We live under the belief that technology alone is the cure for all economic ills. However, the reality is more complex: digitalization does not act magically or uniformly across all nations. It is not enough to install fiber optics on every corner for productivity to soar and the Gross Domestic Product (GDP) to follow the same pace. Digitization does not act uniformly, it requires fertile soil to flourish.
A comprehensive study of 130 countries, between 2000 and 2020, conducted by the authors of this article, reveals an uncomfortable truth: the impact of Information and Communication Technologies (ICTs) on GDP per capita depends drastically on the level of development and technological absorption capacity of each country. In simple terms: there is no point in giving a state-of-the-art computer to someone who does not yet have stable electricity or technical education to operate it.
Using econometric models to segment nations by income range, the study brings a warning to developing economies, such as Brazil. While in high-income countries the internet and broadband are consolidated drivers of wealth, in low-income nations the effect of internet use was, surprisingly, negative in the period analyzed.
How can we explain that more internet may not, initially, generate growth? The answer lies in the misalignment between digital access and structural foundations. In very poor countries, digitalization without the accompanying skilled human capital and solid physical infrastructure may only displace unskilled workers and increase structural unemployment, intensifying internal inequalities rather than catalyzing development. Access to the network only translates into wealth when the worker and the company have the educational tools to transform information into innovation. Without this, the internet becomes just a window for consumption.
If fixed broadband depends on a certain “maturity threshold” to bear fruit, mobile telephony emerges as the great democratic protagonist. Data shows that the increase in mobile phone subscriptions positively impacts economic growth across all income groups, from sub-Saharan Africa to developed Europe. As it is a more accessible and functional technology even in environments with low technological complexity, cell phones have become the true gateway to financial inclusion and the dynamization of small businesses, which today accept instant payments and manage inventories in the palm of their hand.
Classified by the World Bank as an upper-middle income country – per capita income between US$4,466 and US$13,845 – Brazil occupies a transition position. For us, investment in fixed capital – purchase of machinery/equipment, construction or renovation of buildings, acquisition of vehicles, computers, furniture and tools – and in education is as vital as the expansion of the fiber optic network. High-speed broadband, for example, only presents significant returns at more advanced stages of development, where it facilitates innovation and productive efficiency. Therefore, the challenge for public policy makers is not just to “connect people”, but to create an ecosystem that sustains this connection. This requires policies aimed at digitally training the workforce and strengthening institutions that favor competition and innovation.
Digitization is, without a doubt, the great engine of modernity, but its success is not guaranteed by simply pressing a button. Without people’s empowerment and a solid physical infrastructure, we run the risk of creating an even greater digital divide – in which technology, instead of unlocking economic potential, only highlights our structural deficiencies. We need to educate to innovate, or we will continue to be just passive users of other people’s futures.
* Débora Rocha da Silva holds a bachelor’s degree in economic sciences from Centro Universitário Ibmec BH; Christiano Alves Farias and Luiz Carlos Day Gama are doctors in economics and professors of the economic sciences course at Ibmec BH
Source: www.bing.com
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