Economics

Technology and Innovation

  • Technology and Innovation
    Zimbabwe and an “Arab Spring”
    Zimbabwe is rapidly deteriorating, if not imploding. In the midst of a drought, estimates are that up to half of the rural population will face hunger or famine in the coming year. The economy is contracting, and the government is running out of hard currency, British sterling, the U.S. dollar, and the South African Rand, which it uses since it abandoned its own currency. The government is failing to pay its civil servants and some of its security forces and has imposed a ban on imports from South Africa. Unemployment figures are so high – up to 85 percent –as to be meaningless. The government’s diamond revenue is running out or diverted. President Robert Mugabe – at times referred to as “Uncle Bob” – is 92 years of age, and it shows. His political behavior is increasingly quixotic. He has abandoned a traditional pillar of his regime, the “war veterans,” who played a crucial role as Mugabe’s thugs and drove the white farmers out. He has even threatened the “veterans” with mayhem if they dabble in succession politics. Mugabe’s party, ZANU-PF, is factionalized over the succession issue, with the security services supporting Emerson Mnangagwa while “Generation 40” supports Mugabe’s wife, Grace, as does Uncle Bob, at least for now. Meanwhile, Zimbabwe functions as an inefficiently repressive police state, and regime critics “disappear.” Government spokesmen blame “opposition parties” and “Western embassies” for fomenting unrest. The traditional opposition parties continue to be in disarray and do not provide a credible alternative to the current regime. Up to now, however, Zimbabweans have been remarkably passive, or they have left the country, especially for South Africa, and they are now found all over the world. Though Zimbabwe is divided ethno-linguistically, the Shona are the largest; Mugabe’s mother was a Shona. And, undeniably, Mugabe retains substantial support, especially in rural areas. After all, he drove the white people off the land, and they may come back once he is gone. However, driven by and fear of hunger, passivity may be giving way to anger and manifesting itself outside conventional politics. There are now daily demonstrations and strikes that attract some of the unpaid government employees. The strikes are widespread, though of limited duration. A strike on July 6 is described by the media as the largest in the country’s history; more are planned for the week of July 11. Thus far, they have apparently been non-violent, though there has been some destruction of property. Reminiscent of the early days of the Arab Spring, demonstrations are organized through social media and by hitherto unknown figures. One is Evan Mawarire. He is a pastor but earns his living, such as it is, as a professional master of ceremonies. According to South African journalist Simon Alllison who has interviewed him, Mawaire was driven into political activism by his inability to raise the money for his children’s school fees. His mode of public protest, now widely adopted, is to wear the Zimbabwean flag around his neck. His hashtag, #ThisFlag, has hits in the tens of thousands. But, again reminiscent of the Arab Spring, Mawarire appears to have no political program beyond overcoming Zimbabwean passivity about a rotten regime, and he claims no affiliation with any political party. The government jailed him on trumped-up charges on July 12. How these strikes and protests evolve will in large part depend on how much violence occurs. There are scattered reports of police violence in “high density suburbs” (slums) outside the country’s largest cities, Harare and Bulawayo. If the security services, those that are still being paid and are loyal to Mugabe, resort to widespread violence, that could ignite deep public rage with unpredictable consequences. An all-too-frequent African pattern is that it is the security services that set off a cycle of violence which then spins out of control. There is also the question of the impact of ongoing public protests on the ZANI-PF internal political jockeying. In so far as the regime is functioning, Mnangagwa appears to be the most responsible, if also the most sinister. A breakdown of order might drive party support his way.  
  • Technology and Innovation
    Women in Tech as a Driver for Growth in Emerging Economies
    Overview As the world transitions to an increasingly digital economy, many low- and middle-income countries face an obstacle: most emerging economies lack qualified people to fill critical information and communication technology (ICT) jobs, a shortage that is exacerbated by the low representation of women in these industries. The gap between the demand for ICT workers and the supply of job seekers with the necessary technical skills threatens the ability of those countries to participate in a powerful driver of growth in the twenty-first century—the digital economy. As the CFR Discussion Paper "Women in Tech as a Driver for Growth in Emerging Economies" argues, increasing the participation of women in the ICT labor force would help bridge this gap, but women are not yet able to take full advantage of this growing sector. While a degree in computer science or engineering is necessary for most professional-level careers in ICT, the share of women graduates in these fields is slipping in many parts of the world. Although researchers and policymakers have focused on closing the gender divide in ICT jobs in the United States and Europe, far less attention has been focused on emerging economies, which increasingly rely on local labor forces to drive growth. Globally, ICT sector jobs are transitioning from Organization for Economic Cooperation and Development (OECD) countries to non-OECD countries because of the rapid growth of ICT markets in emerging economies. According to a 2012 report by the International Telecommunications Union (ITU), "China is by far the largest producer and exporter of ICT goods today, while India is the largest exporter of computer and information services." The demand for ICT skills has also grown outside of the ICT sector, as digital technologies are applied across other sectors to improve productivity. Additionally, development policy faces an existential crisis. Dramatic advances in automation and artificial intelligence are rapidly replacing low-skilled and routine jobs and closing the traditional path of development through industrialization. Factories, agriculture, and call centers—traditional stepping stones to the middle class for low-wage workers—increasingly require fewer human hands. The global trend toward offshoring is even showing early signs of reversal because increased automation has made the cost of labor less significant. In this upheaval, the ITU notes, "more women than men have been displaced due to increased automation and computerization of workplaces." Expanding women's access to ICT jobs would not only advance economic opportunities for women, their families, and their communities, but it would also help address the shortage of skilled workers for these jobs and grow the digital economy. As women become increasingly active users of technology, their participation in designing and developing tech products and services will help to enhance technology's relevance for women as consumers, further boosting innovation and economic growth. Working together, the public and private sector should address the multiple barriers women and girls face, particularly in low- and middle-income countries whose economies stand to gain the most from greater participation of women in vital ICT jobs.
  • Technology and Innovation
    Net Politics Podcast: Catherine Novelli
    Podcast
    In this latest episode of the Net Politics podcast, I speak to Catherine Novelli, undersecretary of state for economic growth, energy, and the environment.
  • Economics
    Women Around the World: This Week
    Welcome to “Women Around the World: This Week,” a series that highlights noteworthy news related to women and U.S. foreign policy. This week’s post, covering from May 20 to May 27, was compiled with support from Becky Allen and Anne Connell. Tsai Ing-wen inaugurated in Taiwan                                                         Taiwan inaugurated its new president, Tsai Ing-wen, last week, following a landslide win by the liberal Democratic Progressive Party (DPP) in parliamentary and presidential elections this past January. Tsai’s inauguration not only makes her Taiwan’s first female leader, but also the first woman unrelated to a male politician to be elected as a head of government in any Asian country. Tsai has signaled that domestic issues will be her top priority in office, citing the need to improve Taiwan’s educational system, boost its economy, and reform its judicial system in her inaugural address. She treaded cautiously with respect to Taiwan’s relations with China, calling for “positive dialogue” but declining to mention the contentious 1992 Consensus that asserts the “one China” principle backed by Beijing. Just days into her term, Tsai sparked controversy not for her stance on cross-strait relations, but because of her status as a single female politician: an opinion piece published by the Xinhua news agency this week argued that said Tsai is emotionally unfit to lead the country because she has no husband or children, which is still seen by many as anathema to traditional Chinese culture. The piece was widely denounced in both Taiwan and mainland China as sexist and removed from major news sites, and thousands of Chinese-language social media users expressed outrage about its claims. World leaders promote women at the G7 summit                                                           As leaders of seven industrialized countries gather for this week’s two-day G7 summit in Japan, economic and security concerns dominate the agenda. The G7 leaders are expected to discuss monetary, fiscal, and structural policies to spur growth, including the promotion of policies to support the entry of more women in the workforce. Reports suggest that Japanese Prime Minister Shinzo Abe’s government, which has worked to incentivize women’s participation in the labor market in order to foster economic growth, played a significant role in elevating women’s economic contributions on the G7 program. Also on the agenda are proposals to incorporate women into women in science, technology, engineering, and mathematics (STEM) fields. A declaration on women and STEM, adopted during a ministerial pre-summit meeting attended by science and technology ministers from Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States, will be presented to heads of government by Japan’s Science and Technology Policy Minister Aiko Shimajiri during the summit. Woman takes top job at FIFA                                                                                             The president of Fédération Internationale de Football Association (FIFA), soccer’s global governing body, made history last week by appointing Fatma Samoura of Senegal as the organization’s new secretary-general. In assuming FIFA’s second most powerful post, Samoura will become the first woman to ever hold any senior executive position in FIFA, and will be a rare non-European appointee in a global organization heavily criticized for the lack of geographic representation in personnel. Her predecessor, Jérôme Valcke, was fired amid an ethics investigation. Markus Kattner, acting secretary-general, was fired this month for paying himself millions in a secret bonus scheme. FIFA President Gianni Infantino praised the depth of Samoura’s operational experience at the World Food Program in Rome and as a former United Nations official in Cameroon, Chad, Djibouti, Guinea, Madagascar, and Nigeria. She will assume leadership of an organization in crisis: FIFA announced massive restructuring this year in response to allegations of  pervasive corruption, racketeering, wire fraud, money laundering, and match fixing, as well as scathing critiques of gender inequality, including an equal pay dispute between female World Cup champions and the U.S. Soccer Federation.
  • China
    Podcast: The Hacked World Order
    Podcast
    In this week’s Asia Unbound podcast I speak with my longtime colleague Adam Segal, Maurice R. Greenberg senior fellow for China studies and director of the digital and cyberspace policy program here at CFR, about his new book, The Hacked World Order: How Nations Fight, Trade, Maneuver, and Manipulate in the Digital Age. In our discussion, Segal clearly and concisely deconstructs the framework of U.S.-China cyber relations and describes the global implications of the geopolitics of cyberspace. He notes that in recent years, states have increasingly asserted their sovereignty in cyberspace through surveillance, censorship, and cyberattacks, laying to rest any possibility that the web might evolve into a utopian space free from the dominant voice of the state. China plays a particularly important role in the realm of cyberspace, maintaining the Great Firewall to control the flow of data within its borders, engaging in economic espionage against American companies, and upholding a vision of cyberspace that directly contradicts the global, open, and secure model emphasized by the United States. Yet there is still hope for common ground. While the United States and China may never reach an agreement on the fundamental openness of cyberspace, they may find limited areas of cooperation such as crime prevention and counterterrorism. At the very least, it appears that both countries have agreed—at least for now—that disputes in cyberspace should not be allowed to derail stable aspects of the bilateral relationship. Listen below to hear his take on this complex and critical virtual world.
  • Cybersecurity
    Net Politics Podcast: Arati Prabhakar and John Launchbury
    Podcast
    In this latest episode of the Net Politics podcast, I sit down with Arati Prabhakar, Director of the Defense Advanced Research Projects Agency (DARPA), and John Launchbury, Director of the Information Innovation Office at DARPA.
  • Energy and Environment
    Beyond Climate Confusion: Why Both Energy Innovation and Deployment Matter
    I have a new essay in the May/June issue of Foreign Affairs—“The Clean Energy Revolution: Fighting Climate Change with Innovation”—which I co-authored with Teryn Norris, a former advisor at the Department of Energy (DOE). We are grateful for the positive and constructive comments we’ve received, but I do want to respond to a pair of critical posts by Joseph Romm, formerly an acting Assistant Secretary at the DOE under President Clinton. I hope we can put to rest an unhelpful debate among those passionate about confronting climate change, or, at the very least, respectfully agree to disagree. First, here’s some of the positive coverage of our essay. Bill Gates called it “One of the best arguments I’ve read for why the U.S. should invest in an energy revolution.” A visionary who plans to double his personal investment in clean energy technology ventures to $2 billion over the next five years, Mr. Gates is reinvigorating the sector, and we’re honored by his endorsement. One of the best arguments I've read for why the U.S. should invest in an energy revolution: https://t.co/58978QoWeY pic.twitter.com/xJV5Dm8hSp — Bill Gates (@BillGates) April 20, 2016   Gernot Wagner, a senior economist at the Environmental Defense Fund and author of Climate Shock, called it “clean energy revolution, walk-and-chew edition: price carbon, *and* innovate.” On the other side of the aisle, Rich Powell, Managing Director at the conservative ClearPath Foundation, called it “the best summary of our clean energy innovation challenge I’ve read.” Finally, David Roberts at Vox also wrote an article about our essay, remarking, “Here’s a sign of a more constructive debate on clean energy innovation.” I was gratified he recognized our intent to embrace intelligent policies that advance both innovation in and deployment of clean energy technologies “without forcing unnecessary either-or choices.”[1] He quoted our essay’s thesis: "Fighting climate change successfully will certainly require sensible government policies to level the economic playing field between clean and dirty energy, such as putting a price on carbon dioxide emissions. But it will also require policies that encourage investment in new clean energy technology, which even a level playing field may not generate on its own." We set out to write an inclusive essay, and we sincerely appreciate that most readers recognized that. Unfortunately, Dr. Romm chose to interpret our essay as a one-sided argument for innovation at the expense of deployment. That characterization is neither accurate nor constructive, as I’ll demonstrate. Of Red Herrings and Straw Men The first critical post runs over 4,000 words, under the headline, “We Fact-Checked A High-Profile Article On Climate And Energy. It Wasn’t Pretty.”[2] The post boils down to three central contentions: 1.We have made a factual error by asserting, “If the world is to avoid climate calamity, it needs to reduce its carbon emissions by 80 percent by the middle of this century—a target that is simply out of reach with existing technology.” 2. It is impossible to achieve deep reductions in greenhouse gas (GHG) emissions by mid-century using "mysterious nonexistent technology.” 3. Existing clean energy technologies have fallen in cost and will continue to do so as a function of their deployment, which implies that they are sufficient to achieve ambitious climate goals. It should be clear that only the first contention is amenable to straightforward fact-checking. So the title is a red herring that does not reflect the bulk of the post’s discussion, which invites complex, rather than yes/no, answers. We answered the factual question immediately after Dr. Romm published his post. Climate models suggest that global GHG emissions must fall by 75–90 percent by 2050, compared with 2010 levels, to provide the best chance of limiting climate change to 1.5 degrees Celsius. This is a warming level above which scientific uncertainty about the effects of climate change increases substantially. As a result, the Paris Agreement reflects an aspiration to meet this target. Dr. Romm did not contest this fact. We do concede, however, that we could have been clearer in explaining the context behind the 80 percent GHG reduction figure. Still, whether the required reduction is 60 percent (to limit warming to two degrees) or 80 percent by 2050, improved technology can accelerate progress toward either of the targets. And the emissions reduction challenge will not end in 2050, another reason why it is crucial to make long-term investments in innovation today. The second contention suffers from another logical fallacy: it sets up our essay’s argument for supporting innovative technologies as a straw man argument favoring “mysterious nonexistent technology.” I am genuinely surprised by this contention, especially because of its author. Dr. Romm and I are both trained physicists. And my experience in the lab, working with some of the best scientists in the world on a revolutionary solar energy technology, proved to me that the breakthroughs we need are within reach. The technologies we need to develop are neither mysterious nor nonexistent—science and technology enable us to probe materials at the nanoscale and simulate novel ideas on supercomputers. And, as Dr. Romm and I both know, the academic literature brims with sanguine reports that do just that. Concretely, in our essay we propose several clean energy technologies that the world needs to achieve deep decarbonization. We write: "New reactor designs could make nuclear meltdowns physically impossible, and nanoengineered membranes could block carbon emissions in fossil-fueled power plants. Solar coatings as cheap as wallpaper could enable buildings to generate more power than they consume. And advanced storage technologies—from energy-dense batteries to catalysts that harness sunlight to split water and create hydrogen fuel—could stabilize grids and power vehicles. The wish list goes on: new ways to tap previously inaccessible reservoirs of geothermal energy, biofuels that don’t compete with food crops, and ultra-efficient equipment to heat and cool buildings. Every one of those advances is possible, but most need a fundamental breakthrough in the lab or a first-of-its-kind demonstration project in the field." For example, there are several candidate chemistries for an energy-dense battery that could power long-range, inexpensive electric vehicles (DOE’s Quadrennial Technology Review names lithium-sulfur, magnesium-ion, zinc-air, and lithium-air), but further lab science is needed to develop these technologies. And whereas solar perovskites have excelled in lab efficiency tests, they still need real-world experience to persuade investors and customers to trust the product. None of these technologies are mysterious or non-existent, but they will require resources and time to achieve commercial entry and displace fossil fuels. Dr. Romm argues that the pace of previous energy transitions and the colossal amounts of capital required for such a transition preclude next-generation technologies from playing a major role before 2050. I disagree. That Dr. Romm can point to a particular example of a slow technology development cycle (he references “thorium-based nuclear power”) should not entail inductive license to dismiss every other technology out of hand. At the 2015 Paris summit, Energy Secretary Ernest Moniz provided a compelling vision for nuclear technology development: "If we have a viable pathway at building nuclear power in smaller bites, the whole financing structure can change and make it much more affordable…If we can demonstrate let’s say the first modular reactor in the early part of the next decade, then what we hope is it’s part of the planning process in the middle of the next decade for our utilities. Around 2030 the 60-year lifetime of existing reactors will start to kick in, and that’s a time period when utility commitments to a new round of nuclear will be especially important…If a couple of [the more than 50 privately funded companies developing advanced nuclear technologies] make it it’s a big deal." And even though there may not be a good precedent for a rapid transition in the energy sector, there are other infrastructure sectors that have been transformed rapidly by innovation. Consider fiber optic networks, which compose a massive global infrastructure system. Over the last four decades, the information capacity of these networks has increased by a factor of roughly ten million. Real scientific breakthroughs and the deployment of innovative technologies made this possible (for more on the science, see this article on Keck’s Law). Partnering Innovation with Deployment Dr. Romm’s third contention is actually one on which we share substantial common ground. We should celebrate the fall in the costs of several clean energy technologies as a function of their cumulative production (the “experience” effect). But I do disagree with Dr. Romm’s extrapolation that existing technologies will suffice to meet the climate challenge. Still, I think that their deployment plays an important role in paving the way for superior technologies to succeed them. Deployment can lead to financial and business model innovation, as we see with residential solar leases in the United States or rural microgrid ventures in India and East Africa. Similarly, governments can hone policies through the experience of deployment, like the streamlined renewable energy permitting, inspection, and interconnection regimes in Germany. Utilities learn how to manage grids that overflow with intermittent power. Investors learn how to finance large projects that deliver steady cash flows but are unfamiliar to most investors. And innovative companies look for viable deployment pathways to ensure that their investments in technology development can pay off. Today’s technologies alone won’t actually power tomorrow’s world. But they could make it possible for advanced successors to do so. There are clear limits to the potential for existing technologies to meet climate targets. For example, the International Energy Agency warns, “Carbon capture and storage (CCS) remains a vital technology to meet long-term global climate goals for emissions reduction...To reduce the cost gap and stimulate innovation, increased policy action is needed to create more market opportunities in parallel with continued research and development (R&D).” As emerging economies like India invariably build more fossil-fuel generators, cost-effective CCS technology will indeed be essential. Early CCS deployment efforts have experienced setbacks, such as construction delays and cost overruns (cf. Southern Company’s Kemper Project), but the deployment process will yield valuable insights into how to better budget, plan, and implement large CCS retrofit projects in the future. Still, the technology used in current-generation CCS projects to capture CO2, amine absorption, is inadequate for a widely deployable solution to decarbonizing the world’s fossil-fueled power plants. Instead, membrane separation and metal-organic framework capture technologies, which are showing promise in the lab, could meet the performance criteria for a scalable CCS solution.[3] Dr. Romm’s argument is more convincing with respect to solar energy, which has become increasingly competitive with conventional energy sources as a result of rapid deployment. Harvard Professor David Keith recently predicted that solar’s dramatic price declines may obviate the need for technology improvements. I think the jury is still out, but we have good reasons to expect that technology improvements will be necessary for solar power to become truly mainstream by mid-century, as GTM Research director Shayle Kann and I wrote in Nature Energy last month. Still, I will be pleasantly surprised if I am proven wrong. Indeed, just this week, a Saudi-backed consortium placed an astonishingly low bid to build a solar farm in Dubai for only 3¢/kWh, half the local price of power from natural gas. Existing technologies may surprise us, as Dr. Romm suggests, especially if this bid turns into a contract and Dubai’s prices can be replicated elsewhere in the world. (I am skeptical, though, of the latter possibility).[4] Deployment and innovation go hand in hand. Sometimes, policies that encourage deployment can discourage innovation. I contend, for example, that some solar deployment policies create ring-fenced markets in which mature technologies can lock out emerging competitors through incumbency advantages. But in most cases, public and private resources for deployment do not come at the expense of resources for innovation. And by holistically designing policies that support both emerging technologies as well as mature ones, as we argue in our essay, policymakers can most cost-effectively confront climate change. We assert that a price on carbon, in conjunction with increased support for research, development, and demonstration of innovative clean energy technologies, can best coordinate innovation with deployment. I hope this resonates with anyone committed to the cause of combating climate change. I invite Dr. Romm and others who might disagree with me to engage in civil discourse—we have a lot to learn from each other. And if we find we have irreconcilable differences, I will be more than happy to respectfully agree to disagree. [1] I also want to thank CFR’s Michael Levi and Andy Revkin at the New York Times for helping me understand the importance of an inclusive approach to climate change mitigation that embraces both innovation and deployment. [2] Dr. Romm’s second post references the disagreements with our essay previously set out in his first post. But the second one focuses on Bill Gates and makes a third logical fallacy—an inappropriate ad hominem attack: “Gates, however, appears to be someone who doesn’t really listen to the advice of experts. This affliction—common to billionaires (I’m looking at you Donald Trump)—shines through from the very beginning of this interview [with the magazine, Technology Review].” [3] I thank Mengyao Yuan at Stanford University for technical guidance on CCS research. [4] Developers building projects at Dubai’s Mohammed bin Rashid Al Maktoum solar park enjoy a lower cost of capital than any counterpart around the world. Equity has historically been cheap because the Dubai Electricity and Water Agency (DEWA) takes a majority equity stake; debt is also cheap because of sovereign guarantees, for example from the Saudi government. And DEWA has set up the solar park to minimize regulatory and installation costs for developers.
  • China
    Friday Asia Update: Five Stories From the Week of April 29, 2016
    Rachel Brown, Lincoln Davidson, Gabriella Meltzer, Gabriel Walker, and Pei-Yu Wei look at five stories from Asia this week. 1. Afghan female athletes forced to the sidelines. Despite annual donations to the tune of $1.5 million from the American government and other Western donors to women’s sports in Afghanistan, these programs have proven to be an abject failure in the promotion of women’s empowerment and equal participation. The efforts have been riddled by corruption; the cricket program “consist[s] of little more than a young woman with a business card and a desk” and the women’s soccer team has not played an international match in years. The most corruption has been in women’s cycling. The cycling program was originally hailed as a model for women’s sports in the Middle East defying prevailing gender norms. However, the National Olympic Committee terminated its coach and manager, Haji Abdul Sediq, once it was revealed that he had married and divorced three young athletes during his tenure. Another rampant problem is growing violence against women in a conservative, patriarchal culture where many women do not feel safe to publicly train and instead often leave the country to pursue their athletic ambitions. Shamila Kohestani, an Afghan soccer star who aspired to return to Kabul to coach, commented that Afghan officials’ support for women’s sports programs was motivated more by their popularity with donors than a belief in female athletes. 2. U.S. Justice Department asserts its oversight over espionage cases. In a private letter to federal prosecutors around the country, Deputy Attorney General Sally Yates wrote that all cases relating to U.S. national security would require “coordination and oversight in Washington.” Although that procedure had always been intended, the explicitness of Yates’ letter was likely due to a growing number of botched espionage cases against Chinese-Americans over the past two years. Among the most prominent were cases—all of which were later dismissed—against two pharmaceutical scientists accused of leaking proprietary information to a Chinese drug manufacturer, a hydrologist accused of stealing national dam data, and a physics professor accused of sharing U.S. superconductor technology with China. But at the same time, there have also been real cases of recent espionage against the United States by Chinese nationals, including Su Bin, who tried to steal information on the F-22 and F-35 jets, and Mo Hailong, who conspired to steal corn seeds engineered by DuPont Pioneer and Monsanto from an Iowa field. Just yesterday, a Chinese businesswoman was indicted for procuring underwater drone equipment for the People’s Liberation Army Navy. Hopefully, increased Washington oversight means fewer legal mistakes for cases that may be driven more by suspicion than actual facts. 3. China reasserts control over web. As China’s National People’s Congress passed a law restricting the activities of non-governmental organizations in China, the Chinese government also reasserted its control of the Internet. On April 19, Chinese Communist Party General Secretary Xi Jinping convened a meeting with top officials and heads of technology companies, where he said that “the fact that core technology is controlled by others is our greatest hidden danger.” Chinese leaders have long expressed fears that the United States uses technology companies to spy on the rest of the world. According to the Wall Street Journal, the Cyberspace Administration of China (CAC), the country’s chief Internet regulator, put forward a proposal this week that the government take a financial stake in major domestic technology companies and be given a seat on the companies’ governing boards. Meanwhile, CAC Director Lu Wei met with his Russian counterpart at the first China-Russia Cyberspace Development and Security Forum in Moscow. At the meeting, Igor Shchegolev, Russia’s top Internet regulator, echoed the Chinese position on technology, reportedly saying that to protect national interests, Russia “can’t rely on transnational IT firms.” As the two governments come together to promote a norm of “cyber sovereignty” in opposition to the norm of openness online promoted by the United States, it remains to be seen if other countries will join them. 4. Papua New Guinea shuts down asylum detention center. Australia’s asylum processing system faced new challenges this week following a ruling by Papua New Guinea’s Supreme Court to close the Manus Island detention center hosted for Australia. Papua New Guinea’s prime minister confirmed the decision, creating a dilemma for Australia over whether to relocate the approximately eight hundred and fifty asylum seekers held on the island. Australia operates a much-criticized policy of “offshore processing” for refugees in which prospective asylum seekers are sent to small Pacific islands. The government argues that this deters migrants from embarking on perilous ocean journeys to Australia.  The Australian and Papua New Guinean governments are currently debating who has responsibility in the case. One option would be for Australia to relocate asylum seekers to other detention sites at Christmas Island or Nauru. Troubles also exist on the latter island, however, which hosts over four hundred and fifty asylum seekers in an open camp. A twenty-three year-old Iranian man detained on Nauru died today after setting himself on fire in protest of camp conditions. These two incidents may force Australia to rethink its immigration policies. 5. Party organizers receive jail time in Taiwan.  The organizer of a “Color Play Party” that caused a fire at a Taiwanese water park last June was sentenced to four years and ten months in prison. The party, which took place at Formosa Water Park in New Taipei City, featured colored powders  sprayed into an audience of roughly one thousand guests. A subsequent explosion killed fifteen and injured more than four hundred party goers. Some victims sustained burns to over 80 percent of their bodies. Lu Chung-Chi, owner of Color Play Asia, which organized the party, was found guilty on April 26 of negligence causing death. The families of the victims and many members of the public thought that the sentence was too light, but prosecutors said that under Taiwanese law the maximum prison sentence for workplace negligence is five years and so four years and ten months is comparatively harsh. Relatives of the deceased were also angry that Lu was the only person indicted over the fire and eight other park executives were not charged due to lack of evidence. Some family members protested outside the courthouse on Tuesday. Taiwan’s high prosecutor’s office has ordered the case to be reopened and for the district prosecutors to reexamine the culpability of other suspects in the tragedy. Bonus: Movie studios “whitewash” Asian characters. Upcoming movie adaptations of books have drawn ire in recent weeks following announcements that characters who are Asian in the books will be played by white actresses. Major Motoko Kusanagi, the main character of the Japanese manga, TV show, and animated movie series Ghost in the Shell, will be played by Scarlett Johansson in the show’s live-action adaptation. Marvel Studios’ movie adaptation of the Doctor Strange comics will likewise feature a character who is a Tibetan man in the original being played by Tilda Swinton, a white woman. Critics have accused the studios of continuing the Hollywood tradition of reducing the role of Asian characters in film. Producers of both films argue the casting decision is a business imperative. Ghost in the Shell screenwriter Max Landis defended Johansson’s casting with the argument that “there are no A-list female Asian celebrities right now on an international level.” And Doctor Strange writer Robert Cargill suggested that casting a Tibetan would be too sensitive for the Chinese market.
  • China
    Podcast: The Paper Tigers and Hidden Dragons of China’s Tech Sector
    Podcast
    Chinese President Xi Jinping has claimed that the direction of China’s technological development is “innovation, innovation and more innovation.” But besides prominent success stories like Huawei and Lenovo, how innovative are other companies in China’s tech sector? In this week’s Asia Unbound podcast I talk with Douglas Fuller, professor of business administration at Zhejiang University’s School of Management, about his upcoming book—possibly the best China book I have read all year—Paper Tigers, Hidden Dragons: Firms and the Political Economy of China’s Technological Development. Fuller paints the big picture of China’s tech sector and describes how heavy support from the state, which actually disincentivizes innovative behavior, has led to weak domestic tech firms in China. Hybrid firms that combine Chinese management with foreign financing and “irrational” firms like Huawei, which initially pushed away state support in favor of competing abroad, are the true “hidden dragons” driving Chinese innovation. However, the Chinese government’s faith in a “techno-nationalist paradigm” that prioritizes indigenous Chinese ownership and control puts these foreign-invested Chinese firms at a disadvantage when it comes to state procurement and support. Listen below to hear why, at least for now, it seems that China’s tech sector is not the innovation powerhouse that Xi might hope for.
  • Sub-Saharan Africa
    Into Africa: The Islamic State’s Online Strategy and Violent Extremism in Africa
    This is a guest post by David P. Fidler. He is an Adjunct Senior Fellow for Cybersecurity at the Council on Foreign Relations and a professor of law at Indiana University. He blogs regularly at Net Politics. Military campaigns in Iraq and Syria have re-taken territory from the Islamic State and damaged it in other ways, including its ability to finance military operations. As counter-attacks continue in the Middle East, the Islamic State’s activities in Africa, especially North Africa, are increasing. These activities include a defining characteristic of the Islamic State—its use of the Internet and social media to strengthen its control of territory and advance its extremist agenda. This aspect of the group’s efforts in Africa has garnered less interest than the number of its fighters in North Africa or its territorial foothold in Libya. However, the Islamic State is applying its online strategy in Africa, which raises questions about how to respond to this development. The Islamic State’s use of the Internet and social media to spread propaganda, radicalize individuals, and recruit adherents and fighters has produced a dangerous form of cyber-facilitated extremism. The Islamic State developed online strategies to augment its control of territory in Iraq and Syria—the central manifestation of its material power and an ideological cornerstone for its caliphate. The group exploited opportunities and vulnerabilities in cyberspace even in the Middle East, which is less integrated in global economic affairs and has lower Internet access and usage rates than other parts of the world. Policy efforts, including counter-messaging and counter-content strategies, have struggled against the Islamic State’s online offensive, struggles that informed the U.S. decision to launch military cyberattacks against the group’s online capabilities. The factors that explain the Islamic State’s cyber-facilitated extremism are appearing in Africa. The Islamic State seeks to control territory in Libya, an objective consistent with the increasing number of its fighters in North Africa. Following its online playbook, the Islamic State is trying to harness social media to strengthen its power and position in Libya. Such cyber-facilitated extremism is unfolding as African cyberspace undergoes rapid changes, including efforts to expand Internet access and increase use of social media. The 2016 Posture Statement from U.S. Africa Command (AFRICOM) underscores that factors associated with the Islamic State’s brand of cyber-facilitated extremism are emerging in Africa. AFRICOM’s commander, General David M. Rodriguez, identified the Islamic State’s expansion in Libya and its support for terrorist groups in Africa as a threat, highlighting that the Islamic State and African terrorist groups are investing in Internet and social media capabilities to spread their ideology and recruit supporters across Africa. General Rodriguez also described patterns that will affect how African cyberspace develops, including economic growth, urbanization, and a youth bulge (which will accelerate Internet access and use of social media) and entrenched political and economic problems that produce conditions across Africa ripe for violent extremism (which will increase extremist exploitation of cyberspace). For various reasons, the online aspects of violent extremism within Africa have not gained sustained policy attention. Some efforts, such as AFRICOM’s support for a counter-messaging campaign called Operation Objective Voice, lacked prominence and faced questions about its effectiveness. With the Islamic State bringing its cyber-facilitated extremism to the continent, the time has come to formulate better responses. In the 2016 AFRICOM Posture Statement, General Rodriguez argued that countering violent extremism in Africa requires “a comprehensive approach employing diplomacy, defense, and development” strategies. This comprehensive approach should also address the online activities of extremist groups in Africa. As a combatant command that integrates military and civilian capabilities, AFRICOM is well placed to focus on the threat of cyber-facilitated extremism in Africa. It can oversee military involvement in countering this transnational threat, support diplomatic efforts with and among African countries to address extremist exploitation of the Internet and social media, and identify how extremists might take advantage of trends and vulnerabilities that emerge as African cyberspace evolves, including through implementation of the Sustainable Development Goals. Countering cyber-facilitated extremism in Africa will differ from what has been attempted against the online activities the Islamic State has undertaken to bolster its position in the Middle East. The territorial losses it has sustained in Iraq and Syria damage the group’s message, and, despite problems, government and private-sector efforts are challenging and disrupting the cyber means the group has used to spread its message. Whatever happens in the Middle East, the Islamic State has blazed the online trail violent extremists in the digital age will seek to emulate around the world. With the Islamic State bringing its cyber-facilitated extremism to Africa, the need for a comprehensive approach to the cyber components of violent extremism in Africa is becoming a more pressing policy issue. *This blog was originally posted on Net Politics. 
  • China
    Journey to the East: Why Facebook Won’t Make it in China
    Lincoln Davidson is a research associate for Asia Studies at the Council on Foreign Relations. Ever since Facebook was banned in China following riots in Xinjiang Province, China, in summer 2009, there has been speculation that the company is trying to regain access to the market, fueled by Facebook founder Mark Zuckerberg’s attempts to build connections with the Chinese government and business community. Most recently, Zuckerberg made a highly-publicized visit to China last month, meeting with Alibaba founder Jack Ma and Chinese Communist Party propaganda chief Liu Yunshan. But despite Zuckerberg’s efforts, Facebook isn’t likely to be successful in the Chinese market, even if the government unblocks it. It’s not clear that Chinese consumers even want the product Facebook has to offer, and U.S. tech firms have had a particularly difficult time making it in the Chinese market. For a deeper dig into the challenges Facebook is likely to face, check out my blog post on Net Politics.
  • China
    Friday Asia Update: Five Stories From the Week of March 25, 2016
    Rachel Brown, Lincoln Davidson, Ariella Rotenberg, Ayumi Teraoka, and Gabriel Walker look at five stories from Asia this week. 1. Indonesians protest ride-hailing apps. Traffic in notoriously congested Jakarta came to a near standstill this week when approximately ten thousand taxi drivers protested popular ride-hailing apps like Grab, Go-Jek, and Uber, which have driven down taxi fares in the city. Some of the protesters turned violent and attacked other taxis not participating in the protests, leading to the arrest of eighty-three individuals. Many of the protesting drivers work for the Blue Bird taxi company, which has approximately 32,500 cars, making its fleet larger than those of Grab and Uber combined. In response, President Joko Widodo advocated a “fair” resolution between traditional and app-based transportation companies. Two days after the protests, the transportation minister announced that to maintain operations in Indonesia, app-based services will have to register their vehicles and work with traditional transportation firms. While the Indonesian government contemplated banning such apps last December, it ultimately decided against it. 2. Uber sues Ola, India-based ride app competitor. Uber filed a lawsuit earlier this week against Bangalore’s ANI Technologies Pvt. Ltd., which owns Ola, another popular ride-sharing app. Uber has accused Ola of creating tens of thousands of fake accounts and using them to falsely place orders to Uber, which Uber insists disrupts its business. Ola has denied the allegations and claims that it is a publicity stunt for Uber to deflect press about their shrinking market share in India. Uber and Ola have been battling for market share for a long time, and this is only the latest flare-up in tensions. The fight parallels that between Uber and its rival in the United States, Lyft. Similar to Lyft, which competes with Uber over lower prices, drivers, and market share, Ola has given Uber a run for its money in India. 3. Self-nominated independents try for National Assembly seats in Vietnam. In an exciting first, around one hundred potential independent candidates, more than ever before, have registered to run in the May legislative elections in Vietnam. The country, which is governed by the Communist Party of Vietnam, has allowed independents to run since 2002, but until now only seven, who have typically been Party members or individuals with government connections, have ever won seats. To some, the diversity of this year’s independents—including activists like Mai Khoi, a singer-songwriter with a progressive bent, and Nguyen Cong Vuong, a stand-up comedian—represent an increasingly open and pluralistic political process. Some government organs and state media, however, have overtly criticized independent candidates as “troublesome citizens.” Critics of the electoral system argue that it is designed to be controlled by the Party. The real test of Vietnam’s political process and democratic spirit is yet to come, as registered candidates still need further approval to run in May. 4. Abe meets with Nobel laureates for economic advice. For two weeks in a row, Japanese Prime Minister Shinzo Abe met with Nobel laureates Paul Krugman and Joseph Stiglitz for economic advice, both of whom are outspoken supporters of aggressive stimulus measures. As expected, they both advised Abe against a further tax increase that the country’s cabinet is scheduled to enact in April 2017. The planned hike for the consumption tax, from 8 to 10 percent, is a result of an agreement made among three political parties in 2012, including Abe’s Liberal Democratic Party (LDP), then an opposition party led by Sadakazu Tanigaki. Abe’s close economic advisors are also opposed to the planned tax increase, as it only undermines Abe’s economic stimulus policies to encourage household spending. The Japanese economy still suffers from weak consumption, but Abe has stated in the Diet that the postponement of the consumption tax hike is a political decision. While he often emphasizes his willingness to implement the hike as a responsible party leader of the LDP, the decision to meet with Krugman and Stiglitz at this time suggests, by some reports, that Abe is determined to put off increasing the consumption tax. 5. Party assets contentious issue in race for KMT chair. Candidates for chairperson of Taiwan’s Kuomintang (KMT), the political party of outgoing president Ma Ying-jeou, all support increasing transparency of the party’s assets, but have disagreed on how the assets should be handled. The KMT is one of the wealthiest political parties in the world, with assets rumored to be worth more than $3 billion (although the party itself claims to only have $500 million), many acquired when the KMT confiscated the assets of Japanese nationals in Taiwan following Japan’s defeat in World War II. Since the Republic of China democratized in the 1990s and other parties were allowed to operate, critics of the KMT have repeatedly called on the party to return its assets to the state, but the KMT has been slow to act. The dispute was stirred up this week over rumors that the party is looking to sell the Grand Hotel in Yuanshan—a landmark of Taipei, the nation’s capital—to an American businessman. While it’s not clear the hotel is even owned in the party, the rumors seem to be substantiated by the fact that KMT assets are viewed as too toxic for any domestic investors to touch. Bonus: Facebook founder tries to add Chinese friends. On a visit to China this week, Facebook CEO Mark Zuckerberg met with Alibaba founder Jack Ma and Chinese Communist Party (CCP) censorship and propaganda chief Liu Yunshan. According to state media, while meeting with Liu Zuckerberg “spoke highly of the progress China has made in internet field, saying he would work with Chinese peers to create a better world in cyberspace.” The social network founder followed that up by posting on Facebook about his jog through smoggy Beijing; critics were quick to point out that despite “speaking highly” of China’s approach to the Internet, he was quick to use a VPN to skirt Chinese censors and post on Facebook. In response, those same censors rushed to Zuckerberg’s defense after Chinese netizens began teasing him. Why is Zuckerberg so eager to genuflect to the Chinese government, while throwing temper tantrums over restrictions on Facebook’s business imposed by other governments? Perhaps because China’s 660 million Internet users are an appealing market. Let’s hope Zuckerberg doesn’t stoop so low that they don’t want him once Facebook’s let back in to the country.
  • Americas
    CSMD Spring Break Reading List
    As Civil Society, Markets, and Democracy (CSMD) heads into spring break, here is what we will be reading. “This Week in Markets and Democracy” will return, relaxed and refreshed, on Friday, April 8. A new RAND study says corruption costs the European Union over a trillion U.S. dollars (€990 billion) every year—eight times higher than previously thought. The study’s authors, Marco Hafner and Jirka Taylor, recommend ways to stave off some of these losses, including better member-state monitoring, a new investigatory office, and an EU-wide procurement system. U.S. elections in 2012 and 2014 ranked the worst out of any long-established democracy, according to a new report from the Electoral Integrity Project. The United States scored particularly poorly on electoral registration and campaign finance. 90 percent of African trade is by sea, more than any other region in the world. The Economist argues its inefficient and poorly-managed ports fuel corruption. Anne-Marie Slaughter and Elmira Bayrasli write for Project Syndicate on how entrepreneurship is a powerful, but underused, diplomacy tool. They say policymakers should look to entrepreneurs to power development and to help find new solutions to big problems, such as climate change and migration. Writing for Just Security, Human Rights Watch’s Eileen Donahoe argues that by focusing on states, existing human rights institutions are ignoring how other actors defend or violate those rights. Technology accentuates this shift.
  • China
    Xi Jinping’s Virtual Political Reality
    Xi Jinping is the gift that keeps on giving. Scarcely a week goes by in which he does not announce a new policy initiative or adopt some measure that reverberates around the world. I often find myself skimming the news anxiously to see “What has Xi Jinping done today?” Yet, increasingly, I find myself asking, not “what” but rather “why” he is doing what he is doing. This past week, the government released two policies (or re-released depending on your perspective): first, no foreign entity can independently publish anything online in China, and second, all the work of the Party’s media must protect and act on behalf of the Party. These, of course, are only the latest in a series of moves by the Xi leadership to restrict the range of information the Chinese people (and the outside world) can access and the range of independent thinking they can voice. What is behind Xi’s moves? Some outside observers have argued that a degree of political repression is necessary to push forward on economic reform. If you don’t think too deeply about this argument, it almost makes sense: too many disparate voices can muddy the message and delay implementation.  However, the development of a market economy relies on transparency and access to information—not to mention the rule of law—in order to function efficiently and develop the necessary trust among economic actors. In addition, as my friend Minxin Pei has written, the current leadership is prosecuting the anti-corruption campaign without transparency and the rule of law, leaving a trail of paranoia and paralysis in its wake and inculcating a culture of fear. Business deals are hampered, and reform efforts stall. Xi’s political objectives also appear ill-served by the crackdown. Placing your best and brightest in ever smaller boxes and limiting the ease with which they engage with the outside world will do little to enhance their creativity and ability to innovate. Advancing China’s soft power—another Xi priority—is also at risk. Political repression makes living and working in (not to mention emulating) China less likely and has already alienated citizens of Hong Kong and Taiwan. As one Chinese scholar recently noted in discussing Taiwan at a conference, China dominates Taiwan militarily and economically, but it is not winning the hearts and minds of the Taiwanese people. In fact, he noted, it is not winning the hearts and minds of people anywhere. What, then, does Xi want? Xi wants to construct his own political reality. Perhaps it is as David Bandurski put it: Xi wants a mirror that only reflects back what he wants to see, not reality. Alternatively, perhaps Xi sees reality but he is worried that if others see it, there will be growing doubt about the leadership’s capabilities, even more capital flight, and greater social unrest. He might be right. But if this leadership has learned anything from its recent engagement with the Chinese people on air pollution, it should be that no matter the official claims, the Chinese people recognize when the sky is blue and when it isn’t.
  • China
    Podcast: How a U.S. Company Took On a Chinese SOE and Won
    Podcast
    In another break from my podcast series on new books, I interview Patrick Jenevein, CEO of Tang Energy. Patrick relays in fascinating detail the high points—and some of the low ones as well—of his twenty years of experience doing business in China until everything exploded in 2014–2015. The story of breached contracts and bullying behavior will not be new for many familiar with the perils of doing business in China. But how Patrick managed to take on the behemoth state-owned enterprise Aviation Industry Corporation of China (AVIC) and win his case adds a fresh and uncommon twist. Patrick’s story may not be a book—but it could be.