Moving fast with frontier technologies
Henrique Pinto Coelho, Soumita Roy, Fabianna Bacil and Clovis Freire
A pioneering index to measure countries’ preparedness to embrace and adapt frontier technologies.
Over the past two decades, the market for frontier technologies has witnessed remarkable growth and is projected to expand even further. These technologies are poised to reshape economic and social structures, holding immense potential for developing countries. Frontier technologies is a broad umbrella, covering many innovations, which can broadly grouped under three headings (see next figure). Together, their markets are expected to experience a significant expansion, going from $1.5 trillion in 2020 up to $9.5 trillion in 2030.1
Frontier technologies as examined in the Technology and Innovation Report 2023
However, not all countries are similarly placed to take advantage of this market expansion. Knowledge generation in frontier technologies exhibits a strong concentration in the United States and China, which are responsible for over 30% of publications and almost 70% of patents of the 17 frontier technologies mentioned above. There is also an imbalance in the providers of frontier technologies. Of the top providers across all 17 technologies, only two are from developing economies (excluding China). This reflects how developed economies have so far captured most of the economic opportunities linked to frontier technologies.
Readiness to act
For developing countries to seize the economic benefits linked to emerging technologies, their firms and other stakeholders must have the capabilities to enter new and expanding sectors. Simultaneously, their governments must establish the requisite policies, regulations and infrastructure to support and enable their growth.
The United Nations Conference on Trade and Development (UNCTAD) has developed a tool specifically to measure countries’ readiness in this respect. The Frontier Technology Readiness Index indicates how prepared countries are to adopt and adapt frontier technologies by combining data on information and communications technologies deployment (ICT), labour skills, research and development (R&D), industrial capacity and availability of finance. As shown in Table 1, high-income countries take up the top 10 rankings, and emerging economies (represented here by the BRICS) appear from the second quartile.
The Frontier Technology Readiness Index indicates how prepared countries are to adopt and adapt frontier technologies.
Readiness for the use, adoption and adaptation of frontier technologies, selected countries
Sub-Sharan Africa and Latin America and the Caribbean are the least ready to use, adopt and adapt frontier technologies.
Furthermore, there is significant regional disparity. North America, Western Europe and Northern Europe have the highest scores in the index, while Sub-Sharan Africa and Latin America and the Caribbean are the least ready to use, adopt and adapt frontier technologies. There is, however, considerable variation within regions as well. Countries in Latin America and the Caribbean, for instance, rank from 40th (Brazil) to 154th (Haiti).
Analysing data from each index component reveals that, as a group, developing countries -require improved ICT connectivity and skills (see next figure). Least developed countries (LDCs), landlocked developing countries (LLDCs) and small island developing states (SIDS) need more ICT infrastructure and R&D capabilities. On a positive note, analysis of this index over time shows that, while the gaps between groups of economies are wide, they are starting to narrow
Average index ranking by building block, selected country groupings
While there is no one-size-fits-all recipe, policies can target specific dimensions of the ranking. For example, countries scoring poorly in terms of ICT can seek to improve their position by promoting investments in digital infrastructure and creating a supportive regulatory environment to enhance sectoral competitiveness and the diffusion of digital skills. Skills can be developed through training and education programmes, while governments can support the R&D dimension through the provision of public funding projects or incentives like tax subsidies. Carefully designed industrial policies can also aid in boosting industrial capacity, while ensuring sufficient funding for frontier technology projects – perhaps drawing on development and private banks and multilateral funds – will be crucial.
Policies can target specific dimensions of the ranking, such as ICT, skills development, R&D capabilities, and industrial capabilities.
After carefully analysing the specific country priorities and needs for each technology, policymakers and other stakeholders must proactively assess and enhance domestic capabilities and implement the necessary incentive and protection measures to foster the adoption of targeted technologies. The UNCTAD frontier technology readiness index can serve as a starting point for identifying weaknesses in country’s capabilities, helping them prioritize the next steps to better position themselves to take advantage of frontier technologies.
This piece is based on Chapter 2 of the UNCTAD Technology and Innovation Report 2023.
- Henrique Pinto Coelho is PhD candidate in Political Economy at the University of Coimbra.
- Soumita Roy is Master’s student in International Economics at The Graduate Institute, Geneva.
- Fabianna Bacil is PhD fellow at UNU-MERIT.
- Clovis Freire is Chief of Commodity Research and Analysis Section, Commodities Branch, Division on International Trade and Commodities at the United Nations Conference on Trade and Development (UNCTAD).
Disclaimer: The views expressed in this article are those of the authors based on their experience and on prior research and do not necessarily reflect the views of UNIDO (read more).
- This piece is based on Chapter 2 of the UNCTAD Technology and Innovation Report 2023.