Moving Fast with Frontier Technologies

The $9.5 trillion question

Frontier technologies is a capacious label. It covers everything from AI and blockchain to drones, gene editing and solar photovoltaics. What these technologies share is not a common engineering base but a common economic trajectory: rapid growth, high concentration among a handful of producers, and the potential to restructure entire industries in the countries that manage to adopt them early.

The UNCTAD Technology and Innovation Report 2023 groups 17 such technologies into three broad categories. The first cluster is digital and data-driven: artificial intelligence, the Internet of Things, big data, blockchain, 5G, 3D printing, robotics and drones. The second centres on physical and biological frontiers: gene editing, nanotechnology and electric vehicles. The third is green and energy-related: solar PV, wind energy, biofuels, green hydrogen, concentrated solar power and energy storage. Together, these markets were worth roughly $1.5 trillion in 2020. By 2030, on current growth trajectories, that figure is expected to surpass $9.5 trillion. The question is who will capture the value.

A geography of concentration

The distribution of frontier technology capability is strikingly lopsided. The United States and China together produce more than 30% of all scientific publications and close to 70% of all patents across the 17 technology fields examined in the report. Among the top providers of these technologies globally, only two firms come from developing economies (and that count excludes China). The pattern is self-reinforcing: countries that lead in research attract the talent, the venture capital and the first-mover advantages that make it harder for latecomers to break in.

The imbalance extends to trade. Between 2018 and 2021, developed countries saw their green technology exports grow by a factor of 2.6, reaching $156 billion. Developing countries managed a factor of 1.3 over the same period, reaching $75 billion. The risk is that frontier technologies become yet another domain where a small number of advanced economies capture most of the value while the rest of the world remains a consumer rather than a producer.

Measuring readiness

If the problem is that developing countries risk being left behind, the first step is to measure exactly where they stand and what they lack. That is the purpose of the Frontier Technology Readiness Index, developed by UNCTAD and central to Chapter 2 of the Technology and Innovation Report 2023, the chapter on which this project is based.

The index assesses 166 economies across five dimensions: ICT deployment (broadband penetration, internet access, mobile connectivity), skills (tertiary enrolment, engineering graduates, digital literacy), research and development activity (R&D spending, scientific output, patent filings), industry activity (manufacturing value added, high-tech exports, economic complexity) and access to finance (domestic credit, venture capital availability). Each dimension captures a different prerequisite for successfully adopting frontier technologies. A country might have excellent ICT infrastructure but lack the skilled workforce to deploy it, or might produce strong research but have no industrial base to commercialise it.

The results are predictable in their broad contours but revealing in their detail. High-income countries dominate the top of the ranking: the United States leads, followed by Sweden, Singapore, Switzerland and the Netherlands. Emerging economies, represented here by the BRICS, appear from the second quartile onwards. The bottom of the table is populated overwhelmingly by sub-Saharan African and small island developing states.

Where the gaps lie

The aggregate scores tell one story. The component-level data tell a more useful one. When you break the index down into its five building blocks, a clear pattern emerges: developing countries as a group score worst on ICT deployment and skills. Least developed countries, landlocked developing countries and small island developing states face particularly acute deficits in ICT infrastructure and R&D capability. These are not abstract rankings. A country that lacks reliable broadband cannot train an AI model. A country without enough engineering graduates cannot maintain a solar grid. The index pinpoints where the binding constraints actually sit.

There is, however, a note of optimism in the time series. While the absolute gaps between country groups remain wide, they have begun to narrow. Developing economies have been improving their readiness scores faster than developed ones in recent years, driven largely by gains in ICT access and mobile connectivity. Whether this convergence is fast enough to allow countries to participate in the $9.5 trillion market before it matures is the open question.

Regional variation within groupings is also instructive. Latin America and the Caribbean, for instance, spans from 40th (Brazil) to 154th (Haiti) in the global ranking. This kind of spread means that blanket policy prescriptions are unlikely to work. A country ranked 40th has different bottlenecks from one ranked 154th, and the index is designed to help identify exactly which dimension requires the most urgent attention in each case.

What governments can do

The index is diagnostic, not prescriptive, but the diagnostics point in clear directions. Countries scoring poorly on ICT can improve their position by investing in digital infrastructure and creating regulatory environments that encourage private-sector deployment of broadband and mobile networks. Skills gaps call for targeted education programmes, particularly in engineering, data science and digital literacy. The R&D dimension can be supported through public funding, tax incentives for private research, and stronger links between universities and industry. Industrial capacity requires carefully designed industrial policies that create space for domestic firms to absorb and adapt new technologies. And financial constraints, particularly in the earliest stages of technology adoption, may need to be addressed through development banks, multilateral funds and incentive structures that lower the cost of experimentation.

None of this is one-size-fits-all. The point of the index is precisely that it allows each country to identify its own weakest dimension and allocate scarce policy bandwidth accordingly. A country with strong ICT but weak R&D faces a fundamentally different challenge from one where both are absent. The readiness framework makes those distinctions visible and actionable.

What it all means

This project contributed to Chapter 2 of UNCTAD's Technology and Innovation Report 2023 and was published as a policy brief on UNIDO's Industrial Analytics Platform. The full article is available at iap.unido.org.

Tools and methods