Kathmandu, May 13

Investment in the information and communication technology (ICT) sector should be matched by reforms in complementary areas, such as regulatory environment, labour market and governance, to foster economic growth, create more jobs, reduce income inequality, prevent rise of monopolies and reap maximum digital dividend, says a latest World Bank (WB) report.

As digital technologies, such as the internet and mobile phones, are spreading quickly, the number of mobile phone and internet users is going up. This means people, businesses and governments are more connected than ever before, creating a profound sense of social connectedness and global community.

But have massive investments in ICT generated faster growth, more jobs and better services? And are countries reaping sizeable digital dividends?

These are some of the questions posed by World Development Report 2016, titled ‘Digital Dividends’, released here today by the World Bank.

The report basically says although digital technologies, in many instances, have boosted growth, expanded opportunities and improved service delivery, ‘their aggregate impacts have so far been smaller than expected’ and ‘are unevenly distributed’.

“For digital technologies to benefit everyone everywhere requires closing the remaining digital divide, especially in internet access,” says the report.

Currently, for every person connected to high-speed broadband, five are not.

“The unfinished task of connecting everyone to the internet — one of the targets in the recently approved Sustainable Development Goals — can be achieved through a judicious mix of market competition, public-private partnerships and effective regulation of the internet and the telecom sector,” adds the report.

But making internet service universal is not the only condition for fair distribution of digital dividends.

“To get most out of digital revolutions, countries need to work on analogue complements — by strengthening regulations that ensure competition among businesses; by adapting workers’ skills to the demands of the new economy; and by ensuring that institutions are accountable,” says the report.

What these priorities highlight is that core elements of the development agenda — business regulations that ease market entry, education and training systems that deliver skills that firms seek, and capable and accountable institutions — are becoming more important with the spread of the internet, adds the report.

This generally means ‘digital development strategies should be much broader than ICT strategies’.

Since expansion of digital technology has not been accompanied by important analogue complements, global productivity growth is decelerating despite greater connectedness among firms. Also, inequality is on the rise in many countries, even though digital technologies are said to be changing the world of work. Similarly, some governance indicators, such as the share of free and fair elections, are worsening, even though discourses are getting broader due to the internet.

This is happening because economies of scale delivered by internet for businesses may not have been matched by business environment that promotes competition. This may have resulted in excessive concentration of market power and given rise to monopolies, inhibiting future innovation.

Also, the internet may have been automating tasks, but workers may not have been possessing necessary skills, which is promoting inequality, rather than efficiency.

Also, the internet may have helped overcome information barriers but the government may have remained unaccountable, thus, leading to greater control, rather than greater empowerment and inclusion.

“To take full advantage of the opportunities the internet and other related technologies have presented, countries should come up with regulations that allow firms to connect and compete; develop skills that technology augments rather than replaces; and create institutions that are capable and accountable,” says the report, adding, “Investment in both technology and its complements is the key to the digital transformation.”