Leveraging Tech for Economic Inclusion
Across the Atlantic at the dawn of this new decade, societies are grappling with the full impact of the tech industry’s ethos of acceleration and disruption. There is a deep ambivalence between the positive potential of employing tech for financial inclusion and the reality of the tech industry’s role in perpetuating and exacerbating economic inequality. Accordingly, economic inclusion advocacy should consider an honest inquiry of how capital is deployed in order to advance tech innovation and the effects of these deployments.
Economic inclusion means ensuring the right to work, participate in the economy, and be included in the financial mainstream for all. Much of the discourse on economic inclusion focuses on financial inclusion and employing innovative financial tech, or “fintech,” to improve equity of access to financial services. There has been a significant increase in innovation around achieving financial inclusion through the deployment of fintech to reach the unbanked and provide credit to more people. Across developing countries especially, pioneering startups are transforming how millions of people access loans, make mobile payments, prove their identity, and create small businesses. Fintech thus holds great promise for reaching historically underserved areas and populations who continue to be excluded from traditional financial institutions.
The startup rate has halved over the past two decades and, since the Great Recession, more firms die than are established annually in over 60 percent of U.S. metropolitan areas.
Unfortunately, while entrepreneurs have made great strides in creating inclusive fintech, fewer innovative solutions have been proposed or executed to address the role of tech in creating new forms of economic precarity. The beginning of the Information Age was marked by an optimistic belief that, unlike the inherent restrictions of manufacturing and physical infrastructure, digital innovation would allow a wide variety of regions to develop quickly. However, we have instead seen a deep concentration of where tech innovation occurs and digital infrastructure, like broadband, spreads. A report from the Economic Innovation Group shows a surprising simultaneous decline in the rate of startup creation and entrepreneurship in the United States. The startup rate has halved over the past two decades and, since the Great Recession, more firms die than are established annually in over 60 percent of U.S. metropolitan areas. These statistics serve as a reminder that diversity and inclusion are economic imperatives and beg the question of how tech capital can be deployed to tap into the full human potential of a society. The goal of inclusion is to capitalize on the talents and abilities of all members of society to create greater economic opportunity and development. Leveraging tech for economic inclusion means addressing the ongoing digital divide that contributes to the growing disparities between rural and urban areas as well as increasing access to capital for tech entrepreneurs from underrepresented groups.
Furthermore, discussions of economic inclusion must acknowledge the tech industry’s contribution to the growing proletariat of “gig” workers who lack the basic worker rights labor unions spent decades fighting for in the previous century. Thus far, disruption has led to the investment of billions in venture capital in startups that not only show little to no promise of future profits, but also threaten potential future economic growth as the ability of millions to earn living wages decreases and the cost of living climbs. Confronting this phenomenon is an opportunity to pose broader questions about the desired role of technology in daily life and the consequences of technological disruption. What is the true cost of convenience and the “uberization” of work? How do we allow tech innovation to flourish while ensuring workers earn living wages? How do we employ tech to make work meaningful in an age of automation? How do we ensure tech innovation will advance economic development while lessening inequality?
By leveraging tech for economic inclusion, leaders can simultaneously advance financial inclusion and economic development to improve economic well-being and access to opportunity. The vision must be toward improving society’s ability to nurture and reap the benefits of the diversity of thought, experience, and knowledge of the full population. This requires inclusive leadership across sectors to address the wide range of issues that economic inclusion encompasses. The work begins with creating spaces that foster inclusive dialogues and collaborative efforts to disrupt processes of economic marginalization.
The views expressed in GMF publications and commentary are the views of the author alone.