Countries must improve ICT sectors
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Countries must continue to invest and pursue reforms in information and communication technology (ICT) to serve the nearly 60 percent of the world’s population who remain excluded from the digital economy, a new World Bank report said.
In its “World Development Report 2016: Digital Dividends” report, the Washington-based lender noted that the internet, mobile phones and other digital technologies were spreading rapidly.
“Digital technologies are transforming the worlds of business, work, and government,” said Jim Yong Kim, president of the World Bank Group.
The anticipated digital dividends of higher growth, more jobs, and better public services, however, have fallen short of expectations, the World Bank said.
To deliver fully on the development promise, it said countries must pursue “analog complements” to digital investments.
This means regulations must be strengthened to ensure competition among business, adapting workers’ skills to the demands of the new economy, and fostering accountable institutions.
Digital development strategies need to be much broader than ICT strategies, it added.
To reap the greatest benefits, countries must create the right environment for technology, with regulations that facilitate competition and market entry, skills that enable workers to leverage the digital economy and institutions that are accountable to people.
It noted that in the Philippines, business process outsourcing has few entry barriers and that firms use digital technology intensively, which is not the case for the retail sector.
“The Philippine retail sector has substantial restrictions to domestic and foreign entry and is dominated by a few incumbent firms, while few firms use ICTs,” the World Bank said.
“Digital technologies are transforming the worlds of business, work, and government,”
Foreign retailers that aim to establish a commercial presence need to pass prequalification procedures, meet minimum capital requirements, deal with limitations to foreign equity participation, and have the majority of their boards comprised by Filipinos, it stressed.
“Only about 20 percent of retail firms (with at least five employees) sell online in the Philippines,” it added.
In contrast, the Philippine outsourcing sector is characterized by high entry rates and few regulatory barriers to competition.
“It is intensive in ICT-related services such as software development, animation, contact centers and transcription. These ICT-specific services experienced high productivity growth in recent years and provided about 1.2 million jobs in 2015,” it said.
Investing in basic infrastructure, reducing the cost of doing business, lower trade barriers, facilitating the entry of start-ups, strengthening competition authorities and facilitating competition across digital platforms were some of the measures suggested in the World Development Report.
Digital technologies can transform economies, societies and public institutions, but changes are neither assured nor automatic, the report stressed.
“Countries that are investing in both digital technology and its analog complements will reap significant dividends, while others are likely to fall behind. Technology without a strong foundation risks creating divergent economic fortunes, higher inequality and an intrusive state,” the World Bank said.
Questions & Answers
Q.What specifically does the World Bank mean by 'analog complements' that countries should pursue alongside digital investments?
What specifically does the World Bank mean by 'analog complements' that countries should pursue alongside digital investments?
Analog complements involve strengthening regulations to ensure business competition, adapting workers' skills for the new economy, and fostering accountable institutions. These are crucial for fully delivering on the development promise of digital technologies.
Q.Why have the anticipated benefits of digital technologies not met expectations, according to the World Bank?
Why have the anticipated benefits of digital technologies not met expectations, according to the World Bank?
The expected digital dividends, such as higher growth, more jobs, and better public services, have fallen short. This suggests that simply investing in technology is not enough to automatically achieve these benefits.
Q.What is the key difference between the business process outsourcing sector and the retail sector in the Philippines regarding digital technology adoption?
What is the key difference between the business process outsourcing sector and the retail sector in the Philippines regarding digital technology adoption?
The outsourcing sector has few entry barriers and intensely uses digital technology, experiencing high productivity growth. In contrast, the retail sector has substantial restrictions, is dominated by a few firms, and few use ICTs.
Q.What specific challenges do foreign retailers face when trying to establish a presence in the Philippines?
What specific challenges do foreign retailers face when trying to establish a presence in the Philippines?
Foreign retailers must pass prequalification procedures, meet minimum capital requirements, deal with limitations on foreign equity participation, and ensure a majority of their board members are Filipinos.
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