overview 5 Box O.1 Frequently asked questions: The Report at a glance What is the Report about? of mid-level office jobs, could contribute to a hollowing It explores the impact of the internet, mobile phones, and out of labor markets and to rising inequality. And the poor related technologies on economic development. Part 1 record of many e-government initiatives points to high fail- shows that potential gains from digital technologies are ure of ICT projects and the risk that states and corporations high, but often remain unrealized. Part 2 proposes policies could use digital technologies to control citizens, not to to expand connectivity, accelerate complementary reforms empower them. in sectors beyond information and communication technol- ogy (ICT), and address global coordination problems. What should countries do to mitigate these risks? Connectivity is vital, but not enough to realize the full devel- What are the digital dividends? opment benefits. Digital investments need the support Growth, jobs, and services are the most important returns of “analog complements”: regulations, so that firms can to digital investments. The first three chapters show how leverage the internet to compete and innovate; improved digital technologies help businesses become more pro- skills, so that people can take full advantage of digital ductive; people find jobs and greater opportunities; and opportunities; and accountable institutions, so that gov- governments deliver better public services to all. ernments respond to citizens’ needs and demands. Digital technologies can, in turn, augment and strengthen these How do digital technologies promote development and complements—accelerating the pace of development. generate digital dividends? By reducing information costs, digital technologies greatly What needs to be done to connect the unconnected? lower the cost of economic and social transactions for Market competition, public-private partnerships, and effec- firms, individuals, and the public sector. They promote tive regulation of internet and mobile operators encourage innovation when transaction costs fall to essentially zero. private investment that can make access universal and They boost efficiency as existing activities and services affordable. Public investment will sometimes be necessary become cheaper, quicker, or more convenient. And they and justified by large social returns. A harder task will be increase inclusion as people get access to services that to ensure that the internet remains open and safe as users previously were out of reach. face cybercrime, privacy violations, and online censorship. Why does the Report argue that digital dividends are not What is the main conclusion? spreading rapidly enough? Digital development strategies need to be broader than ICT For two reasons. First, nearly 60 percent of the world’s peo- strategies. Connectivity for all remains an important goal ple are still offline and can’t fully participate in the digital and a tremendous challenge. But countries also need to economy. There also are persistent digital divides across create favorable conditions for technology to be effective. gender, geography, age, and income dimensions within When the analog complements are absent, the develop- each country. Second, some of the perceived benefits of the ment impact will be disappointing. But when countries internet are being neutralized by new risks. Vested business build a strong analog foundation, they will reap ample interests, regulatory uncertainty, and limited contestation digital dividends—in faster growth, more jobs, and better across digital platforms could lead to harmful concentra- services. tion in many sectors. Quickly expanding automation, even benefits throughout the economy and society, fur- technological innovations. For Indonesia to reap the ther strengthening the interaction between technol- benefits of steamships took 160 years after their inven- ogy and its complements. tion and for Kenya to have electricity, 60 years; but for Vietnam to introduce computers, only 15 years. Mobile Digital transformations— phones and the internet took only a few years. More digital divides households in developing countries own a mobile phone than have access to electricity or improved san- The internet and related technologies have reached itation (figure O.4, panel a). Greater internet access has developing countries much faster than previous led to an explosion in the production and consumption