Flux Insights

Leverages public and private data to enable firms to capitalise, on proprietary and non-proprietary information. Using open sourced technologies and statistical models.

Leapfrogging Technologies

Leapfrogging Technologies

Leapfrogging in Telecommunications, the Asian Snapshot

In the  1970’s, 80's and 90's Asian countries laid the groundwork for strong economic growth. Thus, it was not surprising that some of these countries were well positioned to deploy telecommunications technologies for leapfrogging purposes.

Hence, within a decade, the switching capacity of the Republic of Korea, Singapore and Malaysia surpassed, Canada and the UK. The leapfrogging phenomenon was repeated 20 years later in Africa with the mobile phone.

 

Share of Electronic Switching Capacity to Total Exchange Lines

Leapfrogging in Telecommunications - Asia

Share of electronic switching capacity to total exchange lines (%)

Share of electronic switching capacity to total exchange lines (%)

1977

1987

Selected NICS from Asia

Thailand 0.0

50.7

Republic of Korea 0.0

70.3

Singapore 4.0

64.5

Malaysia 7.4

64.5

Hong Kong 14.3

63.5

Selected Developed Countries

 USA 10.2  76.2

Canada 14.1

55.8

UK 7.0 

48.4

Leapfrogging in Mobile Phones, the African Snapshot

Leapfrogging  in Mobile - Africa

Share of Mobile to Total Phones

Share of Mobile to Total Phones

Year

2000

2013

Kenya

0.28

72

Mali

0.25

32

Ghana

0.39

108

Selected Developed Countries

Canada

0.2

1.7

France

0.46

1.6

USA

0.36

2.3

SOURCE: ANTONELLI C DIFFUSION OF NEW TECHNOLOGIES

 

As a result mobile applications and services achieved massive growth in the Asian region. Knowledge based organisations are considered to be the nervous system of the new economy.

These firms are embedded with employees that are highly creative and innovative, with skills necessary to dominate the higher end of the value chain of the mobile industry. In electronics, engineering, computer science, design, data science, digital marketing and analytics. 

So, what are the foundations for strong economic growth? In the data-driven knowledge-based economy?

Innovation Led Growth

As the diffusion of new technologies, accelerates across the globe and changes what countries produce and how they trade. Productivity lead growth arising from innovation is essential for achieving success in tech-driven, knowledge-based economies.

However, to be successful, requires investment in intangible assets. Software, data, patents, designs, trademarks, brand equity, new organisational processes and the development of firm specific skills. Along with the frontier technologies in the hard sciences.

To illustrate my point.  In 1982, the tangible book rates represented 62%, of industrial organisations market value. Ten years later, the ratio had plummeted to 38% (Blair 1995). By the end of the 20th century, the book value of tangible assets accounted for less than 20% of a companies’ market value (Webber 2000, quoting research by Baruch Lev).

In many countries in the EU and North America, investment in intangible assets increased faster than investment in physical capital, that is machinery and buildings.

This is true more so in the USA where according to the European Investment Bank, the USA invested 8.8% of GDP in intangible assets. In contrast the EU 14 invested 7.2%.  

At a governmental level, OECD & Asian countries that spend between 0.5 – 2.5 % of their GDP on R&D. Tend to score highest on the Knowledge Economy Index (KEI). This is essentially a measure of how well a country is able to access, embed and disseminate knowledge nationwide.  

However, investment at a governmental level is not enough. In countries like South Korea, SMEs invest up to 10% of their total sales in R&D.  It seems that in tech-led firms there is a strong correlation between the pursuit of R&D investment and financial performance.

Over the last 30 years, countries like South Korea, Japan, Singapore, Taiwan and China have invested in capabilities on multiple fronts.

 

Migrating their economies from labour intensive to technology intensive economies.

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These investments are an acknowledgment that mobile and other emerging technologies, like the Blockchain, the Internet of Things (IOT), Artificial Intelligence (AI), Robotics, Algorithms and Cloud Computing.  Are redefining traditional growth trajectories.

 

Changes-in-economic-structure-for-selected-countries-The-source-of-the-figure-is (1).png

Changes in the Economic Structure for Selected Countries.

Source: Nakicenovic et al. (2000); & Maddison (1995)

Asia's mobile consumer base comprises of 3.5 bn mobile subscribers. Technologies, like 3g and 4g were adopted at a faster rate in some cases than in western nations and most developing countries outside Asia. This along with a well-established emerging middle class. Presents a huge opportunity for new products and services.  

Fintech companies such as, The New SavvyGo-Pay 24/7, MintPayments, BlockAssetVentures, and Mosaic.io. Are integrating their innovative solutions in financial investments, advisory services, big data analytics, the blockchain, and AI with the scale of the mobile ecosystems present in Asia.   

The African Snapshot

To demonstrate how mobile and switching technologies are a game changer and an enabler for leapfrogging. According to Mobile Money for the Unbanked, in 2012 there were 30 million mobile money customers.

Located mostly on the African continent, where in 28 countries there were more mobile money accounts than bank accounts.

In 2017, the mobile money market in Africa was worth approximately US$32 bn.  With Sub-Saharan Africa accounting for US$19.9 bn or 63%.

Industry growth however, is now driven by South East Asia with a 47% year on year growth.    Start-ups like PesaChoice in Rwanda,  PiggyBank in Nigeria, Olivine Technology in Kenya  and Flutterwave in Nigeria.

Are delivering affordable and accessible innovative financial services with the necessary infrastructure to a broader section of consumers incumbent within the African continent.


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