KEY ISSUES FOR DIGITAL TRANSFORMATION IN THE G20

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Despite the rapid spread and uptake of digital technologies, adoption and use vary among G20 economies, demographics, industries and by firm size, raising concerns about the inclusiveness of the digital transformation. While G20 economies vary, barriers to the access and effective use of digital technologies typically include some combination of a lack of high-quality and affordable infrastructure; a lack of trust in digital technologies and activities; a shortage of the skills needed to succeed in the digital economy; a more reactive than proactive approach to the openness of the Internet; services trade barriers; high costs and poor access to financing for smaller firms; barriers to the reallocation of resources across firms and sectors; and a lack of interoperability of standards. These barriers can be overcome or ameliorated by developing and implementing comprehensive national digital strategies; enhancing competition in telecommunication markets and improving Internet access for disadvantaged groups, SMEs and regions; elevating the importance and clarifying the objectives of policies and practices to address digital security and privacy risks; reducing firm-level barriers and enabling complementary investments; ensuring life-long learning mechanisms to improve workers' skills; ensuring Internet openness and cross-border data flows; and fostering robust firm dynamics within the economy. Digital technologies have spread rapidly over the past 20 years, with a large share of the population in G20 economies now having access to fixed or mobile broadband networks, and firms often using several digital applications throughout their businesses (see Part I on digitalisation indicators). Developments in mobile technologies have also enabled people to conduct daily personal computing and communications activities onthe-go. Nevertheless, there is still considerable variation across and within G20 economies in the access of people and firms to digital technologies and services. The variation within G20 economies across different population groups appears largely linked to incomes, levels of education, age, and region, with gender differences typically playing a more limited role. Many lagging G20 economies have made strong progress in reducing these gaps in the past decade, in large part due to advances in mobile broadband availability. Data on Internet access by income quartiles also show that the diffusion process has also advanced substantially for low-income households in many countries (OECD, 2016c). As the benefits of digital technologies increase with the number of people and firms connected, increasing access and ensuring that all are able to benefit from these technologies and their many applications and services is an important challenge for policy makers. Within countries, differences across firms appear mainly linked to firm size, but they are also affected by the sectoral composition of the economy. Moreover, while broadband access and basic applications such as websites are common among most firms, more advanced applications, such as enterprise resource planning (ERP) software and radio-frequency identification (RFID) are used by a much smaller share of firms (Figure 22), perhaps in part because a lack of workers with the skills to use these technologies effectively, but also as these applications require a much greater transformation of business processes.
% 100 Gap 1st and 3rd quartiles Average Lowest Highest 80 60 40 20 0 Notes: The data used to construct this figure include 31 OECD economies and the EU28. Sources: OECD, ICT Database; Eurostat, Information Society Statistics Database; national sources, April 2016. As highlighted in Part I on digitalisation indicators, the uptake of digital technologies remains particularly low among small firms even for technologies that seem particularly relevant for SMEs, such as cloud computing, or for particular industries, such as ERP in manufacturing. As discussed in Part 1 of this report, enhancing access for households and individuals is related to the significant potential of digital technologies to increase incomes and social well-being, and promote social inclusion. Digital technologies can create better access to quality education and offer new opportunities for skills development, for example by expanding access to knowledge for people from low-income backgrounds or disadvantaged areas, supporting new pedagogies with learners as active participants, fostering collaboration between educators and between students, and enabling faster and more detailed feedback on the learning process (OECD, 2014a). Digital technologies can be particularly important to help connect disadvantaged groups (OECD, 2016d). For example, mobile connectivity is helping reach remote populations as well as those with lower incomes due to its low costs. Pantea and Martens (2014) find that low-income users spend even more time on the Internet than the average, browsing websites that deal with education, career opportunities, health and nutrition, and e-commerce platforms. Potential benefits for low-income groups also relate to improved access to free or lowcost knowledge and information; services that allow consumers to negotiate better prices for products (as well as identify better quality products); as well new consumption opportunities offered by Internet-based platforms, such as peer-to-peer platforms that lower the barriers for individuals to rent, swap, share, barter, lend, exchange and sell goods and services among themselves. Digital technologies also offer new opportunities for firms, including in lowering important barriers to entry. For example, digital technologies can facilitate cross-border e-commerce and participation in global value chains (GVCs) (e.g. Skype for communications, Google and Dropbox for file sharing, LinkedIn for finding talent, PayPal for transactions, and Alibaba and Amazon for sales). Enhancing access to networks and enabling SMEs to engage in e-commerce can be an effective way for small firms to go global and even grow across borders where they can become competitors in niche markets. For example, M-Pesa, a Kenyan mobile-money service, is now active across Africa as well as South Asia and Eastern Europe.
Page 1 and 2: KEY ISSUES FOR DIGITAL TRANSFORMATI
Page 3 and 4: Key Issues for Digital Transformati
Page 5 and 6: Figures Figure 1. Fixed broadband s
Page 7 and 8: As the cost of data collection, sto
Page 9 and 10: Open, voluntary standards, grounded
Page 11 and 12: Digitalisation is changing the worl
Page 14 and 15: It is useful to start with a brief
Page 16 and 17: In the past, there has also been un
Page 18 and 19: Having established a positive relat
Page 20 and 21: However, despite the rapid spread o
Page 22 and 23: 160 % 140 120 100 80 60 40 20 0 Not
Page 24 and 25: % 100 90 80 70 60 50 40 30 20 10 0
Page 26 and 27: show that large firms have much gre
Page 28 and 29: % 2011-14 2006-09 60 EUIPO USPTO 50
Page 30 and 31: component may include repatriated i
Page 32 and 33: computers will rather increase). At
Page 34: The risk related to cybercrime and
Page 39 and 40: Research has shown that the availab
Page 41 and 42: 5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 Not
Page 43 and 44: Recent research points to a set of
Page 45 and 46: knowledge sharing by upholding the
Page 47 and 48: skilled labour. Thus, trapping reso
Page 49 and 50: wireless access, the two technologi
Page 51 and 52: network infrastructure sometimes ha
Page 53 and 54: separation of infrastructure and se
Page 55 and 56: other network on the Internet (CIDR
Page 57 and 58: Certain policies promote good use o
Page 59 and 60: Francisco Project”, for example,
Page 61 and 62: Encourage the deployment of more fi
Page 63 and 64: In telecommunications, both fixed a
Page 65 and 66: sufficiently compelling for operato
Page 67 and 68: However, data provides additional c
Page 69 and 70: deductions on investments in seed a
Page 71 and 72: early-stage investment can affect i
Page 73 and 74: The development of standards and st
Page 75 and 76: A positive example of co-operation
Page 77 and 78: As actors navigate the IoT space, t
Page 79 and 80: The private-sector-led standards pa
Page 81 and 82: Co-operation among standardisation
Page 83 and 84: Fixed-line communications, wireless
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the ICT sector tends to outpace reg
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Digitalisation is associated with f
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end user (European Commission, 2016
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The Internet model of traffic excha
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G20 economies could develop strateg
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technologies, and in particular the
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in the United States where criminal
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about digital security risk and how
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conduct of cybercrimes and digital
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The G8 Deauville Declaration outlin
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To ensure that everyone can engage
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ICT specialists have been among the
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Initiatives to promote consumer edu
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All Welding Processing Handling Dis
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economies and societies need to per
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The development of strategies that
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The use of digital technologies is
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These adoption gaps between large f
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Figure 44 (Panel B) illustrates a s
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Frontier firms Laggards Frontier fi
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Despite the steady increase busines
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YouTube to watch media content; Ube
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Platforms are often criticised for
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The potential and pitfalls of digit
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Cross-border commerce has long gene
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Digitalisation is changing the worl
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Digital technologies have a huge re
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One approach is to accept the fact
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and income opportunities. Becoming
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South Korea has opened numerous “
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The ongoing digitalisation of our e
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Developing tools for assessing the
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data across borders, transportation
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BCG (2012), ”The Internet Economy
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Deloitte (2015), “Connected Healt
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Karachalios, K. and K. McCabe (2016
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OECD (2016m), “The Internet of Th
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OECD (2012d), Connected Minds: Tech
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The Economist Intelligence Unit (20
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1. Chapter 2 discusses policies for
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KEY ISSUES FOR DIGITAL TRANSFORMATION IN THE G20

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