Digital India is well positioned to make the most of globalization

Source: The post is based on the article “Digital India is well positioned to make the most of globalization” published in the Live Mint on 3^rd August 2022.

Syllabus: GS 3 – Indian Economy and issues relating to planning, Mobilization of Resources, Growth, Development, and Employment; Effects of Liberalization on the Economy, Changes in Industrial Policy and their Effects on Industrial Growth.

News: According to the United Nations Conference on Trade and Development (UNCTAD) report, internet traffic/ information flows in 2022 will exceed all the internet traffic up to 2016, in this globalized world.

About the Globalization

Jeffrey D. Sachs, in his book The Ages of Globalization, presents seven distinct ages of globalization since pre-historical times. These were driven by the interplay of geography, technology, and institutions.

Economic progress and globalization have undergone three industrial revolutions, and Industrialization 4.0 is currently underway.

(1) First Industrial Revolution: It started in the 19th century with the use of steam and coal which resulted in mechanization, which contributed to lowering the cost of transport across the world.

(2) Second IR: This time the use of electricity and railroads started. It complemented the mass production. Thus, trade and commerce expanded manifold.

(3) Third phase: It was marked by the advent of computers and the emergence of low-cost manufacturing and global supply chains.

(4) Fourth revolution: The present age of globalization, known as Digital Globalization, commenced in 2000. It is described as the Digital Age.

It rides on digital technology, which is set to disrupt almost every industry in every country. Digital economies, in turn, run on the new fuel known as data. Data is a new resource or new oil of the 21^st century.

How digitization is changing the economics of globalization?

The digital platforms are driving down the cost of cross-border communications and transactions.

It enabled small businesses and entrepreneurs like MSMEs, around the world, to participate in global trade through Global Value Chains (GVCs).

Issues and Challenges in the digital globalization

This age of digital globalization is characterized by large imbalances, digital divides between haves and have-nots, and other development challenges.

(1) There are technical and infrastructural challenges that prevent developing countries from using the digital economy as a potential growth engine.

(2) More than 20% of the population in the developing world does not have access to a mobile broadband network. Further, the internet speeds are about 8 times lower in these developing countries.

(3) According to the United Nations Conference on Trade and Development’s (UNCTAD) Digital Economy Report, 2021, there is a huge digital divide in terms of digital readiness between various countries. For example, the US and China are front-runners in harnessing data. They have 50% of the world’s hyper-scale data centers, the world’s highest rates of 5G adoption, 70% of the world’s top artificial intelligence (AI) researchers, and 94% of all funding for AI start-ups.

(4) Both the US and China make up about 90% of the market capitalization of the world’s largest digital platforms. Further, these platforms increasingly control all stages of global data value chains.

(5) Most developing countries will find it difficult to transform their economies through digitization. These countries risk being left on the periphery of an evolving globalization paradigm.

(6) There is a challenge in regulating data/information flows and setting up rules so that all participants prosper.

Measures Taken for Digital India to transform India into a digitally empowered economy:

(1) We have a stable and secure digital infrastructure provided by Aadhaar, CERT-In, etc;

(2) The government digitally delivers government services through the Agrimarket App, Bhim, Digital AIIMS, etc.; and

(3) The government has launched schemes for universal digital literacy, accessible digital resources, and collaborative digital platforms for participative governance to help narrow the digital divide in India.