Episode Transcript
[00:00:04] Speaker A: Welcome to Revolve, where we explore big questions from all angles.
Each season, we use one big question to dive into a topic with experts showing how perspective matters in building thoughtful solutions.
I'm Tripp Williams.
Season one, what makes an economy strong and vibrant?
Using Seattle as a case study, this season we talk with different people involved in economic development to learn how economies are built.
This episode welcomes Max Scott, a digital economy expert with the U.S. state Department.
It feels like technology and the digital world are transforming everything, including the economy.
But what does it mean exactly to have a digital economy?
In this episode, Max and I define and discuss the digital economy and explore how federal and international policy can influence economic development.
[00:00:59] Speaker B: We're joined by Max Scott. He's a foreign affairs officer with the U.S. department of State and an expert in digital economy policy and emerging technology issues in foreign policy in the Asia Pacific region. Max, welcome.
[00:01:12] Speaker C: Welcome, Tripp. I'm so glad to be here.
[00:01:15] Speaker B: Very wonderful. Thank you. Thank you. So, just one quick comment for listeners before we get started. Today, Max is sharing his personal views on economic development and some of his observations. He's not speaking on behalf of or representing the policy of the U.S. state Department.
Okay. All right, great, Max. Let's jump right in. So we're really going to be diving into some economic development concepts. I think it's helpful to start first of all with some definitions. So economic development as a concept or a topic means a lot of things to a lot of different people.
So what does economic development mean to you and the communities that you work with?
[00:01:54] Speaker C: That's a great question. And you're right in pointing out that economic development can mean so many different things. There's definitions within the oecd. There's definitions in the un.
To me, economic development is really the effort at which a government is putting towards thinking about how they develop their economies for the future and moving it beyond just traditional industries, but thinking about what is going to be the lifeblood of their economy as the economy transitions into a world where the Internet is a major component of all aspects of commercial action.
So when I think about economic development, I think a lot about the work that governments are doing to regulate and encourage things like the further development of artificial intelligence, for example, or the further development of digital skills or cyber capacity building that happens within a country and these efforts and how they work to prepare countries for the future.
[00:03:00] Speaker B: Wonderful. And I'm curious, so having seen the breadth of things that you've seen in your current role and past roles too, what have you noticed makes a particular Economic development project successful, or what are some of the components that makes one successful?
[00:03:18] Speaker C: I think, especially if you're exploring the field of technology and development of new industries like artificial intelligence or blockchain, what have you.
One of the key challenges that governments have is they run into this pitfall where they, in their effort to mandate and create opportunities for their citizens, they neglect to include all aspects of society.
You can only create a project that is successful as a government.
It's only going to be as successful as to the extent at which you are inclusive of all aspects of society. So in a lot of countries, we see challenges where governments will initiate a new law, for example, that they think is going to encourage additional investment in the tech sector in their. In their country, but they'll do things where they will, for example, mandate data centers to be located within their country instead of being connected to the wider global system of data centers that we know and love today.
And that actually, rather than create an opportunity because they're forcing, you know, the development of a new.
A new space to store technology, they're actually hindering that because they're making themselves more isolated from the rest of the global community.
And the actual, the flip side of that is in countries where development projects are more successful, especially as it relates to technology, it's where they have an ongoing conversation with not only their local industry, but the global technology community and all different aspects of society, including nonprofits and civil society, who have a lot of stake in terms of ensuring people have their rights, are protected online and other issues.
When governments tend to do that, they tend to make decisions that enable their economies to flourish as they develop the regulations to stimulate them.
[00:05:23] Speaker B: Sure. As we get further in too, I might try to circle back and see if you can even offer some examples of regions or countries that you're seeing do it especially. Well, I think that could be helpful for listeners to hear. But before we go further, further there, as you just described, you're working in a lot of different contexts with a lot of different cultures and a lot of different ways that some of these challenges and opportunities are being approached. And I'm curious in particular the different models that you might be seeing. So you just helped us understand some traits that projects usually share.
That includes bringing in multiple voices, et cetera. Are there different sort of frameworks or models beyond that common foundation that you see different areas deploying and ones that make you more excited than others?
[00:06:14] Speaker C: Yeah. And what I would add is it's also very difficult to mandate innovation.
You can tell someone to be creative or you can create a law that says we're going to have, for example, we're going to create a tax incentive that allows small to medium tech companies to be located and get a tax break within a certain geographic zone within a country. Those happen. All those types of laws happen all the time because every country wants to have their own version of Silicon Valley.
But you can't mandate creativity. It's very difficult to, even from a government perspective, to push and somehow generate innovation.
The way the US Was successful in doing that is by having, is by allowing innovators and creatives have the opportunity without regulation to think about the future and to create ideas and create niches within a market where they can be successful.
Now we're seeing as technology has grown and it's become more of an had an increasing impact in our lives, we're seeing the need for regulation and the needs for a changing dynamic in the way that technology, tech companies are regulated. But it's always been important that the market have opportunities to respond and people have the room that they need to innovate. And in terms of models for governing economic development in the digital economy, there's actually two distinct models. And one is similar to what I said, which is the US Government model or the American or Western style model of technology development, which is to allow, which is really a free market pro business model.
That is one in which tech companies and governments stay out of each other's way. And tech companies are allowed to explore innovation in a very free and open environment. And they also have a lot of say in the development of regulation and a lot of regulation that is developed in Western economies or very successful economies that have strong digital components component to their growth.
It's because whenever they announce a new law or they have a conversation about how they're going to regulate, they involve the community and actually they reach out through business associations and through civil society and they engage professors and academics to ensure that regulation isn't getting in the way of innovation.
Now the flip side of that sort of model is the more authoritarian approach which is promoted by many governments around the world.
That is, the government should have be the chief regulator for how technology should be developed and how an economy should grow.
A good example of that is the Russian Cyberpark, where earlier I was talking a little bit about how governments want to create their own Silicon Valley. Well, at one point Russia had a similar idea and they mandated the creation of their own Silicon Valley, essentially called the Russian Cyberpark. And actually it never came to fruition because it was Again, it's very difficult to mandate innovation and to push creativity to have a government kind of constraining you at the same time and tell you exactly what you're going to build. But that's, that's the other model. And that model comes out of fear of what? You know, fear of allowing creativity or innovation to run amok, which is obviously very threatening to authoritarian regimes. And a lot of authoritarian regimes around the world are, are pushing for more, for governments to have more of a space even beyond what the private sector or other aspects of society have and regulating the digital economy.
[00:10:11] Speaker B: That's great. That's great.
I haven't heard of the Cyberpark before, but I have a new Google search.
So before we move on, the last question I have on this specific just economic development writ large. What is it that people aren't thinking about when it comes to beyond what we've mentioned? But what aren't people thinking about when it comes to economic development? What's being left out?
[00:10:40] Speaker C: Yeah, that's a fantastic question. I think when people think about economic development and particularly as it relates to technology and some of the issues that I work on, they're looking for a quick fix now. And they are thinking more in terms of if you're a government, you're always thinking what can I do to really. I know that the Internet is the future. I know that the, that E commerce and digital economy, that's where there's so much money to be made and I can offer so much to my citizens. How can I create regulations or push that out to my people in a way that really inspires or forces that to actually happen.
But the reality is, especially if you think about technology in a lot of spaces, governments need to be thinking more about how can I get out of the way of innovation and how can I, instead of limiting or hindering this kind of innovation, what can I do to get out of its way and encourage tech companies and entrepreneurs to develop and foster innovation in their own natural environment?
So a lot of governments struggle with that and it's difficult as a concept to get around to.
And it's also, they also kind of see, you know, the developed, There's a separation between the developing world and the developed world when it comes to technology. Because obviously in the US we have the majority of the technology companies that are, that are in our daily lives and that are some of the leaders in the, in the global economy really.
And so a lot of countries are kind of threatened by that as they try and develop their own incuate industries but they really need to be considering that many of these, the Internet is a global phenomenon and these companies are also very global in and of themselves. And there's a whole ecosystem around tech companies that creates and spurs and develops innovation. A lot of these tech companies have spun off accelerators and startups and all of the created an ecosystem in and of themselves.
And so I think governments and communities should always be open minded to, if you're thinking about developing your tech sector, how you can be more inclusive and how you can involve join the global community to spur innovation. It's a very important aspect of how you grow your economy, especially if you think about new spaces.
[00:13:24] Speaker B: Sure, that's wonderful. It's a good place for us to pivot. You mentioned something earlier, a term that we've spoken about and I know you've been diving pretty deeply in the digital economy.
Right. So I am hearing that. Others, I'm sure, are hearing that with increasing frequency. And can you just describe for us what that means and what you're doing to shape it?
[00:13:50] Speaker C: Yeah, I'm happy to, happy to talk about that.
So in the last 20, 30 years, we've really seen the acceleration of a long held trend that is the movement away from physical interactions that happen in the commercial space towards convenience that occurs leveraging the Internet or a digital space.
And this trend has happened more slowly than in other countries in the U.S.
because the U.S. we've been able to benefit from the Internet starting here and we've been able to develop our economy around it. And we've, we've had some hits and some misses in terms of regulation. We've learned a lot over the years as we've developed our own digital economy.
But overseas and particularly in developing countries in Southeast Asia, things are moving a lot more quickly than they are in the rest of the developed world.
If you think about Vietnam and Indonesia, for example, these are countries that have some of the fastest growing rates of connectivity and they look very different from the US they have an extreme, extremely young populations, they have extremely high penetration of, you know, new forms of communication like WhatsApp and Skype and Facebook, which are, which are very, very popular.
And they have grown from traditional agrarian or manufacturing based economies and societies towards really being the battleground marketplace for new technology.
And so when I talk about the digital economy and when we were talking about digital economy, it's really more about the transition away from old modes of thinking about economic development and more towards thinking about the vast, the vast way of field of change that's occurring in the Global economy right now, particularly in some of these newer and developing countries, where the digital economy is really spurring growth in ways that brick and mortar or traditional commerce is not transitioning.
[00:16:18] Speaker B: I got it.
I'll share with you a bit of a sort of a heuristic that I've developed or a reminder that I've developed that helps me understand.
Digital economy is not just those companies or entities that are selling digital products. It actually involves everybody, even if they don't have a everybody, meaning every organization that is operating in a world that's increasingly more connected, even if they don't have a primarily digital product or Internet based product that they're selling. Is that a fair description or have I missed.
[00:16:57] Speaker C: That's a fair description of the digital economy. And also the digital economy is more than just e commerce. It's really, if you think about some of the challenges in regulation and policy that we have as it relates to the Internet, there's a global conversation right now about privacy and how privacy should be regulated, especially in a country that has free speech.
And how do you regulate for privacy when you have challenges like election interference, for example?
Digital economy really involves whole wide range of issues. You think about workforce development and artificial intelligence.
And I would agree that it, it's more than thinking about just e commerce. It's really a transformative catalyst for societies.
[00:17:50] Speaker B: That's wonderful. And you mentioned earlier too, Max, the reality of the physical technology itself impacting how this digital economy is growing.
And so you offered the example of data provenance and where data might be stored and, and, or generated. Can you tell us a little bit more about what you're seeing when it comes to the actual physical location of things and the physical technology infrastructure, how that's helping shape or how it's influencing the digital economy?
[00:18:28] Speaker C: Yeah. So the one benefit, that one thing that's incredibly unique about the Internet is, is that it's not really owned by one person and it's not really confined to one geographic location.
I can easily for my computer right now access a Malaysian website or I can access an Australian website. I can talk to my friends in the UK or I could talk to my friends in Singapore.
It's very easy to connect, but it's also very easy to take that for granted. The reason, the reason framework and the backbone for why that actually happens is because we have a vast network that's globally connected of servers and undersea cables and satellite connectivity that enables this technology to work. And this technology, because it's so inclusive of all aspects in every corner of the world.
It really allows for more innovation and captures voices that would otherwise not have been heard, you know, maybe 40 years ago. It'd be very difficult for me to stay in touch with my friends in Asia or elsewhere.
So that being said, it's very important then that we are enabling and allowing this type of network and the actual infrastructure, including the servers and soft switches and cables, to have the levels of connectivity that is needed to maintain such a network.
But that as a concept is also very difficult for developing countries to understand and to grasp when they're primarily thinking about, okay, well, how can I provide economic opportunities for my citizens in some cases in some places.
So if you have the opportunity to, you know, if say, for example, Amazon wants to do business with you in a country and they're very excited about your population and they want to market their products and services there, well, in order to do that they have to have a data center. Well, if I'm a regulator, I might think, okay, well then I will just create a law that forces Amazon to have all of their data centers in my country.
That way I can, you know, not only can I control all the information and have access to it if I want.
I also, you know, I'm going to create construction jobs, I'm going to create the jobs that work at that data center. But, but that's short sighted then because what it does is it makes it very difficult for these companies to access their data and information and connect to the global resources that that occur as a benefit of the Internet.
So it's very, so ensuring that there are free flows of data across borders and that the Internet, that governments don't impose physical borders to data. Being able to have global ubiquity is incredibly important. And it's a key aspect of my work and some of the things that I'm passionate about.
[00:21:47] Speaker B: You just mentioned. I'd love to pick up on a comment you made in that last thought you shared. You started by saying that the Internet is unique in such an interesting entity that's developed and it's particularly interesting in the sense that it's not owned or directed by any one government or company.
And I'm just curious if you can share a little bit more about how you see all those different actors as they work together.
What is government, for example, doing best? And you've touched a little bit on this, but I'm curious if you could go a little bit more on that thought about there is no ownership, but how does government best work with all the different people touching it?
In an ideal world.
[00:22:37] Speaker C: Yeah, that's a great question.
Yeah.
There's this event called the Internet Governance Forum, and it's actually a fairly unique event because it's like a multilateral conversation, which means that you have foreign governments that show up with big delegations.
My government shows up and we tend to bring several experts in Internet policy.
And typically when you have a multilateral meeting, it'll be governments talking to other governments and no other aspects of society will be included. That's how a lot of UN meetings are held. And in some cases it's for good reason.
But at the Internet Governance Forum, anyone is allowed to go. And it's not only the US who has a delegation.
The US's opinion, the American opinion, as well as the Malaysian opinion, or whatever government that shows up there is held just as equally valid as the nonprofit that really believes in privacy, or the company, the multinational multi billion dollar company that is very passionate about blockchain.
It's a multi stakeholder forum where everybody has the opportunity to talk about a resource that is available to so many aspects of society and not owned by one government or one aspect of society, and that is the Internet.
And I'm really proud of the fact that so many Western countries have promoted and ensured the continued development and governance of the Internet in this multi stakeholder model.
And the promotion of that model is incredibly important in the maintenance and the sustainment of the Internet as we know it today. But it's also not the only model, because there are plenty of authoritarian regimes who have a completely different vision of how the Internet should be governed and how the Internet should be regulated. Many of these authoritarian regimes believe that governments, and governments alone should, should set the rules for what kind of information goes online, how data should flow across borders, how human rights gets respected online. Many of these, like key critical questions we have on Internet governance. They also believe that, you know, governments themselves should, should have their own national laws. Every law should be different in how the Internet should be governed. Which makes it very difficult to have something like the Internet that is essentially borderless as a resource for so many people in so many countries.
[00:25:29] Speaker B: Sure, yeah. So do you happen to have, by chance, is there a website that folks could visit if they're interested in trying to attend that sort of conference? Or maybe I can get it from you later, but the name of it again and how often it tells you.
[00:25:47] Speaker C: It's called the Internet Governance Forum and they have several events throughout the year and it's just a really fascinating, fascinating event.
I can't think of another issue where, you know, all aspects of society are, where there's such an inclusive approach to governing it. You know, you think about the way that governments think about terrorism or the way that governments think about human rights or oil and gas, or you name it, it's just very different. We're so lucky. And it's so fascinating to have this approach and to think about this thing that the world has created and has allowed the rest so many different aspects of society to have a say in its future.
[00:26:33] Speaker B: Yeah, that's pretty, pretty darn cool. Is there, I mean, as you're describing it, it sounds like it, it seems to work pretty well. It's bringing these different parties together. Is there a collaboration or input from a group that you would like to see more of, or is there an entity or an actor that you would love to be able to do more with?
[00:26:58] Speaker C: Well, I think I've talked a lot about the multi stakeholder model and many of the, the aspects that western countries are promoting right now as it comes to Internet governance and the global digital economy. But that's not to say that it works perfect.
There's certainly still challenges.
There's a lot of challenges, especially as it think if you think about the different, the fragmentation of societies and the different aspects.
You know, civil society often has a very different view of what issues are important and how government should be thinking about the Internet. And then the private sector obviously has a profit motive.
So while we can often get in the same room together, that doesn't necessarily mean that we see eye to eye.
So this is an ongoing project that I think governments, civil society and the private sector are going to continue to have to think about.
And I think it will continue to get better and continue to improve over time.
One thing that I'm particularly excited about is the change that I'm seeing in how governments approach the digital economy. Several governments in the world have created cyber agencies.
In the US we don't have a cyber agency. We have aspects of the digital economy are regulated in the FCC and aspects are regulated in commerce. And then we have the pieces of it that are controlled by the White House. And then the State Department manages overseas engagement, but we don't have a cyber agency. But many countries are starting to have that.
It's fascinating to see this approach. And, and I think what has made some of these cyber agencies and some of these various E government initiatives successful is their strong partnership with the private sector.
Because government is very, very rarely on the cutting edge, especially as it, as you think about, especially as it comes to technology.
And to have a government that's regulating something like blockchain or AI, to have policymakers out talking about these issues, they really rely on the experts and the technical expertise that the private sector has.
And so it's exciting to see efforts where foreign policy institutes and foreign ministries are collaborating with the private sector to ensure that their diplomats and that their policymakers understand the real ramifications and the real.
The way the technology actually operates and is effectively deployed overseas. And that comes from a good collaboration with the private sector. So I love to see those kinds of partnerships and I hope there'll be more of those in the future because I think they're necessary.
[00:30:05] Speaker B: That's helpful. Yeah, that's helpful. Thank you. So we're going to end with a bit of a fun question for you, Max.
Part of what we're trying to achieve with this first season is take a look at the topic of economic development from the perspective of the different actors or stakeholders who might be involved. Right. And we've considered that there's, I mean, there's many more. We could spend a whole season talking about how we could generate that list. But the list that I've offered as a starting point is, as you just were talking about, there's private sector actors, there's going to be actors from, as you know very well, from a federal government or national government perspective, there's going to be actors at a local government perspective, there's going to be actors from nonprofit and actors from the emergence of these new sorts of B Corps or social enterprises that are trying to generate profit and also looking to do some of the things that a non profit might traditionally be doing.
If we borrow that idea that there's these different stakeholders and actors involved in developing an economy, let's imagine for the fun of it that we're in a scenario where a new economy needs to be built.
And I'm curious if, you know, if you were offered the chance to step into the shoes of one of those different actors or stakeholders, knowing what you know, both from your current experience and from past experiences, which of those actors would you would you ideally like to be? And what would be one of the first things you would you would do is you look to build a vibrant, thriving economy.
[00:31:39] Speaker C: That's a great question.
It's also a fun one, so appreciate it. Sure.
[00:31:44] Speaker B: Yeah. Good, good, good.
[00:31:49] Speaker C: I was at this event the other day and we were talking about 5G technology, which is the next generation of mobile networks.
And we were talking about it in a foreign policy context. And we're also talking about how expensive some of this technology is and how a lot of countries see that as a barrier to them being able to get it and to get it quickly to remain on the cutting edge.
Someone in the audience apparently was one of the people who determines the budget for a local municipality in the US to procure a 5G network in Virginia, where I live. And it was really fascinating hearing their perspective because they were talking about how, you know, the conversation they're having with their local community is very different than, you know, the conversation you would have with the global community, but not, no less important. And it was fascinating to hear kind of their perspective on, you know, how do you think about, you know, how do you think you have as a policymaker? You always have to make a decision on how is this, what is economic development worth to my citizens and what is the real value they're going to get and at what point in time? So it's a very, it's a very challenging conversation to have and it varies depending on the kind of community that you work with. Anyway, it was a fast, fascinating to hear that perspective.
And for me it really kind of highlighted the importance of if you have the opportunity to be early and to have a long term vision towards something, it's much better than to be a community where, oh, something new has come out and I have limited funds and I don't really understand this technology, but I know it's good for my, for my community and for economic development.
It's very difficult to like, make a decision when you're operating from that point of view. But if you are a person, if you can think long term and develop a strategy, you can be much more successful. And I certainly would if I were to pick a sector in society, I would definitely be thinking about, you know, the digital economy because in a lot of countries and a lot of communities you have the opportunity to think about now regulation that is made today that will affect an entire generation of people.
In the US for example, how are we going to cope with artificial intelligence and the displacement of jobs? A lot of countries are concerned with that. But if you are able to, to really involve all aspects of society and mobilize them effectively, which has happened in some countries, you're able to develop some pretty quality programs with the input of academics and private sector and citizens, you can really come up with some inspired initiatives that can empower people for success.
And I really hope that local communities and other even bigger communities, not only just country level governments, but multilaterals like ASEAN or APEC and oecd, which I know are thinking very vigorously about these issues are taking that long term lens, but also involving all aspects of society and making it an inclusive conversation because that's, that's really how you work towards success.
That's great.
[00:35:50] Speaker B: That's great.
Well, Max, that brings us to the end. I want to thank you so much for participating and offering, as I knew you would, a really valuable and varied and insightful perspective on a really, really interesting topic. So thanks for joining and taking some time today. I really appreciate it.
[00:36:10] Speaker C: Thanks Trip. It was great.
[00:36:15] Speaker A: Thanks for listening. Check the show notes for links and information mentioned in the episode, and explore the other episodes in this season to learn more on this topic. Look, I've listened to them all. I'm obviously a little bit biased, but I really do think each offers a valuable perspective you'll appreciate.
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