Digital Technologies Offer Opportunities for Economic Growth

Konstantin Noskov, Head of the Analytical Center for the Government of Russia, said that, not only science fiction writers of the 1970s, but even our contemporaries could not have imagined just 10-20 years ago how information technologies would change our lives. Today, making a video call to another city from a smart phone or searching for a job on the internet have become routine tasks, even for those who live in small towns.

Information technologies permeate our lives, and have tremendous potential when strengthening development. Andras Horvai, Country Director and Resident Representative of the World Bank in Russia, said that much of the world is reaping digital dividends today: companies benefit through economic growth, people benefit through new jobs, and governments are enabled to deliver better services.

And yet, ensuring that the benefits reach everyone will need deliberate effort: the full benefits will only be reaped by further inclusion.

“Digital Dividends” is the first report in the 37-year history of the World Development Report (WDR) to address the role of information and communications technologies in socioeconomic development. The report says that the world is in the midst of the greatest information and communications revolution in human history.

More than 40% of the world’s population has access to the internet, with new users coming online every day. Among the poorest 20% of households, nearly 7 out of 10 have a mobile phone. The poorest households are more likely to have access to mobile phones than to toilets or clean water. However, countries use opportunities offered by information technologies in different ways.

In Russia, new technologies are aimed at economic diversification. Yandex, Kaspersky, online taxi booking services – these are just a few examples of the development of the domestic information technologies cited by Andras Horvai. Besides, Russia has one of the highest levels of mobile phone penetration.

“It is important that the work is pursued at the government level: information technologies are adopted in public service delivery, the open data system is evolving, and e-government is created,” said Horvai, underlining such evident success as time reduction of property rights registration to 10 days using information technologies moved Russia up to the 8^th place in the relevant section of the Doing Business rating.

The latest WDR examines how digital technologies influence the lives of people, especially the poor. As explained by Deepak Mishra, World Bank Lead Economist and co-director of the report, the poor can contribute to development, and create opportunities for inclusion, efficiency and innovation.

However, the digital divide in the world is still substantial, and those who are better educated or have stronger skills benefit more from the development of information technologies. For digital technologies to benefit everyone everywhere, greater digital adoption will not be enough. Work is also needed on the “analog complements”: countries should strengthen regulations, adapt workers’ skills to the demands of the new economy, and ensure that institutions are accountable.

The report concludes that the full benefits of the information and communications transformation will not be realized unless countries continue to improve their business climate and invest in people’s education and health. In countries where these fundamentals are weak, digital technologies have not boosted productivity or reduced inequality.

Countries that complement technology investments with broader economic reforms reap digital dividends in the form of faster growth, more jobs, and better services.