Publication Date
2016

This World Bank report explores the impact of the internet, mobile phones, and related technologies on economic development. Its statistics and analysis show that, while digital technologies have spread rapidly in much of the world, digital dividends - that is, the broader development benefits from using these technologies - have lagged behind. In many instances, digital technologies have boosted growth, expanded opportunities, and improved service delivery. Yet their aggregate impact has fallen short and is unevenly distributed. To get the most out of the digital revolution, the World Bank stresses that countries need to not only close the remaining digital divide but also to work on the "analog complements" - by strengthening regulations that ensure competition among businesses, by adapting workers' skills to the demands of the new economy, and by ensuring that institutions are accountable.

An Overview section - available as a separate 50-plus-page document in 7 languages - examines strategies for strengthening the analog foundation of the digital revolution. It looks at these topics:

  • Digital transformations-digital divides
  • How the internet promotes development
  • The dividends: Growth, jobs, and service delivery
  • The risks: Concentration, inequality, and control
  • Making the internet universal, affordable, open, and safe
  • Analog complements for a digital economy
  • Global cooperation to solve global problems
  • Reaping digital dividends for everyone

Part 1 of the full report shows that potential gains from digital technologies are high, but often remain unrealised. A few of the main points to emerge:

  • More households in developing countries own a mobile phone than have access to electricity or clean water; among those in the bottom fifth of the economic scale, nearly 70% own a mobile phone. The number of internet users has more than tripled in a decade - to an estimated 3.2 billion at the end of 2015. For these people, digital technologies can be transformational by promoting inclusion, efficiency, and innovation. They expand the information base, lower the information cost, and create informational goods.
  • While there are many success stories, the aggregate impacts of digital technologies have so far been smaller than expected. For example, while the internet facilitates broad discourse, some governance indicators such as the share of free and fair elections are worsening. First, the digital divide is still large. Nearly 60% of the world's people are still offline and can't fully participate in the digital economy. Second, some of the benefits of digital technologies are offset by emerging risks. For example, many governments have used digital technologies effectively for better information provision, easy-to-monitor services such as issuing business licenses, and running elections. But they have not solved difficult governance problems, such as how to improve service provider management and how to increase citizen voice. A significant gap remains between technology and institutions, and where public sector accountability is low, digital technologies often help control rather than empower citizens.

Part 2 proposes policies to expand connectivity, accelerate complementary reforms in sectors beyond information and communication technology (ICT), and address global coordination problems. A few of the main points to emerge:

  • Market competition, public-private partnerships, and effective regulation of internet and mobile operators encourage private investment that can make access universal and affordable. A harder task will be to ensure that the internet remains open and safe, as users face cybercrime, privacy violations, and online censorship.
  • Connectivity is vital, but not enough to realise the full development benefits of ICTs. Digital investments need the support of these analog complements: regulations, so that firms can leverage the internet to compete and innovate; improved skills, so that people can take full advantage of digital opportunities; and accountable institutions, so that governments respond to citizens' needs and demands. Digital technologies can, in turn, augment and strengthen these complements - accelerating the pace of development.
  • Policy priorities change as countries advance through the digital transformation:
    • For countries with low internet access where the digital economy is still emerging, the task is to create the conditions for greater adoption and use. Reforms include removing such fundamental barriers as a lack of basic ICT and supporting infrastructure, excessive regulation of product markets, and high tariffs for digital goods - more than 25% in some countries. Education systems need to focus on basic literacy and numeracy skills, connect teachers to content, and promote adult literacy. Small steps to promote institutional change in the public sector include providing simple information services using mobile phones, strengthening monitoring, and leveraging nonstate provision.
    • For countries transitioning to a digital economy with fairly high technology use, the task is to ensure that opportunities are open to all. For effective competition, countries should develop regulations that open protected sectors and strengthen enforcement. The skills agenda needs to focus on teaching advanced cognitive and socioemotional skills - preparing for careers rather than specific jobs - since fewer than half of today's schoolchildren can expect to work in an occupation that exists today. Governments can introduce or strengthen such e-government tools as digital identifications (IDs), financial management systems, and e-services for citizens and businesses while also changing provider incentives and increasing transparency.
    • For countries already transforming into a digital economy, the main task is to address the problems the internet causes. In the business sector, this involves tasks such as ensuring that digital platforms do not abuse their dominant position and promoting fair competition between online and offline services. Education and training systems should put more emphasis on advanced ICT skills and - especially in rapidly aging societies - offer more opportunities for lifelong learning. Where basic e-government functions are already effective, digital tools can facilitate closer collaboration between all parts of government, enable full integration of public and private services, and bring greater involvement of citizens in truly participatory policy making.

The report's final chapter examines the internet as both a subject of global cooperation and a new tool to facilitate cooperation in other realms: governing the internet, facilitating cross-border exchanges of goods and services, and providing global public goods - including poverty reduction and environmental sustainability (relevant to the Sustainable Development Goals, or SDGs). It is noted that there are significant financing needs for building the data that could guide the pursuit of the SDGs, and the capacity to use those data. There could be opportunities to build reusable, customisable open-source software and systems for monitoring the SDGs, reducing duplication of efforts, saving costs, and improving lives. A spotlight section in this chapter examines a range of technologies, identified in the technology forecasting literature, that promise to be far-reaching in their impact on development: fifth-generation (5G) mobile phones, artificial intelligence (AI), robotics, autonomous vehicles (AV), the internet of things (IoT), and 3D printing.

That said, the central conclusion is that digital development strategies need to be broader than ICT strategies; countries need to create favourable conditions for technology to be effective.

Click here to access the report by chapter, as well as overview and main messages documents in various languages.

Source: 

World Bank website, August 30 2017.

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