The surge in digital technologies available over the past few decades has transformed virtually every sector of the global economy.

For business, digital can help encourage trade in the region by helping businesses, particularly small businesses, access global markets.

For consumers, digital can provide opportunities in terms of connectivity, mobility, and social networks.

For government, digital can drive the development of public infrastructure, particularly around smart cities, which can help them overcome infrastructure development hurdles.

It is acknowledged that there are many other applications of digital technology in the business, consumer, and government spheres. These include the benefits of digital for multinational corporations, analysis of big data, and wide-ranging policy agendas, including privacy and cybercrime. These are all important issues but are not the focus of this paper.

The potential of digital technologies in country prosper

• Digital technologies Breaks down barriers

Digital technologies bring together more options for the business, increasing competition and choice. This has benefits for consumers and sellers in the form of a broader, more competitive marketplace.

Digital technologies address each of these elements. It means that businesses, even small ones, are able to engage with customers, both within and across borders.

For example, digital platforms such as Alibaba, Taobao, and eBay allow SMEs to compete where otherwise they would face disadvantages of scale.

In this way, digital tools can assist trade even if there is limited regulation. The tools include platforms and client relationship management software.

Benefits of digital in connecting buyers and sellers can mean goods and services can be sold more broadly within a producer’s own, often large, domestic market. A boost in intra-country trade can involve import substitution and potentially reduce costs.

• The economy-wide benefits of digitally engaged small businesses

The nature of the potential benefits that can be derived from successfully getting SMEs to embrace digital technologies has been explored in two extensive reports prepared by Deloitte for Google in India and Indonesia.¹

For example- In India’s case, the digital agenda recently received significant support, as the government decided to demonetise large-denomination currency in an effort to promote “less cash” (see the sidebar “Demonetisaton—a push towards further digitisation?”). Initial anecdotal evidence points towards greater adoption of digital modes of payment by consumers and businesses even after remonetisation is almost complete in the Indian economy.

• Digital Banking creates financial inclusion

Financial inclusion through digital banking has been taken very seriously in India, where a large section of the population still relies on informal sources of financing. The government started to push for banking via digital modes in 2014 through the popular JAM (Jan Dhan, Aadhar, and mobile) program. The idea is simple: JAM aims to connect a citizen’s unique identity number (Aadhar number) with the bank account and mobile number. Other examples in India include the use of Unstructured Supplementary Service Data (USSD), which allows for mobile banking transactions using basic feature phones without the need for mobile Internet connectivity; Unified Payments Interface, which powers multiple bank accounts in a single mobile app; and micro ATMs, where business correspondents (BCs)—who might be local shop owners—act as “micro ATMs” to conduct instant transactions

•  Government engagement

Digital technologies can help countries leap over development hurdles, increase productivity, and boost economic growth—technological advances and falling prices mean that even countries without extensive telco infrastructure are able to take advantage of digital. Innovation is increasingly based on digital technologies and business models that effectively utilise ICT. As innovation is a key driver of economic and social gains, encouraging businesses and individuals to fully embrace digital technologies should be a priority for governments. Indeed, governments have a strong incentive to provide the private sector with policy incentives to encourage this investment.