Economic statecraft, technological development and implications for Norwegian security – a preliminary study

Technological progress affects how states may use economic means to pursue strategic, foreign policy goals. Yet, this is an area mostly neglected in existing literature on economic statecraft. The purpose of this report is to strengthen the understanding of how technological developments can affect states' ability to use economic means, and to discuss implications for Norwegian security. The report focuses particularly on artificial intelligence and big data, 5G, cloud services and the Internet of Things. We have collected data from interviews and workshops with researchers at the Norwegian Defence Research establishment (FFI), as well as reviewing the literature. We first identify several ways in which technological developments can change economic activity. This includes increased importance of data, more complex and skill-intensive products, services and value chains, increased market concentration and increased internationalization and/or automation. These insights enable us to discuss how states' abilities to perform economic statecraft may change due to technological progress. We distinguish between potential attempts at exercising power and accumulating power. The latter enables economic – or other types of – use of force in the future. Our analyses suggest that technological developments may strengthen individual states' opportunities to exercise power, particularly through exploiting dependencies on competence, resources, components, etc. to (covert) sabotage systems. Moreover, technological developments may enhance states’ possibilities to accumulate power in several ways, including by utilizing economic activity to collect information and data for intelligence purposes and/or for trying to shape interests and perceptions in the recipient country. Certain states may also experience greater opportunities to establish themselves as key suppliers of important resources, products and expertise – dependencies that may be used strategically in the future to promote these states' interests globally. Technological developments also drive states, especially the U.S. and China, to implement domestic industrial policy for geopolitical purposes – in the literature called “the new economic statecraft”. What are the implications for Norwegian security? We argue that it is becoming increasingly important to manage data produced in the Norwegian society as a strategic resource. We also highlight that development and implementation of new technologies will likely contribute to making Norway more dependent on certain types of expertise, services, raw materials, components and products, and we recommend that studies are conducted to better gauge these dependencies. Furthermore, we believe that the rivalry between the U.S. and China will increasingly have implications for Norway, including increased pressure from the U.S. and NATO to protect Norwegian (and allied) technology and secure greater independence from Chinese suppliers in high-tech supply chains. In order to deal with these potentially security-threatening implications, we recommend strengthening the ability to coordinate across domains nationally and with like-minded countries. It will also be important to continue informing businesses and consumers about the role economic activity can play in facilitating data collection, intelligence, influence, subversion and sabotage, so that any attempts at security-threatening activities are prevented or discovered. The report also identifies and recommends further research in several areas which are beyond the scope of this study, but which will contribute to strengthening policy- and decision-making.