The Need for a Leapfrog Strategy
April 10, 2020
The Promise of Leapfrogging
According to traditional theories of development, the path to prosperity for emerging economies is to follow in the tracks of developed nations. The theory goes that if countries wish to become wealthier, they should simply commit to following the same series of steps that allowed developed economies to prosper. Through modernization, urbanization, and industrialization, this “catch-up” theory of development translates into a sequential process of investment in skills, production capacity, and design technologies that allow developing nations to move through the same stages of development. This process would eventually narrow the income gap and delivering new wealth for their citizens. In recent years, however, an alternative theory of “leapfrog” development has been growing in popularity as the development community has searched for new ways to leverage technological progress to drive growth and help emerging economies avoid the so-called “middle-income trap.”
Leapfrogging occurs when a nation bypasses traditional stages of development to either jump directly to the latest technologies (stage-skipping) or explore an alternative path of technological development involving emerging technologies with new benefits and new opportunities (path-creating). Probably the most famous and regularly cited instance of stage-skipping is the mobile revolution, which put phones in the hands of millions of people while allowing developing nations to skip directly to mobile phones without the need to invest in landline infrastructure. The opportunities of path-creating leapfrogging, on the other hand, are exemplified by the explosion of mobile payment systems and digital banking apps in the developing world. These new services have dramatically expanded access to financial services while allowing emerging economies to chart an alternative, superior path to the credit card-based systems that still dominate in most developed nations.
The concept of leapfrogging has become a popular subject of discussion within the international development community as a potential solution to development challenges in both low and middle-income nations. According to one 2017 World Bank study on development in Africa, “Vertiginous changes brought about by the digital revolution in the past 20 years make leapfrogging . . . not only a possibility but a necessity.” For low-income nations, leapfrogging offers the opportunity to take advantage of new technologies to address development gaps and spur economic growth. For middle-income countries, leapfrogging provides a potential solution to the middle-income trap by allowing nations to rapidly transition to a knowledge-based economy built on digital services and high value-add production.
For these reasons, policymakers in developing nations have begun to see leapfrogging as a possible strategy for driving growth in their countries. In 2017, Elioda Tumwesigye, Uganda’s minister of science, technology, and innovation, argued that Uganda “must support and invest in R&D so that we can leapfrog the technological trends and developments, as we modernize our industrial base and become a player on the global technological platform.” In 2018, Hun Sen, the prime minister of Cambodia, stated that the technologies of the fourth industrial revolution would “allow less-developed countries to leapfrog traditional industry into modern industry.”
Rethink the Strategy
It is clear that developing countries see their future in science and technology-driven industries, not in traditional foreign aid. In recent years, bilateral donor agencies the UK Department for International Development (DFID) and the U.S. Agency for International Development (USAID) have been increasingly looking to expand their development toolkits by tapping into the prowess of the new digital technologies. Yet with few exceptions, large development donors still operate on a grants-first aid basis. To meet the hopes and aspirations of the developing world today, this must change. But this will also require developing countries to affix strategies to these hopes and aspirations.
Those nations that have explicitly included leapfrogging as a goal in their science and technology strategies often frame it in broad terms rather than as a tangible roadmap and strategy to drive economic development. In addition, these strategies tend to focus exclusively on enabling stage-skipping leapfrogging. An example is the case of Ghana’s National Science, Technology, and Innovation (STI) Policy Document, which states that “In considering acquisition, mastering, development, improvement and diffusion of new technologies, a chance remains to leap-frog from the current low-technology status to more knowledge-intensive technologies” through goals like “develop a national competence in computer hardware and software engineering,” “attraction into Ghana . . . world-class solar energy systems design and manufacturing capability,” and “establish Ghana as a regional hub for high-performance materials systems.”
In this framing, the ambition of leapfrog development is limited to simply passing over the need for a country to invest in low-value manufacturing on their way toward building a high-tech, modern economy. These goals can be useful, insofar as they often lead to an emphasis on investing in education, R&D, strong governance, intellectual property protection, and infrastructure development. However, they are still ultimately catch-up strategies at heart. They still assume that the economic configuration of developed nations is the target to aim for. In some cases, they are looking to copy and paste Silicon Valley. These strategies rarely show signs of considering whether developing countries may have unique competitive advantages that would allow them to forge their own development path via their own unique version of leapfrogging. As a result, policymakers are never prompted to explore how they might create an enabling environment for more disruptive, path-creating forms of leapfrogging that allow new, alternative technology-based systems to take root.
This lack of clear strategy is a missed opportunity. There is tremendous potential for leapfrogging to drive growth if done correctly. Developing nations have latecomer advantages over more developed countries when it comes to technology adoption. The lack of legacy infrastructure and entrenched vested interests could allow for the rapid adoption of emerging technologies, especially compared to developed nations that are forced to follow more incremental transition plans. This flexibility could allow developing nations to plan their policies, innovation ecosystems, and infrastructure with emerging technologies in mind from the start. This approach would speed their transition to more efficient systems and provide their entrepreneurs an early opportunity to become a part of the value chain that will grow up around those innovations.
Lessons from Successful Leapfrogging
Even in the absence of explicit leapfrogging strategies, a number of countries have already seen success in supporting leapfrog development. These countries have taken advantage of innovative business models and flexible regulatory approaches to encourage growth. These instances can provide lessons for understanding the enabling conditions necessary for leapfrog development to succeed and how other countries can build strategies that will help create the conditions for growth.
The first example is the case of leapfrogging’s poster child: mobile money. When M-Pesa—the now-ubiquitous African mobile payment system—first emerged in Kenya, the Central Bank of Kenya (CBK) took a deliberately hands-off approach to regulation. Besides requiring users to register, the CBK imposed few restrictions on the service. When combined with the proliferation of cheap mobile devices and a growing demand for financial services, this regulatory flexibility helped mobile payment apps spread rapidly across the country. Today, M-Pesa has over 37 million users, and almost 80 percent of Kenyans use mobile money services compared to just 20 percent in the United States.
Another example can be found in Rwanda. In 2013, the Rwandan government began to explore how it could deliver 4G mobile connectivity to its citizens. Recognizing the opportunity to take advantage of the lack of legacy infrastructure or incumbent operators, the government formed a partnership with Korea Telecom (KT) to deliver 4G service through a unique wholesale business model. Rwanda was the first country to adopt a single wholesale network for 4G, which allowed the government to achieve 95 percent coverage in just four years by directly laying backbone fiber networks through a process that otherwise “would have taken 20 years” for telecom operators.
Rwanda has also been a pioneer in the adoption of drone technology, most famously through partnering with California-based drone startup Zipline to deliver blood to remote villages. Rwanda’s policymakers helped to support the deployment of drone technology in the country by ensuring that the nation’s regulatory systems remained flexible to accommodate the needs of drone operators. Rwanda adopted performance-based regulations for drone flights, which allowed airspace to be accessed by unmanned aircraft on a mission-specific basis. This more agile approach to regulation has reduced barriers for operators and has given drone companies an open environment for testing and deployment.
Pitfalls to Avoid
Despite these successes, we must be careful not to misunderstand the way leapfrogging can contribute to countries’ economic development. Enthusiasm for taking advantage of leapfrog opportunities should not distract developing nations from what should be their overarching goal: becoming producers in their own right, rather than simply consumers of technologies and services developed elsewhere. Leapfrogging has not always served this purpose. Africa’s mobile revolution, for example, may have helped citizens by improving their access to information and allowing them to become consumers of new digital services, but consumption is not what drives sustainable development.
The excitement surrounding past examples of leapfrogging is well deserved. But if these bursts of leapfrog activity are not supported by policies that translate those opportunities into sustainable growth, then the jump will have been for nothing. The late professor Calestous Juma, who chaired the African Union’s High-Level Panel on Science, Technology, and Innovation, wrote, “The failure of the mobile revolution is that it has not succeeded in establishing an infrastructural base for economic development, nor for deploying adjacent emerging technologies.”
Some elements of economic development cannot be skipped over with new technology. Nations still need to provide the core infrastructure necessary for growth, like education, internet access, roads, plumbing, and electricity, in addition to strong social institutions. Distributed solar generation may light health clinics and charge phones, but it won’t be enough on its own to power the industrial machinery or office parks that will bring growth. Telehealth may expand access to some medical services but will not replace the need for sustained investment in public health infrastructure. Developing nations must avoid foregoing investments in infrastructure, R&D, and human capital in pursuit of short-term solutionism. Similarly, developing nations should not see new technologies as replacements for strong social institutions bound together by social capital and public trust. No technology will ever be able to replace the laws, norms, and institutions that provide the foundation for political stability.
Developing nations should also avoid an approach to leapfrogging that starts with a solution, and then tries to find problems to apply it to. Emerging technologies hold great potential but will not be appropriate in every circumstance. A strategy to use networked cameras to improve traffic management won’t make sense if cities are struggling to even install traffic lights or enforce basic traffic laws. Investments in autonomous vehicles or advanced robotics for manufacturing may not work for developing nations whose comparative advantages lie in low labor costs. The better way to approach leapfrogging is to start with development gaps, and then ask how new technologies may be able to help solve them.
The Way Forward
Leapfrogging should be viewed for what it is: an enabler of sustainable development rather than a solution to all development challenges in emerging economies. When properly supported by a robust and dynamic innovation ecosystem and good governance, leapfrog development can have transformative effects. But the leapfrogging itself is only one piece of the puzzle. The question for policymakers, in that case, is twofold: how can countries enable leapfrog development, and how can they ensure that leapfrogging produces real value? Policymakers in developing nations currently lack a framework for thinking through both of these issues.
Hints at the answer to the first question can be seen in the successes of countries like Kenya and Rwanda. Regulatory flexibility and a willingness to embrace experimentation have helped these countries take advantage of leapfrogging opportunities through drones and digital payment systems. These experiences highlight the bottom-up nature of most instances of leapfrog development and the need for policymakers to proactively engage with entrepreneurs and technologists to ensure that growth in new technologies isn’t stunted by regulations meant for a different age.
Leapfrogging should be viewed for what it is: an enabler of sustainable development rather than a solution to all development challenges in emerging economies.
However, a comprehensive leapfrog strategy must be about more than regulators simply getting out of the way. Rwanda’s success in building out its 4G infrastructure was the result of policymakers realizing the unique opportunity they had and being willing to imagine new ways of partnering with the private sector to take advantage of it. Policymakers have an important role in leveraging the power of the state to create opportunities for new technologies to take root, either by providing the necessary infrastructure or by creating the opportunity and the demand for new technologies. International finance institutions can support these efforts with more risk-tolerant capital to governments and businesses alike. A strategy for enabling leapfrog development must account for the role of domestic and international policymakers in not only enabling innovation by others but also participating in the co-creation of new technological systems.
The question of ensuring that leapfrogging produces value is a more challenging one, but many countries are coming to realize the importance of supporting technology leapfrogging with robust innovation policies. Rwanda’s Vision 2020 strategy, for example, observes that “Whilst leapfrogging may not be possible where supporting infrastructure will take time to develop, the key objective of the policy is to provide the general framework under which any emerging sector can succeed.” Following this strategy, the government of Rwanda has made investments in digital infrastructure and human capital that has allowed it to achieve the highest rate of primary school enrollment, and one of the highest internet user growth rates, in Africa. This has helped the country become more than just a consumer of new technologies. In the drone industry, for example, Rwanda has already seen a domestic drone startup take advantage of the country’s test environment to establish itself as an international supplier of drone delivery services. Further, in 2018, Zipline announced it would establish drone assembly and maintenance plants in the country. These developments show how properly supported leapfrog development can help create new, high-tech jobs for the citizens of developing nations, and help countries to build their industrial base.
These insights help point toward the outlines of an eventual strategy for enabling leapfrog development, but there is still much that remains unknown. There is a need for technologists, development experts, and policymakers to come together to evaluate past instances of leapfrogging and explore emerging technologies that could hold disruptive potential for developing economies in the future. These insights should inform context-specific strategies that will help policymakers identify the conditions for leapfrog development, build flexible policies that enable innovation to succeed and scale, and respond to new technology trends in ways that encourage adoption and value creation.
Erol Yayboke is the deputy director and a senior fellow with the Project on U.S. Leadership in Development and Project on Prosperity and Development at the Center for Strategic and International Studies (CSIS) in Washington, D.C. William A. Carter is an adjunct fellow with the CSIS Technology Policy Program and policy lead for responsible AI at Google. William Crumpler is a research assistant with the CSIS Technology Program.
Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).
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