When it comes to the new wave of technology and artificial intelligence, it is easy to assume the winner of the 2010s, the US, will maintain its dominance.  

It fits into our preferred narrative of democracies winning, through the creativity and imagination and freedom that thrives via our open education system.

History tells us we need to be very wary of that narrative. 

The speed of change in emerging markets is simply too fast to be complacent. This is most obvious in the double demographic dividend countries of Asia, where young workers and low interest rates means they have swept the board in more and more higher-value-added sectors. 

Honda produced its first ever car in emerging market Japan in 1963. A generation later, its factories in the UK thrived as local brands died. Korea’s Samsung helped smash Scandinavia’s early global dominance in mobile phones, and now produces many of its phones in Vietnam. Japan and Korea dominate consumer electronics. Most recently, Chinese vehicle exports, boosted by electric vehicles, have boomed, making it the world’s largest car exporter. No wonder German industrialists tell me: “China is winning the race.”  

Given geopolitical tensions, it may have to follow Japan’s example, and establish factories overseas too. Perhaps it will do to Germany’s car industry what Japan did to the UK’s.

The FT’s 2021 business book of the year, This Is How They Tell Me The World Ends by Nicole Perlroth, conveys the argument through the lens of cyber security. 

It highlights the strength in a sector that accrues from good education and government backing, in Russia or China, or simply from motivated educated youth keen to earn money from Argentina to Romania. Here too, there are plenty of examples of China “winning”.  

While the EU struggles to decide on AI regulation, China produced its 200-page guidance already three months ago. Its tech rise is backed by hard cash. China is pouring money into new economy sectors, with $41bn in IPOs from January 1 to September 14 (nearly half the $88bn in IPOs globally) in sectors like semiconductors, biotech and electric vehicles. 

For those who are understandably hesitant about investing in Chinese AI or tech,  there are plenty of alternatives and nearly all are in the emerging world. The highest share of STEM graduates (of total graduates) in 2022 was reported in San Marino (76.6%), Malaysia at (40.2%), Turkmenistan at 39.6% and Tunisia (37.9%), according to Unesco data. 

In terms of absolute numbers, the 34% in India today supports what a Taiwanese businesswoman told me in September: “30% of all STEM graduates in 2030 will be from India, against 4% in the US or Germany.” The US leads today. But emerging markets are catching up fast. 

Charlie Robertson is head of macro-strategy at FIM Partners, and author of The Time Travelling Economist.

This article first appeared in the October/November 2023 print edition of fDi Intelligence