Transcript
We think it is one of the most interesting questions in this course. Here we have this paradox where the things that in the past would have held back a developing country like physical infrastructure: bridges, roads, locomotives, etc. and the financial infrastructure, may now actually turn into an advantage.
David Bishop likes basketball and he is a big fan of the NBA. If we use an analogy of an NBA team, there are often teams with ageing superstars who are no longer as effective and are weighing down the team’s performances. This is because a lot of money was put in their contracts when they were young and there is usually a cap on how much each team can spend on players. Therefore even if the superstars are not as good anymore, the team could not afford to bring on new players to replace them. On the contrary, there are teams with a group of young stars who may not be as good as those superstars, but are considered to have a better future. This is because they’re able to capitalise on those stars for a longer period of time.
Of course, this is not to say that there are no challenges. Kenya or any of these places we use as examples would certainly be willing to change places with the US for certain aspects of their development. But it is super interesting to think that the infrastructure they’re putting in now, theoretically could help them develop and advance at a quicker rate than we’ve ever seen before.
Here it’s important to clarify that we generally think that developing countries should broadly have good infrastructure such as roads, bridges, locomotives, etc. But specifically what we’re talking about is the type of infrastructure directly related to the adoption of technology. One key area of that would be telephone lines, cell towers and internet lines.
As technology continues to advance, many companies are focusing on delivering similar types of service without having to establish complicated infrastructure such as building wires and putting up large towers. As a result, a lot of developing countries in Southeast Asia, and Africa, are looking to deliver basic internet without having to put in all the infrastructure that initially a lot of developed countries did 20 or 30 years ago.
Moreover, even when they do put in the physical infrastructure, it usually provides much better quality service than a lot of the existing services in other parts of the world. In a lot of developing countries, their internet speeds are actually a lot faster than the internet service providers in the US. This is again because major companies have spent a lot of money on that physical infrastructure and they’re essentially like a monopolistic entity there. So they don’t want to rip out those old cables and put in newer, faster ones. They just want to milk it as long as they can.
As a result, a family who didn’t have access to landline or Dial-up Internet can now enjoy mobile phone and fast internet services through 4G or 5G without having to go through rounds and rounds of infrastructure and software update.
In the example of KoeKoeTech, a Burmese American lawyer went back to Myanmar, and started a company, essentially trying to digitise their entire government services, such as tax payments and utility payments. Believe it or not, until now in Hong Kong, these services are still largely paid by check, by paper or by fax. So it was so cool to see that he had this team of developers that were digitising the entire process. Make no mistake, it’s still slow and inefficient because they’re just getting started. But the reality is, these are the exact types of legacy systems that are costing the U.S. government trillions of dollars to deal with.
That really brings us to the crux of the question of whether developing countries have somehow an advantage in the Fourth Industrial Revolution.
