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NATIONAL PRIORITIES
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schools, hospitals, and all government buildings.
Connectivity is important, but it is not enough.
Technology can rarely bypass or substitute for other
shortcomings. When technology is deployed in an
environment of weak complements, the gains will be
limited. But when technology and its complements
work together, the impacts can be profound and
lasting. While the internet is no shortcut, it can be an
accelerator because many digital tools improve the
complements.
Understanding the interaction between
technology and human complements
should guide how much to invest in each
Some sectors, occupations, and services are more
amenable to technology than others (figure 5.2). Gains
from technology will be larger in public services such
as cash transfer programs and utility services—where
outcomes can be easily monitored by citizens—than
in services that require a lot of discretion, such as
policing and management. Similarly, occupations
involving routine tasks will be more affected by technology
than those requiring a high degree of judgment
and intuition. With technological advances,
more tasks could become easier to automate, so the
relative roles of technology and complements could
change over time. Since outcomes are easier to monitor
for private businesses, as a rule of thumb, firms
are likely to be more successful than governments in
using technology to solve problems. Thus in a weak
institutional environment, the priority should be
to encourage greater adoption of technology by the
private sector, while continuing to strengthen the
complements in the public sector.
A digital strategy is more about the
adoption of ICTs than their production
Many policy makers wish to have a Silicon Valley in
their country, dotted with large ICT firms like Apple,
Facebook, Google, Huawei, and Samsung. But the
widespread adoption of ICTs, not their production,
is responsible for most of the growth and job creation.
3 The ICT sector in developing countries is fairly
small, accounting for only 3–4 percent of GDP and
1 percent of the total labor force. But when ICT firms
enter traditional sectors such as retail, banking, manufacturing,
and transport, they spur competition,
raise productivity, and expand opportunities. For
example, Alibaba has 30,000 employees, but provides
a platform for more than 10 million ancillary jobs.
Uber has a few hundred coders, but it supports the
livelihoods of around 1 million on-demand drivers.
The online outsourcing industry creates millions of
freelancing opportunities in professional services.
And in Mexico, manufacturing firms subject to competition
from Chinese imports invest more in digital
technologies, thus boosting productivity and creating
more employment opportunities.
A digital strategy needs to be broader than
an ICT strategy
The digital economy transcends the ICT sector,
encompassing most sectors of the economy and
society. 4 Yet many governments continue to treat the
digital economy as a sector, with exclusive emphasis
on developing ICT infrastructure and creating an
information technology (IT) workforce. Our analy sis
shows that a successful digital strategy needs to stand
Figure 5.2 Some services and sectors are more amenable to digital technology
than others
Sectors
and
services
Ease of automation
High
Low
Extent of
complements
Moderate
Significant
Moderate
Significant
Business sectors
Retail and wholesale
trade, transport,
insurance and banking
Agriculture,
hotel and restaurant,
manufacturing,
real estate
Legal services
Construction
Public services
Cash transfers,
licensing, filing
taxes, monitoring
elections
Utility services,
public works
(roads),
procurement
Inspection,
financial
management
Curative health,
policing, teaching,
policy formulation
More amenable to improvements
through digital technology
Source: WDR 2016 team.