Broadband and digitalization and social impact
Assessing the impact of digitalization on societies is complicated because of a 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 also means motivating economic growth.
Numerous studies show the positive impact of digitalization on a nation’s prosperity. The key attributes that determine a country’s digitalization are (Sabbagh, El-Darwiche, Friedrich, & Singh, 2012):
- Ubiquity. The universal access to digital services by consumers and enterprises.
- Affordability. A level of pricing that makes them available to the majority.
- 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. 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 these key attributes except for skill, which 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.
The 3air community will strongly influence the development of the countries it will connect.
We probably don’t need to explain that digitalization leads to higher productivity and how it would impact a nation’s economy. The connection becomes more apparent by looking at the numbers.
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 this continues to grow steadily.
This is especially important for emerging markets that need to create additional jobs and gain inclusion into the global economy to ensure their young population 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 country’s score on the Global Innovation Index (Sabbagh, El-Darwiche, Friedrich, & Singh, 2012), suggesting that countries become more innovative as they become digitized.
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 expand their search radius globally when they need talent. Good internet connectivity will be a prerequisite to accessing these opportunities.
Standard of living
With economic growth comes an increase in the standard of living. It is also the first step to raising the quality of life within a society.
Introducing broadband to a household increased its average monthly income by 3.67%. (Katz, International Telecommunication Union, 2017)
In an emerging economy, this can lead to better provision of basic needs, such as food and shelter, and brings about exponential growth in life quality and satisfaction.
Online education is powerful because it breaks down the barriers installed by traditional education. While traditional education has its benefits, it is obviously outdated. With its global reach and cost-effectiveness, online education provides abundant equal opportunities, especially to people living in emerging economies.
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 while 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 many schools offered online classes while closed. A study from Romania showed that the top reasons for not attending online classes were a lack of equipment or internet access. (Sava, 2021)
Online learning is becoming even more important as an additional tool. 98% of students in the U.S. use this method on a daily or weekly basis. (Duffin, 2020)
We can see a big step in the globalization of education. The main barriers to providing equal opportunities in this area are technology availability, affordability, and stable connectivity.
As with education, health services are also being globalized by digitalization, having experienced exponential development to address health service barriers during the current pandemic. The internet enables 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)
Many (not all) healthcare services and guidance can be provided through online healthcare platforms, which is especially valuable in emerging economies where going to the doctor could mean half a day’s walk. Digitalization has the potential to save lives by delivering help faster and with greater efficiency.
We only need to look at our own lives to realize how much digitalization has changed our personal and professional communication. Some may argue that its impact has its downsides, but in a global race, lagging behind is far more detrimental.
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 the recent pandemic has exaggerated its effect. Companies introduced an average of 3.5 new communication channels during this period.
Live chat channels increased by 54%, with 35% of the respondents using these channels for the first time during the pandemic. The results were similar for other communication channels such as Interactive Voice Response, SMS, email, social media, and others. (Mlitz, 2021)
During COVID lockdowns, personal digital communication increased. Just remember not being able to communicate with your family and friends while visitations were discouraged. The same is true with travel and internationalization, where the internet has made keeping in contact with faraway friends an easy routine.
Communication and information availability are major factors in governing society. With better information flow comes transparency, which should increase government efficiency and reduce corruption. 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 the Transparency International index by 1.2 points and gives the population more insight into government policies and functions (Sabbagh, El-Darwiche, Friedrich, & Singh, 2012). It might also lead to more active political participation and support for the development of human rights.
Digitalization will also boost e-government services. A 10-point increase in digitalization improves e-government effectiveness by 0.1 points. The same digitalization factor also has a 0.17-point increase in the Inequality-Adjusted Education Index which is more pronounced in emergent nations. (Sabbagh, El-Darwiche, Friedrich, & Singh, 2012)
Blockchain technology is even more promising in revolutionizing governance processes.
Its tamper-proof, trustless environment might bring a positive change to the corruption-prone individuals in power, starting with fair and trustless digital elections conducted 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 which includes all the points mentioned beforehand. Education, health, and standard of living all play a significant role in how we perceive our quality of life. Therefore, it is 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 Wellbeing Thriving Index (67 non-OECD 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 emerging economies and the difference seems to be correlated to factors beyond digitalization such as food, housing, clothing, water, energy, and health transportation or communication. It seems like once the basic needs are resolved, digitalization has exponentially positive effects in providing access to basic services, especially healthcare and education. As economies develop, access to basic services becomes routine, and digitalization’s impact becomes less pronounced again. (Sabbagh, El-Darwiche, Friedrich, & Singh, 2012)