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Broadband and digitalization and social impact

Assessing the impact of digitalization on societies is complicated because of lack of universal metrics. A Gini coefficient is often considered to look at the level of inequality within a society, but in emerging economies, alleviating poverty means also sparking economic growth.

Numerous studies show the positive impact of digitalization on a nations prosperity. The key attributes that determine a country’s digitalization are (Sabbagh, El-Darwiche, Friedrich, & Singh, 2012):

  • Ubiquity. That is the universal access to digital services by consumers and enterprises.
  • Affordability. Is a level of pricing that makes them available to the majority of people.
  • Reliability. As the quality of available digital services.
  • Speed. With real time access to digital services.
  • Usability. So that users can adopt and use the services with ease.
  • Skill. Is the ability of users to incorporate digital services into their lives and businesses.

Looking at these factors, broadband is the cornerstone of digitalization as it directly impacts all key attributes except for skill that is influenced indirectly by increasing usability and providing the means to educate.

Digitalization leads to positive changes in key economic and social areas of life.

3air community will strongly influence the development of whole countries it is going to connect.

Economic Growth

We probably don’t need to explain that digitalization leads to higher productivity and that that would impact a nation’s economy but looking at the numbers it becomes clearer how deeply intertwined it actually is.

A 10% increase in broadband penetration in low- and middle-income countries can result in a 1.38% increase in economic growth. (Barnes, 2015)

A 10% increase in digitalization triggers a 0.5% to 0.62% gain in per capita GDP and reduces the nation’s unemployment rate by 0.84%.

From 2009 to 2010, digitalization added around 19 million jobs to the global economy and has been steadily rising.

This is important especially for the emerging markets that will need to create additional jobs and get global economy inclusion to ensure that a booming population of young people can contribute to their national economies. (Sabbagh, El-Darwiche, Friedrich, & Singh, 2012)

A 10-point increase in digitalization results in a 6-point increase in the countries score on the Global Innovation Index (Sabbagh, El-Darwiche, Friedrich, & Singh, 2012) and that would suggest that as countries become more digitalized, they also become more innovative.

There is a connection to infrastructure investments as network effects of universal broadband access could have a multiplier of 1.17 on the investment in infrastructure. (Katz, International Telecommunication Union, 2017)

With the current COVID-19 pandemic showing us that working from home is an acceptable model, companies will more and more be on the global online talent lookout. Good internet connectivity will be a prerequisite in catching those opportunities.

Standard of living

With economic growth there will be an increase in standard of living. This is also the first step to raising the quality of life within a society.

Introduction of broadband to a household yielded an increase of 3.67% in its average monthly income. (Katz, International Telecommunication Union, 2017)

In a developing country this leads to better covering the basic needs, such as food and shelter, and brings about exponential growth in satisfaction and life quality.

Education

Online education is powerful because it essentially breaks down the barriers put in place by traditional education. While traditional education has its benefits it is decidedly outdated. With its global reach and cost effectiveness, online education provides more equal opportunities, especially to people in developing countries.

The technology-related productivity gains in education could reach from $30 billion to almost $70 billion, enabling governments to achieve more with their education budgets and providing millions of students with the foundation for a better future. (Manyika, et al., McKinsey & Company, 2013)

During the COVID-19 pandemic, online education evolved fast and most of the schools offered online classes during their closures. A study from Romania showed that reasons for not attending online classes have been either lack of equipment or no internet access. (Sava, 2021)

Online learning is becoming even more important as an additional tool. 98% of students in the U.S. are using them on a daily or weekly basis. (Duffin, 2020)

We can see a big step in globalization of education. The main barrier of providing equal opportunities in this area are technology availability and affordable, stable connectivity.

Health

As with education, health services are also being globalized by digitalization, taking exponential development in answer to health service barriers during the current pandemic.

The Internet is enabling greater use of remote diagnosis, treatment, and education. Technology-related benefits in health care could range from $84 billion to $188 billion by 2025, and the broader social and economic impact of improved health outcomes will be far greater. (Manyika, et al., Lions go digital: The Internet’s transformative potential in Africa, 2013)

Not all but many healthcare services and guidance can be provided through online healthcare platforms making it especially valuable in developing countries where going to the doctor means taking a half a day walk. Digitalization brings help fast and efficient and has the potential to save lives.

Communication

We need only look to our own lives to realize how much digitalization has changed our communication, may it be personal or professional. Some may argue that its impact has its downsides, but in the global race, lagging in communication is detrimental in its own ways.

There is a positive correlation between GDP per capita and Social Networking. Secondly, young and educated people, arguably the more productive, are more connected. (Pew Research Center, 2012)

Personal communication is heavily impacted by connectivity and that became exaggerated during the recent pandemic. Companies introduced on average 3.5 new communication channels during this time. 54% reported increased use of live chats and 35% reported using it for the first time during the pandemic. Similar holds true to other communication channels such as Interactive Voice Response, SMS, Email, social media, and others. (Mlitz, 2021)

During lockdowns personal digital communication increased. Just imagine not being able to communicate with your family and friends while visitations have been discouraged. The same is true with travel and internationalization, where keeping contact with friends from all over the world is today easily possible over the internet.

Governance

Communication and information availability are major factors in a governing society. With better information flow comes transparency and that should lead to less corruption and increased government effectiveness. Broadband inevitably improves communication and access to information, and it also enables e-government services. Potential public services such as public education and public healthcare will benefit from internet access. Digitalization promotes inclusion in governmental processes thereby improving equality.

It has been shown that a 10-point increase in digitalization increases Transparency International index by 1.2-point and gives the population more insight into government policies and function (Sabbagh, El-Darwiche, Friedrich, & Singh, 2012). This might lead to more active political participation and support for development of human rights.

Digitalization will also boost e-government services. A 10-point increase in digitalization improves e-government effectiveness by 0.1 point. The same digitalization factor also has a 0.17-point increase in the Inequality-Adjusted Education Index and is more pronounced in developing countries. (Sabbagh, El-Darwiche, Friedrich, & Singh, 2012)

The blockchain technology is even more promising in revolutionizing the governance processes.

Its temper proof, trustless environment might bring a positive change to the corruption prone individuals in power, starting with fair and trustless digital elections with the help of blockchain technology.

The other areas where blockchain is promising in providing viable solutions are digital identities and financial inclusion, land ownership and other official records, kept or used by the government.

Quality of Life

Quality of life is somewhat a catchall measure of all mentioned points. Education, health, and standard of living all play a significant role in how we perceive our life quality. It is therefore no surprise that there is a strong positive correlation between broadband, digitalization and quality of life measured by the Gallup Wellbeing Thriving Index and the OECD Better Life Index.

1 point increase in the Digitization Index leads to an increase of 0.59 points in the Quality-of-Life Index. (Katz & Koutroumpis, SSNR Electronic Journal, 2012)

Digitization and the Better Life Index (34 OECD countries)

Digitization and the Better Life Index (34 OECD countries)

Digitization and the Wellbeing Thriving Index (67 non-OECD countries)

Digitization and the Wellbeing Thriving Index (67 non-OECD countries)

Digitization and the Human Development Index (120 countries)

Digitization and the Human Development Index (120 countries)

Figure 26 OECD Better Life Index; Gallup Wellbeing Surveys; UNDP HDI; Strategy& analysis

The index is a bit less pronounced in developing countries and the difference seems to be corelated to factors beyond digitalization such as food, housing, clothing, water, energy, health and finally transportation and communication. It seems like once the basic needs are covered, digitalization has exponential positive effects by providing access to basic services, especially healthcare and education. As economies develop, access to basic services becomes a given and digitalization’s impact again becomes less pronounced. (Sabbagh, El-Darwiche, Friedrich, & Singh, 2012)