The lack of universal and affordable access to the internet may widen income inequality within and between countries, a senior official of the International Monetary Fund (IMF) has said while urging policymakers to foster a digital-friendly business and regulatory environment.
Advanced economies like the United States, France, Germany, the United Kingdom and Canada have the highest access rates, said Mercedes Garcia Escribano, Deputy Division Chief in the IMF’s Fiscal Affairs Department.
However, big emerging economies show large disparities in the proportion of internet users in their populations which range from about two-thirds in Brazil and Mexico to about one-third in India.
Countries in sub-Saharan Africa followed by many in emerging and developing economies in Asia are among those with the lowest access to the Internet despite being world leaders in mobile money transactions.
There is also a large variation in internet connectivity by firms in sub-Saharan Africa — only about 60% of businesses use email for business compared to about 85% in Europe and Central Asia, said Escribano.
“COVID-19 and the great lockdown triggered a mass migration from analog to digital and highlighted that access to the internet is crucial for socio-economic inclusion,” she wrote in a blog post.
High-speed internet is key for working from home, for children’s education when they cannot attend school in person, for telemedicine, for benefiting from social support programs and for enabling access to financial services for everyone, especially for those living in remote areas.
Still, internet usage remains a luxury: half of the world’s population does not have access to the Internet, either through a mobile device or through fixed-line broadband.
“The digital divide – the gap between those who have internet access and those who do not – is more like a chasm both within and between countries,” wrote Escribano.
Income inequality and inequality of opportunity may worsen – even in advanced economies – because disadvantaged groups and people who live in rural areas have more limited internet access.
The disparity between men and women in their labor force participation, wages, and access to financial services may increase where there is a gender gap in access to the internet.
This could be the case in many emerging and developing countries where fewer women than men own a mobile phone, said Escribano.
The relatively low internet access might depress productivity in emerging and developing countries. IMF staff research finds that a one percentage point increase in the share of internet users in the population raises per capita growth by 0.1 to 0.4 percentage points in sub-Saharan Africa.
The COVID-19 pandemic demonstrates that having reliable internet allows some businesses to continue operations amid lockdowns which keep economies running.
“Given the increasing role of the Internet for the economy and for accessing public services, policies to foster an inclusive recovery must aim to tackle the digital divide within and between countries,” wrote Escribano.