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OVERVIEW
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Figure O.22 Policy priorities for countries that are emerging, transitioning, or
transforming
EMERGING TRANSITIONING TRANSFORMING
REGULATIONS
that promote
competition and entry
Remove barriers
to adoption
Competition
regulation and
enforcement
Platform
competition
SKILLS
to leverage
digital opportunities
Foundational skills
and basic ICT
literacy
Prepare for
careers
instead of jobs
Facilitate
lifelong
learning
INSTITUTIONS
that are capable
and accountable
Mobile phone–
based services
and monitoring
e-government
delivery and
citizen
engagement
Participatory
policy making
and digital
collaboration
Note: ICT = information and communication technology.
raise productivity and those who don’t fall behind.
This highlights the critical role of a country’s business
climate. It includes laws and regulations that ensure
easy entry and exit of firms, and an open trade regime
that exposes companies to foreign competition and
investment. There is a political economy dimension
to this as well—special interests influence regulators
to keep markets closed to competition. This lessens
the need for firms to reach for the technological frontier.
Where banks are heavily regulated and protected
from new market entrants, they have less incentive
to invest in efficiency-boosting technology that might
also help them serve customers better or reach new
ones. But competition policy and enforcement are
complex, and many low-income countries lack capacity
to design and implement them effectively.
Lower the barriers to digital adoption
In countries where the digital economy is still emerging,
the priority is to facilitate connectivity and
develop the foundation for effective competition regulation.
Although 74 mostly middle- and high-income
countries have unilaterally removed tariffs on ICT
capital goods, computers and smartphones are still
treated as luxury goods in some countries, including
Turkey, where taxation adds almost half to the price of
mobile handsets. 33 Djibouti’s tariff on computers is 26
percent. Many countries treat their telecom firms as
cash cows. Where firms may have limited knowledge
about how the internet can improve their business,
benchmarking exercises and information programs
can be effective. And to allow more innovative companies
to enter markets easily, countries need to
improve firm registration and create greater market
transparency to reduce price collusion, market sharing,
and rigged public procurement. E-government
systems such as online business registration and
e-procurement systems can simplify these processes
and produce more openness.
Increase competition through effective
regulation and enforcement
State control in economic sectors, barriers to entrepreneurship,
and restrictions on trade and investment
reduce the incentives for firms in protected sectors to
use digital technologies. Most countries have a competition
authority, although many were set up fairly
recently and enforcement varies, especially when
the state or politically connected firms benefit from
market restrictions. Moreover, the internet makes
it easy to deliver services online from anywhere
in the world, so how trade in services is regulated
becomes increasingly important. Ethiopia, India,
and Zimbabwe have the greatest restrictions on service
trade, but many other countries restrict specific
services such as legal or accounting tasks. Countries
can increase the competitiveness of their economies
and encourage greater use of digital technologies by
gradually reducing market distortions while building
up effective competition enforcement. This applies as