Reaping Digital Dividends: Leveraging the Internet for Development in Europe and Central Asia

From East to West, the economies of Europe and Central Asia (ECA) are not taking full advantage of the internet to foster economic growth and job creation. The residents of Central Asia and the South Caucasus pay some of the highest prices in the world for internet connections that are slow and unreliable. In contrast, Europe enjoys some of the world’s fastest and affordable internet services. However, its firms and individuals are not fully exploiting the internet to achieve higher productivity growth as well as more and better jobs. Reaping Digital Dividends investigates the barriers that are holding back the broader adoption of the internet in ECA. The report identifies the main bottlenecks and provides policy recommendations tailored to economies at varying levels of digital development. It concludes that policies to increase internet access are necessary but not sufficient. Policies to foster competition, international trade and skills supply, as well as adapting regulations to the changing business environment and labor markets, will also be necessary. In other words, Reaping Digital Dividends not only requires better connectivity, but also complementary factors that allow governments, firms and individuals to make the most out of it.

This is a timely assessment of the potential for countries in Europe and Central Asia to benefit more from the digital economy and digital trade. The report does a good job in pointing out both opportunities and challenges in a balanced manner and provides valuable advice to policy makers in the region. ----Torbjörn Fredriksson, Chief, ICT Analysis Section, Division on Technology and Logistics at the United Nations Conference on Trade and Development

Internet penetration and economic development are highly correlated and, as such, are important to all who believe in universal, affordable, open, and safe access to the Internet. Reaping Digital Dividends is an excellent compendium of observations, reflections, and examples in Europe and Central Asia that brings analytical rigor in its conclusions. This book is a must-read for all decision makers, public and private, who believe that benefits of digital transformation should reach all citizens in all areas and who would not allow the emergence of a digital divide. ----Anna Krzyzanowska, Head of Unit, Investment in High-Capacity Networks, European Commission, DG CONNECT

Disruptive impact of modern technologies on firms, jobs, quality of work, and disparities in incomes has become a concern for economists and policy makers around the world, but the effects of information and communication technologies, the Internet, and automation have been largely underresearched for countries other than the United States. This report contributes substantially to our understanding of these cross-cutting issues by thoroughly analyzing the diverse region of Europe and Central Asia. It shows that factors behind information and communication technology adoption and utilization by firms and workers go beyond the level of development and are related to an interplay among regulation, infrastructure, and skills. This report will be a highly valuable read for analysts and practitioners interested in shaping policies that would maximize benefits and minimize risks related to the current digital revolution a crucial challenge of our times. ----Piotr Lewandowski, President, Institute for Structural Research, Warsaw, and IZA, Bonn