Introduction

It is a well-documented fact that major upheavals such as pandemics, wars and natural disasters act as catalysts for system upgrades – momentous societal, political and technological changes. As the historian Yuval Noah Harari points out, such emergencies “fast-forward historical processes”. Digitalisation during the Covid-19 crisis is a case in point. In many countries, large parts of the economy, as well as schools and universities, went online in a matter of days. Decisions that could, in normal times, have taken years of deliberation were made and implemented with astonishing speed. This gigantic natural experiment was made possible by – and, in turn, gave a massive additional boost to – digital technologies.

Highlights

Digital divides

1

Digital divides

Investment in digital technologies can boost productivity growth by increasing the efficiency with which resources are allocated across industries and by allowing capital and labour to be combined more effectively within individual sectors. However, the pace of digitalisation has been uneven.

Digital infrastructure and firms’ performance

2

Digital infrastructure and firms’ performance

The digitalisation of information and its dissemination via the internet can bring substantial benefits for firms. It can facilitate the finding of new products, improve the matching of workers to firms, reduce the time and effort required to learn new skills, and expand firms’ market reach.

Teleworking, AI and the labour force

3

Teleworking, AI and the labour force

Digitalisation is changing the jobs that we do and the way that we do them. That digital transformation has taken a leap forward during the pandemic, as Covid-19 has accelerated the adoption of digital tools, especially for people working from home. In the EBRD regions, young people and women are more likely to have “teleworkable” occupations than older cohorts and men. What is more, people with a tertiary qualification are up to three times more likely to have a teleworkable occupation than those with lower levels of education.

Highlights

Digital divides

1

Digital divides

Investment in digital technologies can boost productivity growth by increasing the efficiency with which resources are allocated across industries and by allowing capital and labour to be combined more effectively within individual sectors. However, the pace of digitalisation has been uneven.

Large digital divides have emerged across countries, with the gap between the EBRD regions and advanced economies being especially pronounced for advanced technologies. Some digital divides have narrowed over the last five years, as economies with medium levels of digitalisation have made significant gains. However, many economies with low adoption rates for digital technologies have seen limited improvements and are falling further behind.

Most of the EBRD regions have seen significant improvements in digital infrastructure. Updating the relevant regulations will now become more important, since more advanced technologies require more complex regulatory and legal frameworks.

Insufficient skills are the key constraint impeding digitalisation in many economies in the EBRD regions. Indeed, the returns to investment in digital-intensive capital are significantly higher in economies with stronger skills. While workers in those regions are just as likely to access free independent training on digital skills as their counterparts in advanced economies, the amount of training provided by employers is considerably lower than in advanced comparators. Furthermore, many economies in the EBRD regions are experiencing significant “brain drain”, as people with strong digital skills are moving abroad.

Within economies, individuals with medium levels of education and income and the middle-aged are catching up with the most digitally literate. However, older individuals and those with lower levels of education and income are increasingly being left behind.

Digital divides may also contribute to increased divergence in the performance of firms, with larger, better-managed and more innovative firms being more likely to reap digital dividends. Such firms are also more likely to have increased their use of digital technologies during the Covid-19 crisis.

Events

Online, 10 November 2021

Launch of the Transition Report 2021-22

System upgrade: Delivering the digital dividend

  • Date:10 November 2021
  • Time:16.00 GMT
  • Venue:Virtual
  • Notes:

    Please join the EBRD’s Office of the Chief Economist for the live launch of the Transition Report 2021-22 – System upgrade: Delivering the digital dividend on Wednesday 10 November. The event will be opened by the EBRD President Odile Renaud-Basso. This will be followed by a presentation of the report findings by EBRD Chief Economist Beata Javorcik, who will then moderate a panel discussion between Toomas Hendrik Ilves, Daron Acemoğlu, Dina Matta and Oleksandr Bornyakov. Read more.

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The EBRD is investing in changing people’s lives and environments across a region that stretches from central Europe to Central Asia, the Western Balkans and the southern and eastern Mediterranean.