Digital technologies are key to economic diversification

SDG indicators
Goal 9: Industry, innovation and infrastructure

SDG target 9.c: Significantly increase access to information and communications technology and strive to provide universal and affordable access to the Internet in LDCs by 2020
SDG indicator 9.c.1: Proportion of population covered by a mobile network, by technology (Tier I)


Goal 17: Partnerships for the goals

SDG target 17.6: Enhance North-South, South-South and triangular regional and international cooperation on and access to science, technology and innovation and enhance knowledge-sharing on mutually agreed terms, including through improved coordination among existing mechanisms, in particular at the United Nations level, and through a global technology facilitation mechanism
SDG indicator 17.6.1: Fixed Internet broadband subscriptions per 100 inhabitants, by speed (Tier I)


SDG target 17.8: Fully operationalize the technology bank and science, technology and innovation capacity-building mechanism for LDCs by 2017 and enhance the use of enabling technology, in particular information and communications technology
SDG indicator 17.8.1: Proportion of individuals using the Internet (Tier I)

Digitalization has changed the way that people produce, consume, trade and live -—
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. Narrowing the technological gap and closing the digital divide between and within developed and developing countries provides an opportunity for improving incomes and resilience, as well as reducing the vulnerabilities, of the poorest, and in particular of women and youth.

The COVID-19 pandemic has further accentuated the importance of the digital dimension of the economy, changing the landscape of international trade and how countries can be affected by it. This and other crises have highlighted the role of digital technologies in building resilient systems that are open, inclusive and secure and benefit everyone. Supporting countries’ digital transformation, while taking account of the challenges and opportunities of swift technological change, must be a priority to successfully address existing digital inequalities.

It all starts with getting people and businesses online

To be able to engage in and benefit from the digital economy and digital trade, individuals and businesses must first be online. This means being covered by Internet infrastructure that is sufficiently fast and reliable, and furthermore by electricity infrastructure to power digital devices. By 2022, 88 per cent of world population was covered by 4G mobile networks, double the share in 2015 -—
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. However, there is considerable variation in 4G deployment between regions; while 4G is available to all in Eastern Asia and in Europe, only half of people in Africa live in areas covered by 4G networks (Figure 1). Furthermore, mobile networks continue to evolve, with 4G being superseded by 5G technology. Preliminary data -—
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show that 19 per cent of the global population was covered by a 5G network in 2021. The widest roll-out was in Europe with 52 per cent of the population being covered, followed by the Americas (38 per cent) and the Asia-Pacific (16 per cent).

Figure 1. Twelve per cent of people worldwide live outside 4G mobile network coverage
(Distribution of population by mobile network coverage, by technology, 2021, SDG 9.c.1)

Eastern Asia
4G or faster:99.9 %
3G/3.5G:0.0 %
Slower than 3G:0.0 %
No coverage:0.1 %
Northern America
and Europe
4G or faster:98.0 %
3G/3.5G:1.0 %
Slower than 3G:0.8 %
No coverage:0.2 %
South-eastern Asia
4G or faster:93.3 %
3G/3.5G:2.4 %
Slower than 3G:2.6 %
No coverage:1.7 %
Southern Asia
4G or faster:92.8 %
3G/3.5G:1.4 %
Slower than 3G:3.5 %
No coverage:2.3 %
Latin America
and the Caribbean
4G or faster:86.6 %
3G/3.5G:5.1 %
Slower than 3G:2.1 %
No coverage:6.3 %
Oceania
4G or faster:85.5 %
3G/3.5G:4.3 %
Slower than 3G:6.8 %
No coverage:3.4 %
Northern Africa
4G or faster:82.1 %
3G/3.5G:12.8 %
Slower than 3G:2.3 %
No coverage:2.8 %
Central Asia
4G or faster:78.0 %
3G/3.5G:14.7 %
Slower than 3G:5.1 %
No coverage:2.2 %
Western Asia
4G or faster:73.7 %
3G/3.5G:22.3 %
Slower than 3G:1.7 %
No coverage:2.2 %
Sub-Saharan Africa
4G or faster:47.0 %
3G/3.5G:30.5 %
Slower than 3G:14.0 %
No coverage:8.5 %
4G or faster
3G/3.5G
Slower than 3G
No coverage

Source: UNCTAD calculations based on -—
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Note: The values for 2G and 3G networks show the incremental percentage of the population that is not covered by a more advanced network technology.

Coverage alone is not enough

While 95 per cent of the world population are covered by mobile broadband (3G or above) networks, many other factors create a gap between those who could access the Internet and those who do use it. In 2022, two thirds of the world’s population used the Internet, leaving 2.7 billion people offline. Furthermore, while almost all people in developed countries are online, only one third of those in the least developed countries (LDCs) use the Internet -—
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One key reason is that the costs involved in getting online can be prohibitive for many. In 2022, the annual cost of a mobile broadband subscription was equivalent to 5.7 per cent of per capita gross national income (GNI) in LDCs while a fixed broadband subscription equated to almost one fifth of GNI per capita -—
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. Given disparities in income distribution within countries, for many people connectivity will be even less affordable. Furthermore, the digital devices needed to access the Internet, such as smartphones, also need to be available and affordable.

Additionally, the skills required to use the Internet, to make orders online and to consume digital services, as well as awareness of the opportunities of the digital economy and digital trade, must be sufficiently widespread amongst the population and especially among those working at firms that stand to benefit from digital transformation.

Speed matters

The speed of an Internet connection is a crucial determinant of the online activities that can be undertaken. The slowest connections may only support basic online communications, such as email and instant messaging, while faster connections can facilitate online activities such as accessing government and financial services, social media, and making online purchases. The digital delivery of services from suppliers domestically or abroad often relies on greater bandwidth to support high-quality video calls or streaming.

In many countries, fixed line technologies play a crucial role (alongside mobile) in delivering Internet connectivity. While fixed broadband is, in general, widespread in Northern America, Europe, Oceania and Eastern Asia, other regions have much lower subscription rates. Furthermore, the contracted speed of fixed broadband subscriptions varies considerably between regions (Figure 2).

Figure 2. Slow Internet connection speeds limit engagement in the digital economy
(Fixed broadband subscriptions per 100 inhabitants, by contracted speed, 2021, SDG 17.6.1)

Source: UNCTAD calculations based on -—
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Digital technologies offer a vital opportunity for economic diversification

Digital technologies, including the Internet, underpin e-commerce - in which buyers place and sellers receive orders online. Additionally, they enable instantaneous remote delivery of services directly into businesses and homes. Both digitally ordered and digitally delivered transactions increasingly take place across borders. The possibility to engage in such digital trade offers new opportunities for the diversification of developing economies. Digitally deliverable services – those that can be delivered remotely over computer networks such as the Internet - now account for almost two thirds of all services exports worldwide and grew especially during the disruptions caused by the COVID-19 pandemic -—
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Figure 3. Trade in digital services has sharply increased in importance, especially in 2020
(Exports of digitally deliverable services as a percentage of total services exports)

Source: UNCTADstat -—
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dataset on international trade in digitally-deliverable services.

Notes: Digitally deliverable services are those that “can be delivered remotely through computer networks”. The measure presented is an aggregation of insurance and pension services, financial services, charges for the use of intellectual property, telecommunications, computer and information services, other business services and audio-visual and related services.

Seizing the opportunities of digital trade requires not only investments in ICT connectivity but also actions to boost digital skills and awareness of the opportunities and risks associated with digital trade, measures to facilitate digitally ordered goods transiting the border, and regulatory actions to encourage digital payments, ensure privacy and data protection, and establish channels for recourse in case of loss or detriment related to digital trade -—
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★ UNCTAD in Action ★

UNCTAD promotes ICT as a tool for development

The rapid changes taking place as a result of widespread Internet access, increasing e-commerce, and other digital advances require new approaches to adapt to and maximize opportunities from these changes. UNCTAD is implementing several initiatives in response. “eTrade for all” -—
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has established a global partnership of 35 organizations working together to support an enabling environment for sustainable development through e-commerce. At the heart of this initiative is an online knowledge-sharing platform through which countries can navigate the technical and financial assistance offered by partnering institutions in key policy areas such as ICT infrastructure and services, payments, trade logistics, regulatory frameworks, skills development and finance.

UNCTAD has also undertaken 32 eTrade Readiness Assessments in LDCs and other developing countries, covering 55 countries in their status of implementation of UNCTAD eT Readies, E-Commerce Strategies, or Action Plans; 41 have successfully launched at least one of the three (Map 1). These identify areas for action across various policy areas to increase countries’ capacity to participate in and benefit from e-commerce. They help give countries the information and awareness to effectively formulate their needs for development assistance related to e-commerce and to seek support for action from donors. UNCTAD also works with developing countries on e-commerce strategies and policies.

Map 1. 41 countries have launched UNCTAD eT Ready, E-Commerce Strategy or Action Plan

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Another key area of action is on improving the measurement of the digital economy and digital trade. UNCTAD is a founding member of the Partnership on Measuring ICT for Development -—
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and the UNCTAD Working Group on Measuring Ecommerce and the Digital Economy -—
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provides an international forum for countries to discuss measurement challenges. In 2020, UNCTAD published the revised Manual for the Production of Statistics on the Digital Economy -—
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, which provides guidance and specifications for key indicators to help countries with measuring the digital economy. In 2022, an online learning course was launched based on the manual. In response to member interest, UNCTAD is also focussing on measuring the value of e-commerce -—
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through a Task Group bringing together interested countries and international organisations to develop measurement guidelines. UNCTAD also collaborates with the OECD, WTO and IMF on the Handbook on Measuring Digital Trade (upcoming).

References

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