In the era of digital technology, the structure of production as well as the interaction between humans and machines is being redefined. The diffusion and application of digital technology can increase productivity in an unprecedented manner, with potential to reshape the role of humans in the function of production. Jobs are the drivers of development and pillars of resilience for people. Five years ago, the World Development Report (WDR 2014), Risk and Opportunity – Managing Risk for Development, highlighted the role of enterprises in supporting people’s risk management by absorbing shocks and exploiting the opportunity side of risk. There have been heated debates on how technology may lead to risks, such as job loss and structural changes of employment. While the risks are real, the estimates of the impact of digital technology on employment vary widely, from substantial job loss for both skilled and the unskilled workers, to potential job gains thanks to the complementarity of humans and machines, as well as the income and wealth effect derived from higher productivity.
The rapid spread of digital technologies has been a development success. But has it also resulted in successful development? No, not when the basic foundations of economic development are missing, argues the World Development Report 2016: Digital Dividends.
Increased prosperity and our incessant desire to stay connected have contributed to the rapid spread of digital technologies. More households in developing countries own a mobile phone than have access to electricity or clean water. Nearly 70 percent of the bottom-fifth of the population in developing countries own a mobile phone. The number of Internet users has more than tripled in the last decade—from 1 billion in 2005 to an estimated 3.2 billion at the end of 2015.
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Pop quiz: Which of these statements do you agree with?
- If you build “IT” they will come.
- Poor people don’t need mobile phones. They need clean water and food instead.
- Digital skills are only relevant for people who work in the ICT sector. The rest of us don’t need them.
“Within two days, I was able to hire the right people from the right locations” -- Employer using Souktel
In West Bank and Gaza, women are 19 percent of the total labor force (figure 1). But among the users of Souktel, an online job matching platform, more than one third of the users are women. This is one of the many promises of digital technologies for development.
Figure 1: Share of the labor force, nationally and in Souktel
Source: Souktel and Palestinian Central Bureau of Statistics, prepared for World Development Report 2016.