UNCTAD released a report that cautions that productivity gains from digitalization generally accrue to a few, already wealthy and skilled individuals.
The report recommends setting in place national and international policies that ensure that digitalization and ICT gains are spread more evenly across as well as within countries.
2 October 2017: The UN Conference on Trade and Development (UNCTAD) released a report that cautions that, while digitalization and information and communications technologies (ICTs) are helping a growing number of small businesses and entrepreneurs in developing countries to connect with global markets and create new income streams, they also bring the risk of widening income inequalities.
The report titled, ‘Information Economy Report 2017: Digitalization, Trade and Development’, explains that the digital economy is expanding fast in the global South, especially in developing economies like China and India, with digitalization fueling the rise of 3D printing, artificial intelligence (AI), the Internet of things, cloud computing and big data and automation. In Myanmar, the report notes, farmers use a 3D printer to create parts for a sprinkler system and the internal mechanics for a solar pump. In Tanzania, recycled plastic bottles are used as the raw material for 3D-print prosthetics.
The report highlights growing disparities in internet and digital access, observing that only 16% of individuals in LDCs use the internet and only 4% of the world’s 3D printers are used in Africa and Latin America.
However, the UNCTAD report cautions, productivity gains from digitalization generally accrue to a few, already wealthy and skilled individuals. The publication explains that “winner-takes-all” dynamics are typical in Internet platform-based economies, as network effects benefit first movers and standard setters. Within this context, the report identifies a series of development challenges:
- only 16% of individuals in least developed countries (LDCs) use the Internet, which is far from the target of universal access to the internet for these countries set in the Sustainable Development Goals (SDGs);
- the urban–rural divide is enormous, with 3G networks covering 89% of urban areas but only 29% of rural areas, and an even wider gap in low-income countries;
- the Internet gender divide is most pronounced in developing countries;
- in LDCs, e-commerce use is below 2% of population, compared with more than 50% in many developed countries;
- only 4% of the world’s 3D printers are used in Africa and Latin America; and
- in Africa, less than 40% of countries adopted data privacy legislation, while in Oceania, only the Cook Islands has such legislation.
The report observes that all countries will need to adjust their education and training systems to deliver the skills required in the digital economy. The report further emphasizes that, as trade goes digital, data flows will play an increasing role for companies. Consequently, the report recommends a closer dialogue between the trade and internet policy communities, especially to address risks related to data privacy and security. The report also recommends that the international community expand its support to developing countries to: ensure that these countries have the capacity to participate effectively; and prevent the evolving digital economy from widening existing digital divides and income inequalities.
On the occasion of the launch, while recognizing the transformational power of digitalization, UNCTAD Secretary-General Mukhisa Kituyi stressed that “the Internet is not a panacea.” He recommended setting in place national and international policies that ensure that the gains are spread evenly across as well as within countries. [UNCTAD Press Release] [Publication: Information Economy Report 2017: Digitalization, Trade and Development]