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Philippine Finance Secretary says disruptive technologies prompt rethinking of development banking

According to a recent press release by the Philippine Department of Finance, Finance Secretary Carlos Dominguez III has called for the rethinking of development banking strategies to make economies more inclusive amidst the rise of disruptive digital technologies.

At a Technology for Inclusion Conference held at the Asian Development Bank (ADB) in Manila, Finance Secretary Dominguez noted that advances in healthcare, education, communications and productivity that were principally driven by the digital revolution helped improve the average life expectancy by 11 years and reduce infant and maternal mortality rates, along with building a large middle class and rescuing hundreds of millions across Asia from absolute poverty.

“We are at the dawn of a utopia driven by digital technologies. Autonomous vehicles, 3D printing and personalised medicine demand we alter the way we do things. Obsolete businesses die like dinosaurs, except at an even faster pace. New businesses will have to be imagined by the day,” said Finance Secretary Dominguez in his remarks.

“The pace of technology-driven change will likely quicken. It alters the terms of our confederation. It instantly redefines the horizon. The challenge is to make this fast-paced technology-dictated change work to make human association better and our shared future brighter,” he said.

Yet, according to Finance Secretary Dominguez, this revolution has only just begun.

“Cloud computing, artificial intelligence and increasingly more powerful mobile technologies will alter the way we live and the way our economies are organized,” he added.

He also named fintech as a “particularly dynamic area” that development banking policymakers should look into as new digital tools like e-payment systems speed up business transactions and make possible a more inclusive financial system.

Finance Secretary Dominguez said new digital technologies, complemented by open borders, free trade and increased connectivity will change the way wealth is produced, shared and used. He emphasised that rather than fear the emerging digital chaos, governments should aspire to make technology-driven economies more inclusive.

Dominguez said the discussions held at the conference make up only the beginning of more dialogues that should be done with the acceptance that today’s institutions must be reinvented lest they perish in this era of rapidly evolving technologies.

ADB deputy Chief Economist Juzhong Zhuang opened the Conference, which began with a report on the highlights of the findings of the ADB’s Asian Development Outlook 2018 Report on how technology affect jobs.

According to the report, despite growing concern that new technologies could cause widespread job loss, optimism about developing Asia’s job prospects springs from several observations:

(1)    New technologies often automate only some tasks of a job, not the whole job. ATMs, for example, have not replaced bank tellers but broadened their role in customer relationship management.

(2)    Job automation goes ahead only where it is both technically and economically feasible. Both requirements tend to be met in capital intensive manufacturing, where employment shares were already low in 2015.

(3)    Rising demand offsets job displacement driven by automation. From 2005 to 2015, jobs created by rising domestic demand more than compensated for job losses to technological advances.

(4)    Technological change and economic growth create new occupations and industries. Many new job titles have arisen in ICT, and new types of jobs will arise in health care and education and in finance, insurance, real estate, and other business services.

The report also suggests that governments should respond to these challenges by ensuring that workers are protected from the downside of new technologies and able to harness the new opportunities they provide. Governments should also use new technologies to improve education and skills development, as well as to deliver public services. This will require coordinated action on skills development, labour regulation, social protection, and income redistribution.

The presentation of the Report’s findings was followed by a discussion on how new technologies can be harnessed to create new jobs to replace the ones rendered obsolete by artificial intelligence. Professor Reuben Ng of the Lee Kuan Yew School of Public Policy also spoke on the role of government in ensuring a more inclusive digital revolution during the final session of the conference.

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