Keeping the Pace

Innovation is everywhere: While new countries push to the forefront, Germany must avoid being left behind.

On July 2nd, the “Atlantik-Brücke” celebrated its 60th anniversary. The transatlantic network is highly respected, chancellor Angela Merkel and Helmut Schmidt attended the event as speakers. The schedule also included a discussion panel about the future of economic cooperation, and a speech by the German foreign minister Guido Westerwelle.

Among the topics discussed by the panel was the future of the start-up and internet industry – a nod to the fact that the transatlantic relationship is no longer dominated by traditional economic and political topics alone. Westerwelle reminded the audience that many of today’s G20 nations were developing countries not too long ago, and that they are already being overtaken by the “Next Eleven” – countries like Mexico, Pakistan, Nigeria, Egypt and Turkey, who are working hard to prepare for economic ascendency. Unless Germany keeps up the pace, Westerwelle argued, we will soon find ourselves surprised by other nations. But Germany alone cannot persist against new and rising markets. The only path leads through deeper European integration.

It’s good to see that the start-up industry has cultivated transatlantic relations. For the past three years, I have traveled to Silicon Valley and San Francisco with other internet entrepreneurs. Europe and America are tightly linked, and our first glace is always directed across the ocean to the United States. But we are also aware that Brazil’s online industries are growing and growing.

For the “Next Eleven” countries, new technologies are an engine of growth. Mobil telecommunications and mobile internet play a crucial role – not only because they are linked to successful business models, but because they drive societal development in the respective countries. This is as true for civil society (I count economic actors as a part of that realm) as it is for the political arena, which is challenged by new forms of participation and organization. Much has been written about the importance of Facebook during the recent revolution in one of the “Next Eleven” countries, Egypt.

Obviously, technology does not automatically deepen democracy. The Arab Spring was sparked by the self-immolation of a Tunisian grocer who couldn’t afford the food he needed to feed his family. Motivations for uprisings seem to have changed little since the French Revolution. Images of the unrest spread via television, and Al Jazeera and Al Arabia fueled revolutions throughout the region.

The mobile use of social networks fulfills a vital function as well: Social networks aid the articulation of civil society. In Egypt, where I lived and studied in 2003, society was then dominated by a sense of mistrust: “Will my friend snitch on me if I say something critical about the government?” Those were the thoughts of everyone who considered making a public statement, even just among a group of neighbors. But online social networks have exposed the widespread nature of those sentiments. Dissidents no longer have to feel alone but socially connected. Online discussions served an organizational purpose as well. Today, Egyptians still use Facebook to debate the future of their country.

Alec Ross, Hillary Clinton’s innovation adviser, has outlined how politics must change in a digital world: “Because of social media, we created a partnership with the Egyptian social media platform “Masrawy” which has lots of credibility on the street and allowed young people to ask direct questions to Hillary Clinton for 30 minutes. We did not make any requirements except that the questions come from Egyptian youth. We got questions from really tough bloggers and people who don’t like the United States.”

Our economic system is affected by sweeping changes as well. Twenty years ago this week, mobile phones were introduced in Germany. In two decades, we have moved from the Motorola 3200 to the iPhone – an indication of the speed of technological change, and of the ever-present danger for a country’s innovation and economic power. If one of the “Next Eleven” countries produces tomorrow’s Bill Gates, Germany could soon find itself on the losing end of technological change. Foreign minister Westerwelle thus argued that Europe’s prosperity depends on its ability to anticipate quick changes.

But just as in the field of politics, traditional economic sectors display surprising amounts of inertia that make it difficult to change course and adapt to speedy innovation. Some still seem to adhere to a logic that was once expressed by Germany’s emperor Wilhelm II with the following words: “I believe in the horse. The automobile will be a transient phenomenon.” But even mighty companies like Yahoo or Microsoft can be overrun by quick digital progress. Growing comfortable is no longer an option, especially when we compare today’s innovation cycles with the comparatively slow speed of the snail-mail age.

Alec Ross and Guido Westerwelle have highlighted the competition we face from markets whose existence is still unknown to us today. As Ross argues, “sub-Saharan Africa, South and Central Asia and other places that were historically more isolated, are now significantly less isolated in part because of connectivity and so people are now able to connect to markets and ideas in ways they were not able in the past.”

Newconomy is the new weekly column for the start-up industry. It focuses on the intersection of classical and new economies and of politics and entrepreneurialism. Newconomy is sponsored by Factory, the new start-up hub in Berlin.


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