We had a conversation with Ravi Shankar Chaturvedi, one of the keynote speakers at this year’s e-Governance Conference in Tallinn. We spoke about how countries compete in the global digital economy, data as a source of competitive advantage, the emerging world data order, and Estonia’s role in this brave new world.
Ravi Shankar Chaturvedi is Associate Director of Research & Doctoral Research Fellow at the Institute for Business in the Global Context, Tufts Fletcher School, where he leads the Digital Planet research program. He is the co-creator of the Digital Evolution Index and the Digital Trust Index and was an advisor to Estonia’s e-Residency.
Do you think that digitalization is the new version of the space race?
If by space race we mean a zero-sum contest to be the first to reach a defined finish line, I don’t think the analogy is apt or even helpful. More to the point, I don’t think digitalisation, which my colleagues and I define as “a process where every day human interactions and transactions—with the government, businesses, and fellow humans—and consumption of goods, services, information, and ideas are primarily conducted through the use of the internet and internet-based technologies and services,” is, or even ought to be, a space race of any kind. It is not a zero-sum game; nor is there a defined finish line.
Digitalization, as I see it, is a rising tide that lifts all boats irrespective of the flags flying on their sterns. It has the potential to help us advance our societies, improve the way our governments function and our businesses innovate, and transform – for the better – the way we interact, transact, work and play, sell, buy, and pay. The hope and promise are that digitalization and emerging digital technologies will enhance our quality of life and the state of the human condition around the world and bring the global community closer.
Every now and then, it could have an opposite effect. That is where institutions, the third sector, and a free and independent fourth estate have a vital role to play: in providing the much-needed norms and guardrails for emerging technologies and digital applications and in ensuring their responsible use – by the producers, purveyors, and procurers of said technologies and tools – in ways that they help advance societal good.
What about AI?
It has become fashionable lately to cast the quest for AI in the mould of an arms race. This is primarily because there seems to be – at least on the surface – a bipolarity of sorts emerging with the Chinese state and its enterprises advancing in a certain direction and US-based technology companies taking a different direction. In my view, casting it as a bipolar arms race does little justice to the complexity of the topic and the issues at hand. We need a more nuanced approach to thinking about AI in the larger global context – its promise and perils, risks and rewards, sources and drivers of value, etc.
Is data the new oil?
In January this year, my colleagues and I wrote about what we called the “new GDP” or the “Gross Data Product” where we explore this question in some detail. The explosion in data generation globally is the outcome of all the digitalization that we have been witnessing in every aspect of our lives. Everything that we do and don’t do, say and don’t say creates a digital trace. If I’m on Twitter or any other social media, I create a digital trace with every like. I go on a run, I leave a digital trace because I’m probably tracking my heartbeat and the distance I cover; even the music or podcasts I listen to on the move create a trace. I choose to stay at home with a bottle of wine (not that it hasn’t happened to anyone before; I’m told the Finns even have a delightful word for it: kalsarikannit?) and binge-watch an entire season of House of Cards on Netflix in one night, that’s also a digital trace. Of course, the data scientists at Netflix probably won’t know that I am sitting with a bottle of wine, but they definitely know that I have the capability to binge through an entire season in just one sitting.
When people talk about data being the new oil, it is again not a terribly helpful metaphor because oil only has a single use: you burn it and it is done. Worse, the emissions and exhaust emerging from the tailpipe are a huge problem! Data has multiple uses. You consume data, you leave a digital trace, those traces – our digital exhaust – are valuable in that they can be combined to create new insights and those insights can be combined yet again to create newer insights, it is a gift that keeps on giving. Data and digital traces are the mother’s milk for AI.
Who are the emerging powers in the data economy?
The ability to generate large volumes of data both in the aggregate and on a per capita basis, the quality of data, the accessibility i.e., institutional openness to free flows of data, and the talent required to extract value out of these data pools are all crucial factors for a thriving data economy.
If we are to treat the amount of broadband data consumed by a country as a bit of a proxy for the raw data and digital traces generated, a small country like Estonia with 1.3 million consumers can never have anywhere near the same levels of data generation capacity as a country like India, which has 1.3 billion consumers and already leads the world in data usage per smartphone. But when you consider the European Union as a single digital market you’re looking at upwards of about 500 million consumers who have very sophisticated data consumption patterns. Moreover, in advanced societies there is a higher device density i.e., individuals using multiple devices and authorizing other devices enabled by internet to operate on their behalf that are also generating digital traces. So, the digital footprint of a median consumer on either side of the Atlantic is likely going to be much bigger, much richer than, and vastly different from the digital footprint of a median consumer living in the Global South whose only window to the digital world is a smartphone. On accessibility, our research shows that the US and EU lead the world on openness to data flows.
If you consider all these factors, what you see is that there are about four influential blocs that emerge in the global data economy: the United States, China, the European Union, and India.
Delivering on the digital single market agenda is crucial to EU’s data economy prospects and to that of every member state (including the UK). While no single country in the EU can match China or India on data generation or sheer size, a tiny country like Estonia that punches way above its weight and has become the global benchmark for what a digital government ought to be and can achieve is a tremendous asset to the bloc, one of the driving engines of EU’s data economy, and is — dare I say — unfortunately underutilized. The data economy is unevenly distributed in the EU and so are its dividends; it would do well to redouble its efforts to distribute and cross pollinate Estonia’s best practices on digitizing public services among its other member states like Greece where it is desperately needed.
There was much talk in the conference about how other countries can leapfrog Estonia including in your keynote. What does Estonia need to do to continue to remain relevant and on the leading edge?
President Kaljulaid’s opening remarks at the e-Governance Conference were fascinating. I was particularly chuffed when I heard her close with an exhortation, “I hope you will all leapfrog Estonia someday.” My talk on “getting to Estonia” quite literally followed her remarks. It was such a perfect coincidence, it almost seemed coordinated. It wasn’t.
Here’s my take on this: it was a great way for the President to set the tone for an event where a 110 countries gathered in Tallinn to understand Estonia’s secret sauce when she said, “we are happy to share with you everything that we know, so you can all rise up and hopefully surpass us.” However, the fact is, surpassing is incredibly difficult because the toughest things to get right are institutions. It takes years of consistent progress to get the institutional foundations right. Wouldn’t it be nice if all it takes is a few lines of code and a software update and et voila! You have a well-functioning digital government. But that’s not how it works. The point I am making is, it is naïve to assume one can just take Estonia’s solution and plug and play without the necessary hard work and capacity building to get the underlying institutional foundations right.
I’ve said this before in various forums in Estonia and around the world, including at an e-residency forum that happened here in Tallinn in 2016, where I remember a member of the audience asked me, “What is Estonia’s competitive advantage?” And my answer was and still remains, institutions are Estonia’s competitive advantage. It is the most enduring competitive advantage because institutions are the most difficult aspect to get right and incredibly difficult to replicate.
The very fact that an e-governance conference is happening in Estonia and there is quite literally the United Nations gathered here – a hundred plus countries knocking on your doors to understand your secret sauce – is proof of your enduring competitive advantage.
So, what does Estonia need to do to remain relevant and on the leading edge? I’d say three things: preserve and protect your institutional foundations; continue to invest in institutional innovation; keep sharing your best practices with the world.
Do you think that maybe the institutions are strong and different because as a nation, we’re still quite young? Is this is also a part of our competitive advantage?
Yes, it is. I liken this to the youngest child of the family. The family has strong traditions and culture built over centuries, but the young one gets the leeway to tinker at the edges and experiment while retaining all the advantages and backing of the family. That’s how I see Estonia and the EU. On the one hand, Estonia gets to take advantage of the EU’s strong institutional traditions and yet because you are young, small, and nimble, you’re able to experiment.
Another way to think of it is: if the EU were a giant organization like, say, a multinational bank, Estonia is like the tiny test and learn innovation lab, which does all the fun experimentation. The lab gets a lot of oxygen and air cover from the mothership, and the good ideas end up getting absorbed by the broader organization. So, in some sense, if you fail every now and then, it is not a big deal; you get a lot of runway there because you’re still a young country and because you are small enough, it is easier for you to pivot. However, when you succeed, you succeed in ways that you are taking the rest of the EU along with you. So, it is a great position to be in. Unlimited upside with just a little downside.
At the conference you and Linnar Viik talked on a panel about an accelerator for governments and Estonia is also looking to establish a Global Digital Society Fund. Clearly, Estonia is very keen on exporting knowledge and supporting other countries as well. Which countries or which areas do you think would be the best fit or would benefit the most? The countries with longer traditions or countries with younger governments like Estonia, or does that make any difference at all?
That’s a good question. When Apple releases a new iPhone, are they trying to target the grandparent or are they trying to get the cool grandkid, who got the latest iPhone for their 14th birthday? I’d like to think it’s both. You’d be surprised by the number of grandmothers that use brand new iPhones, because they are so intuitively easy to understand. Those teenagers are probably most likely to push the phones to the extreme and do things with it that even Apple wouldn’t have thought of. The point is, there is a lot of demand in both segments.
So, I don’t think it is an either/or, it is or should be a both/and. I see no reason why Estonia should choose one set of countries over the other. There’s much that young and old countries alike can learn from Estonia. Obviously, bigger ships take longer to turn, smaller and newer states are nimbler. In that sense, the younger governments like Estonia probably are a low-hanging fruit opportunity. Countries that share the same starting point as Estonia, as in countries that emerged from the breakup of the Soviet Union, probably have the most to learn from the Estonian experience given that you are head and shoulders above them all. Talking of countries with the oldest traditions, countries like Greece – like I mentioned earlier – within the EU have an awful lot to learn from Estonia on how to use digital technologies to deliver better public services. In fact, the 100+ countries participating in this conference are all great candidates for such an accelerator.
If Estonia were to assume this role of a digital mentor, would it also matter if the countries that we mentor are democratic or not so democratic – is this also something that should be kept in mind?
That’s a very good question! This is something that we have been seeing in our research too – some of the fastest digitalizing countries in the world are also some of the most unfree. One can only hope that everyone benefits from this knowledge sharing and will use it for the greater good over time. If I were to make a recommendation to the folks who are leading this Global Digital Society Fund initiative, I would suggest that there has to be some kind of a tiered approach, linked to the levels of freedom in a country, where we are conscious about what we put in that “box” and for whom. That being said, if a country that is not exactly democratic wants to find the fastest and best way to digitize, say, a birth certificate, would I not offer that solution in the box? Not necessarily, I would give them that, but I probably wouldn’t give them (I don’t know, I am just making this up) the technology to link databases and enable the government to trace “every step they take, and every move they make.” There has to be a great level of deliberation about these things; I’m quoting my favourite comic book superhero here, “with great power, comes great responsibility.” With great soft power, also comes great responsibility and it needs to be exercised wisely and prudently. I would like to think that there will be a lot of thought put into creating some kind of tiered packages, and those tiers change based on where you are on a variety of metrics and scorecards. Any initiative of this kind should have a broader set of independent thinkers and academics involved, who have no horse in the race, but are able to provide the right kind of metrics that can help shape and guide the process.
You’re a scientist, you’ve seen the data, so you have insider intel on these big matters. What in your opinion is the single key to unlocking innovation? Is it policy? Is it software? Is it a democratic state? Is it strong institutions? What’s the most important ingredient in this?
I wish I had the insider intel. I’m just a humble researcher with an outside-in view. These are all important aspects. If I were forced to pick one, I’d say it is people. The right kind of institutions, policies, protections, freedoms and norms etc are obviously crucial facilitators that form an enabling environment, but what really matters most is nurturing and attracting the right talent and giving them the oxygen and the air cover to innovate and create.
Do you think it is just about talent or at the end of the day it is about who has the most people?
I don’t think it is who has the most people, I think it is about who can nurture, attract, and retain talent. For example, when we say that Skype was made in Estonia, it was not made just by Estonians, it was made by a bunch of very smart people from a few countries who got together in Tallinn to collaborate and create Skype. I don’t think having a billion people is what matters here, it’s your ability to attract talent from every corner of the world to come and collaborate with Estonians and create here that matters most. There’s absolutely no reason why there can’t be a thousand such collaborations that happen through the e-residency, for example. So, it is talent, but you don’t always have to produce your own talent. There are over seven billion people out there. As long as you are able to attract the best and the brightest from all over the world, in person or digitally, and your institutions and policies facilitate collaboration and innovation, that’s all that matters.