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DIGITAL ECONOMY

Inequalities threaten wider divide as digital economy data surges

By our News Team | 2021

Large power imbalances stalk the growing digital economy as major platforms reinforce their positions in the global data value chain.

The data-driven digital economy is surging. Recent estimates show that global internet data flows will more than triple between 2017 and 2022, according to the Digital Economy Report 2021 recently released by the United Nations Conference on Trade and Development (UNCTAD).

The pandemic has markedly increased internet traffic, as many activities have moved online. Global internet bandwidth rose by 35% in 2020, compared with 26% the previous year, the report says.

A growing part of data flows is related to mobile networks. With the increasing number of mobile devices and internet-connected devices, data traffic by mobile broadband is expected to account for almost one third of the total data volume by 2026, the report states.

Digital economy

Image by Gerd Altmann from Pixabay

“But the data-driven digital economy is characterised by large imbalances and divides,” said UNCTAD’s Director of Technology and Logistics, Shamika N. Sirimanne. “As the digital economy grows, a data-related divide is compounding the digital divide.”

Developing countries in subordinate positions

In this new environment, developing countries risk becoming mere providers of raw data to global digital platforms, while having to pay for the digital intelligence obtained from their data, the report warns.

Only 20% of people in least developed countries (LDCs) use the internet, and when they do, it’s typically at relatively low download speeds and with a relatively high price tag attached, the report says.

Also, the average mobile broadband speed is about three times higher in developed countries than in LDCs. And while up to eight out of 10 internet users shop online in several developed countries, only less than one out of 10 do so in many LDCs.

International bandwidth use is geographically concentrated along two main routes: North America-Europe and North America-China.

New global data governance approach needed

As cross-border data flows become increasingly prominent in the digital economy, UNCTAD has called for a new approach to properly regulate them at the international level.

Currently, entities that can extract or collect data are in a privileged position to appropriate most of the value.

“A new international system to regulate data flows is needed so that associated benefits can be more equitably distributed,” said Sirimanne.

She said the world should pay adequate attention to the current divides that characterise the global digital economy – not only between countries, but also between states and enterprises.

While all countries will need to allocate more domestic resources to the development of their capacities to create and capture the value of data domestically, the report says, many developing countries may need international support due to their limited financial, technical and other resources.

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