How Innovation Can Overcome Inequality

When I attended the World Economic Forum in Davos, Switzerland last month, the agenda included some of the most pressing issues on the global stage right now. Geopolitical instability in the Middle East. Economic uncertainty flowing out of China. The upcoming EU referendum in the UK, and presidential election in the US. But the top of the agenda focused on a topic that will shape global markets for decades: The Fourth Industrial Revolution.

As WEF describes it, the Fourth Industrial Revolution will create “greater technological change over the next decade than the past 50 years, leaving no aspect of global society undisturbed.” That pace of innovation has tremendous implications for the global economy. It raises a number of important questions on topics ranging from privacy and cybersecurity to robotics and regulations.

Above all, I believe this fourth industrial revolution will be defined by a central challenge. We know that we have the technology and the capacity to drive incredible economic growth. But how can we ensure that this growth is inclusive across the globe? How can we ensure that technology doesn’t simply segment the world into winners and losers, but instead empowers people everywhere to lift themselves up?

Innovation’s Unintended Consequences

These are critical questions, because innovation does come with a real risk of deepening income immobility.

For example, even as technology unlocks entirely new careers and industries, robots and software will replace many other jobs. The net effect will be fewer jobs overall. The World Economic Forum projects that, on net, over 5.1 million jobs will be “lost to disruptive labor market changes” in just the next four years. Manufacturing jobs will continue to decline, and WEF notes that a huge number of administrative and office jobs will be “at risk of being decimated.”

Given these very real challenges, it’s crucial to ask: Can we harness innovation to not just provide better products and services, but create more inclusive economic growth?

There are three reasons why I think we can, will, and must.

Leaping Over Lower Barriers to Entry

First, in many ways, the barrier to entry is relatively low when it comes to profiting from technology. Anyone with a computer and some coding skills—whether they live in Silicon Valley or Sri Lanka—can design a million-dollar app.

This enables individuals, communities, even countries all around the globe to develop or adopt technologies that will allow them to take significant leaps forward.

Consider the impact of mobile phones. In 2002, about 10 percent of people in sub-Saharan countries like Kenya and Ghana had access to a phone. Today, more than two-thirds of people in those countries have cell phones, and 93 percent of people on the continent have cell phone service.

And people now use those phones for far more than communication. In countries like Gabon, Kenya and Sudan, for example, over 50 percent of the adult population now uses mobile banking platforms. Kenya has pioneered a form of banking M-PESA, which doesn’t even involve traditional banks. Overall, the World Bank estimates 16 percent of sub-Saharan African mobile users regularly make banking and financial transactions on their phones—far more than any other region.

As technology gets more affordable and more widely available, you can imagine more leaps like this in all kinds of sectors, driving more inclusive growth across the globe.

Solving Challenges that Hold Back Growth

Technology could also help developing countries solve some of their most pressing and immediate problems—which is my second reason for optimism.

Issues like epidemic diseases, lack of clean water, and food scarcity are directly linked to economic growth. For instance, one study found that many African nations lose as much as 2.4 percent of GDP every year because of poor sanitation. The World Bank recently found that curing malaria would increase GDP growth by a percentage point in some African countries.

The calculus is simple: If people in developing nations are able to spend less time focusing on problems like these, it will be much more possible to unleash their innovative, entrepreneurial potential. That’s why new initiatives like India’s National Smart Cities Mission are incredibly promising developments. The Modi administration has pledged to invest $1.2 billion in things like sensor technologies, so local governments can collect and analyze data on services like access to water, sanitation, and electricity. With that information in hand, they can find ways to improve – and entire communities could be lifted up as a result.

Delivering on the Potential of a Demographic Dividend

Third and finally, demographic trends make this new Industrial Revolution a moment of incredible opportunity—but it’s up to us to seize it.

Today, 90 percent of the global population under 30 lives in emerging markets. The youngest countries on Earth, Niger, and Uganda, have a median age of just over 15 years old. Germany and Japan, the oldest countries, have a median age of 46. This means that, one way or another, the future of the world is going to be defined in emerging markets. And the Fourth Industrial Revolution will help determine what that future looks like.

A demographic dividend, where the working-age population outnumbers the dependent older and younger populations, can be a key driver of economic growth. In fact, that’s exactly what we saw in Asia through the latter half of the 20th century.

But for today’s emerging markets to follow that example, these young people must be able to imagine better lives for themselves. Because a young population that lacks hope for the future is the key ingredient that leads to instability and unrest.

As we look to the future, we need to ask, will it be one where these young people feel like the benefits of innovation are flowing elsewhere? Or will it be a future where these young people can become major players in the world’s digital economy, lift themselves and their communities up, and turn the Fourth Industrial Revolution into a force for inclusive growth?

It’s up to us—business, government, and civil society alike—to ensure that this second vision becomes a reality. To invest in education, infrastructure, and entrepreneurship for these young populations. To locate and cultivate their best talent. And to help them turn their best ideas into tomorrow’s biggest companies. This will help benefit all economies as demands for goods and services grow and new resources are brought to market. Innovation transcends geographic boundaries.

This is how we can help these young people not just envision this life of opportunity for themselves, but begin to make it a reality. Ultimately, that will be the true test of the Fourth Industrial Revolution.