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‘Isolationism Is the Pathway to Technological Degradation’

The XX April International Academic Conference continued on April 11 with a discussion on digitalization of the economy and public administration. Maxim Akimov, Deputy Prime Minister of Russia and Curator of the Digital Economy National Programme, spoke about digital business models, public administration, digitalization in industry and science, and the impact of digital technology on the job market.

According to Mr. Akimov, entire industries are being digitalized. The last two years have shown that this trend has even impacted the oil & gas industry. Issues related to user data governance have become more pressing worldwide. The solution of this problem depends on the ability of civil society, the state and the business community to hold a meaningful dialogue on this agenda. This discussion will become a central issue in society’s political life, and we should be prepared for it, Mr. Akimov believes. There is also a growing dilemma between developing and delivering digital products either with the opportunity to manipulate user data or with establishing total control. The other big discussion will be about national sovereignty limits, which will focus primarily on the accumulation of citizens’ data.

If the data of citizens of one country are being collected by another government, its residents or economic agents, that is a major challenge.

In the beginning, the online space was not a subject of international regulation, but today, there are two pathways to development. The first is isolationist. The second pathway, according to the Deputy Prime Minister, is a better but more complicated one. It assumes that all possible scenarios are being discussed, as well as a transition to supranational regulation and taxation of digital data. ‘The choice is as simple as that: either we learn to talk to each other, to our neighbours in the coming decades, or we will be drowning in technological degradation,’ Mr. Akimov emphasized.

The plenary session also covered practical application of AI and related regulatory challenges. A vast amount of regulatory work will have to be done in medicine, industry, logistics, transportation and education over the next three or four years in order to adapt AI technology as well as to assess the risks involved in incorrect implementation.

Digitalization of the economy brings up the question of increasing competitive ability: the choice between the benefits provided by the availability and development of digital platforms and attempts to build national platforms based on exclusive access to data. According to Mr. Akimov, the government is being bombarded by offers from quasi-public-private partnerships to obtain access to user data in exchange for a digital product. According to Mr. Akimov, this is an unpleasant example of how big players may gain a technological advantage. To preserve a competitive environment, it’s necessary to thoroughly regulate the national strategy.

Personal data protection, national sovereignty protection, AI technology regulation and competition will make up the agenda regarding digital issues for the next five years. ‘These issues are determining the digital future that we will be living in,’ he concluded.

Where an Island Scenario Might Lead Us

According to Dmitry Peskov, Special Presidential Representative on Digital and Technological Development, sovereignty over data might allow Russia to implement an independent policy.

Furthermore, an island scenario will develop in the coming decades in that countries will be building data islands. This doesn’t mean the end of globalization but rather its true beginning. ‘We are falling apart into islands, in order to then come back again in true equal relations, which will form a new global policy,’ Mr. Peskov declared.

How to Prepare for Digitalization

Digitalization primarily means the transfer of all processes to a new level. But where can we get resources for digital transformation? Oleg Bocharov, Russia’s Deputy Minister of Industry and Trade, suggests allocating money to private companies for implementing digital solutions on one mandatory condition: the final product must return a guaranteed positive economic effect.

Large-scale digital transformation makes humans part of a digital system and exposes them to risks by automated intellectual systems. That’s why it’s important to discuss the human issues involved and make life the main value.

Changes in the Banking Sector

Today, the success of each financial institution depends on how fast the new digital products are implemented, believes Andrey Kostin, President and Chairman of VTB Bank Management Board. Digital transformation includes integration of new technologies in existing banking activities, such as robotization, wide use of biometry, AI and blockchain. Thanks to its convenient and accessible services, VTB’s online bank increased the number of customers tenfold over the last five years. But some negative outcomes have also become evident: customer loyalty has fallen since it’s now easier for them to go from one bank to another. A significant amount of funds is also being dedicated to cybercrime protection. Last year, VTB had to contend with more than 68,000 cyber-attacks.

To improve their competitive ability, banks are entering related areas that can be penetrated by new technologies. For example, VTB has facilitated a system to pay for rides on Moscow’s buses, trolleybuses and trams using bank cards.

The financial sphere is one of the most dynamic ones that is applying all technological tools. It is important that 25-30% of developments be local.

What the Education System and Job Market Have to Gain

Falling costs of AI will induce a new phenomenon: people will refuse to make choices and will entrust this to AI. ‘Today, we make so many decisions that at the earliest opportunity, we’ll switch to the choice offered by AI. Just imagine how much room for manipulation might arise here,’ said Yaroslav Kuzminov, HSE Rector.

Communicative and creative elements will experience sharp growth, while the shrinking of routine elements will lead to a huge revolution on the job market. In other words, creative professions will be in demand, while routine ones will be taken over by automated intellectual systems.

Yaroslav Kuzminov cited one example of an outcome of digitalization – the drastic change in behavioural stereotypes.

We have started to massively replace traditional lectures with online courses. The new generation receives information in a different way

Leonid Gokhberg, First Vice Rector and Director of the HSE Institute for Statistical Studies and Economics of Knowledge, believes that the global digital agenda goes far beyond technological spheres. The core of the agenda will consist of new administration models, business models, cultural transformations, new education and effects for human capital. All of these issues are innovative and include a lot of new terms that are not reflected in administrative practice or regulation and are quite complicated.