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The new technology frontier for developing economies



THE Covid-19 pandemic has shown how fast new technologies can change the world. Scientists used vast computational power for genomic sequencing that tracked the virus as it mutated. Digital technology was key in modifying messenger RNA to create successful vaccines. Within a year of the virus’ formal identification at the end of 2019, several countries had launched population-wide vaccination campaigns, although many poorer countries struggled with limited access.

The lessons from Covid-19 highlight some of the major challenges societies will face in the coming decades. First, how to harness Industry 4.0 technologies including biotechnology, artificial intelligence, the internet of things, and robotics to address pressing global challenges that require immediate and effective approaches.

Second, how to help ensure that the expected benefits of those advances are more evenly distributed and do not leave the developing world behind. Success can be measured against the United Nations 17 Sustainable Development Goals (SDGs) agreed by 193 countries in 2015 as tangible targets for social, environmental, and governance outcomes for a more prosperous and inclusive world.

The SDGs target poverty, income inequality, education access and attainment, a more sustainable environment, and gender equality. Reaching the SDGs by 2030, as originally proposed, requires vast new investments by governments and the private sector. It is also evident that underlying the link between digital transformation and the SDGs is a recognition that technology has been at the heart of economic growth and broader human development for centuries. But less attention has been given to how developing countries can adopt and use it most effectively; technology plays a decisive role.

Success for developing economies depends on taking advantage of technology advances that have massively reduced the costs of storing information, increased data processing speeds, made connectivity more ubiquitous, and extended the capabilities of data analytics.

These advances, when combined with frontier digital technologies such as the industrial internet of things which involves using multiple interconnected devices to transform the operations of factories, farms, and transport can improve productivity and help reduce environmental impact. Artificial intelligence, robotics, and 5G networks offer similar potential to enhance well-being, expand the circular economy in consumption and production, and make cities more livable.

Underlying the link between digital transformation and the SDGs is a recognition that technology has been at the heart of economic growth and broader human development for centuries. But less attention has been driven to how developing countries can adopt and use it most effectively. This paper is the first in a series of reports that will examine the role of technology in developing economies in reaching the SDGs and the challenges this poses. The report identifies the digital transformation underway, including online education with an uptick in new users since Covid-19 impacted school attendance, new distribution models for home food delivery based on local farm supply chains, and the adoption of drone technologies and geo-spatial data for farming.

In the journey of digital transformation, developing economies have some advantages over developed ones. Widespread use of cellphones and a willingness to adopt mobile payments and fintech models mean that older, legacy technologies and infrastructure have been surpassed. This provides developing economies with opportunities to leapfrog to new digital technologies, avoiding the need to implement fixed-line telephone systems or branch-based banking. Adding to this, younger populations, capable of acquiring new skills and inherent labor cost advantages, allow developing economies to compete for digitally delivered work for clients around the world—creating new markets and well-paid work opportunities.

To potentially benefit from the digital transformation and achieve the SDGs requires addressing existing challenges, large-scale investments are needed to overcome the lack of digital connectivity in developing economies, which is the stepping stone to achieving real, sustained impact. Equally, innovation in program design can help build digital skills among workers and expand access to relevant digital material—including in local languages. New business models can help lower the cost and operational barriers facing small, informal businesses that limit their use of digital marketing, e-commerce, and local supply chains. Finally, collaboration among governments, businesses, and the international community is crucial to address unreliable energy access, poor transport networks, and limited business funding.

Countries need high levels of technology adoption and digital maturity to achieve the SDGs as described in this report. Currently, most developing economies are just beginning this journey, both in terms of implementing technology and introducing regulatory and institutional reforms to support their digital transformation. The private sector is a key partner in this transformation by providing know-how, delivering new digitally enabled services, upgrading infrastructure, and providing needed capital. In governments, the private sector, and civil society, there is no doubt about the direction of travel and the desirability of using digital technology to hasten the achievement of SDGs.

The excerpt was taken from the KPMG Thought Leadership publication “New Technology Frontier for Developing Economies.”

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