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World Development Report 2016 - Digital dividends

World Development Report 2016 - Digital Dividend by World Bank Notes for Civil Services Exam (CSE).

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World Development Report 2016 - Digital dividends

  1. 1. World Development Report 2016 - Digital Dividends Amit Kumar Anand September 20, 2016 1 Overview • We are in the midst of greatest informa- tion and communications revolution in human history. • Digital technologies have boosted growth, expanded opportunities, and improved service delivery. • 40% of world population has access to in- ternet. • Among poorest 20% households 7 out of 10 has mobile phones. • Poorest households are more likely to have access to mobile phones then to toi- lets or clean water. • Access to digital technologies bring more choice and convenience. • Cost of sending remittances dropped down upto 90% after the introduction of M-Pesa, digital payment system, in Kenya. • 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 digital technologies to promote development. • Digital technologies 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 • While digital technologies has been spreading, digital dividends have not. 1. 60% of world population is still of- fline and can’t participate in digital economy in any meaningful way. 2. Perceived benefits of digital tech- nologies are offset by emerging risks. (a) Increasingly polarized markets and rising inequality - technol- ogy augments higher skills while replacing routine jobs, forcing many workers to compete for low paying jobs. (b) In absence of accountable in- stitutions, amplify the voice of elites, which can result in policy capture 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 dramatically cheaper, faster, and more convenient. 1
  2. 2. • When technology is applied to automate tasks without matching improvements in the complements, it can fail to bring broad-based gains. • Technology can make workers more pro- ductive, but not when they lack the know-how to use it. Digital technologies can help monitor teacher attendance and improve learning outcomes, but not when the education system lacks accountabil- ity. • Access to the internet is critical, but not sufficient. The digital economy also re- quires a strong analog foundation- vi- brant business climate, skilled human re- source and accountable institutions that use the internet to empower citizens. • Countries that are able to swiftly adjust to this evolving digital economy will reap the greatest digital dividends, while the rest are likely to fall behind. • A favorable business climate, strong hu- man capital, and good governance is re- quired. • Digital technologies add two important dimensions. 1. Raise the opportunity cost of not undertaking the necessary reforms. They amplify the impact of good (and bad) policies. 2. Digital technologies are no shortcut to development, they can be an en- abler and perhaps an accelerator by raising the quality of the comple- ments. • To deliver universal digital access, we must invest in infrastructure and pursue reforms that bring greater competition to telecommunications markets, promote public-private partnerships, and yield ef- fective regulation. • Countries that complement technology investments with broader economic re- forms reap digital dividends in the form of faster growth, more jobs, and better services. 2 Digital Dividends • Connected people • Connected governments • Connected businesses 2
  3. 3. 3 How Internet promotes de- velopment • promotes inclusion • promotes efficiency • promotes innovation 4 Dividends: Growth, jobs and 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 v traditional car rental. • Creates jobs. New opportunities for en- trepreneurship and self-employment are also 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 war demonstration, participatory law mak- ing. 5 Risks: Concentration, in- equality and control • When the internet delivers scale economies for firms but the busi- ness environment inhibits competition, the outcome could be excessive con- centration of market power and rise of monopolies, inhibiting future innovation. • When the internet automates many tasks but workers do not possess the skills that technology augments, the outcome will be greater inequality, rather than greater efficiency. • When the internet helps overcome in- formation barriers that impede service delivery but governments remain unac- countable, the outcome will be greater control, rather than greater empower- ment and inclusion. 6 Cost of internet filtering and censorship 1. Diverts public fund. 2. Can slow the speed of internet access, which hurt the business users. 3. Can restrict access to economically and scientifically useful information. e.g. Google Scholar. 4. Blocking foreign websites can be viewed as non-tarriff trade barrier. 5. widespread censorship means that peo- ple avoid discussing and exchanging ideas openly, a prerequisite for an innovative and productive society. 7 Analog complement to dig- ital economy 1. Regulations that promote competetion and 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 only a job. 3
  4. 4. 3. Develop advanced technological skills and encourage lifelong learning. 4