United Nations: Digital divide will worsen without better global cooperation

The United Nations Conference on Trade and Development (UNCTAD) has released its Digital Economy Report 2019.

“We must work to close the digital divide where more than half the world has limited, or no access to the Internet. Inclusivity is essential to building a digital economy that delivers for all”.

UN Secretary-General António Guterres

The Report focuses on how developing countries can take advantage of the data-driven economy – both as producers and innovators – but also explores the barriers that prevent them from doing so.  The report gives special attention to digital data and digital platforms, the two main drivers of value creation in the digital economy.  The Report calls for greater international collaboration on issues associated with the digital economy such as competition, taxation, cross-border data flows, intellectual property, trade and employment policies.

The global digital wealth gap

China and the US create the vast majority of wealth in the digital economy (e.g. the two countries combined account for 75% of all patents related to blockchain technologies, more than 75% of the cloud computing market, and as much as 90% per cent of the market capitalisation value of the world’s 70 largest digital platform companies. In least developed countries, only one in five people uses the internet; in developed countries the figure is four out of five.

The data-driven future

Data is an emerging economic resource for creating and capturing value. An entirely new data value chain has evolved, comprising firms that support data collection, the production of insights from data, data storage, analysis and modelling. Control over data is strategically important in order to turn it into digital intelligence. The ability to collect, store, analyse and transform data brings competitive advantages but developing countries find it hard to enter this market against established players.

The dominance of global digital platforms, their control of data, as well as their capacity to create and capture the ensuing value, accentuates concentration and consolidation rather than reducing inequalities between and within countries.

Developing countries risk becoming mere providers of raw data, while having to pay for the digital intelligence generated using their data.

The way ahead – policies and cooperation

“We need to respond to the desire of people in developing countries to take part in the new digital world, not just as users and consumers, but also as producers, exporters and innovators, for creating and capturing more value on their path towards inclusive prosperity.”

Mukhisa Kituyi, Secretary-General of UNCTAD

The Report says new policies at national and international levels are needed to build an inclusive digital economy. These include policies to support and encourage digital entrepreneurship and innovation policies and intellectual property policies. When it comes to the data economy; there needs to be a focus on data ownership policies; data protection and privacy; data security; regulation of cross border data flows; skills development and updating competition policies.

The full report is available for downloading here https://unctad.org/en/PublicationsLibrary/der2019_en.pdf?user=46.