Close digital divide to guard against new inequalities

By the end of the next decade, growth, productivity gains, and human development will be determined by levels of integration into the digital economy. To guard against new forms of inequality, the international community must do more to help developing countries close the connectivity gap.

It is easy to assume that access to the digital economy is ubiquitous, and that online shopping is the natural evolution of commerce. For example, in July Amazon sold more than 100 million products to consumers worldwide during its annual Prime Day event, a $4.2 billion bonanza that included sales of table salt in India, Coke Zero in Singapore, and toothbrushes in China.

But figures like these mask the fact that for many people in developing countries, the road to e-commerce is riddled with potholes. Simply put, the growth of e-commerce is not automatic, and the spread of its benefits is not guaranteed.

Some of the obstacles are logistical. On the tiny South Pacific island of Tuvalu, for example, fewer than 10 streets in the capital, Funafuti, are named, and only about 100 homes have a postal address. Even if everyone in Tuvalu had access to the internet (which they don’t; only 13 percent of the country’s population had broadband in 2016, according to the World Bank), delivery of goods purchased online would be difficult.

Elsewhere, billions of people lack bank accounts and credit cards, and in many developing countries, consumer-protection laws do not extend to goods purchased online. These challenges are particularly acute for people in Sub-Saharan Africa, in remote island states, and in several landlocked countries.

By contrast, in developed economies, well-functioning postal systems and strong legal frameworks mean that products can be purchased online and delivered without a second thought.

But e-commerce is only one facet of the evolving digital economy. Innovation, production, and sales are all being transformed by technology platforms, data analytics, 3D printing, and the so-called Internet of Things (IoT). By 2030, the number of IoT-connected devices is expected to reach 125 billion, compared to 27 billion in 2017. Moreover, this rapid pace of digital tethering is occurring even as half the world’s population remains unconnected from the internet.

If left unaddressed, the yawning gap between under-connected and hyper-digitalised countries will widen, exacerbating existing inequalities. Levels of digitalisation may even influence whether countries are able to achieve the Sustainable Development Goals for tackling challenges like hunger, diseases and climate change. That is why I believe more must be done to support poor countries as they strive to integrate into the digital economy. How that economy will develop is difficult to predict.

UNCTAD is creating strategies to help developing countries leverage their assets and improve digital capabilities.

One initiative, “eTrade for all,” is aimed at making it easier for developing countries to source financial and technical assistance. Since the program’s inception two years ago, nearly 30 global partners have been recruited, and an online platform has linked governments with organisations and donors to share resources, expertise, and knowledge.