Introduction
Globalization, once a buzzword synonymous with the unfettered flow of capital, goods, and ideas across borders, is undergoing a profound transformation. The technology sector, often seen as the vanguard of globalization, is both a driver and a reflection of these changes.
The emergence of Chat GPT in Q4 2022, and its permeation in global society and work flows is now being rivalled by the emergence of DeepSeek – a generative AI platform that is proving to be equally competent – has some key considerations, including:
- ChatGPT has a freemium model – with full access to present-day data bounded by a subscription paywall. DeepSeek is presently a free, full access, open-source model that contains present-day data within its responses.
- Data architecture – not enough is known about the training models, but DeepSeek has been touted to have as broad a base of data sets as ChatGPT, with the extension of industry-specific and task-optimization insight within its responses. Use cases, and user feedback across sectors and at various depths would ascertain the real situation here.
- US vs Chinese orientation – ChatGPT is offered by OpenAI – a US based research company, while DeepSeek is Chinese-owned. This features in such considerations as the extent of the underlying localization – support for multiple languages are present in both platforms, but the training data varies from English-centric GPT to Chinese-centric DeepSeek. The results are demonstrably consistent in both, however. The same issue features with the governing ethics and safety standards – US vs. Chinese regulations, and even market focus – although with sufficient time for diffusion as a fast second, DeepSeek may bolster its international appeal and uptake in quick time.
This is yet another iteration in a steady stream of technological developments in the polarity of the technology and broader global trading landscape. Being involved in the technology sector in the Global South over the past 3 decades, I have witnessed firsthand how the dynamics of globalization are shifting, and how these shifts are reshaping the global technology landscape. The differences in how globalization is manifesting in the technology sector today, compared to previous decades, and its changes, also send signals for the future of global economic and political systems.
The Old Globalization: A Brief Overview
The old model of globalization that dominated the late 20th century was characterized by the rise of multinational corporations (MNCs) from the Global North, which established global supply chains, often outsourcing manufacturing and services to the Global South. The technology sector was no exception. Companies like Apple, Microsoft, and Intel built vast networks of suppliers and manufacturers in countries like China, India, and Mexico, leveraging lower labor costs and less stringent regulations.
This model of globalization was underpinned by a few key assumptions:
- The Inevitability of Economic Convergence: It was widely believed that the economic gap between the Global North and South would narrow as developing countries integrated into the global economy.
- The Primacy of Free Markets: The Washington Consensus, which advocated for deregulation, privatization, and liberalization, was the dominant economic ideology.
- The Neutrality of Technology: Technology was seen as a neutral force that would inevitably spread from the North to the South, bringing with it progress and development.
The New Globalization: A Fragmented World
Fast forward to the present, and the landscape of globalization in the technology sector looks markedly different. The old assumptions are being challenged, and new dynamics are emerging, with key differences including:
1. The Rise of the Global South in Technology Innovation:
- Homegrown Tech Giants: Countries in the Global South are no longer just passive recipients of technology from the North. They are now active participants in the global technology ecosystem. Companies like Alibaba (China), Tencent (China), Reliance Jio (India), and MercadoLibre (Latin America) have emerged as global players, challenging the dominance of Northern tech giants.
- Innovation Hubs: Cities like Bangalore, Shenzhen, and São Paulo have become innovation hubs, attracting talent and investment from around the world. These hubs are not just replicating Silicon Valley; they are creating their own unique ecosystems tailored to local needs and conditions.
2. The Fragmentation of Global Supply Chains:
- Reshoring and Nearshoring: The COVID-19 pandemic exposed the vulnerabilities of global supply chains, and the lack of reliance on integrity within supply chains, leading many companies to reconsider their reliance on distant suppliers and transshipment points. There is a growing trend towards reshoring (bringing production back to the home country) and nearshoring (moving production closer to the home country). This is particularly evident in the technology sector, where companies are seeking to adjust their overseas dependencies and align their policies with political dictates or opportunities.
- Regionalization: Instead of a single, integrated global supply chain, we are seeing the emergence of regional supply chains. For example, the United States is increasingly sourcing technology components from Mexico and other Latin American countries, while the European Union is looking to Eastern Europe and North Africa. This of course is all set to change with the changes in administrations and agendas as they unfold presently.
3. The Geopolitization of Technology:
- Tech Wars: The technology sector has become a battleground in the broader geopolitical rivalry between the United States and China. Issues like 5G, semiconductors, data access and influence on social media, and artificial intelligence are now central to national security concerns. This has led to a fragmentation of the global technology market, with different countries and regions adopting different standards and regulations, in some cases outright banning apps such as TikTok from operating markets.
- Digital Sovereignty: Countries in both the Global North and South are increasingly asserting their digital sovereignty, seeking to control their own data, infrastructure, and technology ecosystems. This is leading to a more fragmented and less interconnected global technology landscape.
4. The Changing Role of the State:
- State-Led Innovation: In the old globalization, the state’s role was often limited to creating a favorable environment for private enterprise. Today, states are taking a more active role in driving technology innovation. This is particularly evident in China, where the government plays a central role in shaping the country’s technology strategy. But it is also happening in the Global South, where governments are investing in technology infrastructure and supporting local tech startups.
- Industrial Policy: There is a resurgence of industrial policy, with governments using a range of tools—from subsidies to tariffs—to support their domestic technology sectors. This marks a departure from the laissez-faire approach of the old globalization, and whispers to the reemergence of Mercantalist approaches of days gone by.
Implications for the Global South
These changes in the globalization of the technology sector have profound implications for the Global South. Here are some of the key takeaways:
1. Opportunities for Leapfrogging:
- The rise of homegrown tech giants and innovation hubs in the Global South presents an opportunity for these countries to leapfrog traditional stages of development. For example, mobile payment systems like M-Pesa in Kenya have allowed the country to bypass traditional banking infrastructure and achieve high levels of financial inclusion.
- The fragmentation of global supply chains also presents opportunities for countries in the Global South to position themselves as regional hubs for technology manufacturing and services.
2. Challenges of Digital Sovereignty:
- While the assertion of digital sovereignty is a positive development in many ways, it also presents challenges. Countries in the Global South often lack the resources and expertise to build and maintain their own technology ecosystems. There is a risk that digital sovereignty could lead to digital fragmentation, with different countries adopting incompatible standards and regulations.
- The geopolitization of technology also poses challenges for the Global South, as countries may find themselves caught in the crossfire of the US-China tech war. This could limit their access to critical technologies and investment, or force sub-optimal decisions on technologies being used.
3. The Need for Inclusive Innovation:
- As the Global South becomes more integrated into the global technology ecosystem, there is a need to ensure that the benefits of technology are widely shared. This requires a focus on inclusive innovation, which addresses the needs of marginalized communities and ensures that technology is used to reduce inequality rather than exacerbate it.
- Governments, businesses, and civil society in the Global South must work together to create an enabling environment for inclusive innovation, including through policies that promote digital literacy, access to affordable technology, and the protection of digital rights.
4. The Need for Harmonization in National Development Strategy:
- The increasing fragmentation of international relations and alignment, technology and supply chain clusters are paralleled by the increasing presence of two-party systems within national political environments in countries throughout the world. This presents both an opportunity – different parties can align with different international clusters – and a risk – the strength and influence of international cluster influence can shape voting preference in the country, and prospects of success.
Conclusion: A New Era of Globalization
The changes we are witnessing in the globalization of the technology sector are a reflection of broader shifts in the global economic and political order. The old model of globalization, characterized by the dominance of the Global North and the free flow of capital and goods, is giving way to a more fragmented and multipolar world. In this new era, the Global South is no longer just a passive recipient of technology but an active participant in shaping the global technology landscape.
This new globalization presents both opportunities and challenges for the Global South. On the one hand, it offers the potential for leapfrogging, regional integration, and the assertion of digital sovereignty. On the other hand, it poses risks of digital fragmentation, geopolitical tensions, and unequal access to the benefits of technology.
As we navigate this new era of globalization, it is essential for policymakers, businesses, and civil society in the Global South to adopt a proactive and strategic approach. This includes investing in technology infrastructure, fostering innovation ecosystems, and promoting inclusive innovation. By doing so, the Global South can not only navigate the challenges of this new globalization but also seize the opportunities it presents to build a more equitable and sustainable future.
In the end, the story of globalization is still being written, and the Global South has a crucial role to play in shaping its next chapter. The technology sector, as both a driver and a reflection of these changes, will be at the heart of this transformation. Being involved in the technology sector and from the Global South, I am both excited and cautious about what the future holds. But one thing is clear: the old rules of globalization no longer apply, or where they do, they bear less weight, and we must be prepared to adapt to a new and increasingly uncertain world.