ICT offers great potential for development, but also risks

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)

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.

While the COVID-19 pandemic has had a sweeping impact on economic activity, it has also resulted in an exceptional surge for the ICT sector. Workers around the world have shifted to telework and online conferencing, while students follow their classes remotely, supported by a variety of digital technologies. A large share of retail trade that has normally been based on physical shops has moved to e-commerce. Use of digital entertainment (streaming, e-media and web-based news services) and social media has accelerated. In addition to enabling continued business in many areas, ICT has also helped social and cultural activities to continue during the pandemic, thus contributing to maintaining a better quality of life while in isolation.

While this will likely have lasting effects on the adoption of ICT in many areas, even beyond the crisis, there are also growing concerns about equal access to these digital goods and services. Before the COVID-19 outbreak, there were already persistent differences in access between men and women, urban and rural sectors, low- and high-skilled workers, large and small firms, public and private schools, and others. The measures taken by the governments to contain the pandemic have the potential to increase these existing inequalities (UNCTAD, 2020a). In addition, privacy and data protection concerns have multiplied. In order to meet the SDG targets of universal access to ICT, efforts to bridge existing and emerging digital divides should be reinforced in order to allow more countries and all sectors of the population to take advantage of digital technologies.

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 in all regions of the world. Except for Sub-Saharan Africa, the share of the population lacking mobile telephony coverage does not exceed six 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 surpassed one billion in 2019, about 45 per cent of them in Sub-Saharan Africa. Daily transaction by mobile money were worth almost US$2 billion in 2019 (GSMA, 2020).

Faster and more reliable Internet and mobile services are important for access to more sophisticated digital content that can add more value for business. Except for Sub-Saharan Africa, 4G or newer wireless systems are now prevalent in all regions.

Figure 1. Distribution of population by mobile network coverage, by technology, 2018 (SDG 9.c.1)

Source: UNCTAD calculations based on ITU (2019a).
Notes: Geographic regions follow United Nations Statistics Division (2020). Missing values estimated by logistic regression models by mobile technology.

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, for example because of technological or affordability constraints. 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 104 in 2019.

Figure 2. ICT access indicators
(Subscriptions per 100 inhabitants)
Source: ITU (2019b).
Notes: Developing and developed regions follow United Nations Statistics Division (2020). Figures for 2019 are estimates.

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 broadband subscriptions per capita has increased globally, developing countries are lagging behind in the adoption of this technology. Mobile connections are the prevailing way to access broadband technology in both developing and developed economies.

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 Northern America, Europe, Oceania and Eastern Asia, other regions have much lower subscription rates. For example, Southern Asian countries had, on average, only 2.2 subscriptions per 100 inhabitants in 2018, and Sub-Saharan African countries only 0.5.

Figure 3. Fixed broadband subscriptions by speed, 2018 (SDG 17.6.1)
(Subscriptions per 100 inhabitants)
Source: UNCTAD calculations based on ITU (2019a).
Notes: Geographic regions follow United Nations Statistics Division (2020). Some missing values estimated by regression models by speed and region.

There is also some variability in terms of speed, influencing the quality and functionality. While in some regions most 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 (5GB basket or equivalent) in developed countries during 2018 was equivalent to only 1.3 per cent of per capita GNI, while it reached 67.5 per cent of GNI per capita in LDCs. The yearly cost of mobile broadband subscriptions (1.5GB basket or equivalent) reached 0.7 and 13.5 per cent of GNI per capita in developed countries and LDCs, respectively.1 A high-speed internet connection, therefore, remains a luxury good for most people in LDCs.

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). As mentioned above, the COVID-19 crisis could exacerbate this digital divide. 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 use the Internet, rather than just have access to it. ITU estimates that 87 per cent of the population in developed economies were using the Internet in 2019, compared to 47 per cent in developing economies and 19 per cent in LDCs. Although Internet use in LDCs is growing rapidly (from 1.4 per cent of the population in 2005), the percentage is still low compared to other developing regions.2 In addition, important disparities still exist between different population groups. For example, the percentage of women using Internet is lower than that of men. Additionally, a large gap is still 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 of businesses that 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 the 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). Businesses that fail to develop digital tools for reaching out to customers may be at a higher risk, as it became evident during the COVID-19 pandemic.

E-commerce sales (B2C and B2B) were estimated to be worth US$26 trillion in 2018 (UNCTAD, 2020f), about 30 per cent of global GDP. This amount has increased continuously in recent years, and it is seven per cent higher than in 2017.5 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 1.45 billion in 2018. However, the distribution is highly unequal, with China accounting for 42 per cent of the total and LDCs responsible for only a small share of Internet shoppers (UNCTAD, 2020f).

The COVID-19 crisis has resulted in spikes in B2C and B2B online sales, as business and consumer replaced their traditional channels for retail and wholesale trade with e-commerce alternatives. In addition, many traditional businesses rapidly deployed an e-commerce presence to continue their business during the containment measures. For example, during the last week of May 2020, online retail orders in Europe were 40 per cent higher than in the same week of 2019, while in Northern America they were 75 per cent higher; in mid-April 2020, at the strictest level of the containment measures, they were 127 per cent and 135 per cent above those of 2019, respectively, for the two regions (CCInsight, 2020). However, e-commerce has also faced restrictions and delays imposed by limited capacity of traditional distribution networks, as well as by disrupted trade channels, supply chain bottlenecks and regulations affecting logistics services (WTO, 2020).

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.6 Map 1 displays the 2019 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 24.4. This suggests that 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, 2019
Sources: UNCTAD (2019b).

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 require 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, 2020b), 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 undertaking rapid e-trade readiness assessments for LDCs, providing an analysis of the current e-commerce situation and identifying opportunities and barriers.7 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, 2017a).

In addition to the B2C e-commerce index, UNCTAD has 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) created the Working Group on Measuring E-commerce and the Digital Economy.8 UNCTAD is also an active member of the Partnership on Measuring ICT for Development.9

Notes

  1. UNCTAD calculations based on data from ITU (2019a).
  2. UNCTAD estimates based on data from ITU (2019b).
  3. UNCTAD calculations based on data from ITU (2019a). Note, however, that country-level statistics on Internet use by population group are incomplete, so the evidence presented is only indicative.
  4. For additional details, see figures on the information economy available in UNCTAD (2020c).
  5. Note that, due to a change in methodology, these figures are not directly comparable with previous years’ estimates. For more details, see UNCTAD (2020f).
  6. 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 2019, are available in UNCTAD (2019b).
  7. For a list of recent assessments, see UNCTAD (2020d).
  8. For more information on the intergovernmental group of experts and the working group, see UNCTAD (2020e) and UNCTAD (2019a), respectively.
  9. 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 ITU, UNCTAD and UNESCO Institute for Statistics. For more information, see ITU (2020).

References

Click on a star to rate this page!

Average rating 0 / 5. Vote count 0

We are sorry that this post was not useful for you!

Let us improve this post!

Tell us how we can improve this post?

Share this page: