Institutional Platform
for Sustainable Development Projects and the Digital Economy.
International Corporation (Hub) for the Management
of Sustainable Development Projects
The world has changed and no longer be the same. Climate, ecology, uncontrolled innovation, virtualization of the economy, economic uncertainty, the COVID-19 pandemic... Problems are becoming more global. The world has become more complicated. A "New Reality" emerged.
In this “New Reality”, traditional economic models focused on simple, rational business processes do not allow to find answers to complicated and complex challenges.
New solutions are needed for economic growth and job creation. We need solutions that would ensure the management of today's variety of problems and transcendental processes. Solutions are needed for systemic modernization of infrastructure, to counter planetary risks and ensure a sustainable future.
In other words, new institutions, new governance mechanisms and a new model of economic collaboration are needed.
As a solution, this project proposes the digital institutional platform that provides an environment for the deployment of “polycentric institutions” and mechanisms of multi-stakeholder cooperation.
This platform, on the one hand, is focused on the implementation of sustainable development projects with complex technologies, blended funding, cross-sectoral interaction and multi-stakeholder cooperation. In this case, projects are provided with large-scale investment based on privileges, preferences, guarantees and immunities granted under international law.
On the other hand, the institutional platform ensures the development of the Digital Economy by deploying institutions, accounting systems and communications for managing digital assets and digital property, creating jobs and distributing income among participants in the Digital Market, as well as for regulation, taxation and legal support of innovations that go beyond the current legislation.
Deployment of a digital institutional platform requires a large-scale scientific maintenance and support. The management of knowledge, information, competencies and expertise is necessary both in the new economic institutions and in the science-intensive sustainable development projects.
Deploying institutional solutions is a critical challenge for science in times of crisis and global shocks, such as the COVID-19 pandemic today.
The new institutional environment: the Digital Economy
The Digital Economy is such a new institutional environment. Digital platforms make it possible to cover the whole variety of rational, irrational and transcendental processes, not simplifying and reducing reality, but presenting it in multiple interpretations and providing management of the increasing complexity. The new Digital Economy is capable of providing new models of global economic cooperation, as well as economic growth and a viable future.
In practice, the digital economy means expanding existing economic model and the creation of 4 new industries:
These industries need to formalize and institutionalize new property relations (especially digital property), and on this basis new management systems and new institutions are being deployed.
Digital property, digital governance systems and new institutions will provide regulation, taxation, the legal framework, security and the development of economic relations in new industries. Given that all these new economic entities provide mechanisms for global interaction, they can be legitimized only at the international level, which requires the establishment of an international institution-Hub.
The inclusion of these industries in the Classification of Economic Activities (NACE - Nomenclature statistique des Activites economiques dans la Communaute Europeenne) will ensure investment growth, new labor markets and the institutionalization of income from innovation.
Conceptual model
The Digital Economy is gradually covers the entire world. Internet, Artificial Intelligence, VR / AR, cryptocurrencies have become “New Reality”. Pandemic COVID-19 with its “stay-at-home-economy” and “social distance”, has significantly accelerated the digitalization, driving the growth of e-commerce, digital collaboration and distant work.
At the same time, legal institutions are not yet able nor to regulate the growing variety of digital cross-border processes, virtual applications and micro-transactions, nor to ensure the cost exchange of information and knowledge which are controlled by users.
Today's digitalization is focused primarily on technology and is limited mainly to the “private interest” of investors. To become the economy, digitalization should be based on institutions and, together with “private interest”, also encompass values and the public good. This transition “from technologies to institutions” has encountered a “phase barrier” today, which slowed down economic growth and gave rise to crisis processes.
International initiative "Contribution of Countries / Individuals to the World Development", which envisages the establishment of the institutional platform for sustainable development projects and the Digital Economy, aims to overcome this "phase barrier."
The digital institutional platform (institutional frame) provides an environment for the establishment of “polycentric institutions” (E. Ostrom) at the global, regional and local levels, and also ensures the interaction of new values, new public goods and “private interests”. This frame is implemented on the basis of the Agreement to Establish the International Corporation (Hub) for the Management of Sustainable Development Projects in accordance with the Vienna Convention on the Law of Treaties (1969) .
The values of the industrial period were based on democratic freedoms. The values of the Digital Economy are expanded towards “democratic individualism” (“true individualism” according to F.Hayek), which means the highest degree of responsibility of the individual to society and nature.
In international relations, it is also beginning to prevail values rather than interests. This means that although the interests of countries differ, civilizational values are inherently complementary and are linked in the Sustainable Development Goals.
The digital institutional platform provides mechanisms for multi-stakeholder cooperation to achieve the Sustainable Development Goals. At the same time, based on “democratic individualism” and the protection of the rights, interests and freedoms of economic entities, this digital platform expands the public good both in the direction of digital and virtual goods, and in the field of environmental protection and reproduction of the potential of the biosphere in accordance with UN documents.
Digital institutions
The Digital Economy is based on its institutions, which provide regulation, taxation, legal support and development amid the permanent innovation, and global and planetary risks (climatic, environmental, demographic).
Given the global nature of innovation and planetary risks, new institutions go beyond national legislation and the existing system of international law. The establishment of institutions of the Digital Economy requires the deployment of a global institutional frame – a digital platform that provides economic interaction of many economic entities.
The need for such a frame is due to the following factors:
Based on this, the digital institutional frame implies two key points: the modernization of property relations and the modernization of governance. The frame ensures the implementation of three fundamental backbone institutions: digital companies, digital property, and the digital platform for economic cooperation (business platform).
The institutions of digital companies and digital property are absolutely adequate to the new reality (new ontology) in today's economy, technology and society. They provide a transition to a more fair world, which is characterized by a more equitable distribution of assets and liabilities in society, based on the quantity and quality of labor, intelligence, talents and motivations of individuals.
Institutions of digital companies and digital property provide employment and “economic inclusion”, where each individual can become a participant in various business processes. At the same time, these institutions ensure a harmony between personal motivation, private profit, and the public good.
Digital business platform means a multidimensional model of economic cooperation based on digital intelligence and process virtualization. The platform provides mechanisms for multistakeholder cooperation, feedback control, accounting system for equity participation, process auto-formalization, arbitration, and the establishment and functioning of the "polycentric institutions."
Digital property
The fundamental issue of any economic model is to solve the problem of ownership: determining the forms and methods of ownership and management of assets and liabilities. On the other hand, the issue of ownership is a key motivating factor in economic development for business, government and society as a whole.
Transition to the new economy is impossible without resolving the issue of property, that is, ownership, disposal, management of new assets (digital, intellectual, environmental).
An important feature of the property (and money, in particular) is the ability to transfer value from the present into the future. The functions of saving, accumulation and wealth are the most important economic characteristics of property and money.
Internet assets and digital money do not have this feature. Digital assets have a notional value relating mainly present moment without transference to the future. If these assets are encapsulated into business processes, relationships and communications that are of a long-term nature, then steady value arises, and property and capital arise.
Today's “monetization” of digital assets based on the concept of “commoditization” does not lead to the expansion of the economy and creation of new markets. To expand the economy requires the institutionalization of new forms of ownership and management systems.
The problem of institutionalizing digital assets is being solved by introducing the institutions of digital companies, digital property and a digital business platform. Within these new institutions, digital assets become long-term value that can be owned, disposed of and managed. This significantly expands the economic space and provides “economic inclusion”.
Sustainable development projects
The following can be considered as priority projects for sustainable development today: projects for systemic modernization of infrastructure, as well as large-scale science-intensive geo-ecological projects aimed at climate change adaptation, preserving natural ecosystems, combating desertification and land degradation, etc.
Due to their scale, infrastructure and geo-ecological projects require coordination of efforts of governments, businesses and society, and therefore cannot be implemented within the framework of national economic and environmental programs. Their implementation is possible only within the framework of an international institutions capable of providing large-scale investment, as well as ensuring privileges, preferences, guarantees and immunity.
The project to establish the International Corporation (Hub) for the Management of Sustainable Development Projects is presented in the International Initiative “Contribution of Countries / Individuals to the World Development”.
Conclusions
During the pandemic period COVID-19 society expects from science not only medical innovation, but also improve the efficiency and manageability of the economy to provide mass employment, economic growth and viable future.
The global pandemic has sharply marked the finiteness of national institutions. We need new international institutions that can effectively resist planetary risks and threats, will stimulate economic growth and development.
Lockdown, structural changes in industries and labor markets, economic uncertainty, social tensions - that's just the tip of the iceberg. The transformations that took place during the COVID-19 pandemic, have affected the economic basis: digitalization has become a leading trend during the COVID-19 pandemic.
Digital innovations are fundamentally changing the life of society. But they become a disaster for many businesses and governments if they are outside the legal system and management system. The Internet, with its new space-time continuum, in which place, processes and events are virtual, intellectual boundaries are expanded, and reality is presented in the form of multiple interpretations, requires a completely different institutional framework that goes far beyond national laws and jurisdictions.
The result of the pandemic will not be a return to the pre-crisis economy, or the “New Normal”, but a completely different economy. After all, even if 15% of the population change their preferences, then on the macroeconomic balances - these are fundamental shifts.
In these conditions, business, governments and society expect from science not only a vaccine and methods to combat COVID-19, but above all a new model of development that would ensure the achievement of the Sustainable Development Goals and a safe, viable future.
The new model means new institutions, a new ideology, a new market architecture, and a new global governance frame.
The new model should overcome the “crisis of global governance”, provide a new format for international relations, management of planetary threats and risks (climatic, environmental, demographic), the deployment of new industrialization, new labor markets, new sources of profit and new public goods.
Society awaits a description of how wealth is created, managed and stored in a world full of innovation, complexity, uncertainty and unprecedented dynamics of change. Society expects from science a new “image of the future” filled with new concepts, senses and motivations.
COVID-19 is a catalyst for change, aimed at making the world more just.
The project of deploying the digital institutional platform that provides overcoming the “phase barrier” of development and getting out of today's crisis is presented in the International Initiative “Contribution of Countries / Individuals to the World Development”.