Digital technologies are key to economic diversification
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 resilienceThe ability of a system, community or society exposed to hazards to resist, absorb, accommodate, adapt to, transform and recover from the effects of a hazard in a timely and efficient manner, including through the preservation and restoration of its essential basic structures and functions through risk management -—
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—-., as well as reducing the vulnerabilities, of the poorest, and in particular of women and youth.
The COVID-19COVID-19 is an infectious disease caused by the strain of coronavirus SARS-CoV-2 discovered in December 2019. Coronaviruses are a large family of viruses which may cause illness in animals or humans. In humans, several coronaviruses are known to cause respiratory infections ranging from the common cold to more severe diseases such as Middle East Respiratory Syndrome (MERS) and Severe Acute Respiratory Syndrome (SARS). The most recently discovered coronavirus causes coronavirus disease COVID-19 -—
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—-. pandemicCommonly described by the WHO as ‘the worldwide spread of a new disease’, no strict definition is provided. In 2009, they set out the basic requirements for a pandemic: • New virus emerges in humans
• Minimal or no population immunity
• Causes serious illness; high morbidity/mortality
• Spreads easily from person to person
• Global outbreak of disease.
The US Centre for Disease Control uses a similar approach, but with a reduced set of criteria. It is very difficult to gauge whether the spread of a disease should be termed an outbreak, epidemic or pandemic. In other words, when to declare a pandemic isn’t a black and white decision -—
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—-. 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.
Table of contents
It all starts with getting people and businesses online
To be able to engage in and benefit from the digital economy and digital tradeDigital Trade is “all international trade that is digitally ordered and/or digitally delivered., 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 2023, 90 per cent of world population was covered by 4GFourth generation of cellular network technology 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 54 per cent of people in sub-Saharan Africa live in areas covered by 4G+ networks (figure 1). Furthermore, mobile networks continue to evolve, with 4G being superseded by 5GFifth generation of cellular network technology technology - which covered 38 per cent of the global population as of 2023 -—
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—-. The widest roll-out was in Europe with 68 per cent of the population being covered, followed by the Americas (59 per cent) and the Asia-Pacific (42 per cent).
Figure 1. Ten per cent of people worldwide live outside 4G mobile network coverage
and Europe
and the Caribbean
Source: UNCTAD calculations based on -—
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Coverage alone is not enough
While 95 per cent of the world population are covered by mobile broadbandA general term meaning a telecommunications signal or device of greater bandwidth, in some sense, than another standard or usual signal or device. In data communications, this refers to a data transmission rate of at least 256 kbit/s. In the context of Internet, this can be delivered via fixed (wired) or mobile networks -—
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—-. (3GThird generation of cellular network technology or above) networks, many other factors create a gap between those whoWorld Health Organization could access the Internet and those who do use it. In 2023, two thirds of the world’s population used the Internet, leaving 2.6 billion people offline. Furthermore, while almost all people in developed countries are online, only one third of those in the least developed countries (LDCsLeast developed country) use the Internet -—
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Fixed broadband 16.8% of GNIGross national income per capita,
Mobile broadband 5.1% of GNI per capita.
One key reason is that the costs involved in getting online can be prohibitive for many. In 2023, the annual cost of a mobile broadband subscription was equivalent to 5.1 per cent of per capita GNI in LDCs while a fixed broadbandFixed broadband subscriptions refer to subscriptions to high-speed access to the public Internet (a TCP/IP connection), at downstream speeds equal to, or greater than, 256 kbit/s. subscription equated to one sixth of GNI per capita -—
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—- – both exhibiting a slight decrease compared to previous year. 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 deliveryDigital delivery refers to transactions that are delivered remotely over computer networks. 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 economySource: UNCTAD calculations based on -—
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Digital technologies offer a vital opportunity for economic diversification
Digital technologies, including the Internet, underpin e-commerceE-commerce is defined as the sale or purchase of goods or services, conducted over computer networks by methods specifically designed for the purpose of receiving or placing of orders. The goods or services are ordered by those methods, but the payment and the ultimate delivery of the goods or services do not have to be conducted online -—
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—-. - 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 over half of all services exports worldwide and grew especially during the disruptions caused by the COVID-19 pandemic -—
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—-, although exhibiting a slightly downward trend in recent years (figure 3).
Figure 3. Trade in digital services has sharply increased in importance, but with a noted recent slowdownSource: 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 ICTInformation and communications technology (ICT) is a diverse set of technological tools and resources used to transmit, store, create, share or exchange information. These resources include computers, the Internet, live broadcasting technologies, recorded broadcasting technologies and telephony -—
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—-. 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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The rapid changes taking place as a result of widespread Internet access, increasing e-commerceE-commerce is defined as the sale or purchase of goods or services, conducted over computer networks by methods specifically designed for the purpose of receiving or placing of orders. The goods or services are ordered by those methods, but the payment and the ultimate delivery of the goods or services do not have to be conducted online -—
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—-., 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 finalized 36 eTrade Readiness Assessments in LDCs and other developing countries and regions, and developed 11 E-Commerce Strategies or Action Plans to serve as roadmaps of how e-commerce can support countries’ strategic development goals (map 1). UNCTAD provides support for their implementation by fostering synergies among development partners, facilitating access to e-commerce capacity-building development solutions and monitoring implementation progress, which so far has been reported by 25 partner countries. 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. 44 countries have launched UNCTAD eT Ready, E-Commerce Strategy or Action PlanSource: -—
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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 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 focusing on measuring the value of e-commerce -—
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—- through a Task Group bringing together interested countries and international organizations to develop measurement guidelines. UNCTAD also collaborates with the OECDOrganization for Economic Cooperation and Development, WTOWorld Trade Organization and IMFInternational Monetary Fund on the Handbook on Measuring Digital Trade -—
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References
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