Digital technologies: Huge development potential remains out of sight for 4bn who lack internet access

A new World Bank report says that while the internet, mobile phones and other digital technologies are spreading rapidly throughout the developing world, the anticipated digital dividends of higher growth, more jobs, and better public services have fallen short of expectations, and 60 per cent of the world’s population remains excluded from the ever-expanding digital economy.

According to the new ‘World Development Report 2016:  Digital Dividends,’ authored by Co-Directors, Deepak Mishra and Uwe Deichmann and team, the benefits of rapid digital expansion have been skewed towards the wealthy, skilled, and influential around the world, who are better positioned to take advantage of the new technologies. In addition, though the number of internet users worldwide has more than tripled since 2005, four billion people still lack access to the internet.

“Digital technologies are transforming the worlds of business, work, and government,” said Jim Yong Kim, President of the World Bank Group. “We must continue to connect everyone and leave no one behind because the cost of lost opportunities is enormous. But for digital dividends to be widely shared among all parts of society, countries also need to improve their business climate, invest in people’s education and health, and promote good governance.”

Although there are many individual success stories, the effect of technology on global productivity, expansion of opportunity for the poor and middle class, and the spread of accountable governance has so far been less than expected. Digital technologies are spreading rapidly, but digital dividends – growth, jobs and services – have lagged behind.

“The digital revolution is transforming the world, aiding information flows, and facilitating the rise of developing nations that are able to take advantage of these new opportunities,” said Kaushik Basu, World Bank Chief Economist. “It is an amazing transformation that today 40 per cent of the world’s population is connected by the internet. While these achievements are to be celebrated, this is also occasion to be mindful that we do not create a new underclass. With nearly 20 per cent of the world’s population unable to read and write, the spread of digital technologies alone is unlikely to spell the end of the global knowledge divide."

Digital technologies can promote inclusion, efficiency, and innovation. More than forty percent of adults in East Africa pay their utility bills using a mobile phone. There are eight million entrepreneurs in China—one-third of them women—who use an e-commerce platform to sell goods nationally and export to 120 countries. India has provided unique digital identification to nearly one billion people in five years, and increased access and reduced corruption in public services. And in public health services, simple SMS messages have proven effective in reminding people living with HIV to take their lifesaving drugs.

To deliver fully on the development promise of a new digital age, the World Bank suggests two main actions: closing the digital divide by making the internet universal, affordable, open, and safe; and strengthening regulations that ensure competition among business, adapting workers’ skills to the demands of the new economy, and fostering accountable institutions—measures which the report calls analogue complements to digital investments.

Digital development strategies need to be much broader than information and communication technology (ICT) strategies. To reap the greatest benefits, countries must create the right environment for technology: regulations that facilitate competition and market entry, skills that enable workers to leverage the digital economy, and institutions that are accountable to people. Digital technologies can, in turn, accelerate the pace of development.

Investing in basic infrastructure, reducing the cost of doing business, lower trade barriers, facilitating entry of start-ups, strengthening competition authorities, and facilitating competition across digital platforms are some of the measures suggested in the World Development Report that can make businesses more productive and innovative. In addition, while basic literacy remains essential for children, teaching advanced cognitive and critical thinking skills and foundational training in advanced, technical ICT systems will be key as the internet spreads. Teaching technical skills early and exposing children to technology promotes ICT literacy and influences career choices.

Digital technologies can transform our economies, societies and public institutions, but these changes are neither assured nor automatic, cautions the report. Countries that are investing in both digital technology and its analogue complements will reap significant dividends, while others are likely to fall behind. Technology without a strong foundation risks creating divergent economic fortunes, higher inequality and an intrusive state.

Over the last decade, the World Bank Group has invested a total US$12.6 billion in ICTs.