ICTworks

Much has—quite rightly—been said and written about governments connecting better with their citizens. During the COVID-19 pandemic, all governments around the world were pushed to provide education to students online, and to diagnose and even treat patients virtually.

In some countries, often the poorest, this push came before they were really ready: sometimes interventions were very low tech and efforts were sporadic. Nonetheless, they were there. These governments clearly recognize both the need and potential for providing services digitally.

But Driving Digital Transformation – Lessons from Seven Developing Countries argues that, while e-government is vitally important, for the countries that most urgently need to find ways to pursue and continue a convergence with the economic position of better-off economies, digital transformation may mean something much bigger.

This version of digital transformation is about restructuring the economy—using digital technologies to reduce the cost of: production; exchanging goods, services, and information; and organization and networking. In other words, these technologies may be an engine of growth by allowing economies to create more value from available resources.

Digital Transformation of Economies

There are already examples of this playing out across the whole economy. In the Philippines, by 2018, exports from IT (information technology) business process outsourcing (BPO) services—that is, outsourced back-office tasks such as data entry, accountancy, IT support, or telemarketing:

• Had grown threefold in the previous ten years;
• Had captured 10–15 per cent of the global BPO market;
• Were generating one-third of the country’s total export earnings;
• Employed 1.3 million people.
• The sector also proved resilient during the COVID-19 pandemic.

This growth needs to be inclusive. The Philippines’ BPO sector has been a positive driver of inclusion and female empowerment; and in rural India, the opportunities its BPO sector offers women has resulted in higher labour market participation, a higher age of marriage, better education outcomes, and greater reproductive choice.

Digital Transformation Governance Risks

There is, of course, significant risk. Whatever the attractions of technology-led change and ‘innovate first, regulate later’, large knowledge gaps remain on optimal technology governance arrangements to mitigate the downside risks of data sharing, competition in digital markets, cybersecurity, and others.

These governance risks, alongside capacity constraints, incentives, and politics, must not be ignored. If digital technologies will not destroy jobs, they will certainly disrupt them (the argument here is not simple: many of the jobs suitable for automation do not exist to start with in these countries, even if other jobs—plausibly far more plentiful in number and of higher value—will be gained). Consideration of digital transformation is not fantasy policy- making, and neither can it be presented as a ‘silver bullet’. Trade-offs will be legion.

We argue that the biggest risk for the emerging and developing countries is inertia—or to not embrace such technologies; to be left behind; or for new business models for service delivery and production to emerge in places unprepared for change, leaving economic opportunities untapped or profits unfairly distributed.

Digital Economy Kit

Getting the right building blocks for digital transformation in place is essential, and the Digital Economy Kit is a way of helping governments do so: to be ready for change. The Digital Economy Kit entails a diagnosis of the status quo, followed by a multi-stakeholder process within government and across the economy, resulting in a strategy primer that prioritizes action points.

We already have a sense of these foundational blocks: the hard and soft infrastructure—electricity and internet connectivity as well as systems for digital identity and trusted data sharing; the finance; the human capital of people skilled to productively use the technology; and the requisite policies and regulations.

Yet, beyond these foundations, whatever anyone may claim, no one really knows the grand design that will build out an economy and wider society towards digital transformation—as is the case with broader sustainable inclusive economic growth. There are no failsafe architectural plans.

There may be a temptation to oversell the possible speed of change or the certainty of which action to take, but it should be resisted. This only serves to hinder sensible policy action. At the same time, it cannot be taken for granted that the building blocks will fall into the correct place: the policymaker will need to take the wheel of the construction vehicle.

Meanwhile, outsiders can, at best, foster and support this process; they can contribute to the preparation of the ground. This is worthwhile. But bringing it to fruition can only be done by committed governments.

A lightly edited introduction to Driving Digital Transformation – Lessons from Seven Developing Countries by Benno Ndulu, Elizabeth Stuart, Stefan Dercon, and Peter Knaack