Rapid expansion of frontier technologies.

 

Frontier technologies are those advanced and emerging technologies – from AI to green hydrogen and gene editing – that have strong transformative potential and offer new opportunities for economic development, sustainability and governance. These technologies help solve complex problems, allow time-consuming undertakings to be carried out more efficiently and offer potential for scalability and fast diffusion. 

In this way, frontier technologies play a key role in creating and implementing global solutions to address the challenges of the twenty-first century. This section provides an update of the status of 17 frontier technologies presented in the previous edition of the Technology and Innovation Report. As in that report, they can be divided into three broad categories: industry 4.0, green and renewable energy technologies and other frontier technologies (figure I.1).

One measure by which to assess frontier technologies is their market size, namely, the total revenue generated from the sales of products and services in the market. Frontier technologies represented a $2.5 trillion market in 2023 and are estimated to increase sixfold in the next decade, reaching $16.4 trillion by 2033 (figure I.2). This translates into a compound annual growth rate of around 20 per cent, in line with the projection in the previous edition of the Technology and Innovation Report that covers the period between 2020 and 2030. Different frontier technologies often overlap and interact with each other, and it is therefore difficult to make clear distinctions for their markets and there may be some double counting. Nevertheless, these technologies are already being deployed on a substantial scale and present strong market potential

By 2033, the frontier technology with the largest market size is likely to be AI, at around $4.8 trillion, accounting for 30 per cent of the overall market. Continuous breakthroughs are making AI more powerful and efficient, favouring its adoption in many sectors and business functions. Since 2022, there has been for example, a surge in interest in Generative AI (GenAI), with organizations across different countries and industries experimenting with its use in a wide range of tasks, including content creation, product development, automated coding and personalized customer service. 

Another major market is the Internetof Things (IoT). By 2033, this growing network of physical devices connecting and exchanging data could contribute $3.1 trillion to the global economy. IoT, coupled with other Industry 4.0 technologies and AI, will accelerate the digital transformation of agriculture, manufacturing and services, increasing productivity and product quality while potentially reducing costs and carbon emissions. These technologies can also benefit consumers if enhanced human-machine interactions lead to more efficient and customized solutions. 

The leading frontier technology providers are now among the largest corporations in the world by market capitalization. Apple, Nvidia and Microsoft each have a market capitalization of more than $3 trillion, close to the gross domestic product (GDP) of the African continent, or that of the United Kingdom of Great Britain and Northern Ireland, the world’s sixth largest economy. Not far behind are Alphabet (Google) and Amazon, with market capitalizations of above $2 trillion, greater than the GDP of Canada.1 The top five companies are from the United States, and three leading chipmakers – Nvidia, Broadcom and TSMC2 – are among the world’s top 10 listed companies; almost all are focused on frontier technologies and invest substantially in AI (figure I.3). Market capitalization data are as at end-2024. GDP figures are from the UNCTAD stat database. GDP is a flow variable and market capitalization is a stock variable; the present comparison is for illustrative purposes only, to highlight the significant market size of leading technology companies. Nvidia and Broadcom, United States; TSMC, Taiwan Province of China.  There is no structured, reliable information about market share or company profit readily available for frontier technologies. The top frontier technology providers were identified through an online search of companies most commonly referred to as top providers. Since the search was conducted in English, more favourable results may have been returned for companies from English-speaking countries. The main providers of frontier technologies are from the United States, developed countries in Western Europe, China, Japan and the Republic of Korea. Collecting globally comparable data on frontier technology markets is challenging, but some trends can be identified. Companies in the United States have an edge in digital technologies and computing platforms, such as AI, IoT, big data, blockchain and 3D printing. Companies from Japan lead in robotics development and those from the Republic of Korea are more active in 5G and nanotechnologies. Companies in Western Europe cover a wide spectrum of frontier technologies. Among developing countries, the dominant player is China, which leads technological development in 5G, drones and solar photovoltaics (solar PV). There are only a few top frontier technology providers from other developing countries, for example, Brazil (e.g. some biofuels companies).

While there are substantial innovation activities among small and medium-sized enterprises (SMEs) and startups, most leading frontier technology providers are large multinational corporations. Some have developed the technology in-house and most stay at the frontier by investing in startups or acquiring highly innovative firms that offer cutting-edge technology and expertise. For example, in 2014, Alphabet acquired DeepMind, a leading United Kingdom-based research lab pioneering the field of deep reinforcement learning that developed the programme ‘AlphaGo’ that defeated the world Go champion in 2016. Another major player is Microsoft that, in 2019, forged a partnership with OpenAI, which developed ChatGPT (GPT stands for generative pre-trained transformer), and in 2022, made a record acquisition, for more than $18 billion, of Nuance Communications, a company that specializes in largescale speech applications and is behind the Siri voice assistant of Apple.4 Market dominance is worrying, particularly in winner-takes-all markets, because the top players reap most of the rewards and 4 For a list of the largest AI acquisitions of United States companies. have the resources to eliminate potential competition or even control the flows of information and revenue. Leading technology companies are gaining control over our technology future, but their commercial motives may not always align with the public interest and could put societies on a suboptimal development trajectory. For instance, studies suggest that companies generally direct AI development towards substituting for human labour rather than augmenting human capabilities. Labour-saving and capital-intensive frontier technologies could undermine the comparative advantage of low labour costs in many developing countries, threatening much of the gains they have made in recent decades. For these reasons, it is essential to explore policies and regulations that incentivize and guide technology firms towards a path that promotes inclusivity and benefits for everyone. Later, we will present an overview of STI and industrial policiesfor AI at the national level and will focus on global AI governance.