Lima, Peru - November 14, 2024
As prepared for delivery
Honorable Ministers, Ambassadors, distinguished guests, and colleagues,
It is an honor to address you on the critical role that innovation and digitalization play in fostering a smooth transition to the formal and global economy. This topic lies at the core of our mission at the World Bank, especially in light of our commitment to promoting inclusive societies and providing new opportunities for the world’s vulnerable and marginalized populations.
The path to formalizing economies paves the way for greater inclusion and brings significant benefits, from enhancing access to social protection and fair wages to financial security. But to ensure these benefits reach everyone, we must decisively integrate digital tools and champion gender equality. We simply can’t afford to overlook the fact that women and other marginalized groups often face heightened barriers to entering the formal economy. And it’s imperative that we address these challenges head-on. The encouraging news for everyone around this table is that we know what works.
In recent years, digital innovation has been transformative across the world, opening doors to new markets, financial tools, and employment opportunities. For example, digital cash transfer programs in the Philippines and Indonesia have allowed for rapid and secure distribution of financial aid, directly reaching low-income families and informal workers, many of whom are women. These programs do not just provide immediate support; they also create financial records and introduce participants to formal financial systems, paving the way for greater economic inclusion. It’s time to harness some of our past successes to amplify our collective impact and create more equitable economies and societies.
One of the most effective ways to foster inclusion is to empower women. At the World Bank Group, we know that to end poverty on a livable planet, we must accelerate gender equality. Our work on gender equality is based on a core belief: when women and girls thrive, whole communities and economies thrive. Studies show that if women were employed at the same rate as men, global income per capita could increase by nearly 20 percent over the long term. Removing gender barriers does more than drive economic growth—it promotes social cohesion and builds resilience against crises.
In the coming years, we are committed to helping 300 million more women gain access to broadband internet, facilitating access to capital for 80 million additional women and women-led businesses, and connecting 250 million women to social protection programs. These are ambitious targets, but they are essential if we are to achieve sustainable, inclusive growth.
The first question before us is how we can ensure that digital innovation genuinely supports inclusion for vulnerable populations, particularly women.
As we transition to the formal economy, digital technologies can be a tremendous equalizer. However, there are still disparities in access; women in low- and middle-income economies are 15 percent less likely than men to use mobile internet. In Indonesia, our Digital ID Project enables better access to government services, bank accounts, and online marketplaces. With a goal of establishing 50 million new bank accounts and 100 million digital IDs, this initiative is set to open opportunities for millions, including women and rural residents, helping them engage meaningfully in the formal economy. These digital advancements are about more than technology—they are about enabling individuals to become active economic participants.
But let’s also acknowledge the fact that the advent of new technologies like generative AI may deepen social inequalities, putting women, informal workers, and minorities at a higher risk of exclusion. We know, for example, that despite the potential for generative AI to enhance productivity, millions of jobs that could benefit from it are hindered by inadequate digital access and infrastructure. To address this, governments need to implement policies to enhance productivity and harness the transformative potential of generative AI for more inclusive growth. Since jobs dominated by women are disproportionately exposed to automation, addressing gender gaps and upskilling the workforce in the age of AI will be crucial.
Next, we must consider the costs associated with transitioning to a formal economy. Informal workers and businesses often face increased regulatory compliance, taxes, and administrative requirements when they enter the formal economy. While these may seem like barriers, they can be minimized through streamlined, digital processes. In Vietnam, for example, our Business Registration Reform Project has helped reduce registration costs and simplified processes, making it easier for small businesses to formalize and access new markets.
Formalization is especially important in sectors with large numbers of informal workers, including many women-led businesses and small enterprises. The World Bank is committed to balancing the costs of formalization with its benefits, such as increased access to financing, better worker protections, and fair competition.
Finally, a critical question is how we can address the structural disadvantages faced by women and other vulnerable groups. Women’s economic empowerment remains a significant challenge, and the World Bank has prioritized addressing these barriers in our projects across many APEC member economies. In Mexico, for instance, the Social Protection System Project extended social security and health insurance to informal workers, the majority of whom are women. In Thailand, our support for e-government initiatives has simplified business registration and tax filing, making formalization more accessible for micro and small enterprises, many of which are women-owned.
These examples highlight the importance of targeted interventions that address the unique barriers women and other vulnerable groups face. In the Philippines, the enactment of the Internet Transaction Act, for instance, sets standards for e-commerce platforms, promoting trust in digital transactions and ensuring fair treatment for women entrepreneurs. The Philippines has also mandated a 5 percent budget allocation for gender programs, underscoring the critical need for sustained, institutional commitment to gender equity.
The journey to a formal and global economy is not without its challenges, but through focused efforts on digital inclusion and gender equality, we can create a path that brings benefits to all. We, at the World Bank, are committed to working with APEC economies to build a future where no one is left behind.
Finally, since our discussion today focuses on protecting the most vulnerable, let me conclude by urging everyone in this room to champion a strong replenishment of the International Development Association (IDA), the part of the World Bank that helps the world’s low-income countries. Several member economies in this room have graduated from IDA and have become donors themselves (China, Chile and Korea are examples of this). As a matter of fact, Korea—set to host the APEC Summit next year—will be hosting IDA’s 21st final replenishment meeting in December. I can’t think of a better way to demonstrate the transformative power of IDA in lifting economies and communities.
Thank you very much.
