Inter-Regional Comparison for the Implications of Digitalization and Disruptive Technologies for Sustainable Growth

The project addresses the inter-regional comparison for the implications of digitalization and disruptive   technologies for sustainable growth, poverty, inequality, women and the youth in North Africa and Sub-Saharan Africa. It examines the impact of disruptive innovation and how it is transforming the economic potential of Sub-Saharan Africa (SSA) and the Middle East and North Africa (MENA). Digital technologies have the potential to transform the global economy, in both good ways and bad. The challenge will be to capitalize on the opportunities technology creates while managing inherent risks, with a view to establishing more prosperous, inclusive, and resilient economies.

Disruptive technologies—in the form of the rapid digitization of economic activity by firms, households, and governments and the process of globalization—have affected economic growth and its impact on jobs at both the global and country levels. While information technology (IT), which is broadly represented by artificial intelligence, robotics, and machine learning, has substantially speeded up data processing and reduced number of tasks, communication technology (CT), which mainly consists of the Internet and smart devices/phones, has strongly overcame distances and made communication and matching easier and cheaper, thereby encouraging the division of labor. The IT results in concentration of economic activities while CT results in dispersion of economic forces. Given the initial endowments of emerging market and developing economies, the immediate need is in developing CT, which has been the backbone of the emergence of social media, business- consumer matching, e-payments, e-commerce, and fintech. Looking forward, the application of disruptive technologies, especially e-government, e-commerce and fintech, may rise rapidly in the face of climate related natural disasters and pandemics, such as the rapid spread of Cov-19. The IT and CT paths initially require different types of investments, as well as policy and regulatory framework, but eventually they converge and underpin a new, knowledge-based economy as both income and economic complexity rises.

In this regard, in the second cluster, two thematic papers are currently being drafted on the following issues:

• Digitalization in MENA and sub-Saharan Africa – A comparative analysis
• Structural transformation in MENA and SSA: the role of digitalization

ERF is collaborating with the African Economic Research Consortium (AERC) to examine the impact of disruptive innovation and how it is transforming the economic potential of selected Sub-Saharan Africa (SSA), namely in four countries: South Africa, Ethiopia, Kenya and Senegal:

• Opportunities and Challenges of Disruptive Technologies on Growth in Ethiopia with a case Study of Service Sectors that are Vulnerably to Disruptive Technology
• Disruptive Technologies Adaptation, Jobs Creation and Poverty Reduction for Sustained Growth in Kenya
• Digital technology adoption, productivity and employment dynamics in the manufacturing and service sectors in Senegal
• Digital Technologies and Manufacturing Performance in South Africa: Firm-Level Evidence
• Proposal for a research paper on the impacts of disruptive technologies in South Africa

Concerning the MENA case studies, a concept note was drafted on “Digitalization, private sector growth and employment in the Middle East and North Africa,” and three case studies will study the impact of digitalization and disruptive technologies in selected MENA countries: Egypt, Morocco and Jordan.

ERF acknowledges the generous financial contribution of the Carnegie Corporation of New York and the Arab Fund for Economic and Social Development (AFESD).