily shut, access to customers for most businesses has been aided by the digital economy. A lack of consensus on a global tax framework could end up restricting access to the digital economy and widen the digital divide even further by restricting investments, cross-border trade, and access to innovations for many communities.

The business community wants the certainty that an agreed global framework would bring. Fiscal consensus enables better long-term planning and a level playing for companies operating across multiple markets. The cost and complexity of individual countries creating and applying their own rules ultimately hits the pockets of the consumer and could potentially dampen the ambitions of companies to invest in future growth.

This is not just an issue for established global companies. If you are a startup operating across Asia, the cost and complexity of adhering to multiple and inconsistent rules might mean that you think twice about offering services to overseas customers.

The Asia Internet Coalition believes that all companies have a responsibility to pay taxes in compliance with the law of countries in which they operate, and members make significant economic contributions in the countries and communities where they do business. However, we believe corporate tax policies should not discriminate against companies and certain sectors and should be applied consistently in accordance with internationally agreed tax systems.

At its core, the new rules being considered by the OECD are to decide how profits are divided among countries in an era of global commerce, and where the line between goods and services is increasingly blurred in an increasingly global modern economy. We believe this is for governments to decide. However, it is in everyone’s interests for new tax rules to provide long-term stability and certainty for businesses to continue to innovate and invest in the future.

Agreement built around the key principles of neutrality, efficiency, certainty, and simplicity will give governments comfort on revenues, businesses the ability to grow and invest for the future, and consumers an understanding of the impact on their wallets.

Harnessing the potential of the digital economy is essential in driving global growth. Working together to create an enabling and harmonized regulatory environment would go a long way toward achieving this. Going it alone does not lead to a more integrated digital economy for any country, it will likely lead to the opposite.

Source: https://asia.nikkei.com/Opinion/Asia-s-digital-economy-needs-a-clear-global-tax-framework

08 Oct 2020
Future reality: Triad of Internet of Things, Artificial Intelligence & Blockchain in action

Future reality: Triad of Internet of Things, Artificial Intelligence & Blockchain in action

The big questions that need solutions are with respect to quality, credibility, genuineness, safety, increase in efficiency and warranting correct distribution of revenue.

Blockchain, with promise of immutability, transparency, security, interoperability, etc., allows us to exploit otherwise unused resources, trade the un-tradable, and allow new ecosystems that were not possible before.

Blockchain today is still in its infancy, and its mainstream value is yet to be realised. While, it’s for sure that blockchain will disrupt the existing solutions, not only in industry and commerce but in almost all aspects of our day-to-day lives, it cannot do so just by itself. Same holds true for Internet of Things (IoT) and Artificial Intelligence (AI). The underlying fact is that to get the real value new-age emerging technologies such as blockchain, AI and IoT have to work in tandem. As we begin to understand the new normal in the midst of the corona pandemic, it will be important to draw value from any digital transformation that firms undertake. Businesses will have to think beyond their domain and scope to provide services which are of actual value to consumers.

How can this happen? IoT has brought new and cheaper ways to communicate with ‘things’ which was not fathomable in the past. Blockchain, with promise of immutability, transparency, security, interoperability, etc., allows us to exploit otherwise unused resources, trade the un-tradable, and allow new ecosystems that were not possible before. The new entrant AI (inclusive of machine/deep learning, vision, NLP, robots or autonomous machines etc.) has already started to deliver great value to many industries, so much so as to reduce or even replace the human element. Further advancement in 5G communication is a positive catalyst to this ecosystem.

However, these technologies, with a disjointed ecosystem or industries’ siloed approach towards them, may not reach their full potential. In the above combination, ‘data’ becomes the common driving factor. While IoT is producing data from new sources and sensors, blockchain is safeguarding and ensuring immutability, and the AI layer on top is helping deliver new business meanings and outcomes in almost real-time. In summary, data value chain comes from new technologies enabling collection, sharing, security, immutability, analysis, and automation of decisions with minimal human involvement.

Let’s run this model on a practical consumer problem of provenance – the classic ‘Farm to Table’ use case. The big questions that need solutions are with respect to quality, credibility, genuineness, safety, increase in efficiency and warranting correct distribution of revenue. IoT takes care of conditions maintained in farms with respect to temperature, humidity, soil nutrients and growth progress, and also conditions at processing centres and logistics. All this information can be stored on blockchain-based smart contracts. AI-based engine on top of this, with feeds from weather systems, etc., can trigger and automatically execute smart contracts and take required action based on pre-agreed rules, including payments, etc. In an adverse event like an outbreak at any stage, the source could be easily traced and isolated. Next, this can be extended to insurance and forward commodity trading using a trade setup, thus bringing real value from agriculture, supply chain, financial services, insurance and other industries combined.

IoT has come a long way in improving the type of sensors, size and cost and even their usage in some industries; the real consumer centric benefits can be manifold. AI faces the challenge of accuracy, trust and confidence over replacement by the human cognitive mind. Building such ecosystems without regulatory pressure, is not easy if not impossible. This is one of the primary factors for blockchain and other similar transformative technologies not gaining mainstream acceptance or adoption.

Let’s also keep an eye on ‘Quantum Computing’ breakthroughs, as this not only threatens the key features of these emerging technologies, but will severely impact best of encryption, security and cryptography that exists today. Which means any industry, digital ecosystems, IT infrastructure will have to evolve at a rapid pace before they get negatively impacted.

Source: https://www.financialexpress.com/industry/technology/future-reality-triad-of-internet-of-things-artificial-intelligence-blockchain-in-action/2100218/

06 Oct 2020
Blockchain: The Next Great Transformational Technology Platform

Blockchain: The Next Great Transformational Technology Platform

Little did I know when I woke up on October 4, 1980, how important that day would become in my life — in more ways than one.

I was just a wide-eyed four-year-old full of excitement as my family and I prepared for game one of the World Series between my beloved Philadelphia Phillies and the Kansas City Royals. The Phillies won the Series and their first championship, and I’ve been thinking back on that memory as this year’s playoffs got underway.

Another historic event also took place 40 years ago tomorrow, though I wasn’t aware of it at the time.

About 100 miles north of me in New York City, Genentech was becoming the first biotechnology company to trade on a public stock exchange. Shares of the company, which traded under the symbol “GENE,” opened at $35. They quickly shot up to $88 before closing the wild first session at $71.25.

A double on the first day.

It was such a historic and crazy day that The Los Angeles Times referred to it as “a frenzy the likes of which hasn’t been seen on Wall Street since the go-go days of the 1960s.”

If you invested in Genentech on its opening day and held until the company was sold in 2009, you would have earned 157X your money. But those gains are nothing compared to some of the early stage biotech companies of the 1980s.

Amgen went public on June 17, 1983, for $18 per share. The stock has since gone through five stock splits and started paying dividends in 2011. Taking all that into consideration, an initial $1,000 investment into Amgen would be worth about $711,000.

That’s right, 711X your money! That turns a $10,000 investment into $7.1 million.

Today, I’m focused on another new industry that is on that same launching pad of hypergrowth and massive profits that early stage biotechs were in the 1980s. Gigantic profits have already been made, and the best is yet to come …

In some ways, this new industry could be even bigger because it’s going to affect everyone.

The way you buy everyday goods and services … buy a home … pay your taxes … even how we vote in the future.

This transformation is already underway, but the truly seismic shift — when the massive profits are made — comes as businesses, consumers, and big-money investors realize what’s going on.

Charlie Shrem and I call this “The Awakening.”

It won’t just be the biggest thing to happen to cryptocurrencies since the creation of bitcoin itself, which is the first and biggest cryptocurrency.

It will be the biggest thing since the mass adoption of the internet.

I’ve said this before but it’s critical to understanding the opportunity: Cryptocurrencies, especially altcoins, are not fantasy internet money. They are revolutionary software programs.

Over the last 10 years, the cryptocurrency industry has been defined by bitcoin. And the revolutionary technology its built on – the blockchain – has also been mostly tied to the success of bitcoin.

But people are starting to wake up to its true potential: Blockchain is the next great transformational technology platform.

Transformational technology platforms bring about a wholesale change … like when a caterpillar becomes a butterfly … or when a toddler become a teenager.

Electricity is a great example. The harnessing of electric power in the early 1900s transformed the world. It gave birth to our use of light bulbs, refrigerators, radios, televisions, telephones, air conditioners … the list goes on.

Electric power was the “platform” from which all those incredible innovations sprang to life. The world after we harnessed electricity looked totally different than the one before it.

These revolutions are rare. We saw the emergence of probably just a handful in the 20th century — electric power, the internet, even smartphones.

Each one presented colossal wealth-building opportunities.

The MORE a technology changes the world for the better, the MORE revenue it will generate, and the BIGGER the gains will be for investors.

That’s why blockchain is going to be so huge. It’s why some high-profile insiders are saying it will be bigger than the internet. It’s going to touch virtually every industry on planet Earth.

Put simply, blockchain is an ultra-safe and secure way to store information. It’s the safest way to store and transfer information ever created.

I’m talking about your financial and banking information… your personal health care information … proprietary business information … contracts … tax information … credit card payments … real estate transactions … even energy … and on and on.

All this disruption and change creates a once-in-a-lifetime financial opportunity for anyone who acts today.

Source: https://investorplace.com/2020/10/blockchain-next-great-transformational-technology-platform/

04 Oct 2020
Balancing The Priorities Of National Security And A Digital Economy

Balancing The Priorities Of National Security And A Digital Economy

Today, just about every consumer product contains a computer or a service that uses a computer. As a result, increasing perceived cybersecurity threats.

Speaking at the launch of his new book, the Minister of External Affairs Dr. S. Jaishankar shared his views on India’s place in a dynamic world. Importantly, the Minister spoke about the change in the nature of power, which now lies in trade and technology. This shift is illustrated by the digitalization of the global economy. According to the United Nations, e-commerce sales reached 25 trillion dollars in 2018, making it equivalent to 30 percent of global gross domestic product (GDP) that year. 

That said, cross-border e-commerce, or digital trade, has also engendered national security risks and threat perceptions. These are exemplified in concerns of surveillance by bad actors in telecom, which led to limitations or bans on Chinese companies that provide 5G equipment in the US, UK, Canada, Australia, and New Zealand.   

The datafication of the global and Indian economy has exacerbated these concerns. Today, just about every consumer product contains a computer or a service that uses a computer. As a result, increasing perceived cybersecurity threats. A lot of data in digital markets is personal, linked to individuals and their identities, and protected in several countries by privacy laws. 

The Supreme Court of India has also recognized privacy, including information or data privacy, as a fundamental right. The Personal Data Protection Bill, 2019 therefore seeks to provide a statutory framework for the same. This includes rules on cross-border transfers of data. Similarly, privacy is now an important part of international discussions on commerce, between advanced jurisdictions in particular. For instance, the EU-US Privacy Shield is a framework which regulates exchanges of personal data for commercial purposes between the two. This Shield was recently declared invalid by the European Court of Justice in July 2020. The Court made this decision on the basis that the Privacy Shield did not adequately safeguard EU citizens from US surveillance, in an illustration of the growing links between national security assessments and privacy. The future of digital trade will therefore rest on nations’ ability to agree on common frameworks for national security. 

Digital trade will grow only if national security concerns don’t stymie markets. As per a study by the Harvard Business Review, in the past 20 years, more than 31 countries have taken regulatory actions over perceived security concerns. A significant portion of such action has occurred in the past five years. Such events risk creating an uncertain business environment for Indian and global players alike. More importantly, they create a domino effect and evoke retaliation by trading partners. 

India can leverage its soft power to drive global consensus on the ways and means to address national security concerns in the digital economy.  For instance, the country recently banned close to 200 Chinese applications based on national security concerns. While there is no denying the potential security threats from Chinese applications, the Ministry of Electronics and Information Technology (MeitY) may have to devise a nuanced, interoperable and graded framework to foster digital trade in the future. 

A framework based on common standards can enhance security by facilitating interoperability and systems integration, and simultaneously improve cyber-defense. While the existing Sensitive Personal Data (SPD) Rules under India’s two-decade-old Information Technology (IT) Act, 2000 recognize an international standard (IS/ISO/IEC 27001) for data security, compliance rates are sub-optimal. India can consider adopting ISO/IEC 27701, a recent international standard that deals with the glaring problem of data privacy. It helps an organization in establishing a framework for the protection of privacy, provides guidance on how institutions should handle sensitive personal data, and also helps in demonstrating compliance with different privacy regulations across the world. It also specifies a Privacy Information Management System (PIMS) and provides a framework for managing Personally Identifiable Information (PII). 

The use of the Common Criteria Certification Scheme is another alternative, widely adopted in jurisdictions such as the US, Singapore, and the EU. The Common Criteria for Technology Security Evaluation is based on an international standard (ISO/IEC 15408), providing a holistic framework for testing and evaluation of common IT systems. Participating organizations can specify functional and assurance requirements, businesses can develop and claim specific product qualities, and testing facilities can examine products to determine whether they meet those claims. 

There is a need for a renewed vigor towards the adoption and enforcement of international standards. Domestic regulators such as the Securities and Exchange Board of India have already embraced the Common Criteria Scheme, and it’s time for the MeitY to consider a similar approach for public-facing common IT systems such as mobile apps. An advantage of mandating Common Criteria or other international Certifications in the event of a national security linked threat perception is the relative ease in rolling out such obligations. This is because the MeitY has already established the Indian Common Criteria Certification Scheme (IC3S). The Scheme evaluates and certifies IT Security Products and Protection Profiles against the requirements of Common Criteria Standards. 

Organizations can simply get their IT systems evaluated and certified either by government-owned Standardisation Testing and Quality Certification (STQC) labs or private labs across India and the world. Since India is already a member of a mutual recognition arrangement for this certification, of which over 30 countries are apart, the certification will be mutually recognized globally. The country is taking the right steps towards ensuring data privacy through the Personal Data Protection legislation. It’s time to ensure that associated national security considerations are comprehensively addressed in an internationally acceptable transparent and standardized manner, to foster digital trade and mutual trust among nations. 

Source: http://www.businessworld.in/article/Balancing-The-Priorities-Of-National-Security-And-A-Digital-Economy/04-10-2020-327126/

28 Sep 2020
Asia's digital economy needs consensus on tax

Asia’s digital economy needs consensus on tax

Over 135 countries, led by the Organisation for Economic Co-operation and Development (OECD), are working hard to build a multilateral consensus around international tax issues arising from the growth of the digital economy. This consensus is sought through the OECD/G20 Inclusive Framework on base erosion and profit shifting (BEPS).

The evolving debate around international taxation seeks to address two primary concerns. The first is profit shifting, which relates to differences in countries’ tax laws existing in the present system. The second concern is that the present system may require a more comprehensive overhaul to suit today’s globalised and digitalised economy.

The framework applies to all consumer facing businesses. Many people assume it is aimed at technology companies. On the contrary, it is a broad framework that recognises that digitalisation has transformed businesses and economies around the world. A large part of the current tax system was designed after World War I and includes approximately 3,000 bilateral treaties. Simplifying this complex framework is crucial. In addition, a modern global tax framework needs to reflect the interconnected and complex trade patterns that drive our globalised world. The original framework was built around single source products, and doesn’t reflect the international nature in the way goods and services are created and sold today.

Taxes must evolve with commerce

 

The OECD has recognised the need for progress and has indicated that a partial framework could be presented in October 2020 for discussion. However, there remain a few headwinds for getting this deal done. A global system that is fair and simple needs consensus. The lack of consensus and potential delays means that government revenues are impacted, and businesses are faced with increased uncertainty.

The adverse economic impact of Covid-19 has led to an acceleration in unilateral digital taxation measures by governments, creating double-taxation and administrative hurdles for companies, and leading the United States to threaten sanctions. This regressive unilateral thinking and protestations from countries large and small are threatening to undo the OECD’s global efforts and could do more harm than good.

Against this backdrop, the world is facing a digital tax deadlock today that could adversely impact economic growth, innovation and jobs unless government leaders return to the negotiating table to find a simple and equitable solution. The lack of coordination means that companies are holding back on plans to establish operations in new markets which has resulted in less jobs.

Pivot towards a digital economy

The digital economy has played a transformative role in the world’s response to the challenges faced during Covid-19. Emerging technologies have been developed and deployed at an extraordinary pace. Artificial intelligence (AI) and big data analytics have enabled innovative, rapid and wide-ranging responses to public health and essential service delivery.

In addition, Covid-19 has accelerated existing trends. With the traditional shop front temporarily shut, access to customers for most businesses has been aided by the digital economy. E-commerce, online education and tele-health services are examples of critical areas that have taken advantage of technology to adapt and thrive during these difficult times. As technology has formed the bedrock of several industries’ Covid-19 responses, more needs to be done to expand access to the digital economy, and not widen the digital divide. A lack of consensus on a global tax framework could widen the gap even further by restricting investments, cross border trade and access to innovations for many communities.

Certainty during uncertain times

The business community wants the certainty that an agreed global framework would bring. Fiscal consensus enables better long-term planning and a level playing field for firms operating across multiple markets. The cost and complexity of individual countries creating and applying their own rules ultimately hits the pockets of the consumer and could potentially dampen ambitions of companies to invest in future growth. This is not just an issue for established global companies. If you are a growing start-up operating across Asia, the cost and complexity of adhering to multiple and inconsistent rules might mean that you think twice about offering services to overseas customers.

The Asia Internet Coalition (AIC) believes that all companies have a responsibility to pay taxes in compliance with the law of countries in which they operate, and members make significant economic contributions in the countries and communities where they do business. However, we believe corporate tax policies should not discriminate against companies and certain sectors and should be applied consistently in accordance with internationally agreed tax systems.

Path forward

At its core, the new rules being considered by the OECD are to decide how profits are divided among countries in an era of global commerce, and where the line between goods and services is increasingly blurred in an increasingly global modern economy. We believe this is for governments to decide. However, it is in everyone’s interests for new tax rules to provide long-term stability and certainty for businesses to continue to innovate and invest for the future.

Agreement built around the key principles of neutrality, efficiency, certainty, and simplicity will give governments comfort on revenues, businesses the ability to grow and invest for the future, and consumers an understanding of the impact on their wallets.

Harnessing the potential of the digital economy is essential in driving global growth. Working together to create an enabling and harmonised regulatory environment would go a long way towards achieving this. Going it alone does not lead to a more integrated digital economy for any country, it will likely lead to the opposite.

Source: https://www.bangkokpost.com/opinion/opinion/1991207/asias-digital-economy-needs-consensus-on-tax

26 Sep 2020
Is The Digital Economy Green? AI, Blockchain, & Sharing Platforms

Is The Digital Economy Green? AI, Blockchain, & Sharing Platforms

Digital technologies have steadily woven themselves into the global economy, transforming the pace at which individuals are able to access and process information. According to the Bureau of Economic Analysis, the digital economy accounted for 9% of the US gross domestic product in 2018. Now the 4th largest sector in the US, digital services are rapidly expanding our energy and environmental footprint while promising broad societal benefits. For example:

Can sharing platforms help reduce food waste?
Does ride-hailing generate more greenhouse gas emissions?
How much direct energy is needed to run blockchain applications?
What benefits can artificial intelligence bring to more traditional industries?
Let’s look into the research that the Project on the Energy and Environmental Implications of the Digital Economy produced to learn more about ways the digital economy is and isn’t green, shall we?

The Project research was a way to expand the understanding of the digital and environmental nexus, to estimate the impacts of real-world applications, and to propose governance options for the sustainable adoption of digital technologies.

Environmental Law Institute Visiting Scholar David Rejeski helped launch the Project 4 years ago and noted that:

“… governments are spending only a fraction of the funding necessary to unravel the environmental impacts of our digital lives. Our society needs to develop an empirical grounding for assessing both the positive and negative impacts of information technologies, especially as they become more ubiquitous and invisible.”


A series of research papers have been released, contributing important insights to an emerging body of knowledge on 3 key technologies:

Artificial Intelligence (AI)
Blockchain
Sharing Platforms

Artificial Intelligence & the Digital Economy

The chemical industry is responding to increased energy demand and environmental performance expectations by exploring the use of emerging technologies in the manufacturing process. AI is one of these technologies, which shows great potential in reducing the energy consumption and environmental footprints of the chemical industry. Researchers determined that, although AI shows great potential in enhancing the sustainability of the chemical industry, it is challenging to quantify the benefits and impacts of AI adoptions due to the lack of system analysis methods and assessment metrics.

Quantitative understandings of the benefits of AI adoptions are critical information for policymakers and early adopters of emerging technologies, whose investments are crucial. Addressing these methods and analysis gaps is critical for improving emerging technology adoption such as AI. The authors developed a framework to aid in quantifying and assessing the environmental impacts of AI in the chemical manufacturing industry, hoping to address the dearth of studies on the topic.

Blockchain & Challenges

Corporate decisions are driven by information. Information volume — big data — is growing quickly, bringing greater organizational challenges in making sense of information necessary for managing their networks and supply chains. Blockchain technology is a disruptive information-based technology incorporating characteristics of decentralized “trustless” databases and ledgers, allowing for global-scale transactions, process disintermediation, and decentralization among supply chain entities.

Blockchain technology can support information required for timely provenance of goods and services in a secure manner that is clear and robust enough to trust, creates more effective information flow in the supply chain, and evolves a product-based economy to an information-customization economy.

Between now and 2023, the global blockchain in supply chain market is estimated to reach a total valuation of $424 million and an over 48% growth rate. This substantial market growth will occur as a significant fraction of companies seeks to benefit from blockchain technology within their supply chain and its sustainability.

The authors determined that a deeper understanding of how these blockchain solutions are to be operated and by whom must be sought. They developed several propositions suggesting important links between organizational, technological, and external concepts for blockchain adoption. They also attempted to systematically investigate and prioritize the barriers to blockchain technology adoption in sustainable supply chains from the lens of 2 groups of stakeholders: organizations and supply chains.

Image retrieved from ftc.gov

Sharing Platforms & Green Goals

A series of different research studies analyzed the degree to which sharing platforms currently work toward green goals in today’s digital economy.

  • One paper sets out feasible paths for quantifying the GHG emissions impact of ride-hailing, a service that warrants consideration as a transportation mode and emissions source distinct from automobiles generally.
  • Another paper found that electrifying ridehailing vehicles would deliver 3X to 4X faster payback, environmental benefits, and greater life cycle cost savings compared to private vehicles.
  • Although there is a small yet expanding body of research focused on frameworks for building equitable platform cooperatives, there has been little to no work thus far examining how existing platform cooperatives actually operate and govern themselves, in reality.  A third paper described how truly peer-to-peer ridesourcing services are feasible and may have stronger incentives to reduce emissions from deadheading — completing a trip without passengers.
  • Researchers who had focused on the impacts and benefits of ride-hailing platforms discussed their results during an online webinar on Ride-Hailing & the Future of Sustainable Transportation.
  • Another paper reviewed the success of a peer-to-peer food-sharing app and suggests that the sharing economy may offer powerful means for improving resource efficiency and reducing food waste. The research team concluded that gaining a better understanding of supply, demand, user behavior, and network dynamics of food sharing platforms is an important step toward answering many open questions regarding the environmental impacts of sharing activities, their potential welfare effects, and the drivers behind their adoption — or lack thereof.

Final Thoughts about the Greening of the Digital Economy

The Environmental Law Institute, in partnership with the Center for Law, Energy & the Environment at UC Berkeley, and the Yale School of the Environment, formed this Project on the Energy and Environmental Implications of the Digital Economy. Supported by the Alfred P. Sloan Foundation, this research is at the core of ELI’s Innovation Lab, a venture focused on supporting high impact research that can drive improved environmental governance and performance.

Sloan Foundation program director Evan Michelson said,

“Digital technologies like blockchain and artificial intelligence have enormous potential to help decarbonize the energy system and address climate change, but only if we deploy them correctly. The key question is: How do we best develop 21st century technologies in ways that help move us toward a low-carbon future? There remain many unanswered questions that need more attention from scholars and funders, but these studies are an important step in improving our understanding of these issues.”

The Innovation Lab explores breakthroughs in science, technology, and policy that promises to reshape the future of sustainability; investigates feasible governance mechanisms; and works to build interdisciplinary communities of practice. In addition to exploring the relationship between the digital economy and the environment, the Innovation Lab is advancing an understanding of a future governance role of these technologies, with a particular focus on the role of algorithmic decision making. 

Source: https://cleantechnica.com/2020/09/21/is-the-digital-economy-green-ai-blockchain-sharing-platforms/

24 Sep 2020
Identifying Archetypes To Boost Digital Economies In The Middle East

Identifying Archetypes To Boost Digital Economies In The Middle East

Across the Middle East, restrictions put in place to ease the impact of the COVID-19 pandemic have begun to ease up. Students in many countries are returning to schools, business activity is on the rise in several sectors, and several markets have officially reopened for tourism. As we gradually transition to whatever this new normal will be, one major change in our society is the pervasive acceleration of information and communications technology (ICT), especially the use of technologies such as 5G, cloud computing, and artificial intelligence.

The pandemic has brought to light just how reliant our societies are on digital infrastructure, as well as the importance of technology innovation in helping humanity progress and overcome such events. If nothing else, 2020 has presented important learnings for governments throughout the Middle East in upgrading their national digital infrastructures. There is now considerable evidence available that investment in digital infrastructure can deliver strong fiscal multipliers and provide long-term returns on investment. Accelerating the transition to a digital economy will further boost industrial productivity, improve societal well-being, and benefit consumers via cost and time savings.

The worldwide digital ecosystem is estimated to be growing three times faster than global GDP. The digital economy, per the broadest of definitions, is estimated to be US$11.5 trillion, or 15.5% of world GDP. A recent study conducted by Oxford Economics and Huawei estimates that in a high-digitalization scenario, the global digital economy could grow to account for 24.3% of global GDP by 2025, which equates to $23 trillion. In terms of specific technologies, 5G is expected to influence two billion new users to come online worldwide and result in $2-4 trillion cumulative real GDP boost by 2030. At 70% adoption rate, AI is also estimated to contribute $13 trillion to $15 trillion (cumulatively from 2020) to global GDP by 2030.

While some countries in the Middle East are increasing investment in digital infrastructure, many are not able to fully benefit from such investments, which is affecting their wealth creation and prosperity opportunities. Governments must prioritize the implementation of pragmatic policies that maximize the benefits of new technology while ensuring that the inevitable short-term disruptions are mitigated.

With that in mind, governments will need to reconsider their approach to the ICT sector, particularly its governance. Developing the very best regulatory environment will help to ensure the sector grows and thrives in a way that benefits everyone– from ICT players to corporates to users. While most countries strive to achieve robust digital economies that can supplement GDP, there is no standard model to follow when it comes to building ICT capacity. A successful digital economy requires a wide range of infrastructure and capabilities.

That said, countries often have scarce resources and finite funds. Choosing and prioritizing focus areas is therefore key. A good starting point for this is to identify a country’s ideal archetype, which will then help tailor the recommendations for digital policies to ensure they are best aligned with its needs.

An archetype approach allows a country to link ICT strategy to national development strategies, which leads to an “interaction effect”– interaction between ICT investment, infrastructure, skill levels, and policy environment. Reaching a minimum threshold allows the country to benefit sufficiently from returns to scale and investment in digital infrastructure.

To that end, seven digital economy archetypes have recently been identified in a report by Arthur D. Little and commissioned by Huawei. These include:

The model of being an “Innovation Hub,” conceptualizing and commercializing new technologies and solutions
An “Efficient Prosumer,” wherein there are niche players deploying solutions for a strong local industry
The “Service Powerhouse,” whereby a nation focuses on the development of software, content and service delivery, leveraging a surplus of skilled resources;
A “Global Factory” of ICT manufacturing with labor surplus and low costs;
A “Business Hub” that serves as a trading business center for the region, attracting talent and companies from different locations;
An “ICT Patron” which is high in ICT usage/consumption but with limited contribution to ICT value creation;
An “ICT Novice,” which as its name implies, is a beginner in ICT adoption and value creation.
The archetype approach to investing in ICT infrastructure can support the Middle East’s policymakers in their decisions. Identifying a country’s strengths, core capabilities, and unique differentiators will enable a focus on those assets that can contribute most significantly towards socio-economic growth. Investment in the right areas can also help to propel the transition from one archetype to another, in which ICT supports greater value creation.

Ultimately, countries throughout the Middle East will realize greater benefits of ICT investments if they develop their strategies in alignment with their most suitable archetypes. This framework can thus empower nations to leverage their inherent strengths while weighing in on their economic and technological realities, providing a solid foundation for building a greater, more digitally-empowered society.

Source: https://www.entrepreneur.com/article/355651

20 Sep 2020
Blockchain-secured land entices real estate investors

Blockchain-secured land entices real estate investors

In the “real” world, real estate has historically been seen as a viable investment. Individuals and corporations usually purchase land and property either for development or to sell at a higher price in the future.

With the world becoming increasingly digitized, it appears that the trend of ascribing significant value to land and property has been spreading to the virtual scene. At the intersection of emerging tech like virtual reality and blockchain, developers, investors and hobbyists alike are creating a vibrant virtual real estate market.

While VR provides the tools to visualize these digital spaces, blockchain technology is acting as a base layer for the monetization of virtual real estate. With the fallout of the coronavirus pandemic causing a pivotal move toward more digital forms of human communication, interactive virtual worlds may provide a safe space for the preservation of numerous social constructs.

Second Life and Linden Dollars

Virtual real estate is by no means a recent phenomenon. ity simulators like SimCity have been around for decades. In 2003, a 3D virtual environment called Second Life arguably kickstarted the monetization of virtual real estate as users rushed to acquire digital land using the platform’s native currency, Linden Dollars. Second Life’s run was before the advent of Bitcoin (BTC); nevertheless, the project saw users buy, sell and lease properties, as well as run businesses on virtual land.

The platform soon declined, as other immersive and interactive virtual real estate projects emerged. However, at the height of its popularity, Anshe Chung, a “Second Lifer,” became a millionaire from selling digital real estate.

Virtual land as a commodity

With the coming of blockchain technology, VR platforms like Somnium Space and Decentraland enable users to acquire and monetize plots of virtual land. Recently, Whale — a nonfungible token vault — became the second-largest holder of virtual land in The Sandbox game.

Binance Launchpad hosted The Sandbox initial exchange offering back in August with the token sale event raising about $3 million. Binance is also an investor in the project, having bought over 4,000 Land tokens earlier in September.

Commenting on the growing popularity of virtual real estate, Joseph Madding, a marketing and PR consultant at The Sandbox, remarked that investors are becoming more open to the idea of digital land as a viable investment, telling Cointelegraph:

Virtual Real Estate is definitely becoming more popular. Over the last 10 weeks, we’ve seen over 1,000% more users interacting with our Telegram chat, Discord, Twitter and other social media platforms and have expanded our community management to match the increasing demand. In terms of virtual land as a commodity, we’ve seen our LAND that originally sold at roughly $370 resell for over $2,000 for what we would sell as a small estate. That’s astonishing and shows huge community interest for our NFTs.”

Indeed, the rush for virtual land assets is only the latest in the established trend of digital real estate selling out quickly. In March, VR world Somnium Space sold 110 Ether worth of virtual land in the first week of a planned, 10-week offering at the time.

Upon opening its platform in February, Decentraland saw users purchasing millions of dollars’ worth of digital acreage. In 2019, a portion of the “Genesis Plaza” estate in the Decentraland metaverse called Estate 331 sold for about $80,000, becoming the second-most expensive NFT of 2019.

Expanding digital property landscape

While it is common to see projects pursuing the tokenization of real-world commodities, the emerging virtual real estate space is creating a self-contained digital economy. With blockchain technology as a base-layer, these platforms can monetize digital land, enabling users to trade assets within the metaverse.

Apart from early adopters acquiring virtual land in the hopes of seeing assets appreciate over time, some individuals and organizations have been developing these assets. The process works similarly to real-world real estate development with the establishment of commercial and residential complexes, industrial zones and parks, among others.

Part of the allure driving the desire to own virtual land appears to be based on optimistic projects about the viability of VR technology. According to a study published in August, the combined VR and augmented reality market is estimated to be worth $20.9 billion by 2025, with companies in China and India expected to drive this significant growth in the next five years. Head-mounted displays are becoming increasingly popular among game developers and enthusiasts alike. With advances in 3D technology, manufacturers are becoming better at creating HMDs that deliver a more immersive and interactive VR experience.

Meanwhile, for blockchain projects, in general, scarcity plays a major role in driving value for their native tokens. As is the case with the real world, for real estate holdings to remain valuable, virtual land on these metaverses needs to be finite.

The monetization of virtual real estate also offers another tangible use case for NFTs. Digital land developers are creating malls, boutiques, shops and other retail outlets where they sell electronic merchandise like fashion items, rare cards, concert tickets, etc. For game developers, the marriage of VR and blockchain technology is creating the opportunity to enjoy “all-digital” gaming. Commenting on the benefits of fully digital environments, Madding argued:

“As a game developer, virtual real estate provides a nearly no-risk platform for publishing your games. With NFT technology, you’re not publishing on just an App Store anymore and you’ll have true ownership over the space in which you design and publish your game. As a consumer, owning LAND feels like buying any physical video game, and if you find yourself wanting to do something new, you can either design something completely new with our free tools, or you can resell the digital real estate just like you’d sell any physical copy of a game.”

Life after COVID-19

The COVID-19 pandemic brought about sweeping changes to human interaction, and the utilization of virtual forms of communication has taken center stage. As shutdowns continue across the world, organizations have been utilizing electronic video conference solutions for meetings. Tech giants in the United States have even issued work from home orders with reports of the practice expected to continue regardless of whether scientists come up with a vaccine for the coronavirus.

Conferences and meetups are a ubiquitous occurrence in the crypto and blockchain space. However, due to COVID-19 restrictions, it was not possible for people to physically attend many such events in 2020.

To navigate this hurdle, organizers and attendees flocked to the virtual realm, sporting creative avatars to discuss important issues in the industry. These events pushed the boundaries of electronic interaction from utilizing third-party messaging services to people interacting in a fully digital space.

According to Madding, the established social construct is becoming more open to digitization: “As the years go by, large social events like we see in Epic Games’ Fortnite may certainly be more and more common, and we hope to lead the way and see these amazing social spaces sprout up in our Metaverse.” For Artur Sychov, the founder and CEO of Somnium Space, the appeal of virtual real estate has been growing, telling Cointelegraph:

“We do see an increased interest in Somnium Land Parcels (PARCEL) because more and more people realize real use cases they can deploy and use those parcels for. Examples are talk shows, art galleries, cinemas, fitness clubs, crypto exchanges and more are already deployed inside our virtual reality world.”

As developers create more immersive and interactive virtual environments by solving issues such as display latency, it may become possible to have almost every social activity taking place in the digital space. Such solutions might even tie-in with the growing NFT marketplace for items like concert and theater tickets.

Source: https://cointelegraph.com/news/breaking-virtual-ground-blockchain-secured-land-entices-real-estate-investors

03 Sep 2020
Supply chains need AI, but AI needs humans

Supply chains need AI, but AI needs humans

The press is full of articles on why businesses need AI because it is expected to make a tremendous impact. The McKinsey Global Institute estimates that by 2030, the additional annual global economic impact will be $13 trillion, a figure that equals about 62 percent of the total current U.S. GDP. Gartner estimates that by the end of 2024, 75 percent of organizations will have moved from merely piloting AI to making it operational, and AI made their list of the Gartner Top 8 Supply Chain Technology Trends for 2020.

AI has made explosive progress since 2012 when a grad student from the University of Toronto won the ImageNet Challenge by a huge margin using deep learning, at the time considered a fringe method. Ever since, deep learning has taken Silicon Valley by storm, and AI has spread into all sectors, including supply chain, to address vexing problems previously considered unattainable. With algorithmic advancements, huge amounts of data and better computing infrastructure, AI has shown promise, making impressive gains in predictive accuracy and speed, far exceeding the cognitive capacity of humans.

The role of humans in AI
But as much as AI is growing in importance to businesses, the role of humans is also more critical than ever. With all the focus on automation (and accompanying fears of job losses), I believe that the idea of a “lights out” or fully autonomous supply chain overemphasizes eliminating the role of the human. We humans are essential to AI because we can provide contextualization, conscience and collaboration.

AI has made tremendous progress but still does not pass the famous Turing Test, devised in 1950 to evaluate whether a machine can think like a human. Examples of areas where machines fail to match our thinking are in understanding cause and effect, reason, and judgement under uncertainty, all of which depend on context.

Humans understand the context
Consider the planning problem of lead times for your average car, which may have more than 30,000 parts. No human has the time or capacity to build a plan that accurately estimates when each of those parts will arrive, so inevitably a planner must guess, resorting to shortcuts, such as assuming related parts from a supplier will have the same lead time, which may not be true. Machine learning can use the historical data to predict what the likely lead time will be, replacing a human’s assumptions and guesses. Combine these 30,000 models with automation and you get the Self-Healing Supply Chain, which can detect variances from plan, auto-correct minor ones and alert the planner to the exceptions for her to address. This kind of application significantly increases accuracy and improves productivity.

But what happens when a disruption shutters plants, delaying the flow of a significant source of these parts? History is no longer an accurate predictor of arrival, throwing a wrench in the machine learning’s algorithmic gears, but a human understands the cause and the effect and can apply reason and judgement under this kind of uncertainty. When lead times are up as much as 200 percent or more, a planner uses her contextual information and abundant domain expertise to make the best decisions possible. When patterns are more reliable, machine learning shifts into gear to provide humans additional insight, but until then, we want to keep the human at the wheel.

Humans have a conscience
Another reason we want humans driving the use of AI is to use our conscience to manage the unintended consequences of AI. McKinsey describes AI as a double-edged sword, given its positive and negative impacts, which are sharper than most new innovations and less well understood. Just a few examples of risks that make headlines are fatal crashes from self-driving cars, job losses from automation, manipulation of political campaigns and state surveillance.

When it works as we want it to, AI can seem like magic, but when it fails us, calls increase for regulation to put the genie back in the bottle. I believe this approach is neither feasible nor desirable. After all, the sharpness of the sword blade applies to positive benefits as well. In addition to the business gains that drive Silicon Valley, there are ample examples of AI for good, from health care to hunger to human rights and more.

Earlier in her career, Dr. Fei-Fei Li invented the ImageNet Challenge mentioned above, but the Stanford professor now leads the Human-Centered AI Institute. She has said, “It’s time to bring AI together with social science, with humanities, to really study the profound impact of AI to our society, to our legal system, to our organizations, to our society to democracy, to education, to our ethics.” Her voice is one of many ensuring we bring conscience to the application of AI, a task only suitable for humans.

Humans know how to collaborate
Finally, humans can collaborate and in ways machines cannot. In fact, some define supply chains by their relationships. Academics Doug Lambert and Matias Enz write: “Thus, supply chain management is actually about relationship management. A supply chain is managed, link-by-link, relationship-by-relationship, and the organizations that manage these relationships best will win.” These relationships work best when the links are connected and all can share the same view of what is happening in the supply chain based on visibility derived from the same data. This visibility allows real-time collaboration to occur when people in different parts of the business can share ideas based on a common understanding of the data, leveraging the wisdom of the crowds.

When a disruption occurs, the linked nature of supply chains means that its impact will not be isolated to one area but will have repercussions across the network. So when lead times are delayed, the pain felt by procurement will also affect production, distribution, sales, etc. If alternate suppliers must be found, solutions should be reached collaboratively by all the parties in the chain. Creating what-if scenarios built on concurrent planning can give the supply chain planner the information she needs to instantly see this impact. But these decisions exist in the context of relationships, which enable the most effective collaboration. Technology can provide a platform to reduce the friction in those relationships, but at the end of the day, humans make relationships work.

Keep the lights on and the human at the center
Intelligent automation from AI can take off people’s plates the mundane tasks that take up time but do not maximize our brains. Increasing our productivity can allow us to focus on what we do best. As much as I believe business needs AI for these kinds of capabilities, I also know that AI needs humans. Our abilities to understand context, provide a conscience and collaborate are not replaceable by machines. Instead of trying to turn out the lights for the grand vision of the autonomous supply chain, we can use AI to shine a light on exceptions so we are augmenting human intelligence, not replacing it. In fact, turn on the lights and get the planner a cup of coffee. AI needs her.

Source: https://www.kinaxis.com/en/blog/supply-chains-may-need-ai-ai-also-needs-humans