The global supply chains for food, agricultural products and technology experienced an unprecedented shock due to the pandemic. Despite the disruption trade in foodstuff remained remarkably resilient, highlighting the essential role of food supply in times of crisis. Nevertheless, global food systems are undergoing a structural transformation that is necessary, not only to feed the world’s growing population, but also to prevent damaging impacts of climate change and environmental degradation.

The globalisation of supply and markets has seen agri-food sectors become more integrated with other sectors of the economy, both within countries and across those value chains. International trade in food and agriculture has more than doubled in real terms between 1995 and 2018 to reach US$1.5trn.1 The total global food and beverages market was worth almost US$6trn in 2019, following annual growth of 5.7% since 2015. Prior to the pandemic, the market was forecast to reach a value of US$8.6trn by 2025, before climbing to nearly US$12trn by the end of the decade.2

The global food system has also become more “global”, as exports from developing countries and emerging economies made up more than one-third of global agri-food exports by 2018, with around a third of global agricultural and food exports traded within global value chains (GVCs).3 Agri-food value chains have been driven by foreign direct investment (FDI) and trade, allowing companies to operate across multiple regions and making it easier for developing countries to integrate into global markets.

Globalised food: Agri-food exports and imports, average annual growth rates

However, the pace of this internationalisation has slowed down in recent years, and the global pandemic fuelled concerned about the resilience and sustainability of the global food system. While supply chains proved largely resilient, parts of the developing world experienced food security crises as a result of the pandemic. The Covid-19 pandemic further execrated the trends that saw the number of undernourished people increase by as many as 161 million from 2019 to 2020.4 The UN FAO warned that even though agri-food systems had proved resilient, the economic effects of the pandemic would cause acute and chronic food insecurity to increase, with the most vulnerable groups in society hit by lower incomes and employment.5 With the world’s population forecast to hit the 10bn mark by 2050, global food demand is expected to continue to grow significantly, putting further pressure on the global food system. 

Meeting this demand will require development and adoption of innovative technologies and practices throughout the global value chain. In developing countries, for instance, agricultural technology (agri-tech) helps to empower the huge population of smallholder farms in areas including Africa and South Asia by giving them platforms for trading, connecting, learning and creating greater efficiency. More advanced technology, such as Artificial intelligence (AI), now plays a large role in agri-tech and is expected to become increasingly focused on precision agriculture with the optimisation of decisions on cropping, livestock husbandry and land management to improve farm efficiency and productivity. The new emerging precision ‘smart’ agriculture market is estimated to grow rapidly from US$13.8bn in 2020 to US$22bn by 2025.6

Many of the solutions developed by agri-tech providers target the urgent challenge of sustainability in supply chains and food production. With the food supply chain accounting for a quarter of all global emissions – 82% of which are attributed to food production – cutting emissions, ecological harm and waste are at the core of national sustainable development strategies.7 Food systems also have a negative impact on biodiversity, contributing to the mass extinction of species, ecocide, soil loss, land degradation, air pollution and emissions. A shift towards alternative sources of protein, nature-positive food practices, such as conservation agriculture, sustainable aquaculture (fish farming) and vertical farming, as well as sustainability standards and targets will all be required to make the global food systems ready to face the current and future challenges.8

Heavy emitters: Global agricultural greenhouse gas emissions

1FAO. ‘The state of agricultural commodity markets - agricultural markets and sustainable development: global value chains, smallholder farmers and digital innovations’. 2020. http://www.fao.org/3/cb0665en/CB0665EN.pdf 2Research and Markets. ‘Insights on the Food and Beverages Global Market to 2030 - Identify Growth Segments for Investment’ (internet). PR Newswire. 2021. https://www.prnewswire.com/news-releases/insights-on-the-food-and-beverages-global-market-to-2030---identify-growth-segments-for-investment-301202729.html 3FAO. ‘The state of agricultural markets 2020’. 2020. http://www.fao.org/home/digital-reports/state-of-agricultural-commodity-markets/en 4FAO. The Sate of Food Security, 2021. http://www.fao.org/state-of-food-security-nutrition 5FAO. ‘Covid-19, agricultural markets and trade and FAO’s response’. 2021. http://www.fao.org/3/nf041en/nf041en.pdf 6Markets and Markets, ‘Smart Agriculture Market worth $22.0 billion by 2025’. 2020. https://www.marketsandmarkets.com/PressReleases/smart-agriculture.asp 7Ritchie, H. ‘Food production is responsible for one quarter of the world’s greenhouse gas emissions’ 2019. https://ourworldindata.org/food-ghg-emissions 8UNCTAD. ‘Trade and development report 2020. From global pandemic to prosperity for all – avoiding another lost decade’. 2020. https://unctad.org/system/files/official-document/tdr2020_en.pdf; The Economist Intelligence Unit. ‘Changing trends in food: discovering and utilising alternative crops’. https://foodsustainability.eiu.com/blogs/changing-trends-in-food-discovering-and-utilising-alternative-crops/

The Covid-19 pandemic has posed unprecedented disruptions to education systems; however it has also accelerated many of the structural changes undergoing in the sector and opened up new opportunities. The emergence online and hybrid learning models, the take-up of Massive Online Open Courses (MOOCs) and augmented and virtual reality (AR/VR) have the potential to reshape the sector and pose serious threats to current incumbents, if investment in supporting connectivity infrastructure and training is not embraced. 

The global education sector has reached an impressive scale, having grown rapidly over the previous decade, and forecasted to double in market size within the next decade. Total enrollment across all levels of education reached 829 million students in late 2019, a 14% increase from 2010. In 2019, more than 5.5 million students studied in degree programmes outside their home countries, more than double the number doing so in 2000. The global education market is projected to continue expanding rapidly and more than double in size, reaching US$2.4trn by 2027, up from US$1.1trn in 2019.1

Growing student population: Global student enrollment, 2010-2019 (million students) growth rates

The pandemic has accelerated the digital imperative, a likely irreversible change, that is forcing education providers to rethink their strategies. Although most students have returned to classrooms since the height of the pandemic, educational institutions can now be certain that blended or digital-only modes of learning are part of their future. Established high education providers can no longer afford to put off investment in the digital future, as growing competition from new entrants in the market intensifies. The strongest challenges are posed by online-only providers of MOOCs (Massive Online Open Courses). This segment has seen rapid growth in 2020, increasing its international base of registered learners by 50%, and reaching 180 million users (excluding China).2 US-based MOOC Coursera has led the charge, adding 30 million new users in 2020 and attracting substantial new funding to increase its expansion. There is growing expectations that MOOCs, as they refine their models, will have a larger impact on the sector in the years to come. 

Global spending on education technology is also showing signs of expansion. Total spending worldwide in 2020 was US$227bn, accounting for 3.6% of total expenditure on education and training. Spending is expected to grow rapidly in the coming years, reaching US$404bn in 2025.3  Advanced technologies that enable immersive and multi-sensory learning methods, such as augmented and virtual reality (AR/VR), are expected to grow fastest to around US$13bn globally, while AI and robotics spend is expected to reach US$9bn.4 Investors follow the suit, as the EdTech segments attracted over US$16bn venture capital (VC) investment in 2020, up from just US$1.8bn in 2014.

EdTech boom: Global Venture Capital (VC) investment in EdTech, 2015-2020 (US$bn) 

There are however significant structural challenges that remain in place that may hinder the growth EdTech. The lack of high-quality broadband infrastructure needed to support more advanced forms of learning, coupled with teachers’ lack of readiness to embrace digital forms of learning are some of the biggest limits to the growth in the sector. Governments and telecom companies have a major role to play in upgrading the current broadband infrastructure, guaranteeing faster levels of connectivity and increasing digital skills training. There are further concerns towards data security and the need to ensure adequate data privacy practices by EdTech firms. 

    1 Fortune Business Insights, 2020: https://www.fortunebusinessinsights.com/higher-education-market-104503 2 The Report by Class Central, 2020: https://www.classcentral.com/report/the-second-year-of-the-mooc/ 3 HolonIQ, January 2021: https://www.holoniq.com/edtech/10-charts-that-explain-the-global-education-technology-market/ 4 Ibid

As a driver of economic growth and competitiveness, however, the science and production of digital technologies are also becoming an area of fierce competition between countries. Global spending on ICT (information and communication technology) has increased steadily at 4% annually for several years, reaching a total of US$4.9trn in 2019.1 Despite the pandemic-related slowdown in momentum for traditional type of hardware and enterprise software, spending on newer technologies such as IoT (Internet of Things), robotics, 3D printing, AI and VR is expected to grow at a faster pace. Global ICT spending is forecasted to increase from US$5.2trn in 2021 to US$5.8trn in 2023, with an annual growth of 6%. Newer technologies will account for 23% of total spend in 2023, up from 14% in 2018.2

The digital economy is also a considerable driver of international trade, with cross border exports of ICT good and services estimated at US$2.74trn in 20203. While trade in goods accounts for the highest share, trade in ICT services is growing annually by 7.7% (CAGR) between 2010 and 2017.4

Rapid recovery: Worldwide ICT spending, 2018-2023 (US$ bn)

Several high-profile sub-sectors epitomize the rapid growth of and challenges faced by the digital technology sector. The worldwide revenue from the sale of artificial intelligence (AI) -based software and services stood at US$62bn in 2020 and is set to reach US$998 by 20285. One study estimated the potential value generated by application of AI techniques across various industries places the market between US$3.5trn and US$5.8trn.6 However, there are two main obstacles that hinder a widescale AI adoption: the shortage of good quality data and data scientists, particularly as the talent that drives improvements in AI is largely concentrated in large economies such as the US, UK, Germany and China. 

Cybersecurity is also an area that has attracted growing investment from corporates and VCs. With the advent of the digital economy, cyber threats put organizations and societies at risk. Global revenues for cybersecurity services are projected to grow from US$67bn in 2019 to US$111bn in 2025.7 Funding for companies providing cybersecurity services has increased nine-fold to US$7.8bn in 20208. The pandemic has further highlighted security vulnerabilities faced by organizations, as the mass shift to remote working coupled with the increased use of cloud infrastructure and services have exposed many to cybersecurity threats. 

The pandemic has also impacted semiconductors, a key commodity for the digital economy representing a market expected to grow to US$469bn in 2021.9 A rise in demand for digital services and computer equipment caused severe supply chain disruptions across the global semiconductor production. The shortages have thrown light on the inadequate resilience of technology sector supply chains. They have also underscored the extreme concentration of semiconductor production. Although US firms account for 47% of global sales, most exports originate from East Asia—namely Taiwan, South Korea and China. Moreover, the most advanced generation of semiconductors is currently produced at scale only by Taiwan’s TSMC and South Korea’s Samsung.10

Something’s phishy: Share of cyber security breaches reported by UK companies over previous 12 months, by type of breach

As digital dominates more parts of the global economy, governments are taking proactive action to include the digital economy within national industrial policy. The need to gain strategic autonomy, in light of growing geopolitical rivalries, is prompting governments to adopt policies aimed at protecting their national technology sector. Since 2008, 101 countries representing more than 90% of global GDP have adopted formal industrial development strategies.11 These have focused mainly on supporting technology innovation and the digital economy. The resulting risk of fragmentation of global technology supply chains is likely to stay high on the agenda for global technology companies and governments around the world.

 

1IDC, Global ICT Spending: Forecast 2020-2023: https://www.idc.com/promo/global-ict-spending/forecast 2 Ibid 3 Estimated using World Development Indicators and IDC data. 4 Ibid 5 Grand View Research, Artificial Intelligence Market Size, Share & Trends Analysis Report, 2021-2028: https://www.grandviewresearch.com/industry-analysis/artificial-intelligence-ai-market 6 McKinsey Global Institute, Notes from the AI Frontier, 2018:https://www.mckinsey.com/featured-insights/artificial-intelligence/notes-from-the-ai-frontier-applications-and-value-of-deep-learning 7 The Business Research Company, “Cybersecurity Industry Overview Shows US To Account For The Largest Share Among Countries, In The Global Cyber Securities Market 2020”, November 2020: https://www.globenewswire.com/news-release/2020/11/05/2121251/0/en/Cybersecurity-Industry-Overview- Shows-US-To-Account-For-The-Largest-Share-Among-Countries-In-The-Global-Cyber-Securities-Market-2020.html 8 Crunchbase, The Rise Of Global Cybersecurity Venture Funding, 2021: https://about.crunchbase.com/cybersecurity-research-report-2021/ 9 Semiconductor Industry Association, 2021 Factbook: https://www.semiconductors.org/wp-content/uploads/2021/05/2021-SIA-Factbook-May-19-FINAL.pdf 10 Ibid 11 UNCTAD, World Investment Forum 2018: https://unctad.org/system/files/official-document/wir2018_en.pdf