IGF 2018 WS #235
How Can Developing Countries Do Digital Industrialization?

If over the 19th and early 20th century, industrial economic paradigm replaced the agarian-feudal economic system across the world, we are seeing a similar shift to a digital economy. And the shift in much faster this time around, and spread across the globe. Digital efficiencies have begun to enter processes of production everywhere, whether in actual manufacturing or primary production, or attended services of logistics etc, or in developing new online marketplaces, or e-commerce platforms. Land was the primary factor of production in the agarian society, and machines and factories in the industrial age. In the digital economy the primary factors of production are data and digital intelligence derived from it. Whoever owns the latter, which can also be called digital capital, will sit at the top of the digital value chains, skimming the greatest benefits.

In the industrial age, merely contributing raw material and consuming manufactured products did not make a country industrialised, even if it was looped into industrial systems. Similarly, just by contributing digital data, collected from various digital interactions, and consuming digital services and products (which includes e-commerce), a country cannot be considered to be digital industrialised, or even moving towards such a status.

What then does digital industrialisation entail? Traditional industrialisation was about the extent to which a nation owned its own manufacturing facilities, which represented the apex of the value chains (later it was to also have its own intellectual property). Similarly, digital industrialisation would be to own enough of data and digital intelligence, and digital platforms, the key site of mining of data and its conversion to digital intelligence towards economic productivity.

ICTs are the infrastructure of a digital economy, but data and digital intelligence contributed by it form its main body, or the chief factor of production. ICTs, especially as cloud computing, tend mostly to follow global templates, while data by definition is a local resource. How these two factors interplay in processes of digital industrialisation, and how can these can leveraged appropriately by developing countries?

What policies can developing countries adopt towards digital industrialisation? As digital economic logic takes over much of the economy everywhere, what kind of digital dependencies countries risk if they do not embark on a path to digital industrialisation?