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51. MIT X TAU Series: Africa's Next Startups

Author:
Tidjane Deme and Claude Grunitzky
Publication Date:
04-2023
Content Type:
Video
Institution:
MIT Center for International Studies
Abstract:
The second webinar in the third annual webinar series focused on various aspects of sustainable development in Africa. Featuring: Tidjane Deme is General Partner at Partech, co-leading Partech Africa Fund, Partech’s multi-stages tech fund exclusively dedicated to Africa's digital markets. He joined in May 2016. Prior to joining Partech, Tidjane worked for 15+ years in the tech industry in Africa, as an entrepreneur, a consultant and a senior business manager. He worked for 7 years as a senior manager at Google, leading activities in Africa. He started the Google Francophone Africa office in Dakar in 2009, led ecosystem efforts to support developer communities and tech startups across 15+ countries and led Google’s Africa Content Strategy, launching and growing YouTube in 6 markets. He also led business development for Google’s Infrastructure investments in Africa. Prior to Google, Tidjane was a tech entrepreneur who founded and led CommonSys, a consulting and integration company deploying e-gov platforms and enterprise solutions in west Africa. He also cofounded 2 startups, an e-reputation platform in Europe and a SaaS platform for African SMEs. Tidjane started his career working with Cap Gemini in France before joining Cosine Communications, a Silicon Valley startup building network virtualization technology for carriers. Tidjane grew up in Senegal until age 18, then moved to France to attend Ecole Polytechnique (Msc Physics), did an exchange program at Imperial College London, and attended Ensta-Paritech (Telecom and IT Engineering).
Topic:
Development, Digital Economy, Sustainability, Venture Capital, and Startup
Political Geography:
Africa

52. North Korea's Advanced Technologies

Author:
KEI
Publication Date:
12-2023
Content Type:
Working Paper
Institution:
Korea Economic Institute of America (KEI)
Abstract:
The Democratic People’s Republic of Korea (hereinafter DPRK or North Korea) has been pursuing technological development in a very different way from the standard path of global technology growth due to its unique historical background and other factors and sought to develop its own science and technology to establish a complete socialist nation in line with its self-reliance (juche) philosophy. Its isolation was intensified by the international sanctions imposed as a consequence of its weapons-of-mass-destruction development programs since 2006. Throughout its existence, it has been leading the life of a recluse nation with a closed economy, resulting in a low level of technology compared to that of advanced economies. In the meantime, its political structure bestows absolute power that allows the supreme leader to allocate resources in whichever sector he wants. Major industries, such as power, mining, metal, machinery, and coal, are being developed. The DPRK is also attempting to transition to a digital economy. Evidence suggests, for example, that the DPRK is raising human capital in software, which appears to have brought positive outcomes in artificial intelligence.
Topic:
Development, Science and Technology, Sanctions, and Digital Economy
Political Geography:
Asia and North Korea

53. Merger Policy, Competition and Innovation Leadership: Implications for the UK’s Investment Attractiveness

Author:
Matthias Bauer, Oscar du Roy, and Vanika Sharma
Publication Date:
10-2023
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
The UK’s competition regulator has adopted hard-sitting views in its assessment of transnational mergers and acquisitions. Since 2019, the Competition and Markets Authority (CMA) has blocked a historic 59% of all mergers that were under investigation, which is double compared to the previous five years. With increased competence to set conduct requirements for large technology companies, aggressive enforcement by the CMA risks undermining Britain’s ambitions to become a leader in global trade, technology, and innovation.[1] Acquisitions in the technology sector have increasingly been scrutinised by competition authorities over the past decade, often based on the hypothesis that transactions involving large multinational companies tend to be anti-competitive. Authorities’ concerns are based on theories about post-acquisition market structures and the impacts of “killer acquisitions”. While their theories lack empirical justification, competition authorities have increasingly quoted them to assess cases through an ideological lens. Indeed, investigations into acquisitions show that competition authorities can come to markedly distinct conclusions when assessing the impacts on competition over time, especially in technology-intensive industries. The premise that acquisitions of small rivals by large tech companies inherently result in decreased competition lacks solid empirical evidence. Competition authorities often fail to adequately consider efficiency criteria and the resultant benefits for consumers. The proposed acquisition of Activision Blizzard, a video game maker, by Microsoft is a case in point. The UK CMA had initially found that the acquisition would reduce competition in gaming markets. EU and US competition regulators, by contrast, have cleared the transaction, highlighting the uncertain nature of merger review results for international transactions. Large multinational technology companies are major sources of innovation and productivity growth. The services they provide are increasingly pervasive across developed market economies, promising large productivity gains. Small, medium, and young companies in high-tech sectors are also important sources of innovation and productivity growth and, therefore, major targets for investment. Ideologically charged competition enforcement would have a negative impact on the UK’s investment attractiveness. The prospect of an innovative and commercially successful company being taken over by another company is an important precondition for investors to make early-stage and continued seed capital investments. Acquisitions also play an important role in driving investments in business growth and internationalisation. By contrast, there is no hard evidence to support the presumption that acquisitions by major tech companies result in decreased competition. A continuation of aggressive merger enforcement by the UK CMA would undermine investments in innovation-driven UK businesses and reduce access to funding for British venture capital-backed start-ups.
Topic:
Digital Economy, Leadership, Investment, Innovation, and Economic Competition
Political Geography:
United Kingdom and Europe

54. The Economic Impacts of the Proposed EUCS Exclusionary Requirements: Estimates for EU Member States

Author:
Matthias Bauer and Philipp Lamprecht
Publication Date:
10-2023
Content Type:
Working Paper
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
The EU Agency for Network and Information Security (ENISA) is proposing a far-reaching “European Cybersecurity Certification Scheme for Cloud Services“ (EUCS) to be established in the European Union (EU). According to the latest draft of August 2023, leaked by Politico in September 2023, the proposed EUCS would by design prevent non-European vendors from providing “high assurance level” cloud services in the EU. In this study, we show that the proposed “immunity” requirements, i.e., foreign ownership and headquarter restrictions, local staff requirements, and data localisation would lead to significant losses in Member States’ aggregate economic activity and drive a big wedge between economic growth in the EU and the growth of non-EU economies. The projected losses in annual EU GDP will vary from EUR 610 billion to EUR 29 billion within approx. two years of implementation, contingent upon the specific sectoral coverage of high-assurance use cases under the cloud service evaluation level CS-EL4. The results fit into the overall picture of EU digital policy, which has weakened rather than strengthened the competitiveness of EU industries in the past. Our findings align with the broader impacts of EU digital policy, which runs the risk of exacerbating the growth gap and technology disparity between the EU and other advanced economies. Cloud services have become increasingly popular and integral to Europe’s economy. Cloud services are granting businesses of all sizes equal access to global data and resources, stimulating collaboration, and bolstering competitiveness. Advanced cloud services are levelling the playing field in domestic commerce and international trade. Smaller enterprises can harness advanced IT capabilities, particularly cloud-based supply chain management, to streamline their operations. Cloud computing solutions are also playing a crucial role in modernising public services, offering transformative potential for government administrations and service quality. Cloud services adoption is expected to grow substantially in the years ahead, driven by data analytics, AI applications as well as quantum and edge commuting solutions. The global cloud computing market is on a rapid growth trajectory and is expected to reach some EUR 2,080 billion by 2030. Industry forecasts indicate that cloud services and transversal cloud-based technologies like AI applications, quantum, and edge computing will experience consistent growth in innovation and are increasingly finding broader applications across various industries. Overall, the global market for IT services is highly competitive and dynamic, with global cloud service providers competing against a broad range of IT service providers of varying scale, including on-premises hardware vendors, private and co-located data centre providers and software providers. Despite showing a trade deficit in international cloud services trade, trade in ICT and digitally enabled services is not a one-way-street for the EU. Recent trade data reveals that the total value of EU exports in digital and digitally enabled services to the rest of the world is roughly equivalent to the total value of EU imports from the rest of the world. This balance in trade is also observed in EU digital trade with the US, where EU exports of ICT services to the US nearly match US exports of digital services to the EU. The proposed EUCS exclusionary requirements entail various negative consequences. As recognised by the European Commission’s latest progress report on digitisation in the EU, European companies have yet to reach the “Digital Decade” targets, especially when it comes to embracing cloud-supported technologies such as AI and big data, as the adoption of digital technologies remains significantly below these objectives.[1] Exclusionary requirements would create operational inefficiencies and increased production costs for cloud services providers and cloud adopters. They would undermine investments in the domestic economy, resulting in reduced international trade, competition, and innovation. The imposition of exclusionary requirements by the EU could create a domino effect of restrictions caused by retaliation and protectionism. Data localisation and nationality requirements stifle innovation and competition, particularly in data-driven industries. The creation of redundant capacities in the EU would have adverse environmental impacts, including increased energy consumption, land use, and electronic waste. Immunity requirements would increase rather than mitigate cybersecurity risks, creating a security deficit for EU cloud adopters that lose access to proven global risk detection and prevention solutions. This study provides estimates of potential GDP and industry output effects from the implementation of exclusionary requirements under the proposed EUCS framework.[2] It is shown that the strict “immunity” requirements in the EUCS cybersecurity certification framework would severely limit European customers’ access to advanced technologies, innovation and global ICT industry growth trends. The study’s findings highlight the significant economic consequences of potential restrictions on access to global cloud services across three scenarios of different sectoral coverage. It is shown that even in the least restrictive scenario, where “immunity” requirements would only be applied to a narrow spectrum of sectors and highly critical use cases, the reduction in the EU’s annual GDP could be substantial. In scenario 1 (broad critical sector coverage), reflecting political demands of the current French government, the EU’s annual GDP is projected to decrease by 3.9% when accounting for lost cloud capacities and forgone cloud capacity and productivity growth, within 2 years of implementation. For scenario 2 (medium critical sector coverage) and scenario 3 (narrow critical sector coverage), the estimated annual losses in GDP amount to -2% and -0.2%, respectively. In terms of current EU GDP, annual losses would amount to EUR 610 billion, EUR 317 billion, and EUR 29 billion, respectively, underscoring the significant magnitude of the potential impacts. For the broad critical sector coverage scenario, our results also show that the EU’s annual GDP losses accumulate over longer periods of time. After 5 years following the implementation of exclusionary EUCS requirements, the annual growth losses for the EU and its Member States remain significant. This is due to the inability of European businesses and the EU’s public sector to tap into the worldwide innovation and productivity gains offered by globally accessible technologies and services. For the EU, we estimate the annual GDP loss to be -3.6%, with a trend to further accumulate in subsequent years.
Topic:
Science and Technology, European Union, Cybersecurity, Digital Economy, and Digitization
Political Geography:
Europe

55. Competition in generative artificial intelligence foundation models

Author:
Christophe Carugati
Publication Date:
07-2023
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
Foundation models (FMs) are the origin of breakthrough innovations in generative artificial intelligence (AI) applications, such as ChatGPT. Only responsible developments in competitive markets can help ensure that FMs deliver their full benefits at minimum risk. FM developers require language models (LMs), data and computing power to generate natural language output, such as texts, from language input. Thus, the FM value chain is composed of three main elements: LMs, data and computing resources. These markets are currently competitive, with multiple providers and degrees of openness thanks to several closed- and open-source models, open-source and proprietary data, and vigorous competition between firms at the computing-resources level, despite high degrees of concentration in some of these markets. These market characteristics ensure that FM developers face low or surmountable entry barriers. Still, potential competition issues are likely to arise in the future. Dominant firms could leverage their dominant positions, refuse to give access to their LMs, scrape data, refuse to grant access to data, impose undue barriers to switching and lock their users into their ecosystems. Firms could also use LMs to achieve an anticompetitive agreement through algorithmic collusion. Competition authorities should focus their efforts on short-term risks. They should also remain vigilant in terms of ensuring the competitive process between open- and closed-source models works and that open-source developers and public authorities do not impose undue restrictions to mitigate the risks of open-source models, which would deter their development in a way that would favour closed-source models. Finally, at this development stage, studies are lacking. Researchers and competition authorities should investigate the impact of fms on content providers and the digital advertising industry, the role of FMs in digital ecosystems, and cooperation mechanisms between competent authorities across regulatory fields and countries.
Topic:
Digital Economy, Artificial Intelligence, Competition, and ChatGPT
Political Geography:
Global Focus

56. E-Commerce and the Digital Economy in Morocco, a Factor of Social Inclusivity and Employment: Context, Approach and Limits

Author:
Youssef Tobi
Publication Date:
02-2023
Content Type:
Working Paper
Institution:
IEMed/EuroMeSCo
Abstract:
The Moroccan job market offers few opportunities for young non-educated Moroccans. With the rise of the Internet, many Moroccans sought to find new ways to generate an income and find financial stability. During the COVID-19 pandemic, we have seen a rise of Moroccan entrepreneurs in e-commerce and dropshipping and a dramatic increase of motivational and educational content that aims at encouraging more people to seek this type of career. This phenomenon is not well studied, and the link between the rise of digital jobs in Morocco and social inclusiveness is even less explored. In this paper, Youssef Tobi aims to interview dropshippers and other e-commerce professionals to establish the link between the rise of digital jobs and social inclusivity, given that Moroccans who seek this type of professional pathways are often unemployed and come from lower social classes.
Topic:
Digital Economy, Labor Market, E-Commerce, Economic Inclusion, and Jobs
Political Geography:
North Africa and Morocco

57. Is CBDC Evolutionary or Revolutionary? What Economic History Can Teach Us

Author:
Pierre L. Siklos
Publication Date:
10-2023
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation (CIGI)
Abstract:
Looking at six historical examples, this paper explores the relationship between technology and monetary arrangements in the context of central bank digital currency (CBDC). The Industrial Revolution in the United Kingdom, the greenbacks era in the United States and the end of private money in Canada are among the examples that illustrate the role of the private sector in the development of money, the role of governments in overseeing key functions of money and the impact of economic crises. The author sees CBDC as an evolution, not a revolution, of the monetary system that can co-exist with traditional currency by performing the same core functions of notes and coins.
Topic:
History, Digital Economy, Private Sector, and Industrial Revolution
Political Geography:
Canada, North America, and United States of America

58. Consumption of New and Emerging Tobacco and Nicotine Products in Zambia: Implications for Policy

Author:
Shimukunki Manchishi, Edna Kabala, and Mulenga Chonzi Mulenga
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
Zambia Institute for Policy Analysis and Research (ZIPAR)
Abstract:
The global economy has in recent years observed a rapid increase in the consumption of New and Emerging Tobacco and Nicotine Products (NETNPs). Consumers of the NETNPs in Zambia and elsewhere justify consumption of these products on grounds that they are less harmful and expose them to fewer health risks compared to traditional tobacco smoke. However, studies have shown that these NETNPs do not entirely filter out harmful chemicals from tobacco as presumed by many people, and in some cases may even expose smokers to more smoke over longer periods of time as is the case of water pipe (shisha). This study investigated the consumption and taxation of NETNPs in Zambia to generate knowledge and come up with evidence-based policy recommendations aimed at informing appropriate stakeholders on the consumption and taxation of NETNPs. The study employed a mixed methodology encompassing a desk review, a survey of 400 respondents and key informant interviews. In terms of the consumption of NETNPs, the study revealed that a majority of those surveyed consume water pipe, which ranked highest among the NETNPs consumed in Zambia. Other NETNPs commonly consumed include bidis, e-cigarettes and dry snuff (nsunko). The consumption of these products varied according to the economic status of the consumers, with products such as snus and e-cigarettes being much more preferred and consumed by those in employment because they can afford more costly products. Meanwhile, products such as water pipe and bidis were the products of choice among those not employed and this could also be attributed to the relatively lower cost of the products. Regarding the socio-demographic characteristics of the surveyed sample, the study established that most of the consumers of NETNPs were young, unmarried males. A notable finding in the study was that those who had attained tertiary level of education were the biggest consumers of NETNPs. With regards to taxation of NETNPs, the study has found that there is potential to increase taxes substantially based on consumers’ willingness to pay which would require very high tax levels to deter consumption. This would require the government to considerably increase excise taxes on these products which would ultimately increase their price and hence curtail their consumption. The study has established that the taxation of all tobacco products in Zambia is the sole responsibility of the ZRA which draws its mandate from various provisions of the Zambian law. Broadly there are eight categories used to classify tobacco and nicotine products based on the HS codes. This broad classification forms the basis for taxation of tobacco and nicotine products in Zambia. The study has established that there are four main taxes applied on tobacco products in Zambia, these include: a 25% customs duty levied on the value of the product imported; a VAT of 16% on the value of the product; a 5% surtax; and excise duty of 145% of the value for duty purposes (VDP) or K355 per kg for all tobacco products.
Topic:
Health, Digital Economy, Business, Tax Systems, Public Policy, Tobacco, Public Health, and Gender
Political Geography:
Africa and Zambia

59. Central Bank Digital Currencies and the implications for the global financial infrastructure: The transformational potential of Russia’s digital rouble and China’s digital renminbi

Author:
Maria Shagina
Publication Date:
01-2022
Content Type:
Policy Brief
Institution:
Finnish Institute of International Affairs (FIIA)
Abstract:
The launch of Central Bank Digital Currencies (CBDC) not only revolutionizes the international financial system, it also represents an opportunity to minimize the exposure to the US dollar transactions and avoid US oversight. China enjoys a first-mover advantage, as it became the first major economy to launch a CBDC. Following in Beijing’s footsteps, Russia is at the forefront of advancing its digital currency project. As US-sanctioned countries, Russia’s and China’s motivation extends beyond transaction costs reduction and financial inclusion: the governments seek to reduce their dependence on the US dollar and mitigate sanctions risks. In the short term, the US dollar’s international status remains unrivalled. No currency is well-positioned to displace the greenback as a reserve currency. In the long term, CBDCs could eliminate the need for third-party intermediaries and allow cross-border transactions that take place outside of the US-led financial system. This would hamper the US’s ability to use sanctions as a geoeconomic tool and oversee their extraterritorial enforcement.
Topic:
Finance, Digital Economy, Central Bank, and Banking
Political Geography:
China and Asia

60. The Indo-Pacific Partnership and Digital Trade Rule Setting: Policy Proposals

Author:
Lurong Cheh
Publication Date:
12-2022
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
The idea of the Indo-Pacific was borne from a global trend that has (re)oriented the centre of the world’s economic gravity to the East. Accelerating digital transformation to harness gains from technology are in countries’ common interests. The launch of the Indo-Pacific Economic Framework for Prosperity tends to supplement economic benefits to the Indo-Pacific. Becoming more deeply involved in the digital economy will require Indo-Pacific members to commit to new international norms on digital trade, of which trade liberalisation of electronic transmissions, free flow of data with trust, cybersecurity, and intellectual property rights protection must be prioritised.
Topic:
Development, International Trade and Finance, Regional Cooperation, and Digital Economy
Political Geography:
Asia and Indo-Pacific