Investment and the Digital Economy

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[Read more session reports from WSIS Forum 2017]

The session investigated the internalisation patterns of digital multinational enterprises and the effect of digitisation on global companies across all industries.

Mr Richard Bolwijn (Economic Affairs Officer, United Nations Conference on Trade and Development (UNCTAD)) moderated and started off the session by sharing thoughts about the architecture of the digital economy, as developed by UNCTAD. The architecture has telecoms at the base of the framework, with IT (hardware and software), digital solutions like electronic payments, Internet platforms, digital content, and e-commerce in the middle, then digital economy at the top. In terms of production, Bolwijn said that ‘Internet heavier’ firms have a lighter international production footprint. Industries impacted by digitisation are often highly regulated; for example if ranked by foreign direct investment (FDI), transportation ranks higher than education or accounting. Digital development strategies should consider infrastructure, digital industries, and digital adoption across all industries. He concluded by saying that demand for digital services definitely impacts the demand for better infrastructure, citing examples such as e-government, e-registration, and online information portals. Participants were referred to the Global Enterprise Registration website to check the status of online service provision in their countries.

Mr Michael Kende (Independent Consultant, Analysys Mason/Internet Society) mentioned that currently 20% of the world’s population uses the Internet. In most developing countries, investment in basic connectivity has been done and countries are now focusing on developing robust infrastructure. He shared statistics of the population using broadband and connectivity gaps by region. In developed economies, the current adoption is up to 82%, with a 17% adoption gap and a 2% 3G upgrading gap. Developing countries have 40% current adoption, a 30% adoption gap, a 24% 3G upgrading gap and a 6% 2G coverage gap. Specifically, current adoption stands at 21%, 50%, and 52% respectively for Africa, Asia, and Latin America and the Caribbean. Kende advised that investment plans in digital development should look beyond infrastructure to other policy determinants for investment in digital infrastructure, such as policy reforms, privatisation, sector regulations, licencing, and open markets. He concluded by estimating that the IT sector in the USA accounts for 7% of the economy, and there is need to get the rest of the economy online.

Ms Philippa Biggs (International Telecommunication Union (ITU)) disagreed with Kende’s estimate of 7% of the US economy being IT related. She continued that there are so many ‘hidden’ things that make statistics hard to measure, such as digital health, the Internet of Things, data privacy, and other new topics that are not directly under the umbrella of IT. On another note, she mentioned that 2017 is the year in which half of the world’s population will be online, and the number of Facebook accounts has surpassed 2 billion – more than the population of China. Biggs added that Google had not produced any usage statistics for the last 2 years. She posed the questions: Developing countries are being asked to liberalise and open doors to foreign investment. What is the benefit? Is there a trade-off? Counting numbers, out of 20 firms, 11 are American, and 7 Chinese. How do these firms in developing countries benefit from opening their doors? Biggs added that governments think it may not matter if consumers are willing to make trade-offs to sell their data for currency-free services. Policy makers in this case will only have power for issues like data protection laws.

In terms of open data, academics are calling for data to be made available, but should people worry about what the data will be used for? She concluded by explaining that if consumers know what is in it for them, they might be willing to share data. For example, if one was to be asked for their DNA in exchange for finding a cure for cancer, they might be more willing to share.

When asked about challenges, a participant from Cameroon mentioned that cyber security is a relatively new issue and current laws need to be reviewed to cater for cyber issues. Another participant reported that there has been an increase in investment of telecom operators in Norway, while investment has been decreasing in neighbouring Denmark and Sweden, because regulators are not aggressive on price reduction.


by Sarah Kiden

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