IMPACT OF ICTS ON INCOME GROWTH AT THE BASE OF THE PYRAMID

28 Feb 2016

The limited impact of ICTs on income growth in lower- income populations can be partially attributed to their significantly lower ICT adoption. Several measures of ICT penetration are highly correlated with country GDP per capita. These include Internet penetration (correlation coefficient of 0.75 with GDP per capita), fixed broadband subscription penetration (correlation coefficient of 0.74), and active mobile broadband subscription penetration (correlation coefficient of 0.69).

This relationship, where lower income implies lower ICT adoption, is also observed within countries. In the United States, for example, households with an annual income below $30,000 in 2010 were less than half as likely to have broadband Internet at home as those earning more than $75,000 (40 percent versus 87 percent); similarly, individuals in those households were nearly half as likely to use the Internet in general (57 percent versus 95 percent)

While affordability is one barrier to adoption, other factors include education and culture. To counter the possible disparity in the impact of ICTs between lower- and higher-income groups, the most immediate action should be to close the disparity in ICT penetration. Many of the benefits of ICTs are not accruing to lower-income populations because access and adoption are low. Some policy actions are recommended to close the access and adoption gap to increase the positive benefits of ICTs to groups at the base of the economic pyramid:

  1. Focus public resources and incentives for building broadband Internet access out to rural and underserved communities. 
  2. Remove excess taxation on devices and access, and consider targeted subsidies for certain populations.  
  3. Develop robust ICT training curricula and programs. Increasing digital literacy and training more individuals in how to utilize ICTs will help drive familiarity and adoption, even for basic ICTs such as feature phones. A recent analysis by McKinsey found the lack of user capability and digital illiteracy (in addition to language illiteracy) to be main barriers impeding many of the 60 percent of the global population who are not yet online.
  4. Focus on closing the gender gap in ICTs. Gender gaps exist in ICT adoption: fewer women and girls than men and boys use mobile phones and the Internet. A wide range of economic and cultural influences drives these gaps, but increasing female participation in ICTs will help spread more benefits to lower-income households.
 
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