Title page

Contents

Foreword 11

Acknowledgments 13

Executive Summary 15

Abbreviations 23

PART 1: Progress 25

Chapter 1. Digital Adoption: Accelerating Postpandemic, yet a Widening Divide 26

Key Messages 26

Introduction 26

The share of Internet users in middle-income countries is moving closer to that in high-income countries, while the share in low-income countries... 27

Larger gaps are forming in internet speeds and data use 32

COVID-19 boosted the use of business, education, finance, medical, health, and shopping apps 34

Digital uptake by businesses varies significantly across countries and types of technology 36

Firms with greater digital readiness before the pandemic and those that invested in digital solutions during the pandemic were more resilient 40

Digital adoption and diffusion must be facilitated to narrow the digital divide 42

Notes 43

References 43

Chapter 2. The Digital Sector: A Driver of Innovation, Growth, and Job Creation 45

Key Messages 45

Introduction 45

The digital sector drives growth, creates jobs, and generates huge positive spillovers 47

Pathways to create value in the digital sector 52

Notes 65

References 65

Chapter 3. Digital Infrastructure: The Continual Need for Upgrading and Greening 67

Key Messages 67

Introduction 67

Telecom network investment moves from coverage toward upgrading 68

Governments can increase the efficiency of telecommunication investment 70

Data infrastructure-IXPs, data centers, and cloud computing-is a vital part of the digital economy 73

Developing countries need to accelerate investment in data infrastructure 78

Greening digital infrastructure creates opportunities for low- and middle-income countries 79

Notes 83

References 84

PART 2: Emerging Trends 87

Chapter 4. Digital Public Infrastructure: Transforming Service Delivery Across Sectors 88

Key Messages 88

Introduction 88

What is DPI, and why is it important? 89

Key gaps remain in access to IDs, e-signatures, data exchange, and digital payments 95

How to build good DPI 102

Notes 103

References 103

Chapter 5. Artificial Intelligence: Revolutionary Potential and Huge Uncertainties 105

Key Messages 105

Transformer models and large language models mark a new stage in artificial intelligence development 106

Potential benefits and risks of AI 107

Implications of AI for low- and middle-income countries: a blessing or a curse? 113

AI governance principles and divergent regulatory trends 116

Strategies to accelerate safe and inclusive AI adoption 119

A new playbook for development in the AI era 120

Notes 122

References 122

Appendix A. Data Sets Used in the Report 127

FIGURE ES.1. Report framework 15

FIGURE 1.1. Internet users as a share of population, global and by country income group, 1990-2022 28

FIGURE 1.2. Location, age, and gender digital divides, by country income group, 2019 and 2022 29

FIGURE 1.3. Fixed and mobile broadband penetration, by country income group, 2015-22 30

FIGURE 1.4. Price of fixed and mobile broadband plans, by country income group, 2015-22 30

FIGURE 1.5. Smartphone penetration, by income group, region, and type of connection, 2015-22 31

FIGURE 1.6. Rural and urban households with a computer or tablet, by country income group, various years 32

FIGURE 1.7. Use of bandwidth per user, by country income group, 2015-22 32

FIGURE 1.8. Median speed of fixed and mobile downloads, by country income group, 2019 and 2023 33

FIGURE 1.9. Fixed and mobile broadband traffic per capita, by country income group, 2015-22 33

FIGURE 1.10. Impact of COVID-19 on patterns of smartphone use, by type of app, 2019-22 34

FIGURE 1.11. Growth in app downloads, by country and type of app, 2019-22 35

FIGURE 1.12. Effect of lockdown stringency on downloads and total time spent on apps, by category of app, 2020-22 35

FIGURE 1.13. Share of firms with a computer or internet connection across countries, 2019-22 36

FIGURE 1.14. Use of website, social media, and cloud computing for business purposes in select countries, 2019-22 37

FIGURE 1.15. Use of technologies applied to payment methods in select countries, 2019-22 38

FIGURE 1.16. Use of technologies applied to sales methods in select countries, 2019-22 39

FIGURE 1.17. Share of firms investing in digital solutions during COVID-19, by firm size, 2020-22 40

FIGURE 1.18. Predicted probability of using digital solutions over time, by size of firm and sector, 2020-22 41

FIGURE 1.19. Association between firms' capabilities and digital investment and use, 2020-22 41

FIGURE 1.20. Association between firms' resilience in sales and digital investment and use, 2020-22 42

FIGURE 2.1. Key segments in the digital sector 46

FIGURE 2.2. Global annual patent publications, by field of technology, 1980-2020 47

FIGURE 2.3. Value added of ICT manufacturing and ICT services, by subsector, 2000-22 48

FIGURE 2.4. Value added growth in ICT manufacturing and services, select countries, 2015-22 49

FIGURE 2.5. Intensity of ICT inputs, by sector, 2000 and 2020 49

FIGURE 2.6. Intensity of IT services inputs in select industries, by country income group, 2000 and 2020 50

FIGURE 2.7. ICT sector as a share of employment, by subsector, 2000-22 50

FIGURE 2.8. Size and growth of IT services and gender ratio in IT services, 2000-22 51

FIGURE 2.9. Global exports of ICT goods, by category, 2000-21 54

FIGURE 2.10. Top 10 exporters of ICT goods, 2000-21 54

FIGURE 2.11. Economies with the largest changes in share of exports of global ICT goods, 2015-21 55

FIGURE 2.12. Global export of ICT services, by category, 2005-22, and top 10 exporters of ICT services, 2010-22 56

FIGURE 2.13. Global services exports, by category, 2022 57

FIGURE 2.14. Growth of IT services exports, by country income group, 2019-22 57

FIGURE 2.15. Share of venture capital deals received, by subsector and country income group, 2017-22 59

FIGURE 2.16. Share of domestic apps among the 100 most downloaded apps, 2015-22 62

FIGURE 2.17. Probability of being among the top 50 most downloaded apps in international markets, 2022 62

FIGURE 2.18. Geographic distribution of users, by category of app and country income group of the app publisher, 2022 63

FIGURE 3.1. Global mobile coverage, 2000-22 68

FIGURE 3.2. Projected growth in data traffic, by device and technology, 2017-27 68

FIGURE 3.3. Amount and regional distribution of global investment in telecom networks, 2017-21 70

FIGURE 3.4. Number and distribution of IXPs, by country income group and region, 2022 74

FIGURE 3.5. Average number of members and traffic per IXP, by country income group and region, 2022 75

FIGURE 3.6. Top companies and applications, by internet traffic generated, 2022 75

FIGURE 3.7. Retail price and monthly consumption of internet data in low- and lower-middle-income countries, 2021-22 76

FIGURE 3.8. Number and distribution of connected data centers, by country income group and region, 2018-22 78

FIGURE 3.9. ICT sector greenhouse gas emissions and electricity consumption, 2020 80

FIGURE 3.10. Data center consumption of electricity in Ireland and the Netherlands 80

FIGURE 3.11. Volume of global renewable power purchase agreements, by sector and top 9 corporate purchasers of renewable energy, 2021 81

FIGURE 3.12. Price of electricity and grid emissions factor, various countries, 2021 81

FIGURE 4.1. The concept of digital public infrastructure 89

FIGURE 4.2. The India stack 90

FIGURE 4.3. G-20 DPI outcomes in 2023 91

FIGURE 4.4. Gaps in access to official identification, by demographics and country income group, 2021 98

FIGURE 4.5. Adoption of digital financial services 100

FIGURE 4.6. Number of payment methods used during the COVID-19 response, by number of countries, as of May 2021 101

FIGURE 5.1. Number of model parameters for significant published AIs, by domain and type of institution, 1940-2020 107

FIGURE 5.2. Automation and augmentation potential, by gender and country income group 110

Boxes

BOX ES.1. About this report 16

BOX 2.1. The importance of apps and an overview of Apptopia app performance data 61

BOX 3.1. Connecting the unconnected: a US$400 billion investment is needed 72

BOX 3.2. Kenyan internet exchange point 77

BOX 3.3. Liberalizing energy markets to attract ICT companies 82

BOX 4.1. Different approaches to DPI 91

BOX 4.2. Growing evidence on the impact of DPI 93

BOX 4.3. Examples of digital IDs: Ethiopia's Fayda, France's FranceConnect, and Maldives' eFaas 96

BOX 4.4. Data-sharing examples: India's DigiLocker, Singapore's APEX, and Uganda's UGHub 99

BOX 5.1. Views of industry leaders on AI 121

Maps

MAP 2.1. Absolute change in the number of investment deals, 2020-22 versus 2017-19 59

Exhibits

EXHIBIT 4.1. How to build good digital public infrastructure 102

Box Tables

TABLE B3.1.1. Golden rules for achieving widespread connectivity 72

Box Figures

FIGURE B3.3.1. Electricity wheeling 82

FIGURE B4.2.1. Theory of change 93

FIGURE B4.3.1. Sample Fayda card issued by the Government of Ethiopia 96

FIGURE B4.3.2. Screenshot of a menu of public services available through the FranceConnect system 96

FIGURE B4.3.3. Screenshot of a login page for eFaas 97

TABLE A.1. Description of data used from the Firm Level Adoption of Technology Survey 128

TABLE A.2. List of countries in the Business Pulse Survey used in this report 129

TABLE A.3. Digital adoption 132

TABLE A.4. Digital sector 144

TABLE A.5. Digital infrastructure 157