Prime Minister Narendra Modi has set the goal of reaching the status of a developed country by the nation’s 100th anniversary of Independence. The mid-point of the new century, 2050 has become a highly visible marker for the ambitious goal of becoming a developed nation for many leaders of developing countries. In a stable ‘flat’ world, 25 years in the economic life of a country is a blip in time. Driving double digit growth to achieve developed nation status is less about radical change and more about sustained execution of current policies along with any new ones to address short term challenges.
But what if the world is very different in 2050? Will we need a new growth paradigm? Or will the paradigm developed in the 20th century and perfected by countries like Japan, Taiwan, and South Korea to move rapidly from developing to developed status hold?
As these questions played in my mind, I was reminded of a quote which (paraphrased) said ‘each moment in history is fleeting but some in retrospect will be seen as the beginning of a new era’. The industrial age we are living in emerged from one such moment was 300 years ago—the invention of the steam engine. This evolved over two centuries into the manufacturing-led economic growth paradigm that has shaped our world and fortunes of countries. I believe that such a ‘steam-engine moment’ is upon us, and it could potentially lead to a very different world in 2050, and beyond.
Let me explain. The steam engine technology developed in the 18th century was the start of an age in which we unlocked and unleashed the ‘physical’ potential of atoms and molecules by processing mined raw materials into finished products. Artificial intelligence, with its enormous data processing power (which will be further enhanced by quantum computers), is the key to unlock and unleash the ‘information’ potential of the very same atoms and molecules. It is the steam-engine moment of the 21st century that which will drive the post-industrial information age. Let’s briefly understand three potentially radical (among many) implications.
First, our current growth paradigms are for a world where economic value was generated from the exploiting the existing properties of atoms by physically processing them into finished products in large labour-intensive plants. By 2050, rapid development in AI-based technologies will have the capability to decode and modify the properties of atoms to ‘design’ new material properties and products using technologies like robots, 3D printers, digital twins, CRISPR, etc. in small-scale, flexible, highly automated units. Second, unlike the ‘physical’ raw material of atom and molecules whose ownership depended on mother earth’s benevolence, the raw material for ‘information’ is widespread. Development of the physical infrastructure as a ‘tolled’ public good democratised the industrial opportunity and attracted investments. Equivalent tolled highways of a regulatory regime and underlying tech-stacks will democratise the opportunity to build a host of new information processing services. Lastly, physical processing is capital-intensive. Information processing is talent-intensive and will emerge as the biggest factor cost advantage. It will call for dramatic new ways to develop it, especially as latest research in neurosciences unravel the mysteries of the brain and how humans learn.
Of course, there is a degree of speculation here, but the speed at which AI and its applications (and allied technologies) are developing has surprised even experts. If these implications were to play out, we will need a new way to think about economic growth for the world in 2050.
Developing countries like India are caught in a fundamental dilemma. On one hand, 25 years may seem too long and too uncertain a period to plan for in today’s fast changing world. On the other, it is but a blip in the economic history of a country, a period of time that passes too quickly, and before you know it the future has caught up with us. The dilemma becomes real as for India@2047 vision. Even after 25 years of sustained progress post the economic reforms during which the GDP grew by eight times, the GDP per capita by 5.5 times, around 200 million people in the nation face many ‘here and now’ societal challenges. On the industrial front, while India built globally competitive industries like generic pharma, automotive, and ITES, we have remained a small player in the global value chains (recent schemes like PLI are still to play out fully). As a developing nation we have finite resources to deploy – how much of them should be focused on today’s challenges and sustained execution of policies already underway, and how much on the future?
Without going into the politics and optics of the choice, we can draw some lessons from large global companies who continuously have to deal with such choices of balancing the demand for resources and talent across two time-scales. Without solving today’s challenges, they know there is no future, neither will there be if they do not start building capabilities and launch ‘pilots’, giving them the ‘option value’ to scale up quickly as the opportunities unfold before competitors build dominant positions.
By 2050, the world will move to the post-industrial information age. The only question is not if, but how fast. India missed the opportunity to harness its full potential offered by the industrial age and has been playing catch-up ever since. The 2050 vision offers another chance. We have a good starting position with our strength in services, our world-leading tech-stacks, and allied data policies, and our historical legacy of world’s great universities. How we balance and execute against two time scales of short-term challenges and longer-term opportunities of the information age will determine whether we become a developed nation before we become old.
Arindam Bhattacharya, Former senior partner, Boston Consulting Group. Views are personal.