WORLD DEVELOPMENT REPORT 2016 4 Figure O.3 Why digital dividends are not spreading rapidly—and what can be done Making the internet Divide Accessible Affordable Open and safe Connectivity Digital Spreading benefits Digital technologies development strategy INCLUSION EFFICIENCY INNOVATION Dividends Reducing risks Complements CONTROL INEQUALITY CONCENTRATION Source: WDR 2016 team. To maximize the digital dividends requires better foundation, consisting of regulations that create a understanding of how technology interacts with other vibrant business climate and let firms leverage dig- factors that are important for development—what the ital technologies to compete and innovate; skills that Report calls “analog complements.” Digital technol- allow workers, entrepreneurs, and public servants to ogies can make routine, transaction-intensive tasks seize opportunities in the digital world; and account- dramatically cheaper, faster, and more convenient. But able institutions that use the internet to empower most tasks also have an aspect that cannot be auto- citizens. The long-term development impact is by mated and that requires human judgment, intuition, no means definitive, being continuously shaped by and discretion. When technology is applied to auto- the evolution of technology (connectivity) and the mate tasks without matching improvements in the country’s choice of economic, social, and governance complements, it can fail to bring broad-based gains. arrangements (complements).4 Countries that are The digital revolution can give rise to new business able to swiftly adjust to this evolving digital economy models that would benefit consumers, but not when will reap the greatest digital dividends, while the rest incumbents control market entry. Technology can are likely to fall behind (figure O.3 and box O.1). make workers more productive, but not when they The triple complements—a favorable business cli- lack the know-how to use it. Digital technologies can mate, strong human capital, and good governance— help monitor teacher attendance and improve learn- will sound familiar—and they should because they ing outcomes, but not when the education system are the foundation of economic development. But 3 lacks accountability. digital technologies add two important dimensions. What should countries do? Making the internet First, they raise the opportunity cost of not undertak- universally accessible and affordable should be a ing the necessary reforms. They amplify the impact global priority. The internet, in a broad sense, has of good (and bad) policies, so any failure to reform grown quickly, but it is by no means universal. For means falling farther behind those who do reform. every person connected to high-speed broadband, With digital technologies, the stakes have risen for five are not. Worldwide, some 4 billion people do not developing countries, which have more to gain than have any internet access, nearly 2 billion do not use a high-income countries, but also more to lose. Second, mobile phone, and almost half a billion live outside while digital technologies are no shortcut to develop- areas with a mobile signal. The unfinished task of con- ment, they can be an enabler and perhaps an accel- necting everyone to the internet—one of the targets in erator by raising the quality of the complements. the recently approved Sustainable Development Goals Online business registries ease market entry for new (SDGs)—can be achieved through a judicious mix of and innovative firms. Well-designed internet-based market competition, public-private partnerships, and training helps workers upgrade their skills. New effective regulation of the internet and telecom sector. media platforms can increase citizen participa- Access to the internet is critical, but not sufficient. tion. And digital enablers—digital finance, digital The digital economy also requires a strong analog identification, social media, and open data—spread