The Geopolitics of the Data-Driven Economy

Abstract

The development of new general purpose technologies centred on the nexus of Big Data, machine learning and artificial intelligence is transforming and disrupting established economic structures and markets, creating prospects for massive economic rents that incentivize strategic trade and investment policies, and reconfiguring the ways and means of geopolitics, including by creating new vulnerabilities and new theaters for conflict. The shift of international competition onto a new technological playing field is inherently “revisionist” in political science terms as it erodes the established advantages of the advanced economies, in particular of the reigning hegemonic power, the United States, and opens the way for new competitors like China that are willing and able to make the necessary investments in the new technologies. The acceleration of the pace of innovation with the industrialization of technological change through machine learning precipitates action to capture first mover advantage and to respond to risk of falling behind. This chapter argues that the emergence of the data-driven economy provides a unifying framework to understand the eruption of a trade and technology war between states, the alignment of the players in this conflict based on their endowments of relevant assets, and the sidelining of the rules-based trading system in favour of geoeconomic and geopolitical power plays. It comments on the possible trajectory of this conflict as the data-driven economy develops in a post-pandemic context.