How did the World Bank respond to the digital revolution in terms of policies and investments in developing countries? Much has been published on the digital revolution as it is creating unprecedented opportunities and challenges for economic development in countries at different levels of development. These include the WDR 2016 and several books I wrote since 1990. Few books examined Bank historical performance and implications for future development assistance practice. In Economic Development in the Digital Age**, I share insights into digital policies and investments in developing countries and the challenges facing countries and aid agencies in pursuing holistic digital transformation for sustainable development.
The book draws on my personal experience in working with many client countries. I reflect upon my experience in strategic planning and development assistance in relation to digital development. The book is inspired by the revolutionary advances in digital technologies as they offer powerful tools for transforming the development process and shaping the future of humanity. In particular, the recent wave of digital technologies, including artificial intelligence (AI), offers dramatic opportunities and transformational capabilities even while presenting existential risks to societies.
The book does not represent official positions of the World Bank. Yet, it corroborates and draws on Bank publications and those of other international development agencies. It draws on relatively recent economic growth research that has given due attention to governance, institutions, and leadership (Growth Commission; Acemoğlu and Robinson, 2012). These governance issues are often ignored in pursuing digital transformation.
In the book, I take a holistic view of digital transformation. I propose an integrated framework that conceives digital transformation as both an ecosystem and a process. Digital transformation is about using digital technologies to initiate and support deep and sustainable change in structures and processes, modes of production and consumption, value creation from available resources, and/or substantial increases in access to and use of data and knowledge.
Digital transformation is not just about internet connectivity or access to digital technology by individual users. It is about learning to drive digital transformation by the whole society, especially if its full benefits are to be reaped. Access to digital technology must be accompanied by “social software” to secure much of the promised productivity increase and socio-political sustainability. That means building and orchestrating collateral policies, governance, and institutional changes. This expanded view of digital transformation has major implications for Bank organization and aid practices.
1 trace the Bank’s response to the digital revolution starting from the late 1980s, when it was learning to use digital technologies internally while striving to become a Knowledge Bank. Would the Bank support client countries in rolling out new technologies, building communications infrastructures, and investing in information resources for sustainable development? What factors were influential in recognizing and responding to country needs and demands for digital development assistance? Back then I advocated a proactive approach to apply digital technologies across sectors in Bank-funded development projects. Building ICT assistance competencies would be critical to the Bank’s future relevance and the quality of its portfolio across all economic sectors. With few exceptions, the Bank’s investments in digital applications in various economic sectors have been ad hoc, partial and unsustainable.
Did the World Bank live up to expectations of global leadership in digital development assistance? What factors have determined the success of digital investments in the context of various developing countries? How can aid agencies retool and up their game to help client countries master digital transformation?
I assess formal World Bank corporate strategies for digital transformation practice. Did these strategies address the foundations necessary for building vibrant digital transformation ecosystems? Did they cover strategic applications in key economic sectors? Were they owned by the operating regions within the Bank? Were they seriously followed, monitored and evaluated? Have aid agencies practice what they preach?
The book discusses the critical challenges to institutional learning and the need for aid organizations to reinvent their services to strategically integrate digital technologies into their products and services – if they are to keep up with the pace of technological change and stay relevant to their clients. These challenges go beyond skill mix and organizational structure and include inertia, risk aversion, short termism, and poor cross-sector collaboration, among others.
The book concludes with an exploration into the key factors that have delayed the Bank’s and other aid agencies’ response to today’s fast-changing technological environment. The book discusses the critical barriers to institutional learning and the need for aid organizations to reinvent their services to strategically integrate digital technologies into their products and services – if they are to keep up with the pace of technological change and stay relevant to their clients. I recommend four key elements of a strategy to accelerate institutional learning: strengthening corporate leadership and strategy for the whole ecosystem of digital transformation; mobilizing staff and other resources for digital disruption and the digital future; nurturing a learning and innovation culture; and promoting cross-sector collaboration within and among international aid agencies and country stakeholders.
* Nagy Hanna can be reached at nagyhanna@comcast.net
** Hanna, Nagy. 2024. Economic Development in the Digital Age. Palgrave Macmillan is also available at Amazon.
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KEYWORDS digital, digital development, economic development, transformation, World Bank
