Over the last five decades, Rail transport has faced major headwinds. The transformation of global supply chains has made the logistics business more challenging than ever, with increasing pressure to deliver fast and flexible services at a lower cost. In that quickly-evolving context, freight rail is grappling with fierce competition from road transport—a trend that will only intensify under the effect of disruptive technologies like autonomous trucks and on-demand mobility services. In addition, railways around the world have been hit by significant government budget cuts, limiting their ability to invest in infrastructure or maintain high service standards. Stiff competition from roads, which have the door-to-door delivery advantage have offered added pain.
At the same time, railways are in the midst of a profound transformation, driven by emerging digital technologies like 5G, big data, the Internet of Things, automation, artificial intelligence, and blockchain. On a recent study tour in China, I had the chance to learn more about these developments, and to reflect on how digitization may help the rail industry reinvent itself.
Billions of people around the world are barely aware of their participation in a trillion-dollar data market. Its growth and impact has been accelerated by the easier flow, storage, and analysis of data—thanks to rapid advances in digital technology combined with falling costs of computing. The global data economy is estimated to be worth more than US$3 trillion; the European Commission believes that personalized data was worth over EUR 300 billion by 2016. The application of personal data for online advertising is also skyrocketing with the internet surpassing television as the leading advertising channel. Two internet giants—Facebook and Google—have combined digital advertising revenues on par with the gross domestic product (GDP) of Morocco.
This marketplace is reshaping how people interact with and use information, leading to new opportunities. Yet, it confronts these people and policymakers alike with new questions of the trade-offs between privacy, convenience, and access to information.
In chapter 4 of our latest Information and Communications for Development report, we started to frame what this marketplace (or places) might look like. We sought to understand what the costs and benefits were for people—the producers of much the data, the most valued commodity in this new economy. We tried to abstract from the now almost (worryingly regular) news of leaks and hacks to get a better sense of what might be ways to think about public policies that lead to a more balanced and fair data marketplace. We thought about the opportunities and the risks that are emerging, but also about what might be ways to make data marketplaces fairer in their functioning.
In my previous career at Lithuania’s Communications Regulatory Authority (RRT), I had the opportunity to observe how EU member states began to acknowledge and embrace the importance of cybersecurity. For many of them, though, it would begin with a major shock – a serious national-level cybersecurity incident.
Since joining the World Bank, I have observed a similar trend across the developing countries. For instance, the Government of the Kyrgyz Republic has begun to place stronger emphasis on cyber resilience after a series of incidents, including digital vandalism of organizations’ websites. Among other considerations, also these cyber events led to the inclusion of cybersecurity financing in a World Bank $50 million Digital CASA (Central Asia-South Asia) – Kyrgyz Republic Project while, at the same time, the Bank catalyzed complementary grants for technical assistance to the government.
One of these grants is the “Global Cyber Security Capacity Building Program”. We chose the Kyrgyz Republic as the first beneficiary country for the Program, and then others followed suit: Ghana, FYR Macedonia, and Myanmar. The financing came from Korea’s Ministry of Strategy and Finance (MoSF), through the Korea-World Bank Group Partnership Facility (KWPF), which is administered by the World Bank.
Not a day goes by without a new story on how technology is redefining what is possible for transport. A futuristic world of self-driving, automated cars seems closer than ever. While the ongoing wave of innovation certainly opens up a range of exciting new possibilities, I see three enduring challenges that we need to address if we want to make sure technology can indeed help the transport sector move in the right direction:
The focus is still on car-centric development
The race towards incredibly sophisticated and fully automated cars is well underway: companies like Google, Uber, Delphi Automotive, Bosche, Tesla, Nissan Mercedes-Benz, and Audi have already begun testing self-driving cars in real conditions. Even those who express concern about the safety and reliability of autonomous vehicles still agree that this innovative technology is the way of the future.
But where is the true disruption? Whether you’re looking at driverless cars, electric vehicles, or car-sharing, all these breakthroughs tend to reinforce a car-centric ecosystem that came out of the industrial revolution over a hundred years ago.
The digital economy has emerged as a key driver of growth and development across the world. According to Huawei and Oxford Economics, it accounted for 15.5% of global GDP in 2016 and this share is expected to increase to 24.3% by the year 2020—growing 2.5 times higher than the overall growth of the global economy.
However, along with rapidly increasing digitization, we are witnessing an exponential increase in cyber risks. These have potentially huge financial impacts that could place entire economies and societies in jeopardy. Such threats now typically include privacy breaches, cyber fraud, denial-of-service attacks, and cyber extortion. There are many examples just within the last few years. For instance, a cyber attack on Ukraine’s power grid in 2015 caused serious power outages, and in 2016, the Central Bank of Bangladesh lost $81 million in a cyber heist. That same year, more than 3.1 billion records were leaked globally.
While traditional approaches such as establishing computer emergency response teams and national cyber security agencies are important, there is a need to engage more actively with both public and private entities through new institutional structures, new technologies, and new business models. Cyber risk insurance is one tool that can help address these challenges.
4 unprecedented disruptions to the global financial system
Climate change, migration, correspondent banking and cybercrime are putting unprecedented and unforeseen pressures on global financial markets.
They aren’t just disrupting the global financial system, but also affect how we approach international development work.
Let’s examine each trend:
“Greening the financial sector” is the new buzz term to finance a transition toward a climate-resilient economy and to help combat climate change. This topic is now getting a lot of attention from the G20 to the Financial Stability Board. The international community is trying to understand what this transition will imply: how resilient the financial sector is to deal with risks stemming from climate change, and how efficiently the financial sector can allocate financial resources. What we know is that currently fossil fuel subsidies and a lack of carbon tax are hindering the market from shifting financial resources from brown to green.
Globally, an estimated 65 million people are forcibly displaced. Migration, resettlement or displacement, of course, impact where and how to channel aid to those in need. But more importantly, as displaced people settle down -- no matter how temporary or long-term -- to become self-sufficient and thrive, they will need to establish new financial relations. This can be for simple transactions such as receiving aid through payment cards (as opposed to cash) or for sending remittances. Or it can be for something more complex as getting a loan to start a business.
At the same time, as the global banking industry is tightening regulations, large banks are withdrawing from correspondent banking and shutting down commercially unsustainable business lines. This recent phenomenon can have a huge impact in some regions on SMEs and on money transfer operators, which largely handle remittances.
Cybercrime is no longer a sci-fi thriller plot, but a tangible potential risk to both national and international financial markets. The focus on cybersecurity risk has increased along with the proliferation of internet and information technology. Fintech is transforming the financial industry -- by extending access to financial services to people and small- and medium-sized enterprises (SMEs) previously left out of the formal financial system – but is also raising many questions, including concerns about cybersecurity. The same technology advancements that are propelling fintech are also addressing cybersecurity risk. However, there is a need to develop an appropriate regulatory framework in combination with industry best practices. This framework is evolving and regulators are grappling with how and when to regulate.
The world is becoming more digitized, interconnected and dependent on the Internet for opportunities and economic growth. Today, there are 7.4 billion cellular phone subscriptions in the world, which means citizens of the poorest countries can access cell phones more easily than toilets and sanitation.
The Internet of Things (IoT), which brings in the promises (and perils) of totally interconnected devices, is already mainstreamed in our everyday lives, with sensor-equipped cars, phones, utility meters and even houses. Our refrigerators, equipped with sensors, are making decisions for us, based on their capacity to analyze data and execute embedded algorithms related to dietary needs.
But how can these advances help ensure more free, open, secure and empowering connectivity rather than a host of undesirable side effects?
According to the International Telecommunication Union (ITU) – which surveys the ICT sector on an annual basis through a formal survey involving regulators, operators and original equipment manufacturers – the Internet of Things (IoT) is currently composed of 25 billion connected devices around the world. According to the United States Federal Trade Commission (FTC), this number will grow to 50 billion devices worldwide by 2020. These devices collect vast amounts of information on industrial, organizational and personal behavior, and gathers users’ preferences that can be leveraged to improve delivery of products and services, health, education, entertainment and shopping.
Therefore, IoT will bring important socio-economic advantages to those connected – but without guidance, proper policies, legislation and globally adopted codes of conduct (“netiquette” as we used to call it), it could also bring a range of challenges.
These are some of the views and reports relevant to our readers that caught our attention this week.
CORRUPTION: The Unrecognized Threat to International Security
Working Group on Corruption and Security, Carnegie Endowment for International Peace
Systemic corruption has an unrecognized bearing on international security. Policymakers and private companies often pay insufficient attention to corruption when deciding what foreign and defense policies to pursue or where to invest. Greater understanding of the nature of acute corruption and its impact on global security would contribute to a better assessment of costs and benefits and therefore to improved policy and practice.
The role of Africa's fourth generation
Post-colonial Africa is in its fourth generation. Over the past few decades, each generation has had a specific role to play: the first generation fought for, and gained, independence from their colonisers. The second generation, marked by greed and corruption, largely destroyed all that the first had fought for. The third was tasked with cleaning up the mess made by the second. So where does that leave us – Africa's fourth post-independence generation? It is up to us to build large-scale prosperity for Africa for the first time in its post-colonial history. Although much remains to be done, the second generation's mess has largely been cleaned up and Africa is the most stable it has been in decades. Inter- and intra-state conflict is declining and trade is booming. Africa's 5 % annual GDP growth is four times that of the EU, and between 2011 and 2015, African countries will account for seven of the ten fastest-growing economies in the world.
Why Humanitarians Should Pay Attention to Cybersecurity
Most international staff I know who are working in the humanitarian field aren’t paying any attention to cybersecurity. Why is that? For starters, it’s an issue rooted in the security community which humanitarians have traditionally tried to maintain at arm’s length. But also humanitarians see themselves as the good guys; "we’re delivering food and water to needy people," the argument goes, "who would want to launch a cyberattack against us?" While this argument has been undermined by the fact that even well-meaning humanitarians are targeted by armed actors using traditional weapons, there’s still a reluctance to pay attention to cybersecurity. And humanitarian actors are under pressure to keep their overheads low so that they can distribute most of their funds to people in need – not to beefing up their IT departments. Inspired by my colleague Peter Singer’s new book, “Cybersecurity and Cyberwar: What Everyone Needs to Know,” I humbly suggest four reasons why humanitarians should pay attention to this field.