Internet Governance Forum 2020
Economic implications of the role of internet governance in the age of uncertainty
Developing countries need to look carefully at their strategies for creating and capturing value from the digital economy. With the pandemic serving as an inflection point in the transformation of global production, developing countries will need to capture higher value from more intangible, production processes, closer to home. Importantly they will need to strengthen their capacities for digital creation, so they do not simply remain digital consumers.
The dominant role played by the global digital platforms has been accentuated amidst the crisis. An impressive signal of this dominance is that while overall stock market performance has been down during the crisis, the value of these digital platforms has surged. China’s JD.com nearly doubled its stock price between January and September 2020. Amazon and Apple saw their price increase more than 50%, eBay, Tencent, Microsoft and AliBaba all were up around 40%. All while the Dow Jones was down 5% and the S&P 500 was up just 2%.
Most of the digital solutions that are being used to cope with the pandemic are provided by a few major companies, most of which based in the United States or China. These two countries alone account for 90% of the market capitalization value of the world’s 70 largest digital platform companies. The rest of Asia accounts for another 5%. By comparison, the share of Europe is only 3.6%; Africa’s 1.3%; and that of LAC: 0.2%. China and the United States also account for 75% of all blockchain patents and of global public cloud computing.
The pandemic has highlighted the challenge that businesses face in digital readiness across the developing world. An UNCTAD survey of e-commerce businesses in 23 countries, mostly LDCs, shows that challenges faced during the pandemic are deeply rooted in pre- existing bottlenecks. 50% of respondents refer to high broadband costs as a challenge. Nearly half of respondents complained that the government did not prioritise the e-commerce sector.
The need to address digital divides and weaknesses in the digital economies of member states has become even more acute. For a “better recovery”, the digital dimension must be kept high on the policy agenda, and policy responses must balance the opportunities with the risks involved. Technology is not deterministic. It is up to governments, in close dialogue with other stakeholders, to shape the digital economy by defining the rules of the game and taking action at both national and international levels.
Differences in digital readiness and the high concentration of market power in the digital economy call for a structural reform of policies and a fair distribution of the gains from digital disruption. These policy challenges are complex and call for smart solutions that chart new pathways towards consensus. In many areas there is a clear need for responses at the regional or global level. For example, we need novel international solutions on digital competition, digital taxation, digital data and digital trade policies. Finding suitable responses will require full involvement of all countries, especially developing countries.
It is precisely when facing disruptions – whether resulting from a global pandemic or from technological change – that we most need to come together as one and work together. Policy dialogue must address the unequal gap between digital producers and digital consumers, if the digital economy’s development potential is to be realized. It is clear, for example, that finding global consensus will require including significant flexibilities accounting for the variation in digital readiness.
