EIU

Until recently, the path of digital innovation largely followed an eastward trajectory from the United States to Western Europe and eventually Asia. But as the economic and geopolitical balance of power has shifted in Asia’s direction, so too has the digital agenda.

In this installment of the Economist Intelligence Unit (EIU) Digital Economy podcast, Ayesha Khanna, chief executive officer of ADDO AI, an artificial intelligence (AI) advisory startup, and Jason Davis, associate professor of entrepreneurship and family enterprise at the business school INSEAD, discuss what this growing Asian influence means for the digital economy.

Comparisons are often drawn between Silicon Valley in the United States and China’s burgeoning technology sector. Davis thinks they’re apt, but that China’s boom differs from the U.S. tech surge in a couple of measurable ways: Coming on the heels of U.S. innovation enables Asian tech companies to benefit from earlier innovations. Then, there’s the matter of market size — 1.4 billion people in China versus about 325 million in the United States. “Larger populations mean that digital platforms can scale up faster. But what’s perhaps less appreciated is it actually creates a larger supply of engineering and entrepreneurial talent that helps to spur innovation,” Davis says.

Davis thinks that head-to-head competition isn’t likely, and that both regions have room to work together: “I mostly see these as two separate digital ecosystems that are doing very well independently, and they probably have a lot that they could learn from each other.”

Large markets convey a particular advantage for rapidly maturing technologies such as AI, according to Ayesha Khanna. She notes that AI relies on large pools of data, a resource that many Asian countries have in abundance: “A lot of the models that are being used today are actually conceived of by researchers in the West. But when it comes to their implementation and application to problem use cases, China, Indonesia, even Pakistan — all of these Asian countries are galloping forth because they have so much information now that they’re getting from usage of the mobile phone, which is generating huge amounts of data.”

Asian startups garner most of the attention, but Davis says that established companies in the region are eagerly adopting new technologies to further their digital transformation goals. “I was chatting with a head of a large call center in the Philippines, and I had my list of three or four things I wanted to talk about,” Davis says. “I showed them the famous video of the Google system that can call up and make a reservation with a real human, and they told me, ‘Professor Jason, we just need to stop right now.  We only want to talk about this — natural language.’” Their biggest problem, Davis explains, is the high turnover rate among call center employees and the high cost of training replacements. “With AI, you train it once and you’re done,” he says.

Considering the accelerating rate of innovation, Khanna says it’s hard to imagine what Asia’s digital economy will look like in a decade, or the influence it will carry. But it’s likely to be pervasive: “I think the internet will move from the phone or the laptop that we are used to finding it on and truly become the fabric of urban environments. And so, maybe it will just become invisible.”

Davis says that he’s surprised by something new every day, and foreseeing the future in a time of such rapid change is difficult: “I wouldn’t even predict what the internet will look like in 10 years, because I would have no idea. And if I did, I would probably be an investor, not a professor.”

Read a full transcript of the podcast.