Digitalization and Inclusive Growth: A Review of the Evidence
Digitalization enhances productivity and market access while influencing employment and government finances, with varying effects on inclusive growth across developing economies. The report reviews evidence on these impacts, emphasizing the need for equitable technology adoption.
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| Quick Facts | |
|---|---|
| Report location: | source PDF |
| Publication date: | October 2024 |
| Language: | English |
| Publisher: | World Bank Group |
| Authors: | Dana Vorisek, Regina Pleninger, Shu Yu, Gaurav Nayyar |
| Time horizon: | 2020s |
| Geographic focus: | Developing Economies, Advanced Economies |
Methods
The research method involved a comprehensive review of empirical literature on the economic impacts of digitalization, focusing on productivity, employment, market access, and government finances. The authors synthesized findings from various studies to assess the relationship between digital technologies and inclusive growth.
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Key Insights
This report examines the effects of digitalization on economic growth and income distribution, focusing on four main channels: productivity growth, employment and wages, market access, and government finances. Digitalization has been shown to increase productivity by improving business processes and matching supply with demand. However, the benefits of automation and artificial intelligence (AI) may be less pronounced in developing economies compared to advanced ones. Evidence suggests that digitalization has not significantly reduced aggregate employment in developing countries, unlike in advanced economies where job polarization has occurred. Additionally, digital technologies have improved market access for rural households and small businesses, enhancing their ability to participate in the economy. Furthermore, digitalization has positively impacted government finances by increasing efficiency in public service delivery and revenue collection. The report highlights the disparities in digital technology adoption between advanced and developing economies, which can perpetuate income inequality. It concludes that while digitalization presents opportunities for inclusive growth, the benefits are not universally distributed, necessitating targeted policies to enhance technology adoption and mitigate potential negative impacts on vulnerable populations.
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Additional Viewpoints
Categories: 2020s time horizon | 2024 publication year | Advanced Economies geographic scope | Developing Economies geographic scope | English publication language | ai impacts | automation | digital divide | digital technologies | employment effects | financial inclusion | government finances | income inequality | market access | productivity growth