In the last 10 years, the global Internet population has grown from one billion to 3.2 billion. More people now have mobile phones than electricity, clean water, or sanitation. And millions are now better connected economically-speaking, with people trading on Alibaba or banking on M-Pesa in East Africa. In India, almost the entire country is now registered on Aadhar, a digital ID system that opens up government services, reduces corruption, and saves $1 billion annually.
Yet, the impact of digital technologies isn't all positive, according to a major new World Bank report. The Internet also seems to increase inequality, widening rewards for people with skills and access, while upping the penalties for not having them. Automation is "hollowing out" routine jobs that used to provide for lots of families. And the Internet doesn't necessarily spur competition. There's just one Google and one Facebook because people can't see the point of using the second-best search engines and the second-best social network, because the leading ones are free and everyone is using them.
"While digital technologies have been spreading, digital dividends have not," the report says. "The better educated, well connected, and more capable have received most of the benefits—circumscribing the gains from the digital revolution."
The report is full of "yes-but" statements. Take the impact of the Internet on democracy. We're now able communicate more easily, share stories, and expose wrongdoing more easily. As soon as a presidential candidate tells a lie, it's all over Facebook, for example. But then there are also fewer free elections these days, and the Internet allows governments to spy on citizens as much as it allows citizens to speak truth to power. "While there are many success stories, the aggregate impacts of digital technologies have so far been smaller than expected," the report says.
The World Bank says we need to expand access to broadband and mobile phones. But it also says we need "analog complements" to go along with technological advancements. That includes regulations that create more competitive markets online. It includes skills that allow that allow more entrepreneurs and public servants to seize opportunities. And it includes accountable institutions that empower citizens rather than hobble them.
"Digital development strategies need to be broader than ICT strategies," the report says. "To bring the largest benefits, countries also need to create the right environment for technology. When analog complements to digital investments are absent, the development impact will often be disappointing. But when countries build strong analog foundations, they will reap ample digital dividends—in faster growth, more jobs, and better services."