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Hi everyone, so I have read one interesting case study for you guys! This is the case study that I found....

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Hi everyone, so I have read one interesting case study for you guys! This is the case study that I found....

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How do you guys think about this?

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Regarding to the case study that halimah had mentioned, these problems are not atypical in
educational technology programs, in both developing and
developed countries. The case study is presented here not
because it represents something highly unusual, but rather
because it provides a rich set of data to better understand
and critique the shortcomings of the digital divide framework.
In particular, there are three important lessons about
the educational technology program in Egypt that are relevant
for a broader understanding.

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Dissecting the “Digital Divide”: A Case Study in Egypt Mark Warschauer Department of Education, University of California, Irvine, Irvine, California, USA For the last decade, the concept of a “digital divide” has framed people’s understanding of technology’s relationship to equity and development. This article critiques theoretically the digital divide concept and supports this critique by examining a case study of technology and education in Egypt. The study illustrates the social embeddedness of technology and the intertwining of computer access with broader issues of political power, thus refuting simplistic notions of divides to be overcome through provision of equipment. Keywords digital divide, education, Egypt, international Since first emerging nearly a decade ago, the concept of a “digital divide” has captured the attention of policy makers and social activities. However, some have suggested (e.g., Cisler, 2000; DiMaggio & Hargittai, 2001; Jarboe, 2001), and I agree, that the concept provides a poor framework either for social analysis or for policy development and implementation. In this article, I first briefly critique the digital divide concept. I then illustrate the problems with the underlying framework by examining a case study of a national educational technology program in Egypt. THE UN-DIVIDE THAT’S NOT DIGITAL The very name digital divide reveals the concept’s confusing basis. First, a “divide” implies a bipolar division between the haves and the have-nots, the connected and the disconnected. Yet, as pointed out by Cisler (2000), connectivity falls along a continuum, rather than into a bipolar split. Compare, for example, a professor at UCLA with a high-speed “Internet II” connection in her office, a student in Seoul who uses a cybercaf´e, and a rural activist in Indonesia who has no computer or phone line but whose colleagues in her nongovernmental organizaReceived 1 August 2002; accepted 1 December 2002. Address correspondence to Mark Warschauer, Department of Education, University of California, Irvine, 2001 Berkeley Place, Irvine, CA 92697-5500, USA. E-mail: markw@uci.edu tion (NGO) download information for her. The notion of a binary divide is thus inaccurate and can be patronizing, as it fails to value the social resources that diverse groups bring to the table. For example, in the United States, AfricanAmericans are often portrayed as being on the wrong end of a digital divide (e.g., Walton, 1999), when in fact Internet access among Blacks and other minorities varies tremendously by income group, with divisions between Blacks and Whites decreasing as income increases (National Telecommunications and Information Administration, 2000). Second, and even more significantly, the stratification that does exist regarding access to online information has very little to do with the Internet per se, but has everything to do with political, economic, institutional, cultural, and linguistic contexts that shape the meaning of the Internet in people’s lives. Thus the inequality that does exist is social, not digital. The notion of a digital divide suggests that the divide can be breached by giving someone an Internet address and e-mail account. However, little data exists to support this. In fact, it is safe to predict that within one to two decades, Internet access will be ubiquitous in the United States, connecting not only computers but also televisions, game machines, and mobile phones. Yet just as the ubiquitous presence of other media, such as television and radio, has done nothing to overcome information inequality in the United States, there is little reason to believe that the mere presence of the Internet will have a better result. If anything, recent economic trends suggest otherwise (Castells, 1996). TECHNOLOGICAL DETERMINISM While the name itself is not of essential importance, the ideas behind the name are. And from popular interpretation to public policy, it is clear that the underlying framework of a “digital divide” is technological determinism—in other words, the view that the mere presence or absence of a technology has a determining affect on behavior and social development (see, for example, Ellul, 1990). Technological determinists range from those who se 298 M. WARSCHAUER as automatically good to automatically bad, but they agree on the overriding role of technology in determining social change (see discussion in Feenberg, 1991). This results in an emphasis on bridging the technological gap through the distribution of hardware, software, and online networks. As Kling explains, [The] big problem with “the digital divide” framing is that it tends to connote “digital solutions,” i.e., computers and telecommunications, without engaging the important set of complementary resources and complex interventions to support social inclusion, of which informational technology applications may be enabling elements, but are certainly insufficient when simply added to the status quo mix of resources and relationships. (cited in Warschauer, 2003, pp. 7–8.) In critiquing the notion of a digital divide, it is of value to examine another great “divide” which had been earlier proposed and rejected, that of an alleged “great literacy divide” (see discussion in Gee, 1996; Tyner, 1998). According to the notion of a literacy divide promoted by scholars such as Goody (1968, 1973; Goody & Watt, 1988) and Havelock (1963, 1986), individuals and societies could be divided up into whether they were literate or not, with far-ranging cognitive and social consequences automatically determined by this distinction. Over the last 20 years though, in-depth research, including that by Scribner and Cole (1981) with the Vai people in Liberia, who were literate in their own language but had never gone to school, revealed that literacy in and of itself brought virtually no cognitive or social benefits, and that almost all the benefits associated with literacy came instead with the other social activities that surrounded it, such as schooling. Critical theorists of literacy now agree on the following points: There is not just one, but many types of literacy (e.g., Cope & Kalantzis, 2000; Gee, Hull, & Lankshear, 1996). The meaning and value of literacy varies in particular social contexts (de Castell & Luke, 1986; Street, 1984). Literacies exists on a continuum, rather than in a bipolar opposition (Gee et al., 1996). Literacy alone brings no automatic benefit (Scribner & Cole, 1981). Acquisition of literacy is a matter not only of education and culture, but also of power (Street, 1984). These points apply equally well to issues of online access. There is not one type of online access, but many; the meaning and value of access varies in particular social context; access exists on a continuum, rather than in a bipolar opposition; access alone brings no automatic benefit; and acquisition of access is a matter not only of education and culture, but also of power. TECHNOLOGY AND EDUCATION IN EGYPT The problems with the digital divide concept can be illustrated by a 3-year longitudinal case study I conducted of educational technology in Egypt (see Warschauer, 2003, in press). Though the term digital divide is seldom used in Egypt, the digital divide mindset—seeking to overcome social gaps through provision of computers and the Internet, with little regard to the context in how they are used— predominates. Though this mindset is hardly unique—and is particularly evident in educational technology efforts around the world (see discussion in Osin, 1998)—an examination of a major national program based on this framework is particularly illustrative of its problems. My case study research examined what steps the government took to introduce computers, the Internet, and other modern technologies in the schools and what impact this introduction has had. I collected data for this research from 1998 to 2001 in the following ways: Participant observation. During this time period, I worked in Egypt as director of educational technology on a large international development project. I participated in numerous planning committees, training programs, and activities related to technology in the schools. I took regular notes and wrote up these notes in reports following events and meetings. Interviews. I carried out formal and informal interviews of more than 100 teachers, educational administrators, nongovernmental organization representatives, government officials, and business leaders regarding their attitudes and beliefs about technology in education. Focus groups. I held focus group discussions with several groups of teachers from schools and universities. Observation. I visited approximately 12 primary, preparatory (middle), and secondary schools to observe how technology is used. Documents. In addition to reviewing books, journals, government reports, and other published literature, I also had access to nonpublished reports issued by government, donor, business, and nongovernmental agencies. Surveys. I conducted written surveys of Egyptian educators about their access to technology and its use in the classroom. Internet discussion. I participated in, and have access to the archives of, an online discussion group of some 200 Egyptian educators interested in technology in education. A Magic Bullet? Egypt faces tremendous challenges in educating its burgeoning population. There is wide consensus among both educators (e.g., Jarrar & Massialas, 1992; Tawila, Lloyd, Bensch, & Wassef, 2000) and economists (e.g., Bartsch, DISSECTING THE “DIGITAL DIVIDE” 299 1995; Fergany, 1998) about the poor performance of Egyptian schools, even when compared to that of other developing countries (Birdsall & O’Connel, 1999). Problems identified include large class sizes; poorly trained teachers with low wages and status; and a centralized, test-driven curriculum focusing on rote memorization of unimportant material (Jarrar & Massialas, 1992; Ministry of Education, 1993; Tawila et al., 2000). Though these broader problems have not been seriously addressed, the government has devoted huge amounts of resources to integrating new technologies in schools. This effort is seen as overcoming two great divides, one international, and one domestic. At the international level, technology in education is seen as a way to leapfrog ahead and catch up with the West (Bahaa El Din, 1997; Ministry of Education, 1999). As explained by the Ministry of Education’s Technology Development Center (1997): The whole world is undergoing an overwhelming technological revolution in information, electronics, computers, and communication. This revolution will widen the gap between the developed and underdeveloped countries. Those who master science and technology and manage information will survive, those who do not will perish, at least economically. Egypt must race against time so that it can jump on the wagon of the elite of the developed world before it is to late. (p. 79) At the domestic level, educational technology is seen as narrowing the gap between the country’s elite, almost all of whom live in the principal cities of Cairo and Alexandria, and its poor, who are spread out in urban and rural areas across the nation, especially in more remote communities of Upper (i.e., southern) Egypt. This is to be accomplished through the use of the Internet and satellite television for distance education (Technology Development Center, 1997). To back these goals, the Ministry of Education (MOE) launched a Technology Development Center (TDC) in 1994 that has since grown to more than more than 600 full-time staff (personal interview, Ministry of Education official, May 1999). Among the steps carried out by the TDC and the MOE have been the following: 1. The establishment of multimedia centers in the majority of Egyptian governmental schools. These centers include a couple of high-end Windows or Macintosh computers, an LCD display for projecting from the computer to a screen, and an educational software collection. The majority are equipped, at least in theory, with Internet access, and many also have televisions, satellites, and digital decoders. 2. The establishment of computer laboratories in the majority of Egyptian secondary schools. These laboratories, which are in addition to the already mentioned multimedia centers, include 10–15 personal computers (based on 486 or Pentium processors) and copies of office software (word processing, presentation, spreadsheet). 3. The development of educational software. A large number of the TDC’s 600 employees are involved in developing educational software. For the most part, this entails simply taking the content of the textbooks produced by the MOE and transferring them onto CD-ROMs. 4. The development of satellite educational television programming. In total, 11 of the satellite television stations are devoted to educational programming, with the idea being that teachers will take their students to the school multimedia centers to view lessons. 5. The installation and use of a multipoint videoconference system. This national interactive videoconference (IVC) network includes 27 IVC halls, one in each governorate (roughly equivalent to a state or country) and each having the capacity to view and project to all the other sites. The network also includes some equipment for roaming IVC networking, which can be transported on special TDC vans. The videoconference system is generally used for national teacher training programs. No figures are available for the expense of the TDC programs. However, the amount of money is certainly substantial especially when considered in comparison to the government budget for K–12 education, which amounts to only $207 per pupil per year (Institute of National Planning, 1998). Return on Investment What then are the results of this investment, and how do they match the MOE’s lofty goals for using technology to leap across gaps? Unfortunately, results to date are unsatisfactory in all areas. Technology has been thrust on top of a dysfunctional system, rather than used to help transform that system. The TDC itself is an add-on to the MOE that grabs up a huge portion of ministry resources but coordinates poorly with other sections of the ministry, such as the departments of secondary or basic education or the department for inservice training. Serious problems have emerged in all of the program areas. The computers in the multimedia ro 300 M. WARSCHAUER clear that most multimedia rooms are rarely used. This phenomenon has been reported frequently in the press. As one article (PCs, Teachers Omitted from New Curriculum, 2000) exclaimed: Primary School teacher Hasnaa el-Hefnawi is enraged by the decision to introduce the computer science curriculum.... The ministry has repeatedly tooted its own horn about how many computers it has supplied to schools. “Doesn’t the minister realize that these computers are kept in school warehouses like antiques or used merely for decoration” she mused. (p. 2) This sentiment was echoed by a teacher on an e-mail list of Egyptian educators, who complained about the technology gatekeepers at this own schools, “And the good people know only how to unplug and cover it to protect the computer from dust so as not to be damaged.” On the rare occasions when students do use these multimedia rooms, they usually sit and watch the teacher lecturing, as usual, but this time with the aid of a CD for presentation. The CDs themselves contain the exact same material as the textbooks, transferred to a new medium, with little attention given to principles of interactivity or participatory learning. Teachers who attempt to use the computers in more creative ways, even by making their own Microsoft Word or Microsoft PowerPoint files, have been informed that any activity other than using the ministry-provided software is prohibited so as to protect against viruses. Meanwhile, the laboratories of 10–15 computers are used for a course in basic computer literacy, which focuses for the most part on mastering DOS (or, in some cases, Windows) commands. Teachers of that class, as of other classes, are not allowed to depart from the prepared curriculum, nor are they prepared to, based on knowledge, background, or training. The laboratories themselves, which could potentially offer a site for creative handson use by students in other subjects or after school, are forbidden to be used for anything other than the specified computer literacy courses. Finally, Internet access is routed by telephone via MOE offices to ensure better control. This necessitates a doubleconnection process that rarely functions. In any case, only the official in charge of the multimedia room is given the Internet account information; neither teachers nor students are allowed to use it. The MOE rushed to transfer its entire curriculum to satellite television programming, similar to how it transferred the curriculum to CD format. In Egypt, the textbook is the curriculum, so this has too often meant simply converting an unappealing textbook into a similarly unappealing television program. Scriptwriters with more creative ideas have had their efforts rejected by the directors who are under pressure to develop an enormous amount of television material in a short amount of time. In any case, satellite television is rarely viewed at all, since almost no one has bought a digital receiver at home and there is little reason to interrupt a class to bring students into a crowded television room to watch the same material that is found in their book. The videoconference centers are used for teacher training, but the training is often based on lengthy talking-head lectures from Cairo rather than real interaction. Scheduled videoconference trainings are frequently interrupted when the system breaks down or when top ministry officials take over the system to communicate with subordinates around the country or to showcase the facilities to international visitors. The ineffective use of videoconferencing parallels a broader problem with teacher training in new technology. Such training is generally reserved for the school computer specialists, and is mostly limited to computer operations. The computer specialists have had no training in assisting teachers to make use of computers in teaching. Teachers themselves know little about either the pedagogy of instructional technology or even basic computer operations. As one university lecturer explained to me, “we have the hardware, we have the software, but we lack the humanware.” The problems with educational technology in Egypt are not located solely with the MOE. Such “magic bullet” policies are often abetted by donors as well. For example, one well-funded program sponsored by the United States Agency for International Development (USAID) attempted to provide expensive state-of-the art computer laboratories in the MOE and universities, while failing to account for the complex social environments that would be required for such laboratories to actually function, let alone make an educational difference. As a result, hardware and software purchased for the laboratories remained locked up and unused for more than a year, thus losing a good portion of its value (Warschauer, 2002, 2003). DISCUSSION As mentioned before, these problems are not atypical in educational technology programs, in both developing and developed countries. The case study is presented here not because it represents something highly unusual, but rather because it provides a rich set of data to better understand and critique the shortcomings of the digital divide framework. In particular, there are three important lessons about the educational technology program in Egypt that are relevant for a broader understanding. A Broader Set of Resources The first and most obvious point is that the provision of computers and Internet connections is just one component of a broader set of resources that allow people DISSECTING THE “DIGITAL DIVIDE” 301 to make full use of technology for social development. Any attempt to categorize this broader set of resources is by nature arbitrary, but an analysis based on four general categories serves the purposes of both analysis and policymaking. These categories have emerged from my ethnographic research in Hawaii (Warschauer, 1999) as well in my case-study research in California, Brazil, and India (Warschauer, 2003), and are found as well in work by other researchers and theorists who have examined issues of technology and social inclusion in various contexts (see, for example, Aichholzer & Schmutzer, 2001; Carvin, 2000). They can be labeled (1) physical resources, (2) digital resources, (3) human resources, and (4) social resources (see Figure 1). Physical resources encompass access to computers and telecommunication connections. Digital resources refer to digital material that is made available online. Human resources revolve around issues such as literacy and education (including the particular types of literacy practices that are required for computer use and online communication). Social resources refer to the community, institutional, and societal structures that support access to ICT. In considering these four sets of resources, it is important to realize their iterative relation with ICT use. On the one hand, each of the resources is a contributorto effective use of ICTs. In other words, the presence of these resources helps ensure that ICT can be well used and exploited. On the other hand, access to each of these resources is a result of effective use of ICTs. In other words, by using ICTs well, we can help extend and promote access to these resources. If handled well, these resources can thus serve as a virtual circle that promotes social development and FIG. 1. Resources that enable technology use for social development. inclusion. If handled poorly, these elements can serve as a vicious cycle of underdevelopment and exclusion. In the Egyptian case discussed earlier, the funding and attention of the Ministry of Education were devoted in disproportional amounts to the four areas. The majority of funding and attention went to physical resources, specifically the purchase of hardware for multimedia centers. A fair amount was also spent on digital resources, though not with any thought or planning as to their appropriateness. A small amount was spent on teacher training, but not in any way that developed educators’ underlying skills or knowledge in using new technologies for instruction. And virtually no attention was given to developing means of social or institutional support for teachers’ and students’ use of technology. For example, low-cost efforts, such as the establishment of e-mail lists or bulletin boards so that teachers could exchange ideas and resources, were ignored, with funding going to high-profile campaigns (e.g., international videoconferences) that had little impact on classroom use of technology. The Social Embeddedness of Technology This brings up a second point, which is the social embeddedness of technology (Deibert, 1997). In other words, while a digital divide framework suggests that technology “impacts” a social situation, in fact, technology and society are coconstitutive. While technology can help shape social relations, social relations also shape how technology is developed and deployed. In this case, a fundamental characteristic of the Egyptian educational system, like the Egyptian bureaucracy overall, 302 M. WARSCHAUER is its steep vertical hierarchy (see discussion in Hudson, 2000). The TDC, like other governmental and MOE departments, is hierarchical to the extreme, with long chains of command, and those at any level but the top are unable to make decisions. Principals, teachers, and students know from experience that they must await orders from above. For example, on one occasion, this researcher made a simple request of a teacher to see a copy of the CD that he uses in school. The request was bounced up one level after the other, with no one lower than the vice-minister of education willing to grant permission. (The vice-minister finally said yes.) In such an atmosphere, it is not surprising that technology serves a purpose of hierarchy and transmission, rather than of horizontal networking (see discussion of this same issue in U.S. education in Hodas, 1993). Though the MOE and TDC adopt the discourse of interactive education, the spending and support—whether on satellite television, or CDs, or top-down training via videoconferencing—have gone almost entirely to transmission technologies. Thus while the rhetoric of educational technology in Egypt discusses overcoming divides through technology-enhanced educational reform, the existing social structures in Egypt have helped shape a very different use of technology. Technology and Power Finally, as Feenberg (1991, 1999) reminds us, the social shaping of technology is intimately tied up with broader issues of class and power. The political context of Egypt reflects a strong carryover from the Nasser period, based on authoritarian rule by a military-backed leadership within a patriotic, nationalist framework (Hinnebusch, 1990). The political role of schooling in this context is to maintain nationalist support for the regime and isolate the government’s enemies, who in today’s climate are the Islamist fundamentalists. Any reform that reduces the authoritarian hierarchy of the educational system is highly suspect. Engaging in the rhetoric of reform, with showcase technology projects that can be pointed to as evidence of governmental greatness, while avoiding the actual implementation of reforms that could shake up a fundamentally conservative institution, thus serves the government well. For the government to engage in high-visibility technology efforts without meaningful reform is thus not necessarily a contradiction at all, but rather a projection of state control. In addition, Egypt is a highly stratified country, especially in the area of education, as illustrated by Birdsall and O’Connel’s (1999) international comparative study (see Table 1). This is due, in part, to disproportionate spending on university and secondary education, which is inaccessible to the majority of the population, and too little funding to primary education (Birdsall & O’Connel, 1999; Fergany, 1998; Institute of National Planning, 1998). The TABLE 1 Comparative national inequality in mean years of schooling completed (Gini coefficients circa 1990) Country Education inequality Egypt .700 Kenya .600 Jordan .615 Brazil .461 Indonesia .494 Korea .257 Thailand .456 Note. From Birdsall and O’Connel (1999). vast spending on educational technology in the country, which has gone overwhelmingly to secondary schools and universities, rather than primary schools, has worsened this inequity, despite all the grandiose but unrealized plans for reaching the rural poor through distance education. Once again, the ambitious programs serve those in power by creating a veneer of equality and reform without its substance. In summary, the framework of a digital divide obscures these important social, economic, and political factors which frame how technology is used in Egypt. While there are undoubtedly ways that technology could be used to advance the educational opportunities of Egypt’s poor, the mere distribution of computers into schools does nothing to make this happen, and could arguably be said to have deepened inequality in Egypt. Similarly, since the technology is rarely used for any meaningful educational purpose, it has also done little to close any international gap between Egypt and the West either. Solving Egypt’s educational problems requires not so much a provision of equipment, but rather a mobilization of social forces to work for an improved and equitable educational system. Technology can play a role in realizing that system if the physical and digital resources are complemented by the development of appropriate human and social resources. Corea (2000) explains well the limitation of top-down solutions based on provision of equipment, and the correspondingly important role of social restructuring. He states that “information technology implementations often create only superficial and transitionary states of flux in organizations,” with organizations returning to their ingrained ways of functioning “once the new systems have been absorbed into, or even ingeniously affiliated with, the previous web of calcified inefficiencies” (p. 9). Corea adds: Technologies like computer systems belong to the realm of expressive tools of human nature. Rather than foisting such DISSECTING THE “DIGITAL DIVIDE” 303 technologies haphazardly on people, the long-term nurturing of behaviors intrinsically motivated to engage with such technologies is likely to prove much more synergetic. In other words, it seems critical to engender a systemic tendency towards innovation in social units.... [Studies] have pointed out the importance of achieving an “innovating” rather than a “borrowing” strategy of growth as a means to reduce technological disparities and increase the degree of industrialization (Amsden & Hikino, 1993). It is argued that “a real catching up process can only be achieved through acquiring the capacity for participating in the generation and improvement of technologies” (Perez & Soete, 1988, p. 459). (Corea, 2000, p. 9) Educational technology reform programs that have been more successful, such as one in Chile (Potashnik, 1996), have devoted only a small portion of their attention to purchase and placement of equipment, and have placed much greater emphasis on human and social development through formation of school-community coalitions, implementation of long-term teacher training programs, and promotion of local autonomy for teachers, schools, and districts. By establishing and researching pilot programs, with funding for teaching development and community involvement, it is possible to identify and build support for the use of technology in alternative educational methods and structures that may go counter to traditional approaches and centers of power (Osin, 1998). CONCLUSION The digital divide term, when it first emerged a decade ago, played a useful role in focusing attention on an important issue. However, continued use of the term today obscures rather than clarifies the interrelationship of technology and social inequality. By implying that a gap can be filled by the provision of equipment, the digital divide concept draws attention away from more complex long-term processes that underlie social development and inclusion. Information and computer technologies can play a critical role in social development if, as Jarboe (2001) advises, we “focus on the transformation, not the technology” (p. 31). In contrast, as the case study presented here suggests, an overemphasis on the mere presence of computers or Internet connections, without a corresponding emphasis on social mobilization and transformation, can squander resources while leaving inequity intact.

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link of the case study

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Hi everyone,

Public Internet services provided by state-owned

enterprise have been continuously phased-in nationwide

since 2000.
Internet played a big role

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While Asia keeps on profiting from this advanced change, understanding the computerized economy remains a test in view of its intricacy. Digital change is about enormous information and digital stages as well as how those cutting edge innovations can be used to amplify open doors for development, new plans of action and procedures, and shrewd items and administrations. Furthermore, the advanced economy is enabling local organizations to move far from the neighborhood and into the worldwide, with regards to the long haul patterns toward showcase progression and decreased exchange boundaries.

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Digital transformation: Are you ready for exponential change? Futurist Keynote Speaker Gerd Leonhard

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Asia’s Digital Divide

The gap between Asia's digital-haves and have-nots is widening, while the capacity to handle mass IoT uptake in the region has yet to take hold.

In Asia, the growth of the telecommunications industry hinges on how good the Internet access is. Experts at the recent CommunicAsia 2015, held in Singapore last May, expressed concern about the region’s growing digital divide.

"The cost of Internet access is high in Asia,” said Abu Saeed Khan, Senior Fellow of LIRNEasia, a Sri Lankan headquartered ICT policy and regulation think tank. “In most American and European cities, it's under US$2 per Mbps. The cheapest in Asia is Hong Kong and Singapore, at US$6. Markets that can least afford it – such as Jakarta – are paying US$12.”

The result, he said, is a “patchwork quilt with little or no cross-border connectivity. We have proposed that the Asian Highway – the 140,000 kilometres of highway linking Japan to Turkey – incorporate fibre optic lines along its route."

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The 2 Things It Takes to Succeed in the Digital Economy

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The 2 Things It Takes to Succeed in the Digital Economy

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For several years now digital has been an appendage to “business as usual.” But recently, digital transformations have reached the tipping point where digital has become “business as usual”; the tail has become the dog. Digital is not just part of the economy — it is the economy.
How are these thriving firms reinventing themselves, their supply chains, and their marketplaces?

1. Customer expectations
Digital technologies enable companies to better engage with their customers and offer superior experiences at affordable costs. But providing outstanding experiences to increasingly savvy, and fickle, customers is getting harder.

2.  Collaborative innovations
Collaboration and ecosystems are particularly important in the emerging Internet of Things, where multiple companies across different industries must make sure that their offerings work with each other in a number of highly complex areas including health care, home automation, and smart cities.

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For several years now digital has been an appendage to "business as usual." But recently, digital transformations have reached the tipping point where digital has become "business as usual"; the tail has become the dog. Digital is not just part of the economy - it is the economy.

It's an economy of limitless opportunities for some and disruption and displacement for others. Many firms - such has Kodak, Blockbuster, Sears, and Blackberry - were unable to adapt, while others are thriving. According to MIT Sloan research, the companies that are adapting to a digital world are 26% more profitable than their industry peers.

How are these thriving firms reinventing themselves, their supply chains, and their marketplaces? For an upcoming MIT symposium on the topic, we're focusing on four main themes: customer expectations, product enhancements, collaborative innovations, and organizational forms.

Customer expectations

No transformation is more challenging than meeting the service expectations of digitally empowered customers. Digital technologies enable companies to better engage with their customers and offer superior experiences at affordable costs. But providing outstanding experiences to increasingly savvy, and fickle, customers is getting harder.

Customer expectations go beyond ease of use; they're now expecting proactive experiences. Dr. Dieter Haban, CIO of Daimler Trucks North America, offers Daimler Trucks's Detroit Virtual Technician as a good example. Imagine that you're on a tight schedule driving an 18 wheeler and your engine light comes on when you're 100 miles from the nearest service station. What to do? Continue driving and risk a time-consuming breakdown, or call a service vehicle to diagnose the issue, also resulting in lengthy downtime?

Detroit Virtual Technician is a telematics solution that records critical vehicle performance data immediately before, during, and after a fault occurs. It then sends the data to Daimler's mission control center for quick analysis of the fault codes by its technicians. The technicians can provide the driver and fleet owner immediate feedback, including whether the truck needs immediate service or whether it can continue on its journey. This is the kind of experience customers will expect in the future.

Big data is one of the enablers of proactive customer experiences. Thriving companies will continue to leverage data by using it to address the cracks in company security, worries about data privacy, and the limitations of analytics that became apparent in the first wave of big data.

Product enhancements

Thriving companies are also integrating related products and services into sophisticated industry solutions, while extending and restructuring industry boundaries, essentially creating whole new industries. Michael Nilles, recently promoted to Schindler's chief digital officer, offers a great example. Schindler has expanded its business beyond its elevator and escalator products to become a mobility solutions company, offering its technology in a variety of industries including health care, hotels, offices, malls and retail outlets, and sports arenas and expos. A major enabler in this evolution was the development of smart elevators and escalators that constantly collect sensor data and transmit it over the internet to Schindler's back-end systems, where the data is analyzed, generating maintenance notifications long before an actual breakdown. These notifications, enriched with expert repair advice, are then dispatched in real time to Schindler's service applications, where technicians are scheduled as appropriate.

Beyond individual products, companies have been harnessing the power of platforms to connect buyers and sellers (e.g., Etsy, Priceline, and Apple's App Store), hosts and visitors (e.g., Airbnb and HomeAway) and drivers with riders (e.g., Uber, Lynx, and RideScout). Some platforms, such as Uber, are giving rise to a new on-demand economy that's redefining the nature of work.

Collaborative innovations

Companies must become more innovative to better respond to the highly competitive, global business environment. Collaboration is indispensable for innovation, both within the company's own boundaries and beyond, with customers, partners, startups, universities, and research communities.

Thriving companies are harnessing collaborative digital networks to build ecosystems, such as Amazon, PayPal, Fidelity, Aetna, Apple, and Microsoft. Ecosystems like these are moving beyond linear supply chains to partner with providers of complementary products and services (or sometimes even competitors). According to MIT research, companies with 50% or more of their revenues from digital ecosystems have higher revenues and higher profit margins than their industry's average.

Collaboration and ecosystems are particularly important in the emerging Internet of Things, where multiple companies across different industries must make sure that their offerings work with each other in a number of highly complex areas including health care, home automation, and smart cities.

Companies such as AUDI, Club Med, and mBank are competing with digital innovations by empowering local teams to build solutions quickly while helping them identify and leverage synergies. These companies are also creating accessible and reusable global platform components that give local solutions competitive advantages while at the same time coaching local teams in designing and learning from experiments.

Organizational leadership

Companies must rethink their structures and culture to better deal with new market environments and business models. The hierarchic organization that prevailed in the 20th century's production-oriented industrial economy will not work in the more global and fast-changing digital economy. The companies that are most successfully adapting are making a cultural shift from "Mad Men" to "Math Men," where decision making is increasingly based on data rather than on the frequently wrong opinions of senior executives. These companies are adding data scientists to enhance organizational learning. They've made some decisions faster by relying on algorithms, and they are introducing artificial intelligence, robotics, and other advanced technologies as appropriate.

Thriving companies also acknowledge the dark side of the digital economy and that more resources and a greater strategic emphasis on cybersecurity will be required to address the increasing number of attacks, the growing expertise of hackers, and the thriving black market for stolen data and malware. Luis A. Aguilar, former commissioner of the SEC, has warned that boards that choose to ignore or minimize the importance of cybersecurity oversight do so at their own peril.

The digitization of the economy is one of the most critical issues of our time. Digital technologies are rapidly transforming both business practices and societies, and they are integral to the innovation-driven economies of the future. But there is another dark side: technological revolutions are highly disruptive to economies and societies. This was the case during the Industrial Revolution, and it is the case today.

While technologies advance rapidly, organizations and skills advance slowly, and the gap between swiftly evolving technology and the slower pace of human development will grow quickly in the coming decades as exponential improvements in artificial intelligence, robotics, networks, analytics, and digitization affect more and more of the economy and society. Inventing effective organizations for the digital economy is the grand challenge for our time, and the companies that are already adapting are leading the way.

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The 4 Things It Takes to Succeed in the Digital Economy

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For several years now digital has been an appendage to "business as usual." But recently, digital transformations have reached the tipping point where digital has become "business as usual"; the tail has become the dog. Digital is not just part of the economy - it is the economy.

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Hi Halimah, this is the conclusion that I've made regarding digital economy after I made some research on the internet.

So, what is the digital economy? It′s the economic activity that results from billions of everyday online connections among people, businesses, devices, data, and processes. The backbone of the digital economy is hyperconnectivity which means growing interconnectedness of people, organisations, and machines that results from the Internet, mobile technology and the internet of things (IoT).

The digital economy is taking shape and undermining conventional notions about how businesses are structured; how firms interact; and how consumers obtain services, information, and goods.

Professor Walter Brenner of the University of St. Gallen in Switzerland states: “The aggressive use of data is transforming business models, facilitating new products and services, creating new processes, generating greater utility, and ushering in a new culture of management.”

Recently, TechCrunch, a digital economy news site, noted, “Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate… Something interesting is happening.”

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Overview

The world as we know it is continually changing, and one of the fundamental drivers is digital transformation. At its core, digital transformation isn't about Internet "unicorns." It's about using the latest technology to do what you already do - but better.

The global economy is undergoing a digital transformation as well, and it's happening at breakneck speed.

So, what is the digital economy? It′s the economic activity that results from billions of everyday online connections among people, businesses, devices, data, and processes. The backbone of the digital economy is hyperconnectivity which means growing interconnectedness of people, organisations, and machines that results from the Internet, mobile technology and the internet of things (IoT).

The digital economy is taking shape and undermining conventional notions about how businesses are structured; how firms interact; and how consumers obtain services, information, and goods.

Professor Walter Brenner of the University of St. Gallen in Switzerland states: " The aggressive use of data is transforming business models, facilitating new products and services, creating new processes, generating greater utility, and ushering in a new culture of management. "

Recently, TechCrunch, a digital economy news site, noted, "Uber, the world's largest taxi company, owns no vehicles. Facebook, the world's most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world's largest accommodation provider, owns no real estate... Something interesting is happening."

What is it about these companies that allows them to re-imagine the traditional boundaries and value proposition of their industry? What can these young companies teach you about leading a digital transformation in your industry? How will you adapt to the emerging fluidity found in traditional roles?

There are four fundamental areas of digital transformation central to business success in the digital economy.

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What is digital economy? | Deloitte Malta | Technology

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The world as we know it is continually changing, and one of the fundamental drivers is digital transformation. At its core, digital transformation isn't about Internet "unicorns." It's about using the latest technology to do what you already do - but better.

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Hi guys, please watch this video because it explains more about digital economy

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Business transformation in the digital economy: redefining retail

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Hope you guys like it

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Egypt - Towards A Digital Economy: A New Era

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Hi Halimah, personally I agree that the digital transformation could give impacts for Asia's economic. As I have read in one of the article, it says that the use of digital technologies can make businesses more efficient, innovative, nimble, and agile. Asian economies are investing in digital infrastructure to support policy agendas and facilitate the achievement of opportunities for businesses, consumers, and government.

As mentioned in your case study that the internet, cloud computing, big data, fin tech, and other new digital technologies are used to collect, store, analyze, and share information digitally and transform social interactions, this shows that if the digital technologies are done right, it can be a powerful enabler for Asian economies and economic growth.

I would also like to highlight some of the benefits from the article that I have found.

For business, digital can help encourage trade in the region by helping businesses, particularly small businesses, access global markets.

For consumers, digital can provide opportunities in terms of connectivity, mobility, and social networks.

For government, digital can drive the development of public infrastructure, particularly around smart cities, which can help them overcome infrastructure development hurdles.

This digital transformation have lots of advantages such as:

1.  Supporting SMEs and facilitating trade in business engagement.
2.  Trade agendas
3.  Breaking down barriers
4.  The economy-wide benefits of digitally engaged small businesses
5. Consumer engagement

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Asian economies are digitally engaged, and this can be leveraged to support the economic growth and development trajectories of emerging economies.

Digital technologies, done right, can be a powerful enabler for Asian economies and economic growth. Investment in digital infrastructure contributes to productivity in the same way as other forms of infrastructure, and by boosting productivity and opening up new channels of commerce, economic growth can be enhanced beyond what would otherwise be the case. As such, digital tools can support policy agendas and facilitate the achievement of opportunities for businesses, consumers, and government.
How?
For business, digital can help encourage trade in the region by helping businesses, particularly small businesses, access global markets.

For consumers, digital can provide opportunities in terms of connectivity, mobility, and social networks.

For government, digital can drive the development of public infrastructure, particularly around smart cities, which can help them overcome infrastructure development hurdles.

It is acknowledged that there are many other applications of digital technology in the business, consumer, and government spheres. These include the benefits of digital for multinational corporations, analysis of big data, and wide-ranging policy agendas, including privacy and cyber-crime. These are all important issues, but are not the focus of this paper.

Business engagement-supporting SMEs and facilitating trade

Economic takeaways

Digital technology has a role to play in helping business, particularly small business, in the Asian region.

Benefits include connecting buyers and sellers, increasing competition and choice, and facilitating trust between parties.

The use of Internet and digital technologies makes businesses more efficient, innovative, nimble, and agile. While all organisations, from very small businesses through to multinational corporations, can benefit from digital technologies, this section focuses on small to medium-sized enterprises (SMEs), which make up the vast majority of businesses and are a dynamic part of economies in Asia.

SMEs are more likely to innovate than larger firms, as they tend to have a greater appetite for risk and, hence, are better placed to pioneer and use new technologies.

Technology lowers barriers to entry, offers new business models, and supports SMEs in responding to consumer-driven change. By enabling SMEs, digital technologies can support the region's economic growth and development.

Trade agendas

While the global economy is moving towards more protectionist policies (coming out of Brexit and US policies), the push for trade liberalisation in Asia continues.

As noted in the Voice of Asia Edition One paper Trade to trump protectionists and boost global growth, the rising Asian economic giants have been shifting their trade policies towards greater openness and global engagement. Their rise will underpin further trade gains through Asia and the world in the decades ahead. Digital has a role in supporting trade in the region.

For 2017, perhaps the most important trade agenda will be the Regional Comprehensive Economic Partnership (RCEP) that is being negotiated for a stronger partnership between ASEAN and the six states with which ASEAN has existing free trade agreements (FTAs): India, China, Australia, South Korea, Japan, and New Zealand.

A central element of the RCEP is the creation of a safe and efficient transaction environment, avoiding cumbersome regulatory barriers that will affect SMEs playing a part in the digital economy. Online payments via platforms like AliPay, Apple Pay, and PayPal ensure that trade can occur across borders.

In addition, an important feature of the trade agreements being negotiated in Asia, including RCEP, is the emphasis on SMEs, which was not usually the case in the previous generation of trade agreements. This signals a clear shift in focus towards supporting SMEs as part of economic growth in the region.

Digital facilitates the breakdown of distance as a barrier and can support these trade agendas in the region. On the other hand, it is important that digital considerations are part of the negotiations to ensure that emerging digital economies do not suffer.

Breaking down barriers

Digital technologies bring together more options for business, increasing competition and choice. This has benefits for consumers and sellers in the form of a broader, more competitive marketplace.

However, basing economic development in the growth of SMEs is not without its challenges. To be effective in the marketplace, a business has to be able to attract consumers by providing its products in a manner that is convenient, attractive from a cost perspective, and instils customer confidence in the quality of the product and ease of transaction.

Digital technologies address each of these elements. It means that businesses, even small ones, are able to engage with customers, both within and across borders.

Trust is a key element. And for SMEs, it can be hard to develop direct relationships.

But, again, the architecture surrounding digital helps solve these challenges.

For example, digital platforms such as Alibaba, Taobao, and eBay allow SMEs to compete where otherwise they would face disadvantages of scale.

Also, e-payment systems can allow people to transact online, knowing their money is safe and being transferred via a third party. This can allow people to transact without cash or a physical meeting.

For many goods traded at distance or for services such as accommodation or transport in the sharing economy, rating systems support the trade by codifying trust. Reviews allow people to know that the seller/buyer will be genuine. Dispute-resolution processes also mean people have a backup if things go wrong. This can make buyers feel safer online and allow for trade across countries.

In this way, digital tools can assist trade even if there is limited regulation. The tools include platforms and client relationship management software.

Benefits of digital in connecting buyers and sellers can mean goods and services can be sold more broadly within a producer's own, often large, domestic market. A boost in intra-country trade can involve import substitution and potentially reduce costs.

The economy-wide benefits of digitally engaged small businesses

The nature of the potential benefits that can be derived from successfully getting SMEs to embrace digital technologies has been explored in two extensive reports prepared by Deloitte for Google in India and Indonesia.

In Indonesia, fewer than 1 in 10 small businesses considered themselves as having advanced online capabilities, while 73 percent are offline or have only very basic online capabilities. The potential benefits of digital technology for Indonesian SMEs include:

1. Up to 80 percent higher growth in revenue

2. One-and-a-half times the present likelihood of increasing employment

3. Seventeen times the current potential for innovation

4. Greater international competitiveness

Indeed, the study found that boosting SMEs' digital engagement could increase Indonesia's annual economic growth by 2 percent, the jump it needs to become a middle-income country by 2025.

In India's case, the digital agenda recently received significant support, as the government decided to demonetise large-denomination currency in an effort to promote "less cash" (see the sidebar "Demonetisaton-a push towards further digitisation?"). Initial anecdotal evidence points towards greater adoption of digital modes of payment by consumers and businesses even after remonetisation is almost complete in the Indian economy.

Demonetisation-a push towards further digitisation?

The Indian government has arguably pulled off one of the most significant reform measures in the recent past by demonetising high-value currency notes. This caused a sudden shortage in currency in circulation, as approximately 86 percent of the currency had to be exchanged. While the move had some negative impact, there were some long-term positives too. A push toward digitisation in the payment stream was one such phenomenon. The decision, in late 2016, to recall banknotes from circulation has essentially been a shot in the arm for fintech and other banking services in the country.

The shortage of currency made it necessary for all segments of society to use electronic money. The result was a massive increase in digital payment mechanisms even after the economy was completely remonetised. In fact, the economy has witnessed a 59 percent increase in transactions through digital channels in March compared to the first month after demonetization was announced. It is important to note that while some of this increase would be an initial reaction, long-term structural factors show that India is ready for a digital revolution and this event will lead to permanent shifts in digital. By 2021, the Indian Internet user base is forecast to reach 555.3 million-44 percent of the population.

Over the longer term, payment gateways, cards, mobile wallets, online retail, payment banks, and e-marketplace industries are likely to see net gains.

Consumer engagement

Economic takeaways

Digital is driving connectivity in Asian countries, particularly via mobile Internet.

This ranges from mobiles connecting consumers, to the rise of social media and opportunities presented by digital banking, particularly in countries where there are large unbanked and rural populations.

Individuals around the globe are embracing and driving change, at least where the technology is available and affordable. Digital has the potential to open up a range of opportunities for consumers, from connectivity and mobility to access to social media and digital banking, and this can support economic growth and development.

Digital is driving connectivity in Asian countries, from mobiles connecting consumers in rural areas to improving liveability and convenience in urban areas, particularly as urbanisation throughout Asia results in congestion and environmental challenges.

Asian consumers are either already embracing digital or showing that they will when access improves and costs ease, as evidenced by the strong adoption of mobile.

Mobile and Internet

Mobile penetration rates are rising rapidly in the region, driving widespread Internet adoption and transforming consumer behaviour.

In Indonesia, for example, consumers have embraced mobile Internet in a country where difficult terrain has inhibited investment in fixed-line communication. There are over 1.3 mobiles per capita in Indonesia, and the trend has been away from 2G phones towards phones that can access the Internet. A survey by Nielsen in 2011 found that Indonesians who do use the Internet were more likely to access it on their mobile phones than in any of the other major countries in Southeast Asia. There has been strong take-up of social media; in May 2016, Indonesia was ranked 4thin the world in terms of number of Facebook users (78 million), behind India, the United States, and Brazil.

Internet penetration in India has also grown rapidly over the last few years, with around 432 million users in December 2016, and a potential 750 million additional potential users. Also, 77 percent of urban and 92 percent of rural users consider mobile the primary device for accessing the Internet.

But price and access remain a hurdle-users are ready but the Internet remains expensive.

In Indonesia, the cost of Internet (measured as 10 mbps, unlimited data, cable/ADSL in 2016) is US$26, the 81st most expensive in the world. It is US$42 in the Philippines, US$37 in Malaysia and US$30 in Singapore. When GDP per capita is taken into consideration, the relative costs of Internet access for Asian countries remain relatively high.

For mobile broadband services, the cost of 500 mb of prepaid mobile data as a share of income is the highest in the world, other than in Africa, as shown in Figure 1.3.

There is high participation in social networks, with India leading the way with the highest number of Facebook users in the world (195 million in May 2016). Indonesia ranks 4th, with 78 million users. Facebook has been banned in China, though there are alternative social networks including the Renren network and WeChat.

When considering all forms of social media, over 1 billion individuals across Asia were active users of social media in 2016, with 806 million in China alone and a further 130 million in India and 76 million in Indonesia. In China, Weibo, the country's most popular blogging platform, reported that monthly active users grew 33 percent year over year to 313 million in December 2016, and that 90 percent of these were mobile users.

In Japan, LINE is the most popular mobile messaging app, allowing users to send messages, share picture, movies, and music. LINE has 50 million active monthly users, representing 40 percent of the country's population. As shown in figure 1.5, Japan has the fourth-highest number of Twitter users in the world, and is the only market in which Twitter is more popular than Facebook. Its appeal to the Japanese includes the ability to post anonymously and the greater detail possible in 140 characters relative to English. Japan also holds the world record for the most number of tweets per second (143,199) during a television broadcast of a local movie classic.

E-commerce is also expanding in China, now the world's largest e-commerce market. Online shopping is emerging as a strong competitor to shopping in physical stores, with its success underpinned by sophisticated payment systems and efficient logistics networks. Some of the major online marketplaces allow users to create accounts with value on the platform itself, so that payments are not delayed while waiting for bank clearance, allowing goods to be delivered faster.

The Taobao Marketplace (launched in 2003) is the Alibaba Group's consumer-to-consumer e-commerce platform. The Alibaba Group also operates the Tmall website (launched in 2008), which is its business-to-consumer e-commerce platform. While Taobao Marketplace facilities the transaction of goods between private buyers and sellers, including small businesses, Tmall sellers are typically larger registered businesses. These two platforms had 443 million active buyers as of the end of 2016, which roughly represents 60 percent of all Internet users in China. Tmall.com and Taobao.com are currently the third- and fifth-most visited websites in China, respectively, and ninth and tenth globally.

In the year ended 31 March 2016, the Alibaba Group reported annual revenue of around RMB 101.1 billion, with over 80 percent of this coming from its e-commerce operations in China. In 2016, the gross merchandise volume (GMV) of the Chinese e-commerce market was RMB 20.2 trillion, with 23.3 percent, or around RMB 4.7 trillion, comprising of online shopping. Alibaba's annual GMV in the year to 31 March 2016 was around RMB 3.1 trillion. Over 60 percent of this activity was transacted on the Taobao Marketplace.

These activity and market share numbers suggest that Alibaba's e-commerce platforms are pervasive in China and have grown rapidly in just over a decade. These numbers also imply that online retailing has had extensive reach in the country. A media report indicates that the number of stores on the Taobao Marketplace with annual sales under $15,000 increased by 60 percent between 2011 and 2013. Over the same period, the number of stores with sales between $15,000 and $150,000 increased by 30 percent, and the number of stores with sales over $150,000 increased by 33 percent. Furthermore, there is activity outside urban areas as well. In 2014, more than 2 million Taobao Marketplace stores were registered to rural IP addresses in China. Digital technologies have lowered the barriers to market access, with examples of this leading to the transformation of remote farming communities.

Online shopping in China

The success of Taobao Marketplace and Tmall is attributed to the ability of the Alibaba Group to customise its features to meet the needs of the local market. For example, the AliWangWang instant chat program allows for pre-sales consultation and after-sales service. The introduction of the Alipay escrow-based online payment platform in 2004 provided consumers the additional security of only paying for goods upon receipt and inspection. At the same time, the availability of Alipay meant that many Chinese consumers who did not have credit cards were able to purchase goods online. In 2014, Alipay surpassed Paypal to become the world's largest online payments platform (Bobsguide).

In addition to the development of this digital infrastructure, investment in logistics support services has also been critical. The online shopping experience is ultimately dependent on the goods delivery experience. The Cainiao Network, a partly owned affiliate of Alibaba Group, runs a logistics platform and central data-communications network that helps coordinate deliveries with more than 3,000 independent logistics companies located across China and abroad (Alibaba Group). As of 2015, Cainiao was able to offer next-day delivery of goods ordered from Alibaba's online marketplaces to 34 cities, and had aimed to expand this to 50 cities by the end of 2015 (Alizila). Again, service coverage goes beyond the cities. For example, Cainiao served more than 1,200 villages across a number of provinces at that time, and around 20 percent of the parcels delivered to rural areas were delivered on the same day or the next day (Alizila).

Other factors driving the success of online shopping in China include regular discounts and sales "events," such as Singles' Day, and extensive marketing via social media.

As these trends converge and combine, the nature of retail, distribution, marketing, and consumer engagement is changing. With over half of the world's population, 58 percent of its mobile subscriptions, and 53 percent of its Internet users, Asia will play an increasing role in the use of digital platforms to engage customers.

Digital banking

Consumers also stand to benefit from gains in digital banking. In developed Asian markets, Internet banking is now near universal and smartphone banking has grown more than threefold since 2011. In emerging Asian markets, about a quarter of consumers are using computers and smartphones for their banking.

This is important for the traditional banking system, as more than 80 percent of consumers in developed Asian markets are willing to shift some of their holdings to a bank that offers a compelling digital proposition. In emerging Asia, more than 50 percent of consumers indicate such willingness.

Digital banking includes smartphone and Internet banking. Smartphone banking is making particular inroads in developing Asia, with penetration increasing over fivefold in the three years from 2011 to 2014, going from 5 percent of the population using smartphone banking in 2011 to 26 percent in 2014.

Mobile banking can also improve financial inclusion in the region. For example, in Papua New Guinea, mobile network operators have been exempted under the Banks and Financial Institutions Act 2000 to conduct mobile phone money transfers. In some countries, electronic top-ups allow individuals to send or receive airtime, which can act as transfers similar to mobile money. Further, mobile banking promotes financial inclusion by providing access even in regions where the number of physical branches is limited.

Financial inclusion through digital banking has been taken very seriously in India, where a large section of the population still relies on informal sources of financing. The government started to push for banking via digital modes in 2014 through the popular JAM (Jan Dhan, Aadhar, and mobile) program. The idea is simple: JAM aims to connect a citizen's unique identity number (Aadhar number) with the bank account and mobile number. Other examples in India include the use of Unstructured Supplementary Service Data (USSD), which allows for mobile banking transactions using basic feature phones without the need for mobile Internet connectivity; Unified Payments Interface, which powers multiple bank accounts in a single mobile app; and micro ATMs, where business correspondents (BCs)-who might be local shop owners-act as "micro ATMs" to conduct instant transactions.

Mobile payments are also booming; of the 900 million WeChat users in China, 800 million are using its mobile payment services. Further, AliPay's Quick Response (QR) codes account for about half of the US$ 5.5 trillion mobile payments made each year in China. Mobile payments are increasingly being used in favour of cash for transactions ranging from grocery shopping to paying for taxis and rental leases.

There is significant potential for such technologies to have an impact on consumers and improve convenience, particularly as much of Asia's populations remain unbanked (see figure 1.7).

Government engagement

Economic takeaways

In Asia, governments have been taking a greater lead on digital relative to the rest of the world, and this can help countries leap over development hurdles.

Digital technologies support economic growth and development, and government can play a role in making the most of these technologies to enable the economic advancement of the region.

Digital technologies can help countries leap over development hurdles, increase productivity, and boost economic growth-technological advances and falling prices mean that even countries without extensive telco infrastructure are able to take advantage of digital. Innovation is increasingly based on digital technologies and business models that effectively utilise ICT. As innovation is a key driver of economic and social gains, encouraging businesses and individuals to fully embrace digital technologies should be a priority for governments. Indeed, governments have a strong incentive to provide the private sector with policy incentives to encourage this investment.

In Asia, governments have been taking a greater lead on digital relative to the rest of the world.

Singapore is ranked first globally on the Networking Readiness Index (NRI), according to the World Economic Forum. This includes ranking No. 1 for government usage on the NRI.

The UN 2016 e-Government Survey ranked Singapore and the Republic of Korea among the top five world leaders on the Online Service Index (OSI). The Republic of Korea is in the process of implementing a new vision for its government operations, "Government 3.0," with a focus on sharing, openness, communication and collaboration. Citizens can see all services provided by the Korean government on one portal.

The UN 2014 e-Government Survey ranked the Republic of Korea and Singapore among the world's top three e-government leaders, followed by Japan at number six.

As noted by the Deloitte indices above, Asian governments have a high level of digital engagement compared with other countries with similar GDP per capita. There are a number of roles and opportunities for government. It could act as a facilitator, for instance, by providing policy incentives to support digital infrastructure development, or directly invest in digital and increase the use of digital in its own operations-by providing government services online, for example. This chapter explores some of these aspects.

Role of government

Government can play a role in a number of areas to drive digital opportunities in Asia. It is acknowledged that there are many policy agendas associated with digital, ranging from privacy, cyber-crime, and censorship to robotics. However, in this chapter, we focus on the role for government as shown in Figure 1.8.

The UN 2016 e-Government Survey ranked the Republic of Korea and Singapore among the world's top four e-government leaders, followed by Japan at number 11. Asia's regional average is above the global e-Government Development Index average.

Coordinating and financing digital infrastructure provision

Governments play a crucial role in improving access to high-quality, reliable, and affordable Internet for all residents.

This has had a positive economic impact. Rollout of broadband in China (1999-2007), with an increase in Internet domains and users per capita, had a positive impact on firms' manufacturing exports in ICT-intensive sectors. It raised the number of firms that export, the firms' share of exports in total sales, and the real value of firms' exports. The higher share of Internet domains and users also increased firms' real output and labour productivity.

Research presented in the World Bank's 2009 report, Information and Communication for Development, found a GDP boost of 1.38 percentage points for every 10 percentage-point increase in broadband penetration.

Whole-of-government service delivery

The spread of digital has also facilitated the trend towards the provision of integrated public services online. This makes it easier for people to interact with the public administration to access information and essential services (whole-of-government service delivery).

India has started the Digital India initiative wherein a whole range of services are to be digitised to increase their reach and improve transparency in tendering. These initiatives have also taken place in the fiscal space, with India establishing the GST System Project. This initiative aims to establish a uniform interface for the tax payer and a common and shared IT infrastructure between the centre and states. This is essentially the backbone upon which India's biggest tax reform in recent years is built.

India has also established the Bhoomi ICT-based land registry and management system in Karnataka. This has involved the integration of the registration department with land-acquiring bodies and banks and other financial institutions, resulting in streamlined and simplified transactions and record administration.

The Japanese economy is unique in its own right as it has one of the most advanced Internet infrastructures in the world. The economy faces strong demographic pressure and one of the ways of tackling it is increasing productivity. Productivity can be increased by retooling the existing population, and digital innovations possibly provide the best way forward. The government, for its part, has a number of initiatives for enhancing its strengths in the ICT sector. Japan also has a number of e-government initiatives that are focused on transcending agency boundaries to enable instant use and sharing of information in ways that unify national and local government.

The smart Japan ICT strategy unveiled in 2014 had two major elements, the first being ICT growth strategy and the second, an initiative on the intensification of international competitiveness and global outreach in the field of ICT. The vision was to create innovation by connecting various things and services via ICT.

Singapore has REACH (reaching everyone for active citizenry @home), a government agency designed to engage citizens on policy issues. Since its inception in 1985, it has been modified to become a designated e-engagement platform to engage citizens via electronic means on key policy initiatives. This is helping it achieve the goals of increasing the participation of citizens in government processes.

The increased connectivity between government institutions also has the potential to encourage different agencies to work more closely together, generating new insights that help improve existing decision-making processes. Singapore has the G-Cloud to securely share information between government agencies.

Open government data

Many governments across Asia are making their data available online in an effort to make public institutions more inclusive and accountable. This can also potentially lead to improved service delivery as data is understood in new ways.

A number of Chinese cities including Beijing, Shanghai, and Chongqing have created open government data websites to allow citizens to access government data freely. Datasets include topics such as tourism, education, transportation, land zoning, and medical treatment. These websites also encourage the development of apps based on the available data and provide a platform for these apps to be shared. Japan has promoted the Open Data Initiative, in which the government widely discloses public data and allows its secondary use.

Data analytics also provides governments with the opportunity to focus on prevention rather than reaction. This is particularly evident in the area of disaster management:

The Republic of Korea has established the National Disaster Management Information System to provide detailed and timely data on impending disasters at each stage of disaster management (prevention, preparation, response, and recovery). Disaster status information can be disseminated between local governments in one minute, down from the 35 minutes that were required prior to the establishment of the system. 3,800 CCTVs are used in an open system for disaster management. Additionally, the public can receive SMS messages with updates on disaster information.

Japan has established a Nowcast earthquake information system to warn of imminent disasters. Information on factors such as the timing of seismic wave arrivals and the estimated intensities of incoming seismic waves can also be obtained.

Ensuring that digital technologies deliver long-term and broad based gains

Governments have a key role to play in ensuring that the social and economic benefits of digital technology are inclusive. The success and sustainability of the digital economy will depend on the ability of governments to develop agile frameworks that allow societies to anticipate and shape the impact of new technologies.

According to the World Economic Forum, "Governments can play a supportive role in creating a level playing field by ensuring a business environment that allows firms to quickly react to new developments; this includes speedy procedures for opening a new business and bringing products to market, providing a supportive innovation ecosystem, ensuring that barriers to entry stay low by enforcing a competition regime that counteracts potential network lock-in, and promoting and facilitating ICT adoption by building out infrastructure and having a clear ICT strategy."

Singapore ranks first in the 2016 Global Information Technology report's measure of social impact. Gains from ICT adoption are widely shared, with digital technologies being used to provide basic access to government services and ensuring that schools are connected.

Smart cities

Smart cities are urban spaces that use innovative digital technologies to support their operations. Digital tools are built into the infrastructure of the city itself to make it more efficient, innovative, and vibrant. This is one area in which digital tools can help a government and city leap over development hurdles in terms of infrastructure, towards more efficient city operations.

Smart cities may include congestion- and crime-management systems: Singapore has a network of sensors, cameras, and GPS devices embedded in taxis to track traffic and predict future congestion to warn drivers to take alternative routes.

In India's ninth most populous city, Pune, the state government introduced Safe City advanced electronic surveillance and the Physical Security Information Management (PSIM) project to combat crime, urban policing issues, and terror threats. This involved installing more than 1,200 cameras as well as a state-of-the-art command and control centre (C3). In almost all major states in the country, police departments have developed apps to support women's safety.

In Japan, smart city initiatives have a particular focus on ensuring the functions of electricity supply networks and emission reduction. As part of these initiatives, thousands of residences have been equipped with home energy-management systems; electric vehicles and renewable energy have been introduced across much of Yokohama. The size of the smart city-related market is expected to be 3.3 trillion yen by 2020.

Another benefit of smart cities is that they support regional connectivity; for example, the government of Singapore has promoted data centres in an effort to attract private entities. In addition, Singapore's Personal Data Protection Commission (PDPC) has actively engaged industry in the development of good practices in data management, including those related to the transfer of data. This has contributed to Singapore becoming a global leader in digital transfer, which has helped underpin the country's success as a financial hub.

In the case of smart cities, it is essential that the government lead the charge, as the initiatives involve managing significant amounts of sensitive and personally identifiable citizen data. The data must be managed collaboratively and also secured against potential cyber-attacks. A country's government is often best-placed to do so.

According to an Economist survey, 33 percent of respondents who claim that their city has better governance were familiar with the concept of a "smart" city and what this constitutes, compared with 16 percent of those with weaker governance.

Many governments in the region have resorted to planning for smart cities to further the goal of digitisation while also alleviating concerns such as overcrowding, environmental issues, and increased demand for infrastructure and energy. The Japanese government has supported these initiatives for some time by giving subsidies and also collaborating across the globe for the development of Japanese businesses. Singapore's government established the Smart Nation Vision in 2014 as an initiative to create their smart city. Today, nearly 98 percent of public services are available online, among countless other initiatives (see infographic at the end of the "Role for government" section). The Indian government also has its own smart city mission, wherein 100 cities have been selected for development, with the idea that cities should be able to plan their own growth.

What's next?

Rapid advances in technologies and digital platforms are certainly changing the way we live and operate. The advent of the Internet and the prevalence of smartphones have caused us to rethink how we, as individuals, consume; digital technologies are lowering barriers to entry and presenting new models for businesses, especially small to medium-sized enterprises; and digital is driving the development of public infrastructure, which can help leapfrog traditional development hurdles, increase productivity, and support economic growth.

Technological advances on the horizon, such as robotics and artificial intelligence, are expected to change the way we live and work. Countries that are prepared and digitally engaged will be better placed to ride this next wave.

The government has a key role to play in helping economies and societies take a proactive position on digital, both through its own investment and by providing policy incentives to encourage private-sector investment. How this translates to a country's economic growth, financial inclusion, and social cohesion depends on a number of other factors, including the country's approach to innovation.

As countries become more digitally savvy and economies develop, the role of businesses and consumers come to the fore, while governments take more of a back seat.

Asian economies are leading the race in terms of digital engagement. However, each country is running its own race and there are clear opportunities for countries to accelerate their growth and development by learning from each other's experiences.

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Economic growth and development in Asia: What is the role of digital?

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Asian economies are digitally engaged, and this can be leveraged to support the economic growth and development trajectories of emerging economies. Digital technologies, done right, can be a powerful enabler for Asian economies and economic growth.