"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 percent 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." Kaushik Basu, World Bank Chief Economist.The World Development Report 2016 titled 'Digital Dividends' assesses the interplay of digital technology (mobile phones, internet and related technologies) with development. The report finds that although digital technology is widespread globally its aggregate impact has fallen short and the benefits are unevenly distributed.
The report stresses that along with measuring connectivity countries must focus on digital dividends (the broader developmental benefits for the majority of the population) and the analog foundations for digital investments such as strengthening regulations that ensure competition among businesses, adapting workers' skills to the demands of the new economy, and ensuring that institutions are accountable.
Digital technology has the ability to be transformative by promoting inclusion, innovation and efficiency by significantly lowering the social and economic transaction costs or the costs of searching for and acquiring information, bargaining and making decisions, and monitoring and enforcing transactions.
Figure 1. How the three tenets of digital technology apply to business, people and governments.
Source: WDR 2016 Pg. 12
Globally more households in the developed world have a mobile phones than have access to electricity or clean water; nearly 70% of households in the bottom fifth percentile have access to a mobile phone. The number of internet users has nearly tripled in a decade to nearly 3.2 billion users by the end of 2015.
Figure 1. Digital Transformation in Action (Source: WDR 2016 pg 6. )
Benefits remain unrealized the digital divide is still wide. Yet challenges remain, nearly two billion people do not have a mobile phone, almost four billion or 60% of the worlds population do not have any internet access, most of these people live in India and China and more than 120 million people are offline in North America. Six billion people do not have high-speed broadband internet,
Figure 2. A closer look at the Worlds Online and Offline Population (Source WDR, 2016 pg. 8)
Digital divides persist across income, age, geography, and gender. In Africa, the richest 60 % are almost three times more likely to have internet access than the bottom 40%, and the young and urban have more than twice the access of older and rural citizens.
Figure 3. The digital divide in access is high in Africa and the divide in capabilities is high in the European Union. (Source: WDR, 2016 Pg. 9)
The largest barriers are not in technology the digital revolution needs a strong analog foundation.
The internet is characterised as disruptive for the public sector and for established markets for product services and labour. Three clear policy areas have emerged for rules, skills and institutions. When analog complements to digital investments are absent, the development impact will often be disappointing. But when countries build strong analog foundations, they will reap ample digital dividends-in faster growth, more jobs, and better services.
Read Here | The World Development Report 2016: Digital Dividends
BW Reporters
The author is Executive Editor of Public Policy at BW Businessworld
