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New markets: between freedom and state regulation

May 29, 2017, 20:10 UTC+3
1 pages in this article

The fourth industrial revolution is shaping new markets which will define the course of global development for the next 1020 years. It requires new approaches to government regulation in order to ensure favourable conditions for the IT business. To catch up with other countries, Russia needs a special policy on the digital economy.

In the next few years, the sectors below are expected to demonstrate rapid progress:

  • Robotics. In 2016, the global market volume stood at USD 35 billion.
  • Augmented and Virtual Reality (VR/AR) market. Revenues are estimated to reach USD 150 billion by 2020.
  • Big Data and analytics. Their volume is projected to near 44 zettabytes by 2020. New data processing technologies may increase the global GDP by USD 15 trillion by 2030.
  • IoT market. In 2016, its volume increased almost by 17% to USD 737 billion, and, according to analysts’ estimates, will continue growing at an annual average 15% by 2020.
  • Cloud-based technologies. In 2016, public clouds expenses stood at USD 209.2 billion, and in 2017 the market is expected to hit a record high.
  • Cyber security technologies. By 2020, cyber security expenses will amount to USD 170 billion, and the market will be growing by 9.8% annually.
  • 3D printing. The global 3D printing market is projected to reach USD 17.8 billion by 2020.

High-tech markets require sound management, including government regulation:

  • Emerging technologies may deepen the economic and social inequality.
  • Without proper control, such problems as spreading cyber attacks on the real world, growing lack of privacy and dramatic changes in the labour market may wipe out the benefits of future development.

One of the key challenges in controlling new markets is that new technologies change faster than regulatory frameworks.

  • Governments should develop a flexible supervision structure to ensure quick response to changes in the economic and social environment.

Although Russia’s IT market is rapidly growing both in terms of domestic developments and exports, the share of the digital economy in the GDP still stands at a measly 2.8% (compared to 5.5% on average in the developed countries).

Its development is limited by the following factors:

  • shortage of skilled professionals;
  • few global-scale IT research programmes;
  • low public demand for IT.

To offset their negative influence and enable Russia to bridge the gap in IT, further steps are being taken:

The digital economy programme is being developed:

  • In line with the project, in 2019 the government is to approve the laws to regulate IoT and Big Data use, and 5G networks deployment.
  • According to the programme, the internet traffic going through foreign servers would be reduced to 5% by 2020, which would enable Russia to rise to the 8th place in the Global Cybersecurity Index by 2025.
  • The goal is to provide high-speed internet across the Russian cities and towns with a population of over 1,000 people.

The National Technology Initiative (NTI):

  • This long-term public private partnership programme aims to promote new high-potential IT markets.
  • The allocations for key NTI roadmap projects in the 2017 federal budget amount to RUB 12.5 billion.

The industry can also be stimulated by creation of state venture capital funds:

  • In 2016, the funds established with the support from the RVC and the Ministry of Economic Development accounted for 71% of withdrawals from the previously invested companies, and the information and communication technologies sector accounted for about 50%. 
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