Here’s how emerging economies are investing in their digital future
- The initiative will identify challenges and solutions to growing digital FDI: cross-border investment in the digital economy.
- Enabling digital FDI requires specific policies and measures vis-à-vis traditional FDI as digital firms operate different business models.
- This initiative opens the door for cooperation in other areas such as data policy, digital payments, digital skills and international agreements.
Digital transformation is rapidly taking place, and we need the right governance frameworks to maximize its positive contribution and enable societies to prosper.
The World Economic Forum and the Digital Cooperation Organization have launched a collaboration – the Digital FDI Initiative – to identify the biggest challenges to growing the digital economy by helping implement policies and measures that will create “digital-friendly” investment climates.
Pakistan and Rwanda will be the first two countries to be supported by this new initiative to create an enabling environment for their digital future. More countries are in the pipeline to join the initiative and will be announced in the near future soon.
With unemployment rates raised by COVID-19, the digital economy presents an opportunity to create innovative new jobs and stimulate entrepreneurialism in new subsectors of the economy, like e-commerce and fintech.
Key to these solutions will be development of digital infrastructure and empowering populations with the tools to participate in the digital economy. Access to the internet is regarded as one of these metrics. In 2020, however, only 53% of people, and 16% of the world’s poorest, had access to the internet.
Government and private sector investment in the necessary infrastructure, hardware and software to boost this interconnectivity is therefore crucial to targeting growth in new sectors in pursuit of the SDGs.
If there’s one thing that the COVID-19 pandemic has taught us, it’s that digital transformation is no longer a luxury, but a necessity for growing emerging economies. To grow the digital economy, markets must attract and facilitate the flow of foreign direct investment (FDI), which brings not only capital but also knowledge, technology and know-how.
Yet attracting “digital FDI” requires specific enabling policies and measures vis-à-vis traditional FDI because digital firms operate different business models, as delineated in the Forum’s thought-leading Digital FDI white paper, which presented the results of a global investor survey on the most important policies, regulations and measures for firms’ decision to invest in the digital economy (Figure 1).
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