27 November 2019

Unraveling the complexities of a digital future

Options Winter 2019/20: The pace of digital transformation is accelerating and in the process redefining traditional industry sectors and how we live and work.

© Adam Islaam | IIASA

© Adam Islaam | IIASA

Over the last two decades, digital technology has radically transformed our world. Global Internet Protocol (IP) traffic, a proxy for data flow, has grown at a mind-boggling rate from 100 GB of traffic per day in 1992 to 46,600 GB per second in 2017, and it is projected to reach 150,700 GB of traffic per second by 2022. The impacts on our world have however been far more wide reaching than the mere introduction of new technologies. The digital revolution has completely overhauled how we exist in the world and interact with it. IIASA researchers are exploring how new digital technologies can leverage collective action towards ensuring a more sustainable future for our planet.

A digital world economy

Digitalization – the process by which digital technologies are used to change the way business is conducted – is creating new trade opportunities for firms to sell more products to more markets. It is increasing trade in goods and services across all sectors and allowing countries to draw greater benefits from their trade agreements. With that said, it is however also important to note that the digital era brings with it a host of new challenges and there are questions about how well adapted current frameworks are to the new realities of trade in the digital era.

New business models that are used in e-commerce, peer-to-peer networks, and the transition of consumers from physical products to the consumption of digital services are, for example, posing a problem for governments as they are reflected as smaller economic activity in a country’s national accounting. The blurring of the boundary between producer and user, and the high growth of assets generated to platforms like Google or Facebook, are in fact not visible in the gross domestic product (GDP) at all. Leena Ilmola-Sheppard, a researcher with the Advanced Systems Analysis Program has been involved with ongoing research to address this issue for the Finnish Government.

“In Finland, Google serves users for free and covers 77% of all global searches. In return, Google collects revenue from advertisers that are buying focused advertising space, and users allow Google to use data related to their search behavior to generate additional income.

Policy Brief #20: Digitalization will transform the global economy

Although it is evident that the consumer will get added value and is generating more value for Google, it is less clear how this part of ‘production’ that is not monetized during the transaction, should be taxed,” she explains.

This means that the relative revenue flow of taxation is radically decreasing and governments need concrete measures for adapting to this development. The research indicates that to compensate for national tax revenue flow that is lost, new sources of income should be found, while paying careful attention to not discourage the use of soft innovation resources.

The researchers identified a number of government actions that can both support national economies and prepare countries for a future shaped by digitalization. This includes governments investing resources to fast track the development of technologies that will enhance the competitiveness of their national economies and replacing the inevitable decrease of tax revenue that accompanies large-scale digitalization with new sources of income.

Governance, communication, and misinformation in the digital age

In light of the above, it is clear that new technologies and game-changing business models will provide governments with opportunities to work more inclusively as roles and responsibilities in both the public and private sectors will likely continue to blur, thus creating accountability and governance challenges. Governments often succeed or fail because of the way they engage with stakeholders, including citizens, in terms of decision-making processes and policy implementation, and in a digital age, it is becoming increasingly clear that governments ought to be proactive in the way they communicate and engage with citizens.

“Digital tools can contribute greatly to learning, creating increased awareness and the sharing of information about various issues. They can also help to maintain the balance between social cohesion and respect for diversity as a foundation for democratic values and heterogeneous societies in terms of origins, culture, ethnicity, and religion. On the one hand, digitalization creates new challenges for interconnected critical infrastructure such as electricity networks, while on the other, it influences the risk perceptions of stakeholders and requires new decision support tools to address the impacts of the risk perceptions on their actions,” says Advanced Systems Analysis Program researcher Nadejda Komendantova.

Unfortunately, misinformation is frequently transmitted along with valid information on social media platforms, especially when it comes to contested policy options. This is a serious threat inherent to digitalization – we have all seen the damage that fake news can do in a relatively short amount of time – and has the potential to devaluate the voices of public and private institutions and experts.

To help address the misinformation issue, the Horizon 2020 IIASA Co-Inform project aims to evaluate the perceptions of policymaking stakeholders, but also of journalists, fact-checkers, and the users of artificial intelligence (AI) tools, and to develop new tools to deal with misinformation. As part of a stakeholder-based process in three countries – Austria, Greece, and Sweden – IIASA researchers conducted decision-making experiments on the  implementation of the tools and analyzed the reaction of stakeholders. The tools developed in the Co-Inform project include browser plug-ins, dashboards, and the misinform.me app.

A changing sustainability paradigm

If we can leverage the plethora of new technologies available to us effectively, we will be able to assess and anticipate risks, increase transparency and accountability in the management of natural resources, change markets, and inform consumer choice. These actions are all required if we are to stand a better chance of achieving the Sustainable Development Goals (SDGs).

TWI2050: The World in 2050

As part of their mandate to provide science for the SDGs and develop pathways that build on synergies and multiple benefits, researchers from the IIASA-led The World in 2050 (TWI2050) initiative and collaborators from 20 partner institutions assessed the major opportunities and challenges that digital technologies pose to achieving the SDGs. According to the resulting report, these technologies can be beneficial on many fronts, including enabling decarbonization across all sectors and promoting circular and shared economies. This will however likely necessitate a radical reversal of current trends to harmonize the disruptive potentials of digitalization with pathways toward sustainability. In this respect, the report
highlights that there is a huge need for corresponding regulatory policies, incentives, and shifts in perspectives, which currently only exist in a small number of sectors and a limited number of countries. Closely related to this is an urgent need for governance to counteract the effects of the disruptive dynamics of digitalization.

“The 2030 Agenda with its 17 SDGs provides an aspirational vision of a future that leaves no one behind. TWI2050 concludes that six major transformations would be necessary to achieve the SDGs and one of them is the digital revolution. The paradox is that the disruptive nature of the digital revolution offers a great opportunity for achieving a sustainable future, but is also testing the absorptive capacity of our societies,” says Nebojsa Nakicenovic, executive director of TWI2050.

Artificial intelligence, machine learning, and systems analysis

Due to the digital nature of the world, there is an enormous amount of data of all types available today. These data sets come from a variety of sources and form an integral part of ongoing developments in AI and machine learning (ML).

AI and ML are rapidly developing fields both in terms of methodology and policy applications. According to Advanced Systems Analysis Program Director Elena Rovenskaya, it is important to explore what new opportunities this may offer in applied systems analysis. She is convinced that these technologies will be used much more in the future.

Among the promising new applications are, for example, modeling uncertainties for robust decision support tools and merging qualitative and quantitative data to enrich analyses and modeling processes. Newly available data sources such as mobile phone records, and financial data, or data directly gathered from citizens through social media, or wearable devices, are also opening up new avenues. Publicly available data for the training and testing of ML algorithms is also helping to improve the prediction quality of models, which could be useful in understanding and managing the potential socioeconomic impacts of, for instance, natural disasters. In addition, there is major potential especially for citizen science in closing the data gaps, for example, in terms of the SDG indicators.

“Through citizen science, people around the world could become much more involved not only in monitoring these indicators, but also in implementing the sustainable development agenda,” explains Steffen Fritz, who leads the IIASA Center for Earth Observation and Citizen Science.

Looking at all the challenges and opportunities offered by the digital environment, one thing is clear: It is time for all researchers, policymakers, and citizens to unite in building a common vision for a digital world where data, infrastructure, algorithms, and insights gained from our use of digital technologies can be used to leverage collective action towards sustainable development.

By Ansa Heyl

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Last edited: 03 February 2020


Elena Rovenskaya

Program Director

Advancing Systems Analysis Program

T +43(0) 2236 807 608

Nadejda Komendantova

Research Group Leader

Cooperation and Transformative Governance Research Group

T +43(0) 2236 807 285

Nebojsa Nakicenovic

Emeritus Research Scholar

Transformative Institutional and Social Solutions Research Group|Integrated Assessment and Climate Change Research Group

T +43(0) 2236 807 411

Steffen Fritz

Program Director:Senior Research Scholar

Strategic Initiatives Program|Novel Data Ecosystems For Sustainability Research Group

T +43(0) 2236 807 353

Options Winter 2019/20

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Rovenskaya, E. , Aghababaei Samani, K., Baklanov, A. , Ermolieva, T., Folberth, C. , Fritz, S., Hadi, H., Javalera Rincón, V. , et al. (2019). Artificial Intelligence and Machine Learning for Systems Analysis of the 21st Century. IIASA Working Paper. Laxenburg, Austria: WP-19-010

Fritz, S., See, L. , Carlson, T., Haklay, M., Oliver, J.L., Fraisl, D. , Mondardini, R., Brocklehurst, M., et al. (2019). Citizen science and the United Nations Sustainable Development Goals. Nature Sustainability 2, 922-930. 10.1038/s41893-019-0390-3.

Nakicenovic, N. (2017). GEA TWI2050 The World in 2050. In: IIASA Institutional Evaluation 2017, 27 February-1 March 2017, IIASA, Laxenburg, Austria.

IIASA Policy Brief

Digitalization will transform the global economy

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