I once heard the technologist, Joi Ito, describe nation-states in terms of the services they could offer to an increasingly global professional class, whose sense of nationality is less about blood-ties and patriotism in the old, conservative, fashion, and more about the economics of success and fulfilment.
Joi spoke about the reception he had received from Singaporean officials, and their willingness to discuss in detail such issues as education for his wards and related affairs. One got the sense of a business transaction, not an immigration interview.
This is of course interesting in its own right. Whilst more and more countries appear to appreciate the global competition for talent and investment, immigration systems still operate on a logic more akin to quarantine rather than recruitment. But there is a more interesting layer of the ‘countries as platforms’ metaphor that I want to concentrate on.
If you pay attention to these things, you would have noticed a growing phenomenon of cloud-hosting companies offering subscribers a choice as to where their data can be hosted. Many commentators have already drawn attention to the paradox of cloud computing, once sold as borderless, uninhibited, and unconstrained, now becoming subject to more and more ‘data residency’ constraints. The old trope was of the internet being the ultimate exemplar of the boundlessness of globalisation. Not entirely, it would now seem.
The role of the ‘domiciles’ appear to gain even more strength as globalisation intensifies the necessity of cross-border economic behaviour. Now more than ever, countries have become central as the building blocks of globalisation.
The whole situation recalls another era. In the few decades before the First World War, globalisation looked set to diminish the relevance of countries. The open seas and cultural metropoles, such as Paris, seemed like the true pillars of the global system, not the nation-states. Internationalism, it would seem, had spawned new values. We all know how that ended.
Not too long ago, many scholars were of the view that transnational corporations (TNCs) were the true and fundamental substructures of our new ‘global architecture’. In that sense, it was what happened within these structures that mattered, and countries were merely an inert backdrop. Then the Great Recession struck, and many TNCs were forced to turn to the States for both succour and direction. The global economy, it would seem, still took much of its shape from the conduct of countries/nation-states, though of course countries also needed to work in blocs to amplify their effects.
No trend has been perceived as more aligned with globalisation than the digitalisation of the society. So it follows logically that where the internet and the digital economy is concerned some of these re-assessments of the role of geography will be relevant.
It is in the above context that the notion of “countries as platforms” becomes something far more poignant than a statement about the reduction of the nation-state to a mere facilitator of business and business talent. Rather, one may perceive the concept as implying that countries can become the very determinants of new industry models.
But because we are talking about the digital economy as opposed to some other type of economy, the more established ideas of ‘investment climate’ and ‘national competitiveness’ only tell half the story, and perhaps not the interesting half. Let me illustrate with the example of maritime flags of convenience.
Maybe more than half of all marine vessels worldwide register in countries such as Antigua, Panama, Liberia and the Marshall Islands, and thus fly their flags. These tiny countries together account for nearly half of all ship registrations. Some observers would lump this phenomenon with that of tax havens and dismiss both as mundane expressions of capitalist rule-evasion. This kind of attitude shields the observer from some intriguing detail.
While it is true that some ship-owners may register their ships in Liberia to evade sound regulation and scrutiny, hide assets, and even maltreat staff, just as it is sometimes the case that a politician will stash funds in the Cayman Islands solely for the purpose of hoarding ill-gotten loot, there are many occasions when arrangements very similar to the foregoing would be made in order to heighten compliance with sound law and regulation.
For example, many people entering into a contract would sometimes choose a foreign jurisdiction such as New York or London, not because they want to evade sound law and regulation in their home countries, but because they want to benefit from the highly developed arbitration and investment dispute resolution laws in those states.
In fact, careful research has shown that in many cases the flexible hiring of maritime workers enabled by flying a flag of convenience is designed less to undermine worker rights but more to circumvent unsound labour immigration laws and rules in advanced economies such as the United States.
Rather than spurring a competitive race to the bottom, countries that become ‘platforms of convenience’ may actually be facilitating the emergence of industry models suppressed elsewhere. This is a very important point.
The recent Snowden revelations have not merely exposed the United States to charges of less than enthusiastic compliance with the rule of law in such matters as privacy and the integrity of property, it has also shown that the key global market are completely oblivious to the gap in the market for products that comply with sound laws and regulation.
This is partly because many people have failed to see that the actions of some Western intelligence services to create backdoors into the security layers of products jeopardise not just civic freedoms but also the sanctity of contracts, protection for intellectual property, and the very essence of product integrity. There is nothing so far that guarantees that the Western intelligence services will confine themselves to passive observance, and not wander off into active manipulation and compromise of the product experience itself.
Whilst many business people might feel inadequate about pontificating on the trade-offs between civil liberties and national security, among other complexities of political economy, they definitely do understand the commercial implications of a system that churns out fundamentally untrustworthy products.
The truth though is that while the focus has been on the US intelligence services, they are far from being the only perpetrators. Powerful countries in Asia, the Americas and Europe are all busy acquiring such capabilities and creating the systems necessary for manipulating the internet and the devices that constitute it, for power begets the will to control.
Historically, countries that have sought to reassure their clients of firm restraint have done so simply by abjuring many of the trappings of power. So for example, Switzerland decided not to have an aggressor army. The smaller, more traditional, tax havens have been careful about building their own aggressive, expansionist, banks. Flag states of convenience never aspired to giant navies.
For it falls to reason that should the balance of power between the clients as a collective and the platform provider widen too inexorably, the principle of firm restraint is in danger. In that sense the Powers of the Global North, in much of Europe, in the Americas, and parts of Asia, are simply too powerful to be able to promise firm restraint. They are not sufficiently credible to fill the gap in the market for sound country regulation of the internet economy.
Many African countries can be credible guarantors of such firm restraint. The balance of power between many potential clients and several states in Africa is at a level of relative comfort, compared to most other locations around the world. Add that to Africa’s status as one of the world’s most exciting, yet least tapped, internet markets, blessed by amazing demographics, much lower levels of legacy impediments to cutting-edge offerings such as Software-As-A-Service and Enterprise Mobility, and you have a clearly winning formula.
And as some African countries, such as Mauritius, Botswana, Rwanda and Kenya, begin to invest substantially in their general infrastructure, and in the skills of their workforce, the prospect of their becoming major hosts for global cloud-computing economies is no longer far-fetched.
Marketing is of course the challenge, but the burden need not exclusively fall on the African countries themselves. ‘Intel Inside’ is often seen on other people’s products. The clients of African Country Platforms have as much incentive to build the brand as the African countries themselves. It is just a matter of narrative. All it takes is for the competitive advantage to be clear to the initial anchor clients.
It pays to remember that just as the State of New York was not singularly responsible for the deepening and enrichment of its arbitration and investment dispute laws, nor Panama entirely to credit for the maturing of its maritime legal system, it should not depend entirely on the leading African countries themselves to incubate the primary factors for internet innovation based on sound regulation in their territories.
All they have to do is align strongly with a new narrative against the untrustworthiness of rigged internet products, and enthusiastically announce their roles as platforms of convenience.