ICT offers great potential for development, but also risks

ICT has led to important economic changes over recent decades. It has also become an important economic sector in itself, comprised of many goods and services produced and traded all over the world. But, more significantly, ICT has also transformed the methods of production across all industries. ICT has become an increasingly important tool for development, providing access to information for science, technology and innovation, fostering and enhancing regional and international cooperation and knowledge-sharing. While this has led to substantial improvements in productivity, it has also created new barriers to entry. Only those individuals with the requisite skills and those firms with access to the right tools can reap benefits from this technological revolution. Moreover, this sector is characterised by constant and rapid changes. The ICT sector has the potential to bring large benefits in terms of productivity and economic development, but it can also risk exacerbating the conditions that lead to inequality and exclusion.

Access to ICT surged globally

While SDG 9 encourages innovation and infrastructural improvements, including through ICT, it also recognises the risk that many people and businesses could be left behind. To address this, SDG target 9.c calls for increased access to ICT, striving to achieve universality and affordability. To this end, SDG indicator 9.c.1 proposes to measure the proportion of the population covered by a mobile network, broken down by technology.

Figure 1 illustrates how mobile networks now cover most of the population all over the world. Except for Sub-Saharan Africa, the share of the population lacking mobile telephony coverage does not exceed five per cent in any region. For many people in developing countries, mobile phones are often the only way of accessing the Internet and they have allowed the poorest to become connected. Increasingly, they are being directly used for economic purposes, supporting entrepreneurship, empowerment and financial inclusion. For example, the number of registered mobile money accounts worldwide reached 690 million in 2017, an increase of 25 per cent from 2016 (GSMA, 2017).

Faster and more reliable Internet and mobile services are important for allowing access to more sophisticated content that can add more value for the business sector. While 4G or newer wireless systems are prevalent in most regions, older systems are still widespread in Africa and Western Asia.

This indicator, however, only reflects a minimum requirement for ICT access, since population coverage does not necessarily mean that those covered are actually able to use the services. A more complete picture can be obtained by the number of subscribers to ICT services relative to the population, and this is shown in the graph below.

Mobile cellular networks have expanded rapidly in recent years and this has helped to overcome the infrastructure barriers to fixed telephony (United Nations, 2015). Figure 2 shows that, in contrast to the global decline in the number of fixed telephone subscriptions, mobile telephony is booming, especially in developing countries, where the number of subscriptions per 100 inhabitants increased from 23 in 2005 to 103 in 2018.

High-speed internet access plays an important enabling role in the digital economy. The rapid development of broadband networks is widely considered essential if developing countries are to leverage the benefits available through ICT and avoid the widening of the digital gaps (UNCTAD, 2015). Therefore, the number of individuals and businesses using broadband technology is a good indicator of the extent to which the private sector is leveraging the Internet. As shown in figure 2, while the number of fixed broadband subscriptions relative to the population has increased globally, developing countries are lagging behind in the adoption of this technology.

Furthermore, these global averages hide large variations across regions. Figure 3 presents the number of fixed broadband subscriptions relative to the population disaggregated by speed, as specified in SDG indicator 17.6.1. While broadband, in general, is widespread in Oceania, Northern America, Europe and Eastern Asia, other regions have much lower subscription rates. For example, Southern Asian countries had, on average, only 2.1 subscriptions per 100 inhabitants in 2017, and Sub-Saharan African countries only 0.5.

There is also some variability in terms of speed, influencing the quality and functionality. While in some regions most of the broadband connections provide high-speed access, in others the problem of limited fixed broadband subscriptions is compounded by lower broadband speeds, which constrain the potential benefits of ICT use. This is the case, for instance, in Northern Africa or Central Asia.

It is useful to examine the cost of broadband in different country groups, as a possible determinant of the extent of its uptake. Although the monthly subscription charge for fixed broadband has fallen considerably all over the world, it remains high in many developing countries, including LDCs. Indeed, the average annual cost of a fixed broadband subscription in 2017 in developed countries is equivalent to only 1.3 per cent of per capita GNI, while it reaches 50.5 per cent of GNI per capita in LDCs.¹ Fixed broadband, therefore, remains unaffordable for most people in LDCs.

It is important to set these developments in the context of broadband delivered via mobile-cellular networks, which represents a rapidly increasing share of total broadband subscriptions. According to 2018 estimates, fixed broadband represents 23 per cent of total broadband subscriptions in developed economies, and only 15 per cent in developing countries.²

More people are using Internet, but access is unequal

UNCTAD has drawn attention to the importance of the digital divide in broadband capacity and quality, noting that it creates new divisions in terms of the extent to which individuals, businesses, economies and societies are able to take advantage of new ICT innovations and applications (UNCTAD, 2013). Ideally, there should be universal coverage of high-speed broadband, with regular upgrading of infrastructure, and reduced regulatory barriers to service providers. In addition, the international regulatory environment for ICT infrastructure and related services should be open, competitive and transparent (UNCTAD, 2016).

As a way to monitor the use of ICT, SDG indicator 17.8.1 measures the proportion of individuals that actually use Internet, rather than just have access to it. ITU estimates that 81 per cent of the population in developed economies were using internet in 2018, compared to 45 per cent in developing economies and 20 per cent in LDCs. Although Internet use in LDCs is growing rapidly, multiplying by four since 2011, the percentage is still low compared to other developing regions. In addition, important disparities still exist between different population groups. In developing countries, the percentage of women using Internet is five per cent lower than that of men. A gap almost three times larger is observed between individuals living in urban and rural areas.³

ICT is now an essential element of business

Disparities also exist between countries in the proportion in which businesses use the Internet. Official data on ICT use in business is limited, particularly in LDCs. But available figures show that most firms in developed economies use Internet, while this proportion varies considerably for developing countries. Within countries, there is a persistent gap in Internet use between small and large enterprises, and between enterprises in rural and urban locations.⁴

Internet use by employees has been positively correlated with productivity (World Bank, 2016). It is also a condition for e-commerce, which could contribute to poverty reduction, innovation and financial inclusion. It also facilitates the participation in global value chains and, in this way, promotes exports (ITU, 2015).

E-commerce was estimated to be worth US$25 trillion in 2015 (UNCTAD, 2017a) and it has continued to increase since then. An indication of the rapid expansion of e-commerce is the number of online shoppers in the world, which rose from less than 600 million in 2010 to about 1.2 billion in 2016 (Fredriksson, 2017). However, in most LDCs, the share of Internet shoppers in the population is two per cent or less, whilst in most developed countries it is around 55 to 88 per cent (UNCTAD, 2017b).

In order to help countries gain insight into their preparedness for e-commerce, UNCTAD has developed the B2C e-commerce index. This index evaluates the prerequisites for the development of e-commerce, such as payment methods, cyber security, postal reliability, and Internet use amongst the population.⁵

Map 1 displays the 2018 values of the B2C e-commerce index. Most developed economies, but also some developing countries such as the United Arab Emirates and Malaysia, have developed all the fundamentals of e-commerce and, therefore, receive a high score in this indicator. Most LDCs are toward the bottom of the ranking: the average index value for the LDCs with available information is 24.3. Clearly, LDCs are still not fully prepared for the adoption of e-commerce and similar development opportunities stemming from ICT.

Map 1. UNCTAD B2C e-commerce index, 2018

Economies

Sources: UNCTAD (2018).

UNCTAD takes an active role in promoting ICT as a tool for development

The rapid changes taking place as a result of e-commerce and other ICT developments necessitate new approaches to accelerate readiness to adapt to and maximize opportunities from these changes. UNCTAD is implementing several initiatives to respond to this need. An example is the “eTrade for all” program (UNCTAD, 2019b), a global partnership comprising around 30 organizations that work together to support an enabling environment for sustainable development through e-commerce. At the heart of this initiative is an online knowledge-sharing platform that allows countries to navigate the supply of technical and financial assistance from partnering institutions in key policy areas, such as ICT infrastructure and services, payments, trade logistics, regulatory frameworks, skills development and finance.

UNCTAD is also undertaking rapid e-trade readiness assessments for LDCs, providing an analysis of the current e-commerce situation and identifying opportunities and barriers.⁶ UNCTAD also works with a number of developing countries to develop e-commerce strategies and policies, such as the one recently completed for Egypt (UNCTAD, 2017c).

In addition to the B2C e-commerce index, UNCTAD is undertaking several initiatives to improve the measurement of ICT-related contributions to the economy and trade. UNCTAD has responded to the need to boost work in this area by establishing the Intergovernmental Group of Experts on E-commerce and the Digital Economy,⁷ as well as the forthcoming Working Group on Measuring E-commerce and the Digital Economy. The organization is also an active member of the Partnership on Measuring ICT for Development.⁸

Notes

1. UNCTAD calculations based on data from ITU (2018a).
2. UNCTAD calculations based on data from ITU (2018b).
3. UNCTAD estimates based on data from ITU (2018a) .
4. For additional details, see figures on the information economy available in UNCTAD (2019a).
5. This index ranges from zero to 100, with higher values indicating higher readiness for B2C e-commerce. For more details on the methodology of the UNCTAD B2C e-commerce index, see UNCTAD (2017b). The most recent figures, corresponding to 2018, are available in UNCTAD (2018).
6. For a list of recent assessments, see UNCTAD (2019c).
7. For more information on this group, see UNCTAD (2019d).
8. This is an initiative launched in 2004 to improve the availability and quality of ICT-related statistics. It is currently composed of 14 regional and international organisations. Its steering committee is made up of the ITU, UNCTAD and the UNESCO Institute for Statistics. For more information, see ITU (2019).

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