Harnessing the Digital Economy for a Sustainable Future

Harnessing the Digital Economy for a Sustainable Future

How policymakers can drive post-pandemic recovery through technology-driven change

As most economies start seeing the end of the COVID-19 tunnel, bigger challenges are being put at the top of post-pandemic agendas. Primarily, the need to recover economically while avoiding the environmental pitfalls of decades past.

Indeed, the latest scientific report by the Intergovernmental Panel on Climate Change (IPCC) concludes that human activities are largely responsible for extreme climate change, turning the very ecosystems that make earth liveable into hostile, barren environments.

At the same time, organisations such as the World Economic Forum (WEF) are envisioning a new growth model, one that acts as a ‘great reset’ in which all aspects of our societies and economies are made sustainable and responsible by design.

In this context, it is no surprise that many—from activists and entrepreneurs to policymakers and politicians—are turning to digital technologies as a safe and effective way to design eco-responsible post-pandemic agendas.

The promise of the digital economy

The digital economy is fast transforming industries and businesses, changing the roles people, products, and platforms play in key economic sectors.

Digital platforms have created markets and communities, provided innovative services—often filling a gap that traditional businesses have overlooked— and allowed individuals to directly participate as digitally enabled, financially included members of society.

This trend was already expected to grow as the sophisticated technologies used to process and analyse the ever-growing amounts of data became increasingly accessible.

Then the COVID-19 pandemic accelerated this movement, with digital adoption rates leaping ahead at the outset of the pandemic as businesses, schools, and governments moved their processes, interactions, and services online in response to safe-distancing measures.

As a result of rapid digitalisation, trade is undergoing substantial transformation with the creation of new ‘digital’ trade opportunities, with new business models connecting different economic actors; producers and consumers having access to global supply chains and markets, and the costs of participating in trade being reduced.

The challenge for policymakers

Despite the opportunities, policymakers face several challenges. As industries, markets, and pricing strategies are transformed, the traditional industry-specific approach to policy setting will increasingly fail to enable the expected economic growth and social development outcomes.

Even more challenging is the job confronting the regulator, with traditional risk management-oriented approaches failing to deliver the expected regulatory control or provide adequate consumer protection.

Furthermore, with the pandemic increasing reliance on the internet, the critical role digital platforms play in creating access to goods and services, and the control they have over key distribution channels by acting as gateways to markets and users has become increasingly apparent.

This is raising new challenges for regulators, including those related to competition, as well as security, privacy, and consumer protection—placing the governance, accountability, and transparency of digital platform businesses under greater scrutiny.

These challenges are further exacerbated by the obstacles created by the COVID-19 pandemic, which has placed unprecedented pressure on regional trading relationships and supply chains. This can potentially complicate digital trade and investment policymaking.

Enabling technology-driven change

These challenges are not unique to one economy. Digitalisation requires examination of who should be regulating various aspects of the digital environment, who should be ensuring accountability (and enforcement), and how those powers continue to work effectively in the development of a digital economy.

Increasingly, the intersection (and overlap in many cases) of regulatory responses—from electronic transaction laws, competition, and consumer protection policies, data governance requirements, and emerging policy considerations—are being examined and called into question.

Navigating this intersection—and integration—between these aspects of broad digital regulation will be crucial in ensuring effective and fit-for-purpose policymaking.

How AP can help: Optimising policymaking processes

Mitigating these challenges requires a targeted and nuanced understanding of the cross-cutting nature of digital transformation as it changes both the nature and the scope of policymakers’ mission. As industries, markets, and businesses digitalise, the traditional industry-specific approach to policy-setting is struggling to remain effective.

Access Partnership’s Global Government Advisory (GGA) team works with governments and multilateral organisations to embrace and navigate these changes, helping them take on a more proactive role in the way they instigate change in the digital age. From policy analysis and formulation to economic impact assessment, we offer public-sector decision-makers specialised advisory, research, and training services, with a focus on regulatory and strategic business issues.

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