The growing digital divide threatens recovery from Covid-19 – Global problems

Credit: EBRD
  • Opinion by Richard Porter (London)
  • Press service
  • EBRD Transition report 2021-22 highlights growing gaps in the use of online services and digital skills since the launch of the Covid-19 pandemic
  • The return on investment in digital services is much higher in economies with greater digital competence
  • A “brain drain” of digitally skilled workers is affecting some countries’ future prospects

The banks Transition report 2021-22 – System upgrade: Deliver the digital dividend reveals the growing gap between economies that have increased their use of online and digital services and those that have fallen further behind.

The report focuses on the 38 economies in which the EBRD invests. The bank found that since the beginning of the pandemic, people who are richer, live in cities and more advanced economies have a better opportunity to order goods and services online, do their banking online and work from home.

Elsewhere, large sections of the population remain excluded from these opportunities and are at greater risk of losing their jobs as digital technology becomes more widespread. In addition, many economies in the EBRD’s regions experience significant “skills flight”, as people with strong digital skills move abroad.

While highlighting the digital divide, the report also shows how much progress has been made in the provision and use of digital and online services since the start of the Covid-19 crisis.

EBRD chief economist Beata Javorcik said: “In many countries, large parts of the economy, as well as schools and universities, went online in a few days when the Covid-19 pandemic struck. The digitization process is intended to continue and will remain one of the key forces shaping our world. “Large digital gaps between the EBRD’s regions and the advanced economies, between the different economies in the EBRD’s regions and within individual economies. Addressing these divisions is crucial to their success.”

Helping countries and customers with their transition to digital technology is one of three strategic priorities for the EBRD, along with tackling climate change and supporting economic integration.

Did the EBRD announce its new strategic approach to accelerate the digital transition and indicate how it will use all the instruments at its disposal? policy, investment and advisory activities? to unleash the transformative power of digital technology in the economies in which it invests.

A new index for digital transformation

The Transition report 2021-22 introducerar a new index for digital transformation as a way of assessing the gap between and within countries. In the economies where the EBRD operates, only Estonia has higher scores than the average for more developed economies. The index calculates a rating based on 22 different measures of availability and use of digital technology.

Estonias index score of 92.2 is the highest in the EBRD regions. Turkmenistan‘s is lowest, at 16.1, while Tajikistans is next, 23.7. The quality of regulation and online access to government services is one of the main reasons for these low scores.

Among other EBRD-owned economies, Egypt, Tunisia and Morocco post low scores for digital skills while Lithuania and Slovenia get in higher, next to Estonia.

The most important limitation for digital development is insufficient competence. There is evidence that more educated people in the EBRD regions have improved their digital skills and caught up with the most developed countries. However, older people and those with lower levels of education and income are increasingly falling behind.

This is having an increasing impact as digital technology is used more widely in all industries. Professions that are more exposed to automation through the use of artificial intelligence have seen more job losses. Employees with fewer digital skills have a harder time adapting to new roles that become available.

The report also looks at the effect on economies and financial services of investing in digital technology.

On investment, it finds that the return on digital intensive capital is significantly higher in economies with stronger digital skills. A case study looking at high-speed broadband in Turkey shows that companies with better connectivity are more likely to export and introduce new products.

IN Russia, smaller companies have increased the number of employees by about 19 percent on average, following the expansion of 4G mobile technology.

Access to Financial services for households and small businesses has improved through the growth of digital financing. But at the same time, banks have reduced the number of physical branches.

And although some alternative financing platforms have emerged, they have mainly focused on debt rather than equity financing – unlike some more developed markets.

Beata Javorcik said: “The future is digital, and our task is to deliver the digital dividend as quickly and smoothly as possible. I am convinced that with the right kind of digital transition, the economies of the EBRD regions will enjoy increased prosperity, better social results and greater environmental sustainability. “

Lack of trust and low levels of digital skills limit teleworking

Richard porter is Director of Communications at the European Bank for Reconstruction and Development (EBRD)

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© Inter Press Service (2021) – All rights reservedOriginal source: Inter Press Service