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A new digital divide threatens growth

Information and communications technology (ICT) – a term used for anything from high-speed broadband cables to the latest app – has revolutionized the way the economy works.

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Information and communications technology (ICT) – a term used for anything from high-speed broadband cables to the latest app – has revolutionized the way the economy works.

Business models have been redefined, supply chains have gone global, the workplace has been redesigned, small start-ups have grown into multibillion dollar behemoths, and profound changes have rippled through healthcare and education.

As well as helping to make companies and services more efficient, ICT has huge potential to increase innovation, boost economic growth and create much needed high-quality jobs.

 

Information and communications technology (ICT)

Information and communications technology (ICT) – a term used for anything from high-speed broadband cables to the latest app – has revolutionized the way the economy works.

With the developed world striving to improve competitiveness and the developing world focused on maintaining growth rates, no country can afford to ignore these opportunities. However, as the World Economic Forum’s Global Information Technology Report 2013 shows, a new kind of digital divide is hampering this progress.

While some countries have continued to consolidate their leadership in the digital landscape, others still trail significantly behind

with little or no sign of significant progress. The Nordic countries, the Asian Tigers and several advanced economies in North America and Western Europe, such as the Netherlands and the United Kingdom, continue to lead in providing high connectivity rates, resulting in high innovation rates that help boost their competitiveness. In these countries, some 90% of households have a computer and an Internet connection.

In sharp contrast, several developing countries – notably in Africa, but also in Latin America and South-East Asia – continue to show low values of connectivity with low level of Internet usage and limited development of e-commerce. Their struggle to upgrade digital connectivity means they are losing out on all the social and economic rewards that go along with better ICT infrastructure.

In the case of the Russian Federation, the country has benefited from a growing number of Internet users and the number of mobile broadband subscriptions has multiplied exponentially in the last years. However, e-business development still remains low and weaknesses in the political and regulatory framework and a poor business and innovation environment affects its capacity to further leverage ICT to boost its innovation performance and the associated potential economic returns.

For the Russian Federation, as for other countries, in order to fulfil the full potential of ICT, improvements in infrastructure, technologies and skills all need to work together in a coordinated way. Innovations often come about when a skilful labour force gets to experiment with the latest technologies and new materials. It is precisely in this area where one of the biggest difficulties lies for several developing economies – creating the right environment for innovation is costly and takes significant time to yield any minimum results.

As the Global Information Technology Report shows, the relationship between developing a highly skilled workforce and quality ICT infrastructure on one hand, and achieving positive economic and social impacts on the other, is far from perfect or linear. The results suggest that there may exist a minimum investment threshold in ICT and skill development that any country may need to undertake to obtain any meaningful results. But once this threshold is achieved, the return on such investment in ICT skills and infrastructure becomes disproportionately higher as the economy transitions to higher value-added activities.

Countries should be encouraged to adopt the right policies and investment decisions to develop their ICTs, while bearing in mind that they may take time to bear fruit. A coherent framework of policies is needed to nurture the kind of innovations that could help us move beyond the economic slump.

Author: Beñat Bilbao-Osorio is Associate Director and Senior Economist of the Global Competitiveness and Benchmarking Network at the World Economic Forum.

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A new digital divide threatens growth

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Myanmar

Digital Revolution and Repression in Myanmar and Thailand

Activists have also proactively published social media content in multiple languages using the hashtags #WhatsHappeningInMyanmar and #WhatsHappeningInThailand to boost coverage of events on the ground.

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By Karen Lee

Following the February 1 coup, Myanmar’s netizens became the latest to join the #MilkTeaAlliance, an online collective of pro-democracy youth across Asia.

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Ecommerce

How will oil prices shape the Covid-19 recovery in emerging markets?

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How will oil prices shape the Covid-19 recovery in emerging markets?

– After falling significantly in 2020, oil prices have returned to pre-pandemic levels
– The rise has been driven by OPEC+ production cuts and an improving economic climate
– Higher prices are likely to support a rebound in oil-producing emerging markets
– Further virus outbreaks or increased production would pose challenges to price stability

A combination of continued production cuts and an increase in economic activity has prompted oil prices to return to pre-pandemic levels – a factor that will be crucial to the recovery of major oil-producing countries in the Middle East and Africa.

Brent crude prices rose above $60 a barrel in early February, the first time they had exceeded pre-Covid-19 values. They have since continued to rise, going above $66 a barrel on February 24.

The ongoing increase in oil prices, which have soared by 75% since November and around 26% since the beginning of the year, marks a dramatic change from last year.

Following the closure of many national borders and the implementation of travel-related restrictions to stop the spread of the virus, demand for oil slumped globally.

In the wake of the Saudi-Russia price war in early 2020, Brent crude prices fell from around $60 a barrel in February that year to two-decade lows of $20 a barrel in late April, as supply increased and demand plummeted. The value of WTI crude – the main benchmark for oil in the US – fell to record lows of around $40 a barrel last year on the back of a lack of storage space.

While global demand for oil remains low, one factor credited with reversing the trend is the decision to make significant cuts to oil production, which subsequently tightened global supplies.

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