At the recent Mobile World Congress, 5G was all the rage. The Economist described the next generation of mobile networks as something that will “offer users no less than the perception of infinite capacity.” The rollout of 5G is expected to enable and widely disseminate technologies,
But what are the broader policy implications of ever-improving connectivity? What impact does mobile have on society? How can we find a balance between accelerating technological progress and governments’ responsibility to improve the economic conditions and raise the level of wellbeing for their citizens?
Competitiveness offer a useful framework for considering such questions. As the IMF warns about economic slowdown, markets grow more volatile, and pundits become increasingly pessimistic about growth prospects, enlightened policy-makers across the world have made the pursuit of competitiveness, rather than GDP, their principal economic goal. Competitiveness is about the fundamentals and the positioning for a successful future, unlike GDP, which is susceptible to Kondratiev Waves and is often dependent on natural endowments, commodities super-cycles, monetary policies in some of the world’s biggest economies, and other external factors.
What then is the best way to improve competitiveness? As with all the other complex problems, there isn’t a single solution. Different strategies apply to countries at different stages of development. Nevertheless, one policy area has a nearly universal applicability. This ‘silver bullet’ of economic development is broadband connectivity.
All three pillars of competitiveness as defined by the World Economic Forum, incorporate the connectivity component, be it telecoms infrastructure under the basic sub-index, technological readiness under efficiency enhancers, or the entire pillar of innovation and business sophistication where a high degree of connectivity is a basic precondition.
The World Bank calculates that with “a 10% increase in high speed Internet connections, economic growth increases by 1.3%” and leads to “democratization of innovation.” In a world where only 40% of the population have access to the internet; we could boost the global GDP by $1 trillion by connecting another 327 million people. More importantly, this will contribute to sustainable and inclusive growth, supporting economic development in the emerging markets where internet penetration is lagging. While a consensus is yet to be reached over the scope and scale of the effect we should expect from mobile connectivity on poverty-reduction, some argue that it might be the best hope we have.
GSMA postulates that “Mobile internet access can create a virtuous cycle in developing countries” and has calculated that a better part of a mobile ecosystem’s impact on the global economy comes from productivity gains elsewhere.