The Global Economy’s Next WinnersJuly/August 2019 129
create huge pools o data that their creators can use to oer individu-
ally tailored loans, insurance, and investment products. In every
country, the rise oÊ big data raises dicult legal and ethical questions;
in China, especially, ocial use o such data has come under scrutiny.
No two countries are likely to come to exactly the same conclusions,
but all will have to grapple with these issues.
In addition, e-commerce, mobile Internet, digital payments, and
online Ãnancial services tend to contribute to more inclusive growth.
A 2019 report by the Luohan Academy, a research group established
by Alibaba, found that the beneÃts o the current digital revolution
are likely to be more evenly distributed than those o previous tech-
nological revolutions. That’s because digital technologies are no lon-
ger restricted to rich people in rich countries. Today’s technologies
have made it easier for people everywhere to start businesses, reach
customers, and access Ãnancing. The report found that in China, dig-
ital technologies have accelerated growth in rural areas and inland
provinces, places that have long lagged behind the coasts.
Even as middle-income countries shift to higher-value manufac-
turing and services, their manufacturing workers are likely to face
struggles similar to those o American and European workers who
have been displaced by digital technologies. Factory workers in China,
Mexico, and Southeast Asia may bear the brunt o job displacement
as wages rise and automation proceeds. A study by the economist
Robert Atkinson found that China, the Czech Republic, Slovenia, and
Thailand are adopting industrial robots faster than their wage levels
would predict. Although automation will raise productivity growth
and product quality, these countries will need to help displaced work-
ers and avoid the mistakes made by the West.
THE DEVELOPING COUNTRY CHALLENGEIn a world o increasing automation, the prospects for low-income
countries are growing more uncertain. In the short term, export-led,
labor-intensive manufacturing may still have room to grow in some
low-wage countries. Bangladesh, India, and Vietnam are achieving
solid growth in labor-intensive manufacturing exports, taking advan-
tage o China’s rising wages and the country’s emphasis on more so-
phisticated and proÃtable products. To make the old model o
export-led manufacturing growth work, countries will need to invest
in roads, railways, airports, and other logistics infrastructure—and