The annual World Development Report (WDR) is considered to be one of the most authoritative reports published by the World Bank and is widely read by policy makers in developing countries and anyone looking at development issues that affect the poor.
WDR2016 looks at the how the internet for development. At a presentation in Nairobi today, the researchers spoke of the unprecedented diffusion of digital technology – with the comparison that while Kenya got electricity, 60 years after its discovery, Kenyans were able to use mobile banking 5 years before the USA.
The internet affects development by helping people and economies around the world overcome information barriers/inclusion .(e.g women, and freelancers are able to get more online opportunities and funding (kickstarter)) than were available offline, attain lower transaction costs /efficiency (manual filing systems in government replaced by models like Estonia where you can start a company in 20 minutes) and achieve economies of scale/ innovation.
However, access has been unevenly spread and there are risks and challenges brought by the internet. These include exclusion (elite take the lion’s share), efficiency may lead to inequality, cyber security attacks & wasted projects , while more innovation may lead to job destruction.
Firms in lower-income countries are less likely to use the internet and low-income countries are becoming more disadvantaged as the internet rewards those at the top of the chain, while middle skilled occupations may disappear (bank tellers, drivers – from a hollowing out of the labour market)
- Internet brings growth opportunities but they are largely unrealized (You need 15% broadband penetration to see impact. Also it has to be fast, affordable and always on – mobile broadband does not have the impact of fixed broadband)
- Internet can improve welfare and reduce poverty but can also worsen inequality
- Affordable internet requires open access and public private partnerships (which are still lacking)
- A digital economy needs a strong analog foundation – competitive environments where incumbents are forced to innovate, and internet savvy newcomers can enter market easily