THERE are old questions that resurface when we talk about technology and innovation: Will new technology and innovation change the employment structure and the way we work? Will the latest technology result in unemployment and create growing inequality, the world is now witnessing? How does innovation and technology square with Malaysia’s political economy? Are we technology laggards? How can the state cope with technology and innovation?
There are two effects of technology and innovation. The first is that new technology is disruptive; it replaces labour with capital. This means that new technology could see more people being unemployed or forced to seek new ways to gain employment. The second is that technology brings new capital into the economy. This will create new demand for goods and services and produce new jobs and business models.
There are some of us who are less sanguine about the impact of technology and innovation on society. The pessimist among us think that the collapse of the old economy will create widespread unemployment. The mismatch of skills generated by new technology would produce new social, political and economic challenges.
To be fair, these could be true. As it is, new technology and innovations are creating fewer jobs than jobs being displaced. Traditional jobs are now at risk because of technology. Technology has taken over some parts of the jobs carried out by lawyers, financial analysts, librarians and journalists. The commercialisation of 3D printing and advances in biotechnology could also mean that manual jobs would be threatened with obsolescence.
The optimists among us, however, think that we are better off embracing technology given our dexterity to adapt even when innovation changes the way we work, live and play. History has proven that humans have managed to negotiate difficult turns in fortune and adapt to the harshest of environment. We have avoided the Malthusian trap because new technology has forced us to come up with new things and learn new skills. The optimists believe that new technology will release new ways of living, create new employment and produce more prosperous, informative and knowledgeable society.
More recent phenomena give reason to be positive. Take the case of the agricultural sector in America. Agriculture used to take up 90 per cent of employment at the start of the 19th century. Now, the sector employs only two per cent of American workforce but without disruptions to its political economy.
More recently, the late Steve Jobs released the ubiquitous iPhone that would prove to be a game changer. The iPhone changes radically how the economy is structured. In releasing the iPhone, Apple, provided a collaborative platform when it invited outside application developers to create applications for the iPhone. That triggered a deluge of applications that are friendly to both iPhone and Android phone users. So amazing was the growth of the global application economy that by 2015, the global application economy generated US$100 billion (RM420 billion) in revenue. Such development has generated a whole new economy — the geek economy. The Uberatisation and Grabisation have changed or disrupted transportation, logistic and services industries. Alibaba and Instagram have become convenient platforms for shared or collaborative economy. Blockchain and bitcoins are now the talk given their scalability.
The huge development in technology has given new set of challenges to governments. The disruptiveness posed by technology are forcing states to find new ways of thinking to make sense of the changes and how best to facilitate, regulate and adapt to an increasingly geek economy. Is Malaysia ready for such so-called fourth industrial revolution?
Two reasons to be optimistic. First, thanks to a growing economy, Malaysia is creating a new generation of Malaysians that breathe the Internet. We are seeing a new generation that is highly adept and dependent on the Internet, so much so that Malaysia is experiencing an increasingly geek economy. Malaysians are among the highest users of WhatsApp, Facebook and Instagram applications, where numerous transactions and employment are being generated. Grab has its roots in Malaysia.
The recently launched Digital Free Trade Zone (DFTZ) could be an important collaborative or shared platform that should be harnessed to unearth new services and employment.
Second, Malaysia’s open trading economy naturally ties it with the latest development in the global economy, inevitably making Malaysians natural adopters of the latest in globalisation trends. The growth of the past years and the openness of the economy have unintentionally geared up the young to be Internet ready and savvy. When viewed from a bigger scheme of things, Malaysians are well poised to take advantage of new advances in technology.
But, there is more to gaining an edge. Countries that offer the best of Internet infrastructure and technology would be among the leading pack of innovative states. Smart applications, smart cities and the continued pursuance of various collaborative applications require that we constantly change our mental model when it comes to technology, innovation and new forms of employment.
To be winners in this new game, Malaysia has to offer the best Internet infrastructure. Cheap and fast Internet speed, for instance, come with greater competition. Funding Internet connection to low-income as well as unconnected people would trigger better leveraging of technology. Indeed, embracing and leveraging on the best that the geek economy has to offer require the right ecosystem — optimum Internet infrastructure, funding, legal framework, business processes etc.
Let us hope that the upcoming budget will provide the necessary incentives for the creation of an ecosystem that allows for technology and innovation to thrive.
Dr Abdillah Noh is Associate Professor at Tun Abdul Razak School of Government Universiti Tun Abdul Razak (UniRazak). He specialises in public policy, innovation and political economy.