World Bank's WDR – internet for development

The 2016 World Development Report will explore the impact Internet and digital technologies have on development, especially in developing countries

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World Development Report: what is it?

The World Bank’s World Development Report, published since 1978, provides annually in-depth analysis and policy recommendations on a specific aspect of development. It's a highly influential publication that is used by many multilateral and bilateral international organizations, national governments, scholars, civil society networks and groups, and other global thought leaders to support their decision-making processes. 

The 2016 World Development Report will explore the impact of internet and digital technologies on development, especially for the poor in developing countries. The report is written by a group of World bank experts assembled for the task, and will be published at the end of 2015.

The report will explore the internet’s impact in terms of economic growth, social and economic opportunity and efficiency of public service delivery. It will also analyze the factors that have allowed some businesses, people, and governments to benefit greatly from the internet. In order to help countries better leverage the internet for development, the WDR will identify the policy reforms in the information and communication technology sectors, in complementary sectors, and in the development community.

The World Bank published a Concept Note that anticipates the main contents of the report.

Why this topic?

In this section the Concept Note lists the main reasons that led the WB experts to focus on this specific topic.

1. We reside in a physical world, but live an increasingly digital life.
2. The rapid diffusion of digital technologies to developing countries is unprecedented. More households in developing countries own a mobile phone than have access to electricity or improved sanitation facilities,
3. The rapid penetration of digital technologies is changing the lives of the poor. Citizens in Bangladesh, India, Peru, and Uganda use one-stop portals to register birth certificates, drivers’ licenses, and land records without having to travel long distances, visit multiple government offices, or pay bribes,
4. Despite the previous examples, broader understanding of the impact of the internet on economic development remains incomplete. In fact, incomplete understanding of the impact of the internet on economic development has hindered the design of effective policies to help countries take full advantage of these technologies.
5. While many of the internet’s transformations are beneficial, rapid changes are always disruptive, creating many winners but also losers. Digital technologies disrupt established businesses, increase efficiency, expand markets, create new products, and lower prices, but their use can be impeded by entry barriers and regulatory obstacles that risk widening the income divergence between rich and poor countries.

How does the internet affects development?

The Concept Note lists the three main mechanisms by which the internet operates on development:

• Inclusion: overcoming information barriers creates opportunities and expands markets,
• Efficiency: streamlining existing transactions lowers costs and increases convenience,
• Scale: Automating routine transactions yields economies of scale and enables network effects

The 2016 WDR, says the Concept Note, will analyze the impact of the internet through the lenses of businesses, people and governments, corresponding to the major policy objectives of leveraging the internet to accelerate growth, expand opportunities and improve service delivery. More specifically, it will describe how inclusion, efficiency and scale, through various channels, affect these major development objectives.

• for businesses, the internet raises the productivity of existing processes and makes new production processes possible, promoting growth. It facilitates new and more intensive trade, boosts the quality of capital and increases competition as internet-using firms become more efficient;
• for people, the internet opens access to jobs and inputs such as financial products, especially in developing countries and importantly for disadvantaged groups. It affects the returns to human capital, with significant effects on labor markets. Furthermore, internet firms create new and cheaper services that promote consumer welfare.
• for governments, the internet affects the core aspects of governance. It can help increase government capacity to deliver services more conveniently, at lower cost, and to all citizens. It can also support efforts to increase government accountability.

What are the risks?

While the internet’s potential contribution to development is really positive, it poses several risks for firms, people, and governments. Among the others, the main three are:

• the large concentration and market dominance of international firms in many internet intensive sectors as well as the vested interests of existing firms could hinder market entry for new firms and restrain the growth of domestic internet firms. 
• evidence of a falling labor income share could at least in part be a consequence of the internet’s role in automating many routine service tasks. By changing the returns to different levels of human capital, the internet could contribute to inequality.
• the persistent digital divide and the limited ability of poor citizens to organize to hold policy-makers and providers accountable could exacerbate elite capture. It is possible that elites are better able to exploit digital technologies to further their interests thereby widening dispersion in access to services.