Can the Internet accelerate development?

How do mobile telephones, the Internet and IT as a whole change the conditions for development? "Digital Dividends" – this is the title given by the World Bank to its latest World Development Report analysing the impacts of the rapid spread of digital technologies at global level. What are the effects on growth and employment? Has digitalisation improved the living conditions for people in developing countries? Is there more transparency, political participation and democratic governance worldwide?

Deepak Mishra, Co-Director for the World Development Report, painted a mixed picture during his presentation at KfW in early April. Digital technologies have spread rapidly around the entire world – yet the much-hoped-for benefits for development have not been as forthcoming. Accelerated growth, more jobs and better public services are not automatic consequences of digitalisation. Prevailing inequalities regarding income, education and political participation have sometimes got worse, not better. Companies are networked more strongly than ever before, but productivity growth has slowed down. The employment effects are unbalanced too. Both highly-specialised experts and low-skilled workers are in greater demand, but the same does not apply to the qualification levels in between. The situation varies when it comes to the topic of good governance as well: while the Internet does indeed promote global freedom of speech, the number of fair and free elections has dropped.

Digitalisation offers a great deal of potential, but harnessing all of the advantages from the technologies is proving more difficult than originally thought. "The Internet is not a shortcut to reaching development objectives, but it can help speed things up," said Deepak Mishra. To ensure that everyone around the world can benefit from digital technologies, we first need to bridge the current digital gap: some 60 % of the world’s population still has no access to the Internet. Changing this, however, is not enough. What we also need to do is bring about adequate "analogue complements", i.e. better education, to be able to make purposeful use of the digital opportunities.

The critical analysis of the Report’s conclusions by Thorsten Scherf, an ICT specialist at KfW Development Bank, gave rise to a discussion about technical and instrumental issues that both the World Bank and KfW are confronted with during implementation work: What challenges does promoting highly dynamic digital technologies pose for funding tools and how should they be tackled? How can Financial Cooperation make the most effective contribution to bridging the digital gap and creating suitable analogue complements? And how can promoting information technology, used mostly by privileged groups of the population for now, be reconciled with the objective of reducing poverty and inequality in the world?