August 6, 2021

Central Bank Research Hub

The Economics of Privacy: A Primer Especially for Policymakers

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Originally published on by Bank of International Settlements . Link to original report

This paper presents a survey of a field called the economics of privacy. Reflecting growing concerns worldwide about the handling of personal data on the Internet, the economics of privacy is developing rapidly, coinciding with recent efforts by privacy regulators to tighten regulations. The literature argues that it is difficult for market mechanisms to resolve problems such as how to determine the socially optimal level of privacy protection and how to avoid excessive privacy loss driven by negative data externalities. These insights should be useful for policymakers facing the question of how to deal with personal data issues and to ensure that people's privacy is protected.

( < 1 min)

Bank of Japan Working Papers by Yosuke Uno, Akira Sonoda and Masaki Bessho

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Why we need increased investment in food and agriculture in developing countries and international organizations that support them

( 4 mins) The Sustainable Development Goals are off track. The prospects of the SDGs being realized by 2030 are bleak. The rapid pace of consistent decline in poverty and hunger until 2015 had slowed even before COVID-19. Often overlooked is the fact that much of that reduction in poverty and hunger occurred in China and Southeast Asia. A once-in-a-century global tragedy, COVID has been particularly hard on the world’s poor, compounded by severe impacts of climate change. Migrant labor has returned to rural areas and structural transformation has registered a big setback, particularly in countries in South Asia and sub-Saharan Africa already lagging in movements out of agriculture. The result is increasing dependence of vulnerable populations on agricultural and rural employment. Decline in child mortality and other indicators of child poverty have similarly slowed, concurrently with a slower dietary transition in the patterns of food consumption. Incidence of obesity is growing and is associated with consumption of cheap junk food. The consequence is increased incidence of noncommunicable diseases such as cancer, diabetes, and heart disease.

To address these complex challenges, strengthened international cooperation backed by financial resources is more urgent than ever. Since their establishment, five big international organizations have played key roles in contributing to food and agricultural development: The World Bank and International Development Organization have been the largest source of investment in food and agriculture; the Food and Agriculture Organization of the United Nations is the only organization with a holistic mandate for food, agriculture, natural resources, information, norms and standards; the World Food Program is the largest humanitarian organization for emergencies logistics, delivery of food or cash in a situation where the number of displaced people has skyrocketed to 75 million; CGIAR is the largest scientific organization for research on food security (lately including nutrition); the International Fund for Agricultural Development’s investment focus is on marginal populations and women.
But collectively their resources are now miniscule compared to the trillions of dollars needed annually in investments to achieve transformational change in food and agriculture to reduce poverty and hunger. While developing-countries’ own resources are increasingly important, they are also nowhere near sufficient for such transformational change.

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In a just issued, freely downloadable book, “Food for All: International Organizations and the Transformation of Agriculture” published by Oxford University Press (September 2021), Lele, Agarwal, Baldwin, and Goswami address food and nutrition security issues in two parts.
One part of the book is a historical account of when and how the “big five” major international organizations have contributed to world food needs since their establishment: the flow of their financial resources to developing countries, the evolution in the nature of their activities and impacts on outcomes—food security standards and norms, policy changes, institutions, human capital, and technology. The second part of the book examines how the concept of structural transformation has evolved since W. Arthur Lewis. It pays attention to the role that small/medium- and large-scale farmers are playing in the transformation process, and asks which of the 130 odd countries included in the transformation process have done well, and which have not.
Key findings
Developing countries now have the major responsibility to invest in food and agriculture and related growth-enhancing sectors, including education, health, infrastructure, and research and development. Increasingly a multi-sectoral strategy is needed. Absent such a strategy, in the face of climate change, many countries are facing gross underinvestment in growth-enhancing sectors, slowing agricultural productivity growth, and premature industrialization. Notable exceptions are China, and, for different reasons, Vietnam and Bangladesh. These three countries are also more export-oriented.
While incidence of hunger has increased, the shift to new highly processed forms of food through nutrition transition has reduced dietary quality. Transformative changes are needed in the food systems to achieve nutritious food for all. Current income levels are not sufficient to achieve nutritious food for 3 billion people. The role of international organizations has declined relative to the growing needs because their own resources have not grown commensurately with the needs.
The way forward

Get domestic policy strategy frameworks right and implement them consistently.
Increase domestic human and institutional capacity as the central focus.
Abandon autarchical policies.
Mobilize domestic and international capital in support of employment-oriented sectors.
Support international organizations by understanding their complex financing history.

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Key strategies to accelerate Africa’s post-COVID recovery

( 5 mins) The COVID-19 pandemic brought unprecedented disruptions to Africa—reducing earnings and increasing poverty and food insecurity as well as leading the region into its first recession in 25 years. While the global economic effects of the pandemic have started to recede as Western and Asian countries recover, 2021 is still turning out to be a difficult year for Africa. Moreover, the region will face even riskier external and internal environments in the future.

Thus, African leaders must now adopt strategies for a resilient recovery post-COVID-19 as we discuss in our recent report. Resiliency—a country’s capability to recover from shocks and adapt flexibly to stressors—not only protects economic and social gains, but also facilitates economic transformation and sustainable employment. In a “resilient” country, fewer assets are lost when a shock occurs, so more sustained improvements in economic welfare occur for the same amount of investment. Post-COVID-19 African economic development policy needs, therefore, to be centered around both improving resiliency and accelerating transformation to realize sustained economic welfare gains. Strategies for resiliency should build on the COVID-19 experience, helping households, communities, and countries to strengthen coping measures that reduce losses thus allowing for a faster recovery, and investing to adapt to and mitigate the effects of future shocks. Adapting to a “new normal” can help resilient countries to grow and transform at a faster rate.
While successful policies will be context-specific, two key strategies for enhancing a country’s resiliency deserve consideration.
Deregulation for the growth of large firms
Since the entrance and growth of large firms increase a country’s resilient economic transformation—because large firms, with more assets, are inherently more resilient and are better equipped to endure economic storms—policymakers should prioritize policies for facilitating the entrance and growth of such firms, through domestic deregulation and encouraging foreign direct investment (FDI). Notably, large firms in Africa (employing more than 100 people) tend to start large and grow from there. Evidence shows that their use of newer technology, combined with the fact that they pay higher wages and are more likely to export, supports both transformation and resilience, which is why large firms are more likely to survive and grow. A company in a developing country that begins with fewer than 20 employees has a low chance of surviving its first five years, and a less than 1 percent chance of ever employing over 100 people if it does survive.

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Importantly, regulation can stifle innovation, productivity, good job creation, and resilience as a firm is unable to adapt to a changing world economy. Therefore, deregulation can encourage investment by helping large firms receive equal and impartial treatment from the government, which is necessary to grow, create good jobs, and take advantage of scale opportunities.
Support agricultural productivity-led growth and the development of the agro-food system
A second strategy leading to increased resilience and transformation is to improve agricultural productivity-led growth and the development of the agro-food system. African economic strategy and policy discourse have long underestimated the role that agriculture can play in a resilient and sustained transformation. Yet recent evidence shows that, in 2020, the agricultural sector outperformed the broader economy exactly because it was more resilient. This result continued a 20-year trend where the average annual growth rate of Africa’s agricultural production was faster than any other region in the world. Research has clearly demonstrated that, at lower income levels, agricultural sector growth and development is critical for poverty reduction, and less poor households are inherently more resilient.

If Africa can continue this trend, primarily by raising productivity on existing land and increasing climate resilience, the future for African agriculture is bright. As the world’s population grows, demand for food increases: In fact, the African continent will account for 80 percent of the world’s population growth between now and 2050. These new consumers are also expected to be richer, demanding higher-value food products (processed foods, fruits, and vegetables). At the same time, available farmland the world over is diminishing due to urbanization—offering an opportunity for Africa, with its vast quantity of arable land—to step in. Moreover, demand for food within Africa offers significant potential for intra-African trade. The importance of the agricultural sector in building a more resilient economy is clear.
Countries should move quickly to stay ahead of the risks, while building for a more resilient future. Achieving resilient, sustainable growth will not be easy, and will require the following: African food value chains becoming more internationally competitive; raising on-farm productivity; lowering the costs of production and distribution to cities and small towns; facilitating private investments in logistics and processing; reducing nontariff trade barriers between African countries; and, most importantly, successfully implementing appropriate adaptation policies for climate-vulnerable regions.
The African continent will face many challenges in the post-COVID-19 world. Past strategies focused on transformation as a main outcome, but COVID-19 has highlighted the role resilience plays as an equally important economic outcome. Therefore, African countries’ economic development goals need to strive to achieve these dual objectives. These goals can be further advanced by the two key strategies provided in this article. Importantly, success in both of these strategies would improve employment opportunities across Africa and strengthen poverty reduction at a time when progress on both has stagnated.

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Where is the Fed Vice Chair for Supervision?

( 5 mins) Randal Quarles, the first Trump appointment to the Federal Reserve’s Board of Governors, finished his four-year term as the Vice Chair for Supervision on October 13, 2021. To replace him, President Biden has nominated no one. The Fed replaced him with no one. For now, the Fed’s vital supervisory and regulatory priorities will be managed by the Fed’s Board of Governors, through their committee structure.

There is much to lament with this state of affairs. Quarles was the first to hold the position: it was created in 2010 in the Dodd-Frank Act to encourage the Fed to focus more completely on the vital work of bank regulation and supervision, areas that many feared had become neglected during the Greenspan years. Even though the position was created under a signature law of the Obama administration, that administration did not prioritize the formal appointment, relying instead on Fed Governor Tarullo to manage the portfolio, just as former Fed Governors had done. Today, for reasons known only to the administration itself, if known at all, the Biden administration has been plagued by delays in filling Fed and other financial regulatory vacancies. Even though the Vice Chair’s term is fixed by statute at four years, we still have no insight into the people the administration is even considering to succeed Quarles, as the administration has not even announced an intent to nominate anyone to any position at the Fed.
Quarles, a Republican, pursued a bank regulatory and supervisory agenda with expertise and a clear vision. He is no favorite of some Democrats, who do not endorse his vision, have little use for his expertise, and have been eager to see him depart the scene. Whether the Democrats would prefer it otherwise or not, Quarles is not going anywhere for now. He remains a Fed Governor, with the same important responsibilities over regulatory, supervisory, and monetary policy as his colleagues on the Board. That term is fixed for fourteen years and will not expire until 2032.
Here is the good news. Despite the mishandling of these vacancies from the Biden administration, the Fed’s decision not to reassign these priorities to another Governor is exactly the right thing to do. Its other alternatives are not attractive. It could have given now-Governor Quarles the responsibilities despite the expired term, but his ability to operate without the benefit of his statutory status would be significantly curtailed. The other option is hardly better: the Fed could have given these responsibilities to a candidate more in line with Democratic priorities—Fed Governor Lael Brainard, an expert on virtually every regulatory and supervisory question before the Fed, would fit this bill nicely. But Governor Brainard herself is a candidate to succeed Fed Chair Jay Powell, whose term as Chairman expires in January, and any move to reassign her portfolio could look like meddling in the Fed Chair sweepstakes that is still ongoing.
And so, the Vice Chair for Supervision—that unique creature of governance created by Congress just a decade ago—remains vacant, creating the possibility that financial regulation and supervision will not take their place at the forefront of the Fed’s policymaking. What’s more, the replacement of the Vice Chair position with a committee will devolve more authority to the Fed’s staff to handle this highly political and politicized portfolio.
So why is this good news? Because public oversight of the Federal Reserve System is primarily a product of public governance. We need, as a public, to have rigorous debates about who we want our central bankers to be. One such debate is underway as the Biden administration continues to consider the president’s appointment of the Fed Chair. Those who support Jay Powell, the incumbent, praise his leadership during the 2020 pandemic crisis and his management of a major shift in monetary policy regime. His detractors argue that his regulatory priorities are insufficiently aligned with those of the president, especially around bank regulation, financial stability, and climate change. While the tone of this debate can veer toward hyperbole—an American political tradition as old as the Republic—this is what politics looks like. We should welcome it.

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What we are not having, however, is that same level of debate around the priorities that the Fed should pursue as a regulator and supervisor. For this debate, we need to have time to consider viable candidates for this position. And we need the Fed not to do this work for us by pretending that the work of bank regulation and supervision has no political content in it.
The position obviously does have political content. The act of regulating and supervising the financial system is almost top to bottom a political exercise. We have elections to let that content and those exercises dictate the course that regulation and supervision should take. Just because the Biden administration has inexplicably dodged its responsibility for sponsoring that debate does not mean that the Fed should skip the debate entirely. By failing to appoint a successor to Quarles, the Fed has turned up the heat on the politicians to give us—the people and institutions affected most by the Fed’s regulatory and supervisory work—the chance to perform our role in vetting the nominees for this job.
Let’s hope the president accepts the Fed’s invitation as quickly as possible.

The Brookings Institution is financed through the support of a diverse array of foundations, corporations, governments, individuals, as well as an endowment.  A list of donors can be found in our annual reports published online here. The findings, interpretations, and conclusions in this report are solely those of its author(s) and are not influenced by any donation.

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1 year in: Our new Center for Sustainable Development takes stock

( 9 mins) What a difference a year can make.  After generating more than 130 public products within in its first 365 days—research papers, journal articles, book chapters, policy reports, blogs, op-eds, podcasts, and public events—the Center for Sustainable Development (CSD) at Brookings celebrated our first birthday this past week, on October 21.

CSD was launched with a vision of providing leading research, insights, and convenings to advance global sustainable development and implement the Sustainable Development Goals (SDGs) within and across all countries—including advanced economies. In our public launch event last October, we were honored that so many extraordinary leaders from around the world conveyed encouragement and support. We were especially grateful that Ms. Amina Mohammed, U.N. deputy secretary-general, and Dr. Rajiv Shah, president of The Rockefeller Foundation, joined to discuss so many of the world’s frontier challenges of sustainable development. We took to heart the deputy secretary-general’s reminder that “None of us can achieve the SDGs alone,” and her challenge to the center “to strive to be a beacon of inspiration for the pursuit of sustainable development in all countries and communities around the world.”
Some highlights
One year later, as this stock-taking file shows, CSD scholar teams have taken up the challenge with vigor, making contributions across a wide range of sustainable development topics, including:

The SDGs & global sustainable development.
Climate change.
Cities and local leadership.
Workforce of the future.
Global debt crisis.
Ending extreme poverty and deprivation.
Global development cooperation.
S. domestic sustainable development policy.
S. global sustainable development policy.
Gender equality.
The global middle class.

However impressive the volume of CSD outputs might be, our team cares vastly more about the quality and results of its efforts. In the world of research and ideas, it is generally unwise for any single actor to try to claim too much credit, but we are fortunate to have a unique roster of scholars who are contributing in so many exceptional ways.  To share a few examples:

Amar Bhattacharya co-chaired the U.N. Secretary General’s Independent Expert Group on Climate Finance,  which published its seminal report last December on “Delivering on the $100 Billion Climate Finance Commitment and Transforming Climate Finance.” More recently, Amar has been named a member of the World Bank-IMF High-Level Advisory Group (HLAG) on Sustainable and Inclusive Recovery and Growth, co-chaired by Mari Pangestu of the World Bank, Ceyla Pazarbasioglu of the IMF, and Lord Nicholas Stern of the London School of Economics. Amar is deeply involved in global climate deliberations in the lead-up to the forthcoming COP 26 U.N. climate summit in Glasgow, U.K., including as adviser to the Coalition of Finance Ministers for Climate Action and adviser to the COP 26 presidency. He and Lord Stern recently co-authored an important op-ed on “Our Last, Best Chance on Climate.”
Marcela Escobari has continued to pioneer the Workforce of the Future initiative at Brookings, bringing extraordinary data richness and rigor to advance opportunities for place- and job-specific worker mobility in geographies across the United States. Her mobility pathway tool, a multiyear team project summarized in a blog with Natalie Geismar, generated important public interest, including high-profile coverage in the New York Times. More recently, Marcela published, along with Ian Seyal and Carlos Daboin Contreras, a Moving Up report that reveals multidimensional hurdles to labor mobility across America, especially for people in low-income occupations. We are very proud that, earlier this year, President Biden nominated Marcela to serve as USAID Assistant Administrator for Latin America and the Caribbean, a position she previously held under the Obama Administration. While awaiting Senate confirmation for the appointment, Marcela is continuing to press forward her research on the role companies can play in improving job quality.
George Ingram drew from his extensive policy experience to publish a series of important papers following the 2020 presidential election, including a prescription for renewing U.S. global partnership in a post-COVID-19 world. George also celebrated a victory for good data in a recent post co-authored with Sally Paxton of Publish What You Fund (PWYF). They noted the fruits of a multiyear collaborative research effort to address conflicting official U.S. aid data, which previously could vary by up to billions of dollars per year across different government websites. USAID and the Department of State recently agreed to consolidate competing aid data dashboards into a single data collection and reporting channel. In July, George partnered with PWYF to convene a public event on transparency in development assistance for gender equality, which generated several new commitments to improve donor reporting on aid for gender equality. He also issued a call for a U.S. initiative to help bridge the global digital divide among low- and middle-income countries.
Homi Kharas has been prolific in contributing to global economic debates during the COVID-19 crisis, with special emphasis on steps to avoid a developing country debt crisis amid the deepest and most widespread global recession in modern history. The U.N. Secretary-General recognized Homi’s paper with Meagan Dooley on “Debt Distress and Development Distress: Twin crises of 2021” as  foundational to his March 2021 U.N. report on “Liquidity and Debt Solutions to Invest in the SDGs: The Time to Act is Now.” Concurrently, Homi and co-authors generated world-leading empirical assessments of extreme deprivation (e.g., here and here), including extreme poverty in the context of COVID-19. He also published, with Raj Desai and Selen Özdoğan, important research on the spatial dimensions of global poverty reduction.  Impressively, Homi was recently named alongside Amar Bhattacharya to serve on the HLAG on Sustainable and Inclusive Recovery and Growth.
Tony Pipa has been advancing a remarkable range of efforts on localized leadership for sustainable development. This includes a City Playbook for Advancing the SDGs, co-edited with Max Bouchet, which captures an inspiring array of insights from across the global SDG Leadership Cities community of practice that Tony launched and facilitates. In parallel, last November, Tony and Natalie Geismar released a key report with recommendations to reimagine U.S. federal policy for U.S. rural development, informed by lessons and changes in U.S. policy and practice for sustainable development overseas. The report’s insights have been influential with Congress and the Biden administration as they develop new approaches to invest directly in rural America, including the proposed $4 billion Rural Partnership Program currently being considered as part of the budget reconciliation process. Meanwhile, Tony has also spearheaded CSD’s partnership with the U.N. Foundation to expand and connect American Leadership on the SDGs in communities across the United States.

We are also extremely proud of our collaboration with leaders of the Center for Universal Education (CUE) at Brookings, who amount to the “education team” for CSD. I never go anywhere on SDG 4 (Ensure quality education) without talking with CUE co-directors Emiliana Vegas and Rebecca Winthrop, who have both made enormous public contributions over the past year.  Emiliana, for example, co-authored a seminal study on the global cost of COVID-19 school closures in earnings and income, while also publishing an important series of reports on the implementation of computer science education in geographies around the globe. Rebecca has meanwhile led a major initiative on family-school engagement and collaboration to transform and improve education systems. She has also been a driving force in the global movement to advance education for tackling climate change.
For my own part, I have been privileged to co-chair the 17 Rooms initiative in collaboration with Zia Khan and our partners at The Rockefeller Foundation. Within the past year, we have made great progress in describing key design principles for this new approach to problem-solving across all 17 SDGs. This has largely been made possible by CSD’s small but mighty new 17 Rooms secretariat team, comprised of Alexandra Bracken, Jacob Taylor, and Shrijana Khanal. All of them have been central to the progress of both the annual 17 Rooms global flagship process and the growing 17 Rooms-X community of practice. We were honored that U.N. Deputy-Secretary-General Amina Mohammed joined the 2021 flagship summit as keynote listener for the second year in a row, commenting on the Room (working group) report-outs that will be published next month in a next wave of action plans and insights. Meanwhile, the 17 Rooms-X efforts are helping universities, communities, regions, and now countries to advance localized action, insight, and collaboration processes for the SDGs. The growing interest in 17 Rooms has helped inform an evolving vision of how the initiative could help fuel a new approach to multilateral cooperation, and even an annual global “17 Rooms Day” for communities around the world.

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Looking forward
As much as we take pride in CSD’s accomplishments over the past year, we know we are only a small node in a vastly larger global network of contributors to the broader challenges of sustainable development. Over the coming year, we plan to continue our existing core workstreams while ramping up efforts on key priorities, in line with a spirit of networked leadership. We look forward to the culmination of some major research products, including a book on breakthrough technologies for the SDGs, and to launching a major new effort on gender equality and sustainable development. In parallel, we aim to ramp up work on aligning the private sector with the SDGs—in other words, bridging ESG to SDG. We are keen for our center to serve as a neutral platform that helps bring diverse constituencies together. In that spirit, we are also excited soon to be announcing CSD’s first-ever cohort of nonresident scholars. We are enthusiastic to tap into an ever-larger network of experts and allies who can share insights on both the substance of the center’s work and the opportunities for broader stakeholder engagement.

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Enlightened climate policy for Africa

( 5 mins) As the world convenes in Glasgow for the 26th United Nations Climate Change Conference of Parties (COP26), it is time to recognize Africa’s role in averting a climate disaster without compromising the continent’s growth and poverty reduction. The world needs to transition away from fossil fuels. But access to electricity is a human right as enshrined in sustainable development goal 7. Electric power is vital for any economy to advance, and relegating African countries to greater poverty is not the solution to the global climate crisis.

The world must transition away from the fuels that powered industrialization in Europe, the U.S., and Asia. Today, coal still accounts for up to 38 percent of electricity generation worldwide, with China, India, the U.S., and the EU remaining the world’s largest consumers of coal. At the same time, international financing institutions are restricting investment in electric power projects in Africa to wind and solar on grounds of environmental concerns. Africa’s current energy demand is estimated at 700 TW, which is 4,000 times the 175 GW of wind and solar capacity the entire world added in 2020. Africa cannot industrialize on wind and solar energy alone.
In sub-Saharan Africa, 12 million new people enter the workforce every year. They cannot run successful businesses in the dark. Today, nearly 600 million Africans lack access to electric power, a number that the International Energy Agency (IEA) projects will actually increase by 30 million due to the COVID-19 pandemic. To create jobs for Africa’s burgeoning youth population, we need to find ways to power the continent’s industrialization.
The world is facing an existential climate crisis and must come together in solidarity to stave off the potentially devastating impacts, but leaving 600 million Africans in the dark is not an option.
Importantly, Africa bears the least responsibility for the world’s climate crisis but faces its most severe consequences. Forty-eight sub-Saharan African countries outside of South Africa are responsible for just 0.55 percent of cumulative CO2 emissions. Yet, 7 of the 10 countries most vulnerable to climate change are in Africa.
Still, Africa will play a major role in solving the global crisis. The Congo Basin is the world’s second-largest rainforest and vital to stabilizing the world’s climate, absorbing 1.2 billion tons of CO2 each year. Without the Congo Basin and the Amazon, the world would be warming much more quickly.

Related Content

The global transition to renewable energy will mean exponentially scaling up the production of batteries, electric vehicles (EVs), and other renewable energy systems, which require Africa’s mineral resources. For example, the Democratic Republic of the Congo (DRC), accounts for 70 percent of the world’s cobalt, the mineral vital to battery production. Cobalt demand is expected to double by 2030. Conversely, 84 million people (80 percent of the total population) in the DRC could still lack access to electric power in 2030.
We believe that we can achieve the global emission reduction targets without constraining Africa’s development. To power Africa’s economic growth and prevent the worst consequences of climate change, we propose a four-point agenda for action:

Utilize the African Continental Free Trade Agreement (AfCFTA). The AfCFTA will create the world’s largest free trade zone by integrating 54 African countries with a combined population of more than 1 billion people and a gross domestic product of more than $3.4 trillion. Africa’s commitment to lowering intra-African trade barriers can attract more private sector investment with larger, connected market opportunities.
Leverage green economic opportunities. Increased demand for electric vehicles, critical minerals, and renewable energy systems is an opportunity for Africa to capture larger portions of supply chains in the new green economy. Nations and firms can collaborate across borders to create a pipeline of bankable power projects to attract investment. Increasing local manufacturing and production capacity for resources, materials, and value-added products vital to green technology will create jobs locally.
Adopt just development finance. The large-scale power projects needed to industrialize economies are capital-intensive and often require investments from development finance institutions. Development finance institution funding should catalyze private sector resources. While we agree on the environmental and economic justification for not financing new coal-fired plants, they should not limit support for natural gas, hydro, and geothermal power generation projects. This policy creates an unjust burden on those economies that require a variety of sources to increase access and build resilience into their power infrastructure. It is hypocritical of the EU, the U.S., and China to utilize fossil fuels while effectively denying others the means to lift themselves out of poverty.
Embrace proportionate responsibility. China, the EU, and the U.S. emit over 40 percent of total global greenhouse gases, while all of Africa emits 7 percent. Prioritizing the transition to renewables and imposing higher emission reduction requirements in the EU, U.S., and China will ease the burden on those nations that still need a variety of power generation methods to increase energy access.

The world is facing an existential climate crisis and must come together in solidarity to stave off the potentially devastating impacts, but leaving 600 million Africans in the dark is not an option. We must avert a climate disaster and expand energy access in Africa at the same time.

Read More »

Enlightened climate policy for Africa

( 5 mins) As the world convenes in Glasgow for the 26th United Nations Climate Change Conference of Parties (COP26), it is time to recognize Africa’s role in averting a climate disaster without compromising the continent’s growth and poverty reduction. The world needs to transition away from fossil fuels. But access to electricity is a human right as enshrined in sustainable development goal 7. Electric power is vital for any economy to advance, and relegating African countries to greater poverty is not the solution to the global climate crisis.

The world must transition away from the fuels that powered industrialization in Europe, the U.S., and Asia. Today, coal still accounts for up to 38 percent of electricity generation worldwide, with China, India, the U.S., and the EU remaining the world’s largest consumers of coal. At the same time, international financing institutions are restricting investment in electric power projects in Africa to wind and solar on grounds of environmental concerns. Africa’s current energy demand is estimated at 700 TW, which is 4,000 times the 175 GW of wind and solar capacity the entire world added in 2020. Africa cannot industrialize on wind and solar energy alone.
In sub-Saharan Africa, 12 million new people enter the workforce every year. They cannot run successful businesses in the dark. Today, nearly 600 million Africans lack access to electric power, a number that the International Energy Agency (IEA) projects will actually increase by 30 million due to the COVID-19 pandemic. To create jobs for Africa’s burgeoning youth population, we need to find ways to power the continent’s industrialization.
The world is facing an existential climate crisis and must come together in solidarity to stave off the potentially devastating impacts, but leaving 600 million Africans in the dark is not an option.
Importantly, Africa bears the least responsibility for the world’s climate crisis but faces its most severe consequences. Forty-eight sub-Saharan African countries outside of South Africa are responsible for just 0.55 percent of cumulative CO2 emissions. Yet, 7 of the 10 countries most vulnerable to climate change are in Africa.
Still, Africa will play a major role in solving the global crisis. The Congo Basin is the world’s second-largest rainforest and vital to stabilizing the world’s climate, absorbing 1.2 billion tons of CO2 each year. Without the Congo Basin and the Amazon, the world would be warming much more quickly.

Related Content

The global transition to renewable energy will mean exponentially scaling up the production of batteries, electric vehicles (EVs), and other renewable energy systems, which require Africa’s mineral resources. For example, the Democratic Republic of the Congo (DRC), accounts for 70 percent of the world’s cobalt, the mineral vital to battery production. Cobalt demand is expected to double by 2030. Conversely, 84 million people (80 percent of the total population) in the DRC could still lack access to electric power in 2030.
We believe that we can achieve the global emission reduction targets without constraining Africa’s development. To power Africa’s economic growth and prevent the worst consequences of climate change, we propose a four-point agenda for action:

Utilize the African Continental Free Trade Agreement (AfCFTA). The AfCFTA will create the world’s largest free trade zone by integrating 54 African countries with a combined population of more than 1 billion people and a gross domestic product of more than $3.4 trillion. Africa’s commitment to lowering intra-African trade barriers can attract more private sector investment with larger, connected market opportunities.
Leverage green economic opportunities. Increased demand for electric vehicles, critical minerals, and renewable energy systems is an opportunity for Africa to capture larger portions of supply chains in the new green economy. Nations and firms can collaborate across borders to create a pipeline of bankable power projects to attract investment. Increasing local manufacturing and production capacity for resources, materials, and value-added products vital to green technology will create jobs locally.
Adopt just development finance. The large-scale power projects needed to industrialize economies are capital-intensive and often require investments from development finance institutions. Development finance institution funding should catalyze private sector resources. While we agree on the environmental and economic justification for not financing new coal-fired plants, they should not limit support for natural gas, hydro, and geothermal power generation projects. This policy creates an unjust burden on those economies that require a variety of sources to increase access and build resilience into their power infrastructure. It is hypocritical of the EU, the U.S., and China to utilize fossil fuels while effectively denying others the means to lift themselves out of poverty.
Embrace proportionate responsibility. China, the EU, and the U.S. emit over 40 percent of total global greenhouse gases, while all of Africa emits 7 percent. Prioritizing the transition to renewables and imposing higher emission reduction requirements in the EU, U.S., and China will ease the burden on those nations that still need a variety of power generation methods to increase energy access.

The world is facing an existential climate crisis and must come together in solidarity to stave off the potentially devastating impacts, but leaving 600 million Africans in the dark is not an option. We must avert a climate disaster and expand energy access in Africa at the same time.

Read More »

Strengthening international cooperation on AI

( 27 mins) Executive Summary

International cooperation on artificial intelligence—why, what, and how
Since 2017, when Canada became the first country to adopt a national AI strategy, at least 60 countries have adopted some form of policy for artificial intelligence (AI). The prospect of an estimated boost of 16 percent, or US$13 trillion, to global output by 2030 has led to an unprecedented race to promote AI uptake across industry, consumer markets, and government services. Global corporate investment in AI has reportedly reached US$60 billion in 2020 and is projected to more than double by 2025.

Cameron F. Kerry

Ann R. and Andrew H. Tisch Distinguished Visiting Fellow – Governance Studies, Center for Technology Innovation

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@Cam_Kerry

Joshua P. Meltzer

Senior Fellow – Global Economy and Development

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@JoshuaPMeltzer

Andrea Renda

Senior Research Fellow and Head of Global Governance, Regulation, Innovation and the Digital Economy (GRID) – Center for European Policy Studies (CEPS)

Alex Engler

Fellow – Governance Studies

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@AlexCEngler

R

Rosanna Fanni

Associate Research Assistant and Digital Forum Coordinator, Global Governance, Regulation, Innovation and the Digital Economy (GRID) – CEPS

At the same time, the work on developing global standards for AI has led to significant developments in various international bodies. These encompass both technical aspects of AI (in standards development organizations (SDOs) such as the International Organization for Standardization (ISO), the International Electrotechnical Commission (IEC), and the Institute of Electrical and Electronics Engineers (IEEE) among others) and the ethical and policy dimensions of responsible AI. In addition, in 2018 the G-7 agreed to establish the Global Partnership on AI, a multistakeholder initiative working on projects to explore regulatory issues and opportunities for AI development. The Organization for Economic Cooperation and Development (OECD) launched the AI Policy Observatory to support and inform AI policy development. Several other international organizations have become active in developing proposed frameworks for responsible AI development.
In addition, there has been a proliferation of declarations and frameworks from public and private organizations aimed at guiding the development of responsible AI. While many of these focus on general principles, the past two years have seen efforts to put principles into operation through fully-fledged policy frameworks. Canada’s directive on the use of AI in government, Singapore’s Model AI Governance Framework, Japan’s Social Principles of Human-Centric AI, and the U.K. guidance on understanding AI ethics and safety have been frontrunners in this sense; they were followed by the U.S. guidance to federal agencies on regulation of AI and an executive order on how these agencies should use AI. Most recently, the EU proposal for adoption of regulation on AI has marked the first attempt to introduce a comprehensive legislative scheme governing AI.
Global corporate investment in AI has reportedly reached US$60 billion in 2020 and is projected to more than double by 2025.
In exploring how to align these various policymaking efforts, we focus on the most compelling reasons for stepping up international cooperation (the “why”); the issues and policy domains that appear most ready for enhanced collaboration (the “what”); and the instruments and forums that could be leveraged to achieve meaningful results in advancing international AI standards, regulatory cooperation, and joint R&D projects to tackle global challenges (the “how”). At the end of this report, we list the topics that we propose to explore in our forthcoming group discussions.
Why international cooperation on AI is important
Even more than many domains of science and engineering in the 21st century, the international AI landscape is deeply collaborative, especially when it comes to research, innovation, and standardization. There are several reasons to sustain and enhance international cooperation.

AI research and development is an increasingly complex and resource-intensive endeavor, in which scale is an important advantage. Cooperation among governments and AI researchers and developers across national boundaries can maximize the advantage of scale and exploit comparative advantages for mutual benefit. An absence of international cooperation would lead to competitive and duplicative investments in AI capacity, creating unnecessary costs and leaving each government worse off in AI outcomes. Several essential inputs used in the development of AI, including access to high-quality data (especially for supervised machine learning) and large-scale computing capacity, knowledge, and talent, benefit from scale.
International cooperation based on commonly agreed democratic principles for responsible AI can help focus on responsible AI development and build trust. While much progress has been made aligning on responsible AI, there remain differences—even among Forum for Cooperation on AI (FCAI) participants. The next steps in AI governance involve translating AI principles into policy, regulatory frameworks, and standards. These will require deeper understanding of how AI works in practice and working through the operation of principles in specific contexts and in the face of inevitable tradeoffs, such as may arise when seeking AI that is both accurate and explainable. Effective cooperation will require concrete steps in specific areas, which the recommendations of this report aim to suggest.
When it comes to regulation, divergent approaches can create barriers to innovation and diffusion. Governments’ efforts to boost domestic AI development around concepts of digital sovereignty can have negative spillovers, such as restrictions on access to data, data localization, discriminatory investment, and other requirements. Likewise, diverging risk classification regimes and regulatory requirements can increase costs for businesses seeking to serve the global AI market. Varying governmental AI regulations may necessitate building variations of AI models that can increase the work necessary to build an AI system, leading to higher compliance costs that disproportionately affect smaller firms. Differing regulations may also force variation in how data sets are collected and stored, creating additional complexity in data systems and reducing the general downstream usefulness of the data for AI. Such additional costs may apply to AI as a service as well as hardware-software systems that embed AI solutions, such as autonomous vehicles, robots, or digital medical devices. Enhanced cooperation is key to create a larger market in which different countries can try to leverage their own competitive advantage. For example, the EU seeks to achieve a competitive advantage in “industrial AI”: EU enterprises could exploit that AI without the prospect of having to engage in substantial reengineering to meet requirements of another jurisdiction.
Aligning key aspects of AI regulation can enable specialized firms in AI development to thrive. Such companies generate business by developing expertise in a specialized AI system, then licensing these to other companies as one part of a broader tool. As AI becomes more ubiquitous, complex stacks of specialized AI systems may emerge in many sectors. A more open global market would allow a company to take advantage of digital supply chains, using a single product with a natural language model built in Canada, a video analysis algorithm trained in Japan, and network analysis developed in France. Enabling global competition by such specialized firms will encourage healthier markets and more AI innovation.
Enhanced cooperation in trade is essential to avoid unjustified restrictions to the flow of goods and data, which would substantially reduce the prospective benefits of AI diffusion. While the strategic importance of data and sovereignty has in many countries given rise to legitimate industrial policy initiatives aimed at mapping and reducing dependencies on the rest of the world, protectionist measures can jeopardize global cooperation, impinge on global value chains, and negatively affect consumer choice, thereby reducing market size and overall incentives to invest in meaningful AI solutions.
Enhanced cooperation is needed to tap the potential of AI solutions to address global challenges. No country can “go it alone” in AI, especially when it comes to sharing data and applying AI to tackle global challenges like climate change or pandemic preparedness. The governments involved in the FCAI share interests in deploying AI for global social, humanitarian, and environmental benefit. For example, the EU is proposing to employ AI to support its Green Deal, and the G-7 and GPAI have called for harnessing AI for U.N. Sustainable Development Goals. Collaborative “moonshots” can pool resources to leverage the potential of AI and related technologies to address key global problems in domains such as health care, climate science, or agriculture at the same time as they provide a way to test approaches to responsible AI together.
Cooperation among likeminded countries is important to reaffirm key principles of openness and protection of democracy, freedom of expression, and other human rights. The risks associated with the unconstrained use of AI solutions by techno-authoritarian regimes— such as China’s—expose citizens to potential violations of human rights and threaten to split cyberspace into incompatible technology stacks and fragment the global AI R&D process.

The fact that international cooperation is an element of most governments’ AI strategies indicates that governments appreciate the connection between AI development and collaboration across borders. This report is about concrete ways to realize this connection.

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At the same time, international cooperation should not be interpreted as complete global harmonization: countries legitimately differ in national strategic priorities, legal traditions, economic structures, demography, and geography. International collaboration can nonetheless create the level playing field that would enable countries to engage in fruitful “co-opetition” in AI: agreeing on basic principles and when possible seeking joint outcomes, but also competing for the best solutions to be scaled up at the global level. Robust cooperation based on common principles and values is a foundation for successful national development of AI.
Rules, standards, and R&D projects: Key areas for collaboration
Our exploration of international AI governance through roundtables, other discussions, and research led us to identify three main areas where enhanced collaboration would provide fruitful: regulatory policies, standard-setting, and joint research and development (R&D) projects. Below, we summarize ways in which cooperation may unfold in each of these areas, as well as the extent of collaboration conceivable in the short term as well as in the longer term.
Cooperation on regulatory policy
AI policy development is in the relatively early stages in all countries, and so timely and focused international cooperation can help align AI policies and regulations.
International regulatory cooperation has the potential to reduce regulatory burdens and barriers to trade, incentivize AI development and use, and increase market competition at the global level. That said, countries differ in legal tradition, economic structure, comparative advantage in AI, weighing of civil and fundamental rights, and balance between ex ante regulation and ex post enforcement and litigation systems. Such differences will make it difficult to achieve complete regulatory convergence. Indeed, national AI strategies and policies reflect differences in countries’ willingness to move towards a comprehensive regulatory framework for AI. Despite these differences, AI policy development is in the relatively early stages in all countries, and so timely and focused international cooperation can help align AI policies and regulations.
Against this backdrop, it is reasonable to assume that AI policy development is less embedded in pre-existing legal tradition or frameworks at this stage, and thus that international cooperation in this field can achieve higher levels of integration. The following areas for cooperation emerged from the FCAI dialogues and our other explorations.

Building international cooperation into AI policies. FCAI governments should give effect to their recognition of the need for international engagement on AI by committing to pursue coordination with each other and other international partners prior to adopting domestic AI initiatives.
A common, technology-neutral definition of AI for regulatory purposes. Based on the definitions among FCAI participants and the work of the OECD expert group, converging on a common definition of AI and working together to gradually update the description of an AI system, and its possible configurations and techniques, appears feasible and already partly underway. A common definition is important to guide future cooperation in AI and determines the level of ambition that can be reached by such a process.
Building on a risk-based approach to AI regulation. A variety of governments and other bodies have endorsed a risk-based approach to AI in national strategies and in bilateral or multilateral contexts. Most notably, a risk-based approach is central to the policy frameworks of the two most prominent exemplars of AI policy development—the U.S. and the EU. These recent, broadly parallel developments have opened the door to developing international cooperation on ways to address risks while maximizing benefits. However, there remain challenges to convergence on a risk-based approach. Dialogue on clear identification and classification of risks, approaches to benefit-risk analysis, possible convergence on cases in which the risks are too high to be mitigated, and the type of risk assessment to be performed and who should perform it, would greatly benefit cooperation on a risk-based approach.
Sharing experiences and developing common criteria and standards for auditing AI systems. The field of accountability in AI and algorithms has been the subject of wide and valuable work by civil society organizations as well as governments. The exchange of good practices and—ultimately—a common, or at least a compatible, framework for AI auditing would eliminate significant barriers to the development of a truly international market for AI solutions. It also would facilitate the emergence of third-party auditing standards and an international market for AI auditing, with potential benefits in terms of quality, price, and access for auditing services for deployers of AI. Additionally, exchange of practices and international standards for AI auditing, monitoring, and oversight would significantly help the policy community keep up to speed in market monitoring.
A joint platform for regulatory sandboxes. Even without convergence on risk assessments or regulatory measures, an international platform for regulatory learning involving all governments that participate in FCAI and possibly others is a promising avenue for deepening international cooperation on AI. Such a platform could host an international repository of ongoing experiments on AI-enabled innovations, including regulatory sandboxes. As use of sandboxes becomes a more common way for governments to test the viability and conformity of new AI solutions under legislative and regulatory requirements, updating information on ongoing government initiatives could save resources and inform AI developers and policymakers. Aligning the criteria and overall design of AI sandboxes in different administrations could also increase the prospective benefits and impact of these processes, as developers willing to enter the global market might be able to go through the sandbox process in a single participating country.
Cooperation on AI use in government: procurement and accountability. A natural candidate for further exchange and cooperation in FCAI is the adoption of AI solutions in government, including both “back office” solutions and more public-facing applications. The sharing of good practices and overall lessons on what works when deploying AI in government would also be an important achievement. Important areas in this respect are procurement and effective oversight of deployment.
Sectoral cooperation on AI use cases. A sector-specific approach can ensure higher levels of regulatory certainty. In sectors like finance, key criteria such as fairness, discrimination, and transparency have long been subject to extensive regulatory intervention, and sectoral regulation must ensure continuity while accounting for the increasing use of AI. In health and pharmaceuticals, the use of AI both as a stand-alone solution and embedded in medical devices has prompted a very specific, technical discussion regarding the risk-based approach to be adopted and has already enabled valuable sectoral initiatives. The adoption of different standards and criteria in sectoral regulation may increase regulatory costs for developers willing to serve more than one sector and country with their AI solutions. In such a cross-cutting framework, examples from mature areas of regulation such as finance and health can also become a form of regulatory sandbox to model regulation for other sectors in the future.

Cooperation on sharing data across borders
Data governance is a focal area for international cooperation on AI because of the importance of data as an input for AI R&D and because of the added complexity of regulatory regimes already in place that restrict certain information flows, including data protection and intellectual property laws. Effective international cooperation on AI needs a robust and coherent framework for data protection and data sharing. There are a variety of channels addressing these issues including the Asia-Pacific Economic Cooperation group, the working group on data governance of the Global Partnership on AI, and bilateral discussions between the EU and U.S. Nonetheless, the potential impact of such laws on data available for AI-driven medical and scientific research requires specific focus as the EU both reviews its General Data Protection Regulation and considers new legislation on private and public sector data sharing.
There are other significant data governance issues that may benefit from pooled efforts across borders that, by and large, are the subject of international cooperation. Key areas in this respect include opening government data including international data sharing, improving data interoperability, and promoting technologies for trustworthy data sharing.
Cooperation on international standards for AI
As countries move from developing frameworks and policies to more concrete efforts to regulate AI, demand for AI standards will grow. These include standards for risk management, data governance, and technical documentation that can establish compliance with emerging legal requirements. International AI standards will also be needed to develop commonly accepted labeling practices that can facilitate business-to-business (B2B) contracting and to demonstrate conformity with AI regulations; address the ethics of AI systems (transparency, neutrality/lack of bias, etc.); and maximize the harmonization and interoperability for AI systems globally. International standards from standards development organizations like the ISO/IEC and IEEE can help ensure that global AI systems are ethically sound, robust, and trustworthy, that opportunities from AI are widely distributed, and that standards are technically sound and research-driven regardless of sector or application.
International standards from standards development organizations like the ISO/IEC and IEEE can help ensure that global AI systems are ethically sound, robust, and trustworthy, that opportunities from AI are widely distributed, and that standards are technically sound and research-driven regardless of sector or application.
The governments participating in the FCAI recognize and support industry-led standards setting. While there are differences in how the FCAI participants engage with industry-led standards bodies, a common element is support for the central role of the private sector in driving standards. That said, there is a range of steps that FCAI participants can take to strengthen international cooperation in AI standards. The approach of FCAI participants that emphasizes an industry-led approach to developing international AI standards contrasts with the overall approach of other countries, such as China, where the state is at the center of standards making activities. The more direct involvement by the Chinese government in setting standards, driving the standards agenda, and aligning these with broader Chinese government priorities requires attention by all FCAI participants with the aim of encouraging Chinese engagement in international AI standard-setting consistent with outcomes that are technically robust and industry driven.
Sound AI standards can also support international trade and investment in AI, expanding AI opportunity globally and increasing returns to investment in AI R&D. The World Trade Organization (WTO) Technical Barriers to Trade (TBT) Agreement’s relevance to AI standards is limited by its application only to goods, whereas many AI standards will apply to services. Recent trade agreements have started to address AI issues, including support for AI standards, but more is needed. An effective international AI standards development process is also needed to avoid bifurcated AI standards—centered around China on the one hand and the West on the other. Which outcome prevails will to some extent depend on progress in effective international AI standards development.
R&D cooperation: Selecting international AI projects
Productive discussion of AI ethics, regulation, risks, and benefits requires use cases because the issues are highly contextual. As a result, AI policy development has tended to move from broad principles to specific sectors or use cases. Considering this need, we suggest that developing international cooperation on AI would benefit from putting cooperation into operation with specific use cases. To this end, we propose that FCAI participants expand efforts to deploy AI on important global problems collectively by working toward agreement on joint research aimed at a specific development project (or projects). Such an effort could stimulate development of AI for social benefit and also provide a forcing function for overcoming differences in approaches to AI policy and regulation.
Criteria for the kinds of goals or projects to consider include the following:

Global significance. The project should be aimed at important global issues that demand transnational solutions. The shared importance of the issues should give all participants a common stake and, if successful, could contribute toward global welfare.
Global scale. The problem and the scope of the project should require resources on a large enough scale that the pooled support of leading governments and institutions adds significant value.
A public good. Given its significance and scale, the project would amount to a public good. In turn, the output of the project should also be a public good and both the project and the output should be available to all participants and less developed countries.
A collaborative test bed. Governance of the project is likely to necessitate addressing regulatory, ethical, and risk questions in a context that is concrete and in which the participants have incentives to achieve results. It would amount to a very large and shared regulatory sandbox.
Assessable impact. The project will need to be monitored commensurately with its scale, public visibility, and experimental nature. Participants will need to assess progress toward both defined project goals and broader impact.
A multistakeholder effort. Considering its public importance and the resources it should marshal, the project will need to be government-initiated. But the architecture and governance should be open to nongovernmental participation on a shared basis.

This proposal could be modeled on several large-scale international scientific collaborations: CERN, the Human Genome Project, or the International Space Station. It would also build on numerous initiatives toward collaborative research and development on AI. Similar global collaboration will be more difficult in a world of increased geopolitical and economic competition, nationalism, nativism, and protectionism among governments that have been key players in these efforts.
Recommendations
Below, we present recommendations for developing international cooperation on AI based on our discussions and work to date.
R1. Commit to considering international cooperation in drafting and implementing national AI policies.
This recommendation could be implemented within a relatively short timeframe and initially would take the form of firm declarations by individual countries. Ultimately this could lead to a joint declaration with clear commitments on the part of the governments involved.
R2. Refine a common approach to responsible AI development.
This type of recommendation requires enhanced cooperation between FCAI governments, which can then provide a good basis for incremental forms of cooperation.
R3. Agree on a common, technology-neutral definition of AI systems.
FCAI governments should work on a common definition of AI that is technology-neutral and broad. This recommendation can be implemented in a relatively short term and requires joint action by FCAI governments. The time to act is short, as the rather broad definition given in the EU AI Act is still undergoing the legislative process in the EU and many other countries are still shaping their AI policy frameworks.
R4. Agree on the contours of a risk-based approach.
Alignment on this key element of AI policy would be an important step towards an interoperable system of responsible AI. It would also facilitate cooperation among FCAI governments, industry, and civil society working on AI standards in international SDOs. General agreement on a risk-based approach could be achieved in the short term; developing the contours of a risk-based classification system would probably take more time and require deeper cooperation among FCAI governments as well as stakeholders.
R5. Establish “redlines” in developing and deploying AI.
This may entail an iterative process. FCAI governments could agree on an initial, limited list of redlines such as certain AI uses for generalized social scoring by governments; and then gradually expand the list over time to include emerging AI uses on which there is substantial agreement on the need to prohibit use.
R6. Strengthen sectoral cooperation, starting with more developed policy domains.
Sectoral cooperation can be organized on relatively short timeframes starting from sectors that have well-developed regulatory systems and present higher risks, such as health care, transport and finance, in which sectoral regulation already exists, and its adaptation to AI could be achieved relatively swiftly.
R7. Create a joint platform for regulatory learning and experiments.
A joint repository could stimulate dialogue on how to design and implement sandboxes and secure sound governance, transparency, and reproducibility of results, and aid their transferability across jurisdictions and categories of users. This recommended action is independent of others and is feasible in the short term. It requires soft cooperation, in the form of a structured exchange of good practices. Over time, the repository should become richer in terms of content, and therefore more useful.
R8. Step up cooperation and exchange of practices on the use of AI in government.
FCAI governments could set up, either as a stand-alone initiative or in the context of a broader framework for cooperation, a structured exchange on government uses of AI. The dialogue may involve AI applications to improve the functioning of public administration such as the administration of public benefits or health care; AI-enabled regulation and regulatory governance practices; or other decision-making and standards and procedures for AI procurement. This recommended action could be implemented in the short term, although collecting all experiences and setting the stage for further cooperation would require more time.
R9. Step up cooperation on accountability.
FCAI governments could profit from enhanced cooperation on accountability, whether through market oversight and enforcement, auditing requirements, or otherwise. This could combine with sectoral cooperation and possibly also with standards development for auditing AI systems.
R10. Assess the impact of AI on international data governance.
There is a need for a common understanding of how data governance rules affect AI R&D in areas such as health research and other scientific research, and whether they inhibit the exploration that is an essential part of both scientific discovery and machine learning. There is also need for a critical look at R&D methods to develop a deeper understanding of appropriate boundaries on use of personal data or other protected information. In turn, there is also a need to expand R&D and understanding in privacy-protecting technologies that can enable exploration and discovery while protecting personal information.
R11. Adopt a stepwise, inclusive approach to international AI standardization.
A stepwise approach to standards development is needed to allow time for technology development and experimentation and to gather the data and use cases to support robust standards. It also would ensure that discussions at the international level happen once technology has reached a certain level of maturity or where a regulatory environment is adopted. To support such an approach, it would be helpful to establish a comprehensive database of AI standards under development at national and international levels.
R12. Develop a coordinated approach to AI standards development that encourages Chinese participation consistent with an industry-led, research-driven approach.
There is currently a risk of disconnect between growing concern among governments and national security officials alarmed by Chinese engagement in the standards process on the one hand, and industry participants’ perceptions of the impact of Chinese participation in SDOs on the other. To encourage constructive involvement and discourage self-serving standards, FCAI participants (and likeminded countries) should encourage Chinese engagement in international standards setting while also agreeing on costs for actions that use SDOs strategically to slow down or stall standards making. This can be accomplished through trade and other measures but will require cooperation among FCAI participants to be effective.
R13. Expand trade rules for AI standards.
The rules governing use of international standards in the WTO TBT Agreement and free trade agreements are limited to goods only, whereas AI standards will apply mainly to services. New trade rules are needed that extend rules on international standards to services. As a starting point, such rules should be developed in the context of bilateral free trade agreements or plurilateral agreements, with the aim to make them multilateral in the WTO. Trade rules are also needed to support data free flow with trust and to reduce barriers and costs to AI infrastructure. Consideration also should be given to linking participation in the development of AI standards in bodies such as ISO/IEC, with broader trade policy goals and compliance with core WTO commitments.
R14. Increase funding for participation in SDOs.
Funding should be earmarked for academics and industry participation in SDOs, as well as for SDO meetings in FCAI countries and more broadly in less developed countries. Broadened participation is important to democratize the standards making process and strengthen the legitimacy and adoption of the resulting standards. Hosting meetings of standards bodies in diverse countries can broaden exposure to standards-setting processes around AI and critical technology.
R15. Develop common criteria and governance arrangements for international large-scale R&D projects.
Joint research and development applying to large-scale global problems such as climate change or disease prevention and treatment can have two valuable effects: It can bring additional resources to the solution of pressing global challenges, and the collaboration can help to find common ground in addressing differences in approaches to AI. FCAI will seek to incubate a concrete roadmap on such R&D for adoption by FCAI participants as well as other governments and international organizations. Using collaboration on R&D as a mechanism to work through matters that affect international cooperation on AI policy means that this recommendation should play out in the near term.

Proposed future topics for FCAI dialogues
– Scaling R&D cooperation on AI projects.
– China and AI: what are the risks, opportunities, and ways forward?
– Government use of AI: developing common approaches.
– Regulatory cooperation and harmonization: issues and mechanisms.
– A suitable international framework for data governance.
– Standards development.
– An AI trade agreement: partners, content, and strategy.

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In other related news, South Africa’s drug regulator has rejected the Russian Sputnik V vaccine due to safety concerns. According to the Associated Press, regulators asked the makers of Sputnik V for data proving the vaccine’s safety but their request was not suitably addressed. Sputnik V is currently being reviewed for authorization by WHO and the European Medicines Agency. Both AstraZeneca and J&J have been approved in South Africa.

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Africa in the news: Energy and climate finance updates, Mozambique’s debt write-off, and US COVID-19 vaccine donation

( 4 mins) Africa proposes expanding and tracking climate finance; Egypt and Greece plan to link electrical grids; South Africa seeks low-cost financing for clean energy
Frustrated with a lack of climate-related funding from wealthy nations, Africa’s lead climate negotiator proposed this week to build a new system to track climate finance contributions by country. Indeed, funding has fallen short of the 2006 agreement to raise $100 billion per year for climate change-related financing by 2020. From the existing pool,  African countries only received 26 percent of the funding in 2016-2019, compared to 43 percent on average by Asian countries. African countries are now pushing to scale up funding tenfold by 2030 for global climate change mitigation and adaptation finance, calling the $100 billion package a political commitment and “not based on the real needs of developing countries to tackle climate change.”

Following the signing of an agreement on October 14, 2021 between Egypt and Greece to construct undersea interconnectors, transmission cables used to link electrical grids between countries, the Greek Prime Minister Kyriakos Mitsotakis pledged on Tuesday to connect Egypt with the European Union’s electricity market via an undersea cable network running beneath the Mediterranean Sea. Although formal details of the project have not been released,  Prime Minister Mitsotakis is confident that connecting Egypt’s energy grid to Greece, and ultimately Europe, will promote energy security during times of global turbulence in the energy market and energy diversification.
In related energy news, South Africa continues its search for low-cost financing to develop its clean energy infrastructure and decommission coal-burning power plants. The world’s 12th largest carbon emitter seeks 400 billion rand ($27.6 billion) of electricity infrastructure for its energy transition, earmarking 180 billion rand for cleaner energy technology and 120 billion rand for transmission gear. The rest of the funding will go toward transformers, substations, and electrical distribution technology. With more than 80 percent of South Africa’s electricity generated by burning coal, the state energy company, Eskom, plans to decommission between 8,000 to 12,000 megawatts of coal-derived electricity over the next decade and replace this electrical capacity with other energy sources such as wind, photovoltaic, and natural gas.
Credit Suisse to write off $200 in Mozambican debt after defrauding prosecutors
Regulators announced on Tuesday, October 19, that Credit Suisse will forgive $200 million worth of Mozambican debt as part of a settlement with UK, Swiss, and U.S. authorities due to corruption issues. The regulators alleged that Credit Suisse employees received and paid bribes while they arranged industry loans totaling $1.3 billion. According to U.S. prosecutors, three Credit Suisse bankers, two middlemen, and three Mozambican government officials diverted at least $200 million of the  loans for their private use. The debt write-off is part of a settlement agreement with regulators that includes a $175 million fine to the U.S. Justice Department, a $99 million fine to the U.S. Securities and Exchange Commission (SEC), and a $200 million fine to Britain’s Financial Conduct Authority. The SEC indicated on Tuesday that the Credit Suisse staff and their intermediaries have been indicted by the U.S, Department of Justice.
On Thursday, October 21, the Budget Monitoring Forum (FMO), an independent public finance organization based in Mozambique, called Credit Suisse’s offer insufficient and instead demanded the “full cancellation of illegal debts.” As of Friday, October 21, Mozambican officials have yet to comment publicly on the debt forgiveness.
US announces COVID-19 vaccine donations for Africa as South Africa rejects Sputnik V
On October 14, U.S. President Biden met with President Kenyatta of Kenya where Biden promised an additional donation of 17 million doses of the Johnson and Johnson (J&J) vaccine to the African Union . Indeed, this announcement is timely as the World Health Organization (WHO) announced in September that in order to fully vaccinate 70 percent of the continent by September 2022, COVID-19 vaccine shipments must increase from 20 million per month to 150 million.
In other related news, South Africa’s drug regulator has rejected the Russian Sputnik V vaccine due to safety concerns. According to the Associated Press, regulators asked the makers of Sputnik V for data proving the vaccine’s safety but their request was not suitably addressed. Sputnik V is currently being reviewed for authorization by WHO and the European Medicines Agency. Both AstraZeneca and J&J have been approved in South Africa.

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