#wdr2016 www.worldbank.org/wdr2016 1
2 Digital revolution has brought many private benefits A typical day in the life of the internet SOURCE: WDR 2016 team; h0p://www.internetlivestats.com/one-second/ (As compiled on May 29, 2015)
3 But are countries reaping sizable digital dividends? DIGITAL DIVIDENDS Growth Jobs Services Business People Government AGENTS Are the benefits reaching everyone, everywhere?
4 Digital technologies are transforming BUSINESS, PEOPLE s LIVES & GOVERNMENT DIGITAL MARKETPLACE DIGITAL PAYMENTS DIGITAL IDENTITY Number of small & medium enterprises on Taobao (Alibaba): 5 MILLION & COUNTING Number of mobile money accounts worldwide: 300 MILLION & COUNTING (end of 2014) SOURCE: http://www.kariyawasam.com/ezcash-mobile-money-introduces-to-sri-lanka-by-dialog/. SOURCE: h0p://www.sundaytimes.lk/160626/uploads/enicgraphic.jpg
5 The main mechanisms to promote development Expand the information base, lower information costs and create information goods SOURCE: WDR 2016
6 Then why the deep pessimism surrounding the global economy? -10 Business People Governments Not because of digital technologies, but in spite of them SOURCE: Total Economy Database, Conference Board; and WDR 2016 team; Christoph Lakner and Branko Milanovic 2013; Bishop and Hoeffler 2014.
7 1. A significant digital divide remains 6 BILLION without BROADBAND 4 BILLION without INTERNET 2 BILLION without MOBILE PHONES 0.4 BILLION without A DIGITAL SIGNAL Divides persist between and within countries in access and capability SOURCE: WDR 2016 team based on Research ICT Africa and ITU data
8 Sri Lanka s digital economy has shown steady growth in recent years Yet, many households remain without access to ICTs Networked Readiness Index Ranking Year 63 (out of 139) 2016 65 (out of 143) 2015 Global Compe99veness Index Ranking Year 68 (out of 140) 2015-2016 73 (out of 144) 2014-2015 35.00 30.00 25.00 20.00 15.00 10.00 Percentage of populacon using the Internet in Sri Lanka 29.99% Sri Lanka ICT Exports Year 1 Billion USD 2015 719 Million USD 2013 5.00 0.00 1995 2000 2005 2010 2015 2020 SOURCE: World Economic Forum, http://www.lankabusinessonline.com/sri-lankas-ict-export-sector-revenue-to-hit-us-1-bn-in-2015-minister/
9 2. Digital technologies hold benefits as well as risks with complements INNOVATION EFFICIENCY INCLUSION DIGITAL TECHNOLOGIES without complements CONCENTRATION INEQUALITY CONTROL What are those complements?
10 Connectivity + Complements à Digital Dividends Digital development strategies need to be broader than ICT strategies Regulations that allow firms to connect and compete Skills that leverage technology Institutions that are accountable and capable Digital technologies add two important dimensions They amplify the impact of good (and bad) policies à Failure to reform means falling further behind While not a short-cut to development, they can be an accelerator, by raising the quality of complements The payoff Increasing digital dividends: Faster growth, more jobs and beder services www.worldbank.org/wdr2016
Sri Lanka: Digital adoption is relatively high in government and lower among business and people 11 Business People Government 1.0 1.0 1.0 0.8 0.8 0.8 0.6 0.6 0.6 0.4 0.4 0.4 0.2 0.2 0.2 0.0 100 1,000 10,000 100,000 Y axis: Digital AdopCon Index (DAI) X axis : GDP per capita in 2015 0.0 100 1,000 10,000 100,000 0.0 100 1,000 10,000 100,000 SOURCE: WDR 2016 team based on Research ICT Africa and ITU data
12 Scale without COMPETITION à lower digital adoption and growing divergence SOURCE: Eurostat, circa 2014,.WDR 2016 Team
13 Race between technology and complements Complements Complements: Index of quality of institutions, skills and regulations.! Technology: Digital adoption index - businesses, people and governments. SOURCE: WDR 2016 team. For more details see figure 5.3 in the full Report. Technology
14 The WDR 2016 proposes policies at three levels SECTORAL NATIONAL GLOBAL
15 SECTORAL POLICIES Making internet access universal, affordable, open and safe SUPPLY SIDE ISSUES Competition policy Public-private partnerships Effective telecom & internet regulation 16,000,000 14,000,000 Mobile cellular subscriptions in Sri Lanka Unique Mobile Phone SubscripCons in Sri Lanka 12,000,000 DEMAND SIDE ISSUES Protecting personal privacy Cybersecurity Censorship and content filtering 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Source: GSMA Intelligence
16 NATIONAL PRIORITIES Analog foundations for a digital economy EMERGING TRANSITIONING TRANSFORMING REGULATIONS Remove barriers to adoption Competition regulation and enforcement Platform competition SKILLS Foundational skills and basic ICT literacy Prepare for careers instead of jobs Facilitate lifelong learning INSTITUTIONS Mobile phone based services and monitoring e-government delivery and citizen engagement Participatory policy making and digital collaboration SOURCE: WDR 2016 team.
17 GLOBAL COOPERATION International consensus on cross-border issues A governance model for an open and safe internet Removing barriers to a global digital market Leveraging information for sustainable development Get wired Build platforms Go global
Automation without SKILLS à polarized labor markets and greater inequality 18 Annual average change in employment share, circa 1995 circa 2012 SOURCE: WDR 2016 team, based on ILO KILM (ILO, various years); I2D2 (World Bank, various years); National Bureau of Statistics of China (various years)
19 What is driving polarization and decreasing labor shares of labor? Technology complements some Workers (skillbiased) But technology can subsctute others (laborsaving) Depending on how easy it is to automate tasks (rou9ne vs non-rou9ne)
20 A Policy Framework for jobs and skills in the digital age Stage in the Digital transforma9on Incipient Transi9oning Transforming Low skills base Low technological base DisrupCons will take a long Cme Medium skills base Medium technological base DisrupCons in short and medium term Good skills base High technological base DisrupCons already apparent Rapidly-aging FoundaConal cognicve and socio-emoconal skills Digital literacy High-order cognicve and socio-emoconal skills Advanced ICT and STEM educacon Life-long learning AdapCng labor market, taxacon and social proteccon insctucons
Agriculture and ICTs 21 Digital Technologies have been shown to enhance on-farm produc9vity, facilita9ng market transparency and enabling efficient logis9cs and improving quality control. However governments needs to make the following adap9ons to reap sustainable and inclusive benefits of the digital revolu9on in agriculture: High tech tools and technologies can benefit big farms. ASen9on must be paid to close the digital divide in rural areas, by empowering the poorest segment with digital technologies, such as basic mobile phones. Rather than assuming that an informa9on and communica9on technology (ICT) approach will always be cost-effec9ve and yield a beser outcome, a more nuanced understanding of the underlying ins9tu9onal environment and constraints is warranted. Technology-enabled interven9ons are no panacea in themselves, and need to be backed by complementary investments in physical infrastructure, including electricity and literacy. Finally, informa9on technology (IT) policy and the broader regulatory environment in a country should be discussed jointly. For instance, interdisciplinary commisees comprised of regulatory experts, scien9sts, agriculture specialists, economists and technology experts from academia, civil society and private sector can be formed to tackle the most pressing Agricultural development challenges faced by Sri Lanka.
www.worldbank.org/wdr2016 22
Back-up Slides 23
Digital technology can accelerate growth 24 TRADE PRODUCTIVITY COMPETITION The internet enables more firms to reach new markets, 2001-12 Vietnamese firms using e- commerce have higher total factor productivity growth, 2007-12 Average monthly trips per traditional taxi in San Francisco after Uber started operation SOURCE: Chapter 1, WDR 2016 (http://www.worldbank.org/en/publication/wdr2016)
.but not when complements are missing 25 Barriers to Trade/Regulations associated with lower ICT use ACCESS v/s. SKILLS & REORGANIZATION Frequency of non-tariff barriers in manufacturing SOURCE: Chapter 1, WDR 2016 (http://www.worldbank.org/en/publication/wdr2016)
Digital technology can expand opportunities 26 JOB CREATION Number of o-desk contractors PRODUCTIVITY & CONSUMER SURPLUS Africa: Respondents that agree with each statement on benefits and use of mobile phones, 2011 12 SOURCE: Chapter 2, WDR 2016 (http://www.worldbank.org/en/publication/wdr2016)
27 Employment becomes more intensive in ICTs as economies grow SOURCE: p. 125, WDR 2016 (http://www.worldbank.org/en/publication/wdr2016)
Automation without SKILLS à risks of polarized labor markets and greater inequality 28 SOURCE: p. 107, WDR 2016 (http://www.worldbank.org/en/publication/wdr2016)
Employment in ICT sector and ICT occupations remains small 29 SOURCE: p. 107, WDR 2016 (http://www.worldbank.org/en/publication/wdr2016)
Lack of ICT skills is a constraint to employment 30
Digital technology can improve service delivery 31 CAPACITY Complaints were resolved quickly in the Nairobi water utility after the introduction of digital customer feedback TRANSPARENCY e-government systems increase the transparency of government budgets, 2014 SOURCE: Chapter 3, WDR 2016 (http://www.worldbank.org/en/publication/wdr2016)
32 Information without ACCOUNTABILITY à risks of greater state control and elite capture SOURCE: WDR team, based on Polity IV 2015; UN 2014; Open Net Initiative 2013.
33 but information without ACCOUNTABILITY à risks of fiscal waste and elite capture Success rate of large public sector ICT projects Profile of online and offline voters in a participatory budgeting vote in Rio Grande do Sul, Brazil, 2011 12 SOURCE: WDR team, based on Polity IV 2015; UN 2014; Open Net Initiative 2013.
SECTORAL POLICIES A Framework for considering policy interventions 34
35 SECTORAL POLICIES How public-private partnership helped build the internet backbone in Korea Broadband per 100 inhabitants, 2002 Q4 through 2014 Q2 Mobile cellular subscriptions in the Horn of Africa
36 Globally, work is becoming more intensive in nonroutine skills and less so in routine ones Employment Composi9on (simple cross country average by type of occupa9on) (2000-2012) OECD countries Developing countries 60 60 Share in total employment (%) 50 40 30 20 10 0 Share in total employment (%) 50 40 30 20 10 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Non-rouCne cognicve or inter-personal RouCne cognicve or manual Non-rouCne manual Non-rouCne cognicve or inter-personal RouCne cognicve or manual Non-rouCne manual Source: WDR 2016 team, based on ILO KILM data. Skills classification follows Autor (2014).
37 The worker of the 21 st century Will increasingly be a non-wage worker; Will have more flexibility in the time of work but also the location of work; Will change jobs more often. Changing nature of the rela9onship between employers and employees
Emerging risks: Informality Many of the jobs in the new economy are informal 38 In most cases, workers are considered independent contractors rather than employees. These jobs lack benefits of formal jobs: pensions, unemployment insurance, health insurance. This industry is in its infancy, though Already changes in the United States (Uber and health insurance; Airbnb and hotel taxes)
39 Policy Implications Technology changes the skills required to succeed in a modern economy. Technology also accelerates the pace of change, making skills obsolete more quickly and opening up new opportunities. Technology further changes the world of work, introducing new forms of work and allowing for more flexible work arrangements but also eroding traditional employer-employee relationships.