World Development Report 2016 - Digital Dividends

Amit Kumar Anandwww.amitkanand.com

September 20, 2016

1 Overview

• We are in the midst of greatest informa-tion and communications revolution inhuman history.

• Digital technologies have boostedgrowth, expanded opportunities, andimproved service delivery.

• 40% of world population has access to in-ternet.

• Among poorest 20% households 7 out of10 has mobile phones.

• Poorest households are more likely tohave access to mobile phones then to toi-lets or clean water.

• Access to digital technologies bring morechoice and convenience.

• Cost of sending remittances droppeddown upto 90% after the introductionof M-Pesa, digital payment system, inKenya.

• Aadhaar, by overcoming complex infor-mation problems, helps willing govern-ments to promote the inclusion of dis- ad-vantaged groups.

• PwD can lead more productive life.

• easier communication and information,greater convenience, free digital prod-ucts, and new forms of leisure.

• created a profound sense of social con-nectedness and global community.

• Inclusion, efficiency, innovation-these are the main mechanisms for digitaltechnologies to promote development.

• Digital technologies promote innovationwhen transaction costs fall to essentiallyzero. They boost efficiency as existingactivities and services become cheaper,quicker, or more convenient. And theyincrease inclusion as people get access toservices that previously were out of reach

• While digital technologies has beenspreading, digital dividends have not.

1. 60% of world population is still of-fline and can’t participate in digitaleconomy in any meaningful way.

2. Perceived benefits of digital tech-nologies are offset by emerging risks.

(a) Increasingly polarized marketsand rising inequality - technol-ogy augments higher skills whilereplacing routine jobs, forcingmany workers to compete forlow paying jobs.

(b) In absence of accountable in-stitutions, amplify the voice ofelites, which can result in policycapture and greater state con-trol.

(c) Economics of internet favor nat-ural monopolies. Lack of com-petition results in more con-centrated markets benefiting in-cumbent firms.

• Digital technologies can make routine,transaction-intensive tasks dramaticallycheaper, faster, and more convenient.

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• When technology is applied to automatetasks without matching improvements inthe complements, it can fail to bringbroad-based gains.

• Technology can make workers more pro-ductive, but not when they lack theknow-how to use it. Digital technologiescan help monitor teacher attendance andimprove learning outcomes, but not whenthe education system lacks accountabil-ity.

• Access to the internet is critical, but notsufficient. The digital economy also re-quires a strong analog foundation- vi-brant business climate, skilled human re-source and accountable institutions thatuse the internet to empower citizens.

• Countries that are able to swiftly adjustto this evolving digital economy will reapthe greatest digital dividends, while therest are likely to fall behind.

• A favorable business climate, strong hu-man capital, and good governance is re-quired.

• Digital technologies add two importantdimensions.

1. Raise the opportunity cost of notundertaking the necessary reforms.

They amplify the impact of good(and bad) policies.

2. Digital technologies are no shortcutto development, they can be an en-abler and perhaps an accelerator byraising the quality of the comple-ments.

• To deliver universal digital access, wemust invest in infrastructure and pursuereforms that bring greater competitionto telecommunications markets, promotepublic-private partnerships, and yield ef-fective regulation.

• Countries that complement technologyinvestments with broader economic re-forms reap digital dividends in the formof faster growth, more jobs, and betterservices.

2 Digital Dividends

• Connected people

• Connected governments

• Connected businesses

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3 How Internet promotes de-velopment

• promotes inclusion

• promotes efficiency

• promotes innovation

4 Dividends: Growth, jobsand service delivery

• The internet can lead to more trade, bet-ter capital use, and greater competition.

• Expands trade. e.g. e-trading, e-tutoring.

• Improves capital utilization.

• Advancing competition. e.g Ola, Uber vtraditional car rental.

• Creates jobs. New opportunities for en-trepreneurship and self-employment arealso growing rapidly in the digital econ-omy.

• Increases labor productivity.

• Increasing the consumer surplus. In-creased variety of goods and service avail-able.

• Makes government more capable and re-sponsive.

• Expanding participation.

• Advancing voice. Arab spring, anti wardemonstration, participatory law mak-ing.

5 Risks: Concentration, in-equality and control

• When the internet delivers scaleeconomies for firms but the busi-ness environment inhibits competition,the outcome could be excessive con-centration of market power and rise ofmonopolies, inhibiting future innovation.

• When the internet automates many tasksbut workers do not possess the skillsthat technology augments, the outcomewill be greater inequality, rather thangreater efficiency.

• When the internet helps overcome in-formation barriers that impede servicedelivery but governments remain unac-countable, the outcome will be greatercontrol, rather than greater empower-ment and inclusion.

6 Cost of internet filteringand censorship

1. Diverts public fund.

2. Can slow the speed of internet access,which hurt the business users.

3. Can restrict access to economically andscientifically useful information. e.g.Google Scholar.

4. Blocking foreign websites can be viewedas non-tarriff trade barrier.

5. widespread censorship means that peo-ple avoid discussing and exchanging ideasopenly, a prerequisite for an innovativeand productive society.

7 Analog complement to dig-ital economy

1. Regulations that promote competetionand entry.

2. Lower the barriers to digital adoption.

3. Tailor “new economy” regulations to en-sure competetion.

8 Skills for digital economy

1. Start early with foundational skills.

2. Rethink curricula and teaching methods:Prepare stuents for a career and not onlya job.

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3. Develop advanced technological skillsand encourage lifelong learning.

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