Harnessing digitalization for sustainable economic development: Insights for Asia

• Main Authors: BEIRNE, John, FERNANDEZ, David
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2021
• Subjects: Finance; Finance and Financial Management
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/6897; https://ink.library.smu.edu.sg/context/lkcsb_research/article/7896/viewcontent/adbi_harnessing_digitalization_122421_web.pdf
• Institution: Singapore Management University

Digitalization has helped to transform economies by enhancing competitiveness and productivity across a wide range of sectors. The use of big data and the rise of online platforms have accelerated this process over the past decade. In addition, the adoption of digital solutions in the face of social distancing and lockdown measures introduced due to the coronavirus disease 2019 (COVID-19) pandemic has been integral to the economic recovery process. The shift to a digitalized economy has also reduced barriers to market entry for firms, lowered inequality, and led to a promotion of social and economic inclusion. Advances in digital technology have also had substantial positive impacts on the productive capacities of economies, helping to improve economic efficiency and long-run output growth potential. In addition, digitalization has contributed to rises in regional and global economic integration, including via international capital flow and trade dynamics. All of these have been important contributory factors in helping economies make progress toward achieving the United Nations Sustainable Development Goals. That said, while digitalization can have substantial positive effects on overall macroeconomic performance, there can also be labor market implications as automation and artificial intelligence (AI) replace workers. Ensuring a sufficient level of internet infrastructure development and digital education and reducing the digital divide are other factors driving the potential of digitalization as an input to economic progress. Policy makers therefore face challenges in order to harness the maximum benefits of digitalization for the competitiveness of their economies, including through appropriate education and labor market reforms, as well as digital infrastructure investment