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Where are the ‘Digital Dividends’ from the ICT revolution? The new World Development Report

Duncan Green's picture

© John Stanmeyer/National Geographic Creative. Used with the permission of John Stanmeyer/National Geographic Creative. Further permission required for reuse.Earlier this month I headed off for the London launch of the 2016 World Development Report, ‘Digital Dividends’. The World Bank’s annual flagship is always a big moment in wonkland, and there has been a lot of positive buzz around this one.

Here’s how the Bank summarizes its content (Frequently Asked Questions, pg. 5):

"What is the Report about? It explores the impact of the internet, mobile phones, and related technologies on economic development.

What are the digital dividends? Growth, jobs, and services are the most important returns to digital investments." (pg. 5)

How do digital technologies promote development and generate digital dividends? By reducing information costs, digital technologies greatly lower the cost of economic and social transactions for firms, individuals, and the public sector. They promote innovation when transaction costs fall to essentially zero. They boost efficiency as existing activities and services become cheaper, quicker, or more convenient. And they increase inclusion as people get access to services that previously were out of reach.

Why does the Report argue that digital dividends are not spreading rapidly enough? For two reasons. First, nearly 60 percent of the world’s people are still offline and can’t fully participate in the digital economy. There also are persistent digital divides across gender, geography, age, and income dimensions within each country. Second, some of the perceived benefits of the internet are being neutralized by new risks. Vested business interests, regulatory uncertainty, and limited contestation across digital platforms could lead to harmful concentration in many sectors. Quickly expanding automation, even of mid-level office jobs, could contribute to a hollowing out of labor markets and to rising inequality. And the poor record of many e-government initiatives points to high failure of ICT projects and the risk that states and corporations could use digital technologies to control citizens, not to empower them.