IMD World Digital Competitiveness

Figure 1: Internet usage and economic development Source: World Bank Development Indicators. Data for 2022

The future of digital nations

There is abundant academic work showing the impact of digital technology on income inequality. Daud et al. (2020) investigated the relationship between finan cial development caused by technology and income inequality and concluded that, in the 54 countries analyzed between 2010 and 2015, the income inequality gap increased. 5  Interestingly, Nguyen (2022) was also able to demonstrate that digitalization narrows inequality in developed economies and widens it in developing economies. Therefore, the relationship between shaped 6 . It seems, then, that developing nations need to pay an initial inequality cost of digital transformation before it begins to see its social benefits emerge gradually. The relationship between digital transformation and ESG factors is also significant. The 2022 United Nations E-Government Survey 7 stressed the positive impact of

In the coming years, countries pursuing the “digital imperative” (the need to incorporate technology into their economies) will be faced with headwinds, including the negative externalities of technology and the wealth and income inequalities that result from it. They will also have to grapple with the challenges inherent to achieving a national agenda that preserves both digital transformation and sustainability. The Global Digital Compact proposed by the United Nations seems like a reasonable approach. It is an initia tive proposed by Secretary-General António Guterres to ensure the responsible use of technologies, and it is to be agreed by September 2024. The Compact states the need to make digital agendas consistent with the UN Sustainable Development Goals.

5 Mohd Daud, Siti Nurazira et al. “Financialization, digital technology and income inequality.” Applied Economics Letters 28 (2020): 1339- 1343. 6 Nguyen, Van. “Does Digitalization Widen Income Inequality? A Comparative Assessment for Advanced and Developing Economies.” South East European Journal of Economics and Business 17 (2022): 154-171. 7 UN E-Government Survey, available at https://publicadministration.un.org/egovkb/en-us/Reports/UN-E-Government-Survey-2022

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