Digitalization helps mitigate pandemic impacts, but digital and data-related divides affect ability to recover

SDG indicators

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)


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)

ICTs have led to wide-ranging economic changes over recent decades, transforming value chains and the production and trade of goods and services. Related to this, ICTs have become an increasingly important tool for development; their adoption has the potential to spur productivity, trade, and economic development, but can also cause disruption that exacerbates inequities and exclusion, as well as other risks.

As the COVID-19 pandemic caused wide-ranging disruption, many turned to digital means to continue with economic activity, social life, education and entertainment -—
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. Digitalization helped societies cope with the health and economic impacts of the pandemic. It is likely that in many areas this boost to digital transformation will continue into the recovery. However, those without the access, skills, or resources to “go digital” will have been further disadvantaged.

Even before the COVID-19 outbreak, there were already persistent differences in access between men and women, urban and rural locations, low- and high-skilled workers, large and small firms, public and private schools, and others. This is also seen at the country level; the pandemic appears to have further increased the already high levels of digitalisation present in many developed countries, while some developing countries, especially the LDCs, saw reduced imports of the ICT goods needed to support digital transformation -—
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. In addition, privacy and data protection concerns have multiplied. To meet the SDG targets of universal access to ICTs, efforts to bridge existing and emerging digital divides should be reinforced to allow more countries and all elements of the population to take advantage of digital technologies.

More people than ever are using the Internet, but access remains unequal

To monitor a key aspect of ICTs for development, SDG indicator 17.8.1 measures the proportion of individuals who use the Internet. ITU estimates show that, although the percentage of people using the Internet in developing countries remains far below the 90 per cent rate of developed countries, Internet use increased markedly during the pandemic. Across developing countries, 57 per cent of people used the Internet in 2021, up from 44 per cent in 2019. Meanwhile, in the LDCs the increase was from 19 to 27 per cent -—
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Just as disparities exist between countries, they also occur between different population groups within countries. For example, the percentage of women using Internet is lower than that of men, especially in LDCs and in Africa. Additionally, a large gap is still observed between individuals living in urban and rural areas. Overall, an estimated 37 per cent of the world's population – or 2.9 billion people – have still never used the Internet -—
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To support access to ICTs, 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 ICTs, striving to achieve universality and affordability. In support of this, SDG indicator 9.c.1 measures the proportion of the population covered by a mobile network, broken down by technology.

For many people in developing countries mobile devices are often the only option for telephony and Internet connectivity. Mobile devices are increasingly used for economic purposes, supporting entrepreneurship, empowerment, and financial inclusion. For example, the number of registered mobile money accounts worldwide surpassed 1.2 billion in 2020, about 45 per cent of them in Sub-Saharan Africa. Mobile money transactions were worth almost US$2 billion daily in 2020 -—
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Figure 1 illustrates how mobile networks now cover most of the population in all regions of the world. Except for in Sub-Saharan Africa, the share of the population lacking coverage does not exceed seven per cent, and 4G or newer wireless systems are now the dominant technology in use globally. Nevertheless, more than one-in-five people in Northern Africa and Central Asia have yet to gain 4G coverage.

Figure 1. Distribution of population by mobile network coverage, by technology, 2021 (SDG 9.c.1)
Eastern Asia
4G or faster:99.8 %
3G/3.5G:0.1 %
Slower than 3G:0.00 %
No coverage:0.1 %
Northern America and Europe
4G or faster:97.3 %
3G/3.5G:0.3 %
Slower than 3G:2.1 %
No coverage:0.3 %
South-eastern Asia
4G or faster:92.8 %
3G/3.5G:3.4 %
Slower than 3G:2.1 %
No coverage:1.7 %
Southern Asia
4G or faster:92 %
3G/3.5G:1.9 %
Slower than 3G:3.7 %
No coverage:2.4 %
Western Asia
4G or faster:89.6 %
3G/3.5G:7.6 %
Slower than 3G:2.2 %
No coverage:0.6 %
Oceania
4G or faster:86.4 %
3G/3.5G:4.1 %
Slower than 3G:6.4 %
No coverage:3.1 %
Latin America and the Caribbean
4G or faster:84.4 %
3G/3.5G:6.6 %
Slower than 3G:2.5 %
No coverage:6.5 %
Northern Africa
4G or faster:80.4 %
3G/3.5G:12 %
Slower than 3G:5 %
No coverage:2.6 %
Central Asia
4G or faster:73.4 %
3G/3.5G:16.4 %
Slower than 3G:7.7 %
No coverage:2.5 %
Sub-Saharan Africa
4G or faster:40.6 %
3G/3.5G:34.5 %
Slower than 3G:14.8 %
No coverage:10.1 %
4G or faster
3G/3.5G
Slower than 3G
No coverage
Source: UNCTAD calculations based on -—
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The availability of mobile or fixed-line networks where people live and work, is a crucial foundation for Internet access. However, uptake is dependent on many other factors including the affordability of both network services and the devices needed to use them, access to electricity (e.g., for charging), literacy and other skills, and more.

In 2019, developing countries exceeded one mobile telephone subscription per person for the first time - a level developed countries reached around a decade before. Having stalled as the pandemic took hold in 2020, growth in developing countries picked up again in 2021, to reach 105 subscriptions per 100 inhabitants -—
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. In 2021, LDCs had the lowest rates of adoption, with only 77 subscriptions per 100 inhabitants, though multiple people may have access to a single subscription, or indeed, one person may have multiple subscriptions. Furthermore, it is Internet access which is crucial for participation in the digital economy, and not all subscriptions offer “broadband” speeds of 256kbps or more. In 2021, there were 131 active mobile broadband subscriptions per 100 inhabitants in developed countries, close to twice the number of developing countries (74) and over three times the number in LDCs (39).

In many countries, fixed line technologies also play a crucial role in delivering Internet connectivity - especially connections with the highest speeds, such as fibre broadband connections. Figure 2 presents the number of fixed broadband subscriptions relative to the population, disaggregated by speed - as specified in SDG indicator 17.6.1. While fixed broadband, in general, is widespread in Northern America, Europe, Oceania and Eastern Asia, other regions have much lower subscription rates. For example, Southern Asian countries had, on average, around 2 subscriptions per 100 inhabitants in 2021, and Sub-Saharan African countries only 1 subscription.

Figure 2. Fixed broadband subscriptions by speed, 2020 (SDG 17.6.1)
(Subscriptions per 100 inhabitants)
Source: UNCTAD calculations based on -—
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As well as the availability of networks, differences in the affordability of broadband are a key reason for varying uptake across countries. Although monthly subscription charges for fixed broadband have in general fallen considerably, they remain relatively high in many developing countries, especially LDCs. The median annual cost of a fixed broadband subscription (5GB basket or equivalent) in developed countries during 2020 was equivalent to only 1.2 per cent of GNI per capita but equates to over one-fifth of GNI per capita in LDCs. The yearly median cost of mobile broadband subscriptions (1.5GB basket or equivalent) equated to 0.6, 4.4 and 6.1 per cent of GNI per capita in developed, developing and least developed countries respectively -—
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. High-speed Internet access therefore remains a luxury for most people in LDCs.

During the COVID-19 pandemic, those living in areas unserved (or underserved) by ICT infrastructure, or lacking the necessary financial or other capabilities, have been least able to use ICTs to mitigate the disruption and carry on economic and social life. As such, the pandemic will have compounded the disadvantages faced by some individuals, businesses, and indeed countries.

ICT is an increasingly essential element of business and trade

Disparities also exist between countries in the proportion of businesses that use ICTs. Official statistics are lacking for many countries, particularly for LDCs, but available figures show that most firms in developed economies use computers and the Internet, while this proportion varies considerably for developing countries. Within countries, there is a persistent gap in ICT uptake between small and large enterprises, and between enterprises in rural and urban locations according to UNCTADstat -—
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Internet use by employees has been positively correlated with productivity -—
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. It is also a condition for e-commerce (digital ordering of goods and services) and digital delivery (of services), including across national borders – “digital trade” -—
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The pandemic has highlighted the importance of digital technologies in supporting international trade. In 2020, global services exports fell by 20 per cent compared with 2019, but exports of digitally deliverable services – those that can be delivered remotely over ICT networks such as the Internet – proved relatively resilient, declining by only 1.8 per cent, despite extensive economic disruption -—
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. As a result, digitally deliverable services reached almost 64 per cent of global services exports, as shown in Figure 3.

These developments have accelerated a pre-existing trend, namely, that digitally deliverable services are becoming an increasingly important element of services trade. From 2005 to 2019, global exports of digitally deliverable services grew at an average nominal rate of 12 per cent per year and at a rate of as much as 21 per cent in Asia. The share of digitally deliverable services in total global services exports had already increased from 45 per cent in 2005 to 52 per cent in 2019.

Figure 3. Exports of digitally deliverable services, by region and country grouping
(Percentage)
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Types of services have been identified as digitally deliverable, also referred to as “potentially ICT-enabled” per -—
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, yet the share of services that are actually delivered digitally is not routinely distinguished. UNCTAD is working with countries to measure this through surveys. Initial results obtained from Costa Rica, India and Thailand suggest that, between 80 and 99 per cent of services that can be delivered through ICT networks are actually delivered in this manner -—
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Digitally ordered trade is a subset of e-commerce. In 2020, on average across countries with statistics available, 24 per cent of firms received orders online and over 40 per cent of firms placed orders online -—
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. Uptake varies with firm size; on average, more than twice the share of large firms sell online compared with small firms -—
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. Among the 27 member countries of the OECD for which data are available, the share of people shopping online increased by 5.2 percentage points in 2020. This was the greatest increase since records began in 2005 -—
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The extent to which rising total e-commerce has translated to increases in cross-border e-commerce is not currently known due to a lack of statistics. A minority of countries produce e-commerce value estimates and even fewer break these down into domestic and international components. Under the auspices of the Working Group on Measuring E-commerce and the Digital Economy, UNCTAD is conducting detailed research on current approaches to measuring e-commerce among Member States (including cross-border ecommerce) as a basis to identify good practices for wider adoption.

The data-related divide and the need for a global data governance framework to oversee cross-border data flows

Alongside digital trade, international data flows are a hallmark of the global digital economy. Data flows are expanding rapidly, with the majority of cross-border flows taking place between North America and Europe and between North America and China -—
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. Slower and less ubiquitous Internet access in developing countries limits the possibilities for their citizens to participate in and benefit from the evolving data-driven digital economy.

Cross-border data flows can be considered in the context of the data value chain from raw data collection to the production of digital intelligence (data products), which implies value addition and therefore the potential for economic growth and development. Currently, there are indications that most developing countries’ data outflows are in the form of raw data, while their data inflows consist more of digital intelligence produced in those countries that enjoy the main data advantages and have better capacities to process raw data. Consequently, a data-related divide is adding to the traditional digital divide.

Two countries stand out in terms of capacity to engage in and benefit from the data-driven digital economy: the United States and China. They account for half of the world’s hyperscale datacentres, about 90 per cent of the market capitalization of the world’s largest digital platforms, 94 per cent of all funding for AI start-ups, and have the highest rates of 5G adoption -—
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Currently, those that can extract or collect the data and have the capacity to further process them – mainly the global digital corporations – are in a privileged position to appropriate most of the value of data. By contrast, those who can be considered as producers or the source of the data in its raw form – such as the users of online platforms, many of whom are in developing countries, who are also contributing to that value – do not necessarily receive development gains. There is a need for a new international system to regulate these flows so that the benefits of cross-border data flows are equitably distributed.

Among the major geopolitical players in the digital economy, approaches for governing data flows – and the digital economy more broadly – vary considerably. In simplified terms: the United States of America focuses on control of the data by the private sector; the Chinese model emphasizes control of data by the Government; while the European Union favours control of data by individuals on the basis of fundamental rights and values. The current context is one of tensions among these areas, particularly between the United States of America and China.

Divergent “data nationalism” will be especially inimical to the interests of developing countries, including LDCs:

  • First, it will result in suboptimal domestic regulations, especially in developing countries with low regulatory capacity, resulting in adverse consequences for privacy and security, and prejudicing the interests of domestic Internet users, as will be discussed in the following section.
  • Second, a fragmented Internet reduces market opportunities for domestic MSMEs to reach worldwide markets, which may instead be confined to some local or regional markets.
  • Third, it reduces opportunities for digital innovation, including various missed opportunities for inclusive development that can be facilitated by engaging in data-sharing through strong international cooperation.
  • Finally, a world of divergent data nationalism has only a few winners and many losers. Certain established digital economies may emerge as winners due to their advantageous market size and technological prowess, but most small, developing economies will lose opportunities for increasing their digital competitiveness.

In the absence of a properly functioning international system of regulations of cross-border data flows that allows maximizing benefits from data while addressing the risks in a way that income gains are equitably distributed, the only option for developing countries is to regulate their data flows at the national level.

A strong case can be made for a global data governance framework that complements other levels of governance. Existing institutional frameworks at the international level are not fit for purpose to address the specific characteristics and needs of global data governance. For global data governance to be effective, a new global institutional framework is needed, with the appropriate mix of multilateral, multi-stakeholder, and multidisciplinary engagement. Global debates on the governance of data and cross-border data flows need to be fully inclusive; they should ideally take place under the auspices of the United Nations, the most inclusive international forum in terms of country representation.

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

The rapid changes taking place as a result of widespread Internet access, increasing e-commerce penetration, 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” has established a global partnership of over 30 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 25 eTrade Readiness Assessments in LDCs as well as four assessments in other developing countries. These identify areas for action across various policy areas to increase countries’ capacity to participate in and benefit from ecommerce. They help give LDCs the information and awareness to effectively formulate their needs for development assistance related to ecommerce and to seek support for action from donors. UNCTAD also works with a number of developing countries to develop e-commerce strategies and policies, such as Egypt, Botswana, Oman and Rwanda.

UNCTAD has also launched 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, which on its third session (2019) recommended the creation of the Working Group on Measuring E-commerce and the Digital Economy. UNCTAD is also an active and founding member of the Partnership on Measuring ICT for Development. 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 based on the manual will be launched.

References

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