“If you expand from that, the next battlefield in Asian technology is whether Asian firms can provide viable alternatives for what seems extremely likely domination by relatively few software firms,” Thong says.
Coming years will bring opportunities for companies in areas as diverse as healthcare and diagnostic technologies and automated vehicles, he adds.
Asian economies will need high levels of entrepreneurship and innovation, coupled with the removal of barriers to trade to become competitive and to succeed in the sector.
“If software is the primary engine of value creation and it’s ‘winner takes all’, then it’s very difficult for Asian companies to replicate the success of those existing firms unless governments or entire societies change themselves to be more open and more innovative,” Thong says.
“The one obvious example is China because it’s a very closed market and we are already seeing entrepreneurship and innovation.”
At the other end of the spectrum, the rapid pace of technological advancement presents enormous challenges for developing nations.
Macquarie’s analysts highlight that the rising deployment of automation and artificial intelligence could displace manufacturing workers in third world countries before they are able to capture the wage gains from advances in productivity.
Thong says there is a risk that “premature deindustrialisation” could lead to more disparity between rich and poor nations.
“Places like India or Vietnam which haven’t reached industrialisation phase yet will never get those jobs,” he says.
“At that point, we will have to try very hard to figure out changes to the education system, to the social system, and how you deal with the increasing disparity that comes from technological advancement.”