Remember the digital divide? It’s still here

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The World Bank released a report Wednesday entitled Global Economic Prospects 2008: Technology Diffusion in the Developing World. As the name implies, the report details what kind of technical progress developing countries are making—how many people have computers, access to the Internet, that kind of thing. The report is quite long, so I’m going to focus on a few key points:

The number of people living in absolute poverty in developing countries has decreased from 29 percent in 1990 to 18 percent in 2004. This is one of the upsides of globalization and the spread of technology. As technology spreads to poor countries, incomes grow. Yet as the World Bank acknowledges, it’s very difficult to quantitatively prove a relationship between technology and income growth, so the causation here is murky.

There is a large technology gap between the rich and poor. This is one of the downsides of globalization. A good example of this phenomenon is India. India has a robust high-tech industry concentrated in its cities. However, in poorer rural areas less than 10 percent of people have access to a telephone let alone a computer, according to the Bank’s own figures. Such stratification is dangerous and becomes a self-fulfilling prophecy. Look at income growth in the United States over the last few decades: the gap between the rich and the poor has grown dramatically. Once this separation starts, it’s hard to stop.

Developing countries have difficulty absorbing new technologies and are incapable of innovations. Because of low literacy rates and infrastructure shortcomings in poor rural areas, poor countries have difficulty embracing technology. For instance, computers are great, but are pretty worthless if the person trying to use one can’t read. And cell phones are a great way to connect people, but many rural areas in developing countries don’t get coverage. These difficulties embracing basic technology make it impossible to innovate.

The spread of technology is inevitable, and it does have enormous benefits. But the second and third points listed above have dangerous implications. Once the fortunes of rich and poor begin to diverge, the trend is nearly impossible to reverse. And problems in developing countries make it very difficult to get technology into the hands of the poor. Hundreds of millions of people are being dug into a technological hole that they can’t emerge from. They’re being left behind by the global economy.