For digital technologies to benefit everyone everywhere, countries must close the remaining digital divide, especially in internet access. But greater digital adoption will not be enough. To get the most out of the digital revolution, countries also need to work on the “analog complements.”
In this 2016 report, the World Bank Group examines the impact of digital technologies on economic development and shows that potential gains from it often remain unrealized. The report refers to the broad development shifts from using these technologies as digital dividends. Digital dividends occur for two reasons. First, nearly 60 percent of the world’s people are still offline and can’t participate in the digital economy in any meaningful way. Second, some of the perceived benefits of digital technologies are offset by emerging risks.
In order to utilize the potential gains from digital technologies, countries should maximize digital dividends. This requires better understanding of how technology interacts with other factors that are important for development—what the report calls “analog complements.” Analog complements include regulations, so that firms can use the internet to compete and innovate; improved skills, so people can take full advantage of digital opportunities; and accountable institutions, so that governments react to citizens’ needs and demands. Then digital technologies will be able to augment and strengthen these complements—accelerating the pace of development.
“While people around the world make more than 4 billion Google searches every day, 4 billion people still lack access to the internet.”
Internet access will play an important role in realizing digital dividends. Market competition, public-private partnerships and effective regulation of internet and mobile operators are all needed to encourage private investment that can make access to the internet universal and affordable. Public investment will sometimes be necessary and justified by large social returns. A more difficult task will be to ensure that the internet remains an open and safe space as users deal with cybercrime, privacy violations and online censorship.
Universal internet access is an important goal and a tremendous challenge. However, countries will need to create favorable conditions in order for technology to be effective. When the analog complements are absent, development outcomes will be disappointing. However, when countries build a strong analog foundation, they will garner sufficient digital dividends in the form of faster growth, more jobs, and better services.