Every developing country today that aspires to become a wealthy, industrialized nation follows a time-tested playbook. Start with the manufacturing and export of low-value goods — shoes, tennis balls — then steadily climb the value chain toward steel, automobiles, and high-end electronics. This was the path taken by South Korea, Taiwan, and China. Alternatively, a country can start with low-value services work, like call centers, and steadily move up to software engineering, financial services, and technology R&D. This is India’s playbook, and what the Philippines is now attempting. In both cases, a developing country leverages labor arbitrage to attract investment and kickstart its economy toward industrial development.
But with the arrival of AI and robotics, that playbook is becoming obsolete. A fully automated toy factory in the U.S. can now match the cost of a toy manufacturer in Bangladesh relying on cheap labor. An AI-enabled customer service center operating out of the U.S. is now a viable alternative to one in Manila. AI and robotics are effectively closing the door on today’s developing countries ever graduating into wealthy, industrialized nations. So while AI has triggered a new industrial and technological revolution that promises to make today’s wealthy nations even wealthier, it also risks condemning the rest of the world to permanent poverty.
What is to be done? Perhaps history offers an answer. In the 14th and 15th centuries, the Italian city-states held a monopoly on the spice and silk trade with Asia. That monopoly let them accumulate enormous wealth and finance the Renaissance while the rest of Europe remained mired in poverty and endless war. Then, at the dawn of the 16th century, Portugal and Spain sailed out onto the open ocean, built new trade empires and established colonies, and leapfrogged the Italian city-states in wealth and power.
Perhaps, like 15th-century Portugal and Spain sailing out on the open ocean, the salvation of today’s developing countries lies in going out into space.
____________________________________________________________________________
Vicente Diño is the writer and publisher behind Galleon Space — a newsletter covering the space economy in Southeast Asia and Latin America | @GalleonSpace