How Can Asia Grow its Digital Economy?

Kara Sutton
Former Senior Manager, Center for Global Regulatory Cooperation

Nicholas Montella
Former Manager, Japan Korea

Published

December 22, 2017

Asian businesses are making more digital investments than the global average, and digital growth across the region has accelerated over the past year. Yet, fears of the downsides of digitization remain. In order for the region, to continue to benefit from massive digital opportunities, regulators will need to ensure a digital approach that overcomes some of these perceptions.

Last week, the U.S. Chamber’s U.S.-Korea Business Council, U.S.-Japan Business Council, and Center for Global Regulatory Cooperation convened a design thinking workshop, bringing industry representatives together with officials from Asia-Pacific Economic Cooperation (APEC) and Trans-Pacific Partnership 11 (TPP11) economies to discuss the perceptions and policy challenges affecting the growth of the Asia’s digital economy in the region..

The “design thinking” process is extremely useful in tackling complex problems that are ill-defined or unknown by brainstroming ideas and adopting a hands-on approach in prototyping and testing. It is a favorite tool of some of the world’s most innovative companies and is used in one form or another by strategists in the armed services.

Applying design thinking in a policy context allowed us to solicit feedback from industry and government on the complex and ill-defined challenges in the digital policy space.

From the start, participants were divided into three smaller groups. Each group was tasked with using the design thinking process to define challenges or best practices around Asia’s digital economy and brainstorm solutions.

In the sessions group members rapidly shared their ideas about the various perceptions of technology and the digital economy in Asia and grouped them into distinct themes. Some of these perceptions were negative, such as concerns around security and privacy. Others were positive, such as the new economic opportunities and social benefits for technology. Still other perceptions were more neutral, such as the pace of technology. Some see it as an opportunity, while others fear being left behind.

The groups then brainstormed on “What solutions exist to these challenges?” or “How might we promote the best practices in the region?”

Overall, the session highlighted that regulatory challenges need to be addressed both internally by a country as well as multilaterally to ensure regulations that allows companies to operate throughout the region. Solutions ranged from traditional ideas such as encouraging multilateralagreements to new ideas such as issue specific best practices and education programs for regulators.

Here is a short summary of the brainstorming sessions.

Improving governments’ technical know-how

One group examined how the level of technical expertise across all levels and types of government organizations could be raised in order to better manage regulation.

While they concluded there was no one magic bullet, the group determined that funded exchange programs, residencies, and fellowships between the government and private sector, and across government, would be extremely helpful.

They also recommended governments look to establish a technology development fund aimed at raising education levels across society as a productive approach. Of course, how programs like this would be funded would need to be determined.

Protecting intellectual property

Another group tackled how to prevent intellectual property theft in order to encourage innovation.

This group agreed that enhancing intellectual property protections requires a range of domestic changes starting with basic rule of law. There is a need for more education in the region related to how strong intellectual property laws can help advance innovation, and, in particular, how countries have made the transition from a “content copier” to a “content producer.” South Korea and Japan are case studies of this transition.

Beyond domestically spurred changes, trade agreements or best practice frameworks can be important carrots to encourage the development of stronger intellectual property protections.

Adopting the multi-stakeholder approach

A third group examined how to overcome obstacles to adopting the multi-stakeholder approach to regulation more broadly in order to encourage more interoperability between policy regimes.

This bottom-up policy development process has been successful in introducing new principles and rough consensus into global negotiations.

For example, the APEC Cross Border Privacy Rules system (APEC CBPR) and the NIST Cybersecurity Framework are popular among certain governments and companies, but have struggled to gain traction in a number of economies.

They found a need for more education on the benefits of these multi-stakeholder approaches, and the business community and governments could prioritize this in existing international forums like the OECD, APEC, G7, and G20.

There is also room to make the process more inclusive by discussing ideas with other stakeholder groups, including nongovernmental organizations and civil society.

The use of company- and country- specific case studies would also be a strong tool in promoting these approaches, as they are often more relatable than abstract policy prescriptions.

Overall, given the borderless nature of the Internet, policymakers must be wary of short-sited or inward-looking policies that will ultimately dampen the digital potential of the Asian economy.

Tackling the negative perceptions of the digital economy will require looking to best practices that already exist as well as working with like-minded partners to think creatively about how to tackle new challenges with solutions that will enhance digital benefits.