Bahjat El-Darwiche, Roman Friedrich, Karim Sabbagh, and Milind Singh
April 19, 2012
Policymakers today face a different environment for information and communications technology (ICT) than the one for which they designed policies. ICT technologies are far more pervasive than they were previously: More people today have access to a mobile phone than to electricity, powering exponential growth in global data generation.1 With ICT access approaching ubiquity, policymakers’ next challenge is to ensure that individuals, businesses, and governments are making the best possible use of networks and applications. Countries that have achieved advanced levels of digitization — the mass adoption of connected digital technologies and applications by consumers, enterprises, and governments — have realized significant benefits in their economies, their societies, and the functioning of their public sectors.
Previous attempts to measure the impact of ICT have focused primarily on assessing the economic effects of widespread access to either wireless or broadband technologies. But in developing a comprehensive methodology to measure the impact of digitization, Strategy& found greater benefits linked to growing usage of digital technologies and applications, rather than access alone. We also found that benefits are not just economic, but encompass social and political spheres as well. Digitization offers incremental economic growth: countries at the most advanced stage of digitization derive 20 percent more in economic benefits than those at the initial stage. Digitization has a proven impact on reducing unemployment, improving quality of life, and boosting citizens’ access to public services. Finally, digitization allows governments to operate with greater transparency and efficiency.
Policymakers have an important role to play in ensuring that their countries are progressing toward advanced stages of digitization. They need to acknowledge where they currently stand and recognize the benefits of digitization. Finally, they need to shift focus away from access and set into motion programs and plans that focus on the widespread adoption and usage of technology. That includes elevating digitization on the national agenda, including the systematic planning and tracking of their efforts; evolving sector governance structure; adopting an ecosystem perspective; enabling competition; and stimulating demand.
The world is witnessing an accelerated pace in digitization — the mass adoption of smart and connected ICT by consumers, businesses, and governments.
Measuring digitization and its impact is essential for supporting policymaking and investment decisions.
Proposed econometric methodology quantifies the impact on economic advancement, societal well-being, and government effectiveness.
Digitization multiplies the benefits of connectivity, as it generates three times more economic benefit than broadband alone.
Digitization contributes positively to job creation, with a 10 percent increase in digitization reducing the unemployment rate by 0.84 percent.
Countries in the advanced digitization stage reap 20 percent more economic benefits than countries at the start of their digitization journeys.
Policymakers need to acknowledge where their countries currently stand and set into motion programs and plans that focus on the widespread adoption and usage of digitization. That includes elevating digitization on the national agenda, evolving sector governance, adopting an ecosystem perspective, enabling sustainable competition, and stimulating demand.
It has been clear to policymakers for several years that digitization has the potential for dramatic economic, social, and political improvements. Anecdotal evidence abounds: water utilities have installed sensors that reduce leakage, saving water and money; healthcare organizations send text messages to pregnant women with advice on prenatal care, creating a healthier new generation before children are even born; fleets of trucks use digital GPS devices that direct them to shorter routes, cutting down on their greenhouse gas emissions.
The challenge for all stakeholders in the ICT ecosystem has been to quantify the impact of digitization. Numerous organizations, including the World Economic Forum with its evolution of the Networked Readiness Index, are taking steps in that direction. Our hope is that this analysis, which illustrates the need to define and measure ICT beyond broadband access, can provide an input on such efforts.
However, realizing the opportunity that broadband presents will require that policymakers undergo a shift in their thinking. They must go beyond considering ICT and focus instead on digitization, with an emphasis on ICT usage rather than just access. They must take into account their current level of digitization in order to ensure that they are focusing on the right investments to advance to the next stage. And they need to look with fresh eyes at policies that were developed a decade ago to understand how they can be updated for a new era.
Policymakers are hopeful about this opportunity, and many are committed to action. The steps they take in the coming years will determine whether they can translate opportunity into reality.
See ITU’s World Telecommunication/ICT Indicators, the World dataBank World Development Indicators (WDI).