Does the internet help to reduce poverty?

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In 2013, Mexico reformed its constitution. Among other things, it established that the internet became a right. Universal access to the web was guaranteed by law to end poverty, among other reasons.

With 65% of the population having access to the internet, Mexico is above the global average (close to 59%, according to Internet World Stats). Of the nearly 130 million Mexicans, 41.9 percent are poor and 7.4 percent are extremely poor, according to the Mexican government’s figures, which are slightly better than the world average. On the International Day for the Eradication of Poverty, what is the point of relating the internet to development and well-being?

Internet access in the world

Since last year, more people have access to the internet than not. According to data from June 2019, just over 4.5 billion people can access the internet worldwide. Since the beginning of the 21st century, internet access has grown by more than 1,000% thanks, above all, to cheaper technology and easier deployment of mobile connectivity.

But the slightly more than 3 billion human beings without the internet are not equally distributed across different countries. Some 800 million are in Africa and nearly 2 billion in Asia. The rest is spread mainly between Latin America and the Caribbean. The data are even more extensive if we look at the extremes.

Switzerland, with 94% internet penetration, is one of the countries in the world with the best access to the web. With a similar population, Burundi is less than 5%. Both countries are also at the extremes of the per capita gross domestic product (GDP) list drawn up by the World Bank. Among the 10 poorest countries in the world (nine in Africa and Afghanistan), Mozambique alone has a 20% penetration of internet services. In Europe, no country is below 70%.

Can the internet reduce poverty?

“There is a growing global consensus that information and communication technologies (ICTs), and particularly the Internet, provide great opportunities for economic, political and social development”. This is the start of the UN’s presentation of its goals for increasing access to ICTs and reducing poverty.

We only have to look at the cases of our countries (here an analysis of the example of Europe) to see that access to the internet is changing the way we organise ourselves, do business, learn, move or relate. This is the direct impact of the internet on development and poverty reduction.

  • It reduces communication barriers in business. According to the World Bank’s World Development Report, the internet makes it easier to close transactions globally, access new markets and find new customers, without driving up costs for traders.
  • It increases the productivity of existing economic activities. The Internet has not invented commerce. But it has made pre-existing commercial transactions faster, cheaper and more efficient. It also contributes directly to more efficient supply chain management and easier resource management.
  • It triggers innovation through economies of scale. Setting up an internet business requires an initial investment. However, once this first step has been taken, costs do not increase in the same proportion as income, as is the case in many physical businesses. This is what is known as economies of scale. This in turn drives innovation through the development of new business models and services.
  • It increases inclusion. The Internet allows access to new job opportunities and to update knowledge at low cost. It has opened up new forms of employment, such as teleworking, which allow a better reconciliation of family and work life, as well as access to better jobs for people with disabilities.
  • It raises awareness of poverty. Finally, the internet helps to give a voice to those who previously had no voice or only a limited one. Despite the amount of hoaxes and fake news circulating on the web, the internet is still the best tool for accessing information and disseminating it globally.

Increasing internet access in poor countries

Being connected improves access to education, job opportunities and better health care. More importantly, it helps small and medium enterprises to boost e-commerce, reaching new markets at lower costs”, says Ratnakar Adhikari, Executive Director of the World Trade Organisation, in an article outlining what he sees as the key measures to increase access to the internet worldwide.

For him, the first step is to invest in competition in the telecommunications sector. This will help increase investment in infrastructure and attract new consumers. The second is to reduce bureaucracy by investing in e-government, facilitating people’s access to information. Finally, the third step involves the development of a digital strategy in which administrations and the private sector, as well as foreign investors or donors, work together to expand the telecommunications infrastructure in developing countries.

More opportunities, more efficiency, more equality and greater economic activity. According to a study by Deloitte, reaching Europe and US connectivity levels worldwide would lift 160 million people out of extreme poverty.