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1、LeveragingDigitalization forProductivity andDecent EmploymentASIA-PACIFIC COUNTRIESWITH SPECIAL NEEDS DEVELOPMENT REPORT 2O24The Economic and Social Commission for Asia and the Pacific(ESCAP)is the most inclusive intergovernmental platform in the Asia-Pacific region.The Commission promotes cooperati

2、on among its 53 member States and 9 associate members in pursuit of solutions to sustainable development challenges.ESCAP is one of the five regional commissions of the United Nations.The ESCAP secretariat supports inclusive,resilient and sustainable development in the region by generating action-or

3、iented knowledge,and by providing technical assistance and capacity-building services in support of national development objectives,regional agreements and the implementation of the 2030 Agenda for Sustainable Development.The shaded areas of the map indicate ESCAP members and associate members.*The

4、designations employed and the presentation of material on this map do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country,territory,city or area or of its authorities,or concerning the delimitation of its

5、frontiers or boundaries.United Nations publicationSales no.E.24.II.F.6Copyright United Nations 2024All rights reservedISBN:9789210031257e-ISBN:9789213589250ISSN:2520-6435e-ISSN:2520-6443This publication may be reproduced in whole or in part for educational or non-profit purposes without special perm

6、ission from the copyright holder,provided that the source is acknowledged.The ESCAP Publications Office would appreciate receiving a copy of any publication that uses this publication as asource.No use may be made of this publication for resale or any other commercial purpose whatsoever without prio

7、r permission.Applications for such permission,with a statement of the purpose and extent of reproduction,should be addressed to the Secretary of the Publications Board,United Nations,New York.The designations employed and the presentation of material do not imply the expression of any opinion whatso

8、ever on the part of the Secretariat of the United Nations concerning the legal status of any country,territory,city or area or of its authorities,or concerning the delimitation of its frontiers or boundaries.Mention of any firm,product,service or licensed process does not imply endorsement or critic

9、ism by the United Nations.In the vibrant and diverse Asia-Pacific region,the transformative role of digitalization in shaping the future of countries in special situations least developed countries(LDCs),landlocked developing countries(LLDCs)and small island developing States(SIDS)cannot be overstat

10、ed.This report delves into the ways digital advancements can catalyse productivity and employment and includes discussions on policy options to overcome traditional development challenges,such as limited productivity capacities,lack of economies of scale and challenging geographic features.Digitaliz

11、ation has emerged not just as a technological leap,but also as a catalyst for sustainable development,enabling countries in special situations to overcome conventional infrastructural limitations.Digital solutions open doors to global markets,foster entrepreneurship and transform the provision of es

12、sential services.Yet,the path to a comprehensive digital economy is fraught with obstacles from establishing robust digital infrastructure to fostering a digitally literate workforce capable of navigating the complexities of a rapidly evolving digital landscape.A balanced strategy that prioritizes r

13、apid digital advancements is needed alongside the development of foundational sectors.Various examples from countries in special situations are showcased and the importance of regional cooperation in overcoming barriers to digital trade and investment is stressed,spotlighting policies that enhance l

14、egal and technical interoperability to support them.It is our hope that this report serves as a valuable resource for policymakers,development practitioners and stakeholders of LDCs,LLDC and SIDS,and their development partners.Together,we can harness the full potential of digitalization to bridge th

15、e digital divide and lay the groundwork for a future in which digital inclusivity propels prosperity for all.The forthcoming global conferences on LLDCs and SIDS in 2024 present an opportune moment for the international community to fully acknowledge the importance of digitalization as a driver of s

16、ustainable development and to reaffirm its commitment to support and complement the efforts of countries in special situation in this regard.Armida Salsiah Alisjahbana Under-Secretary-General of the United Nations and Executive Secretary of ESCAPForewordiiAcknowledgementsThis report was prepared und

17、er the direction of the Executive Secretary and the Deputy Executive Secretaries of ESCAP and its Editorial Board.This report was coordinated and prepared by Oliver Paddison,Yusuke Tateno and NyingtobPemaNorbu of the section on Sustainable Development and Countries in Special Situations,Office of th

18、e Executive Secretary.Substantive inputs were provided by Sanjesh Naidu,Jongsur Park,Seunghwa Jun,DarinSooksripaisarnkit and Eric Sugandi.Ichiro Takinami,Daniel Hubertus Wilhelmus Mari Bruning and Chenyu Xu provided research assistance.The following are ESCAP staff members,who provided reviews and/o

19、r comments:MatthewDavid Wittenstein(Energy Division);Tiziana Bonapace(ICT and Disaster Risk Reduction Division);HamzaAli Malik(Macroeconomic Policy and Financing for Development Division);SabineHenning(Social Development Division);Rachael Joanne Beaven(Statistics Division);Rupa Chanda,WitadaAnukoonw

20、attaka and Heather Lynne Taylor-Strauss(Trade,Investment and Innovation Division);Sandeep Jain and Thanattaporn Rasamit(Transport Division);and Sudip Ranjan Basu(Subregional Office for the Pacific).The report benefited from discussions at the expert group meeting on the Countries with Special Needs

21、Development Report 2024:Leveraging Digitalization for Productivity and Decent Employment,held on 1 December 2023.Experts from academia,think tanks,private sector organizations,and regional and international organizations who participated in the meeting were:Dulguun Damdin-Od(International Think Tank

22、 for Landlocked Developing Countries);Federica Irene Falomi(United Nations Technology Bank for the Least Developed Countries);Enamul Hafiz Latifee(Bangladesh Association of Software and Information Services,BASIS);Khemera Mok(Ministry of Post and Telecommunications,Cambodia);Jongsur Park(Sunmoon Uni

23、versity);Tanatat Puttasuwan(International Consultant);Kunal Sen(United Nations University Institute World Institute for Development Economics Research,UNU-WIDER);and Nidhaan Shrestha(True North Associates,Nepal).The manuscript was copyedited by Alan Cooper.The layout and design were created by Danie

24、l Feary.iiiAcronyms APIS Asia-Pacific Information SuperhighwayASEAN Association of Southeast Asian NationsCPTA Framework Agreement on Facilitation of Cross-border Paperless Trade in Asia and the PacificDSGI Digital Skill Gap Index DTI Digital Transformation IndexDTPs digital trade provisionsESCAP Ec

25、onomic and Social Commission for Asia and the Pacific e-wallet electronic walletFDI foreign direct investmentFFA Pacific Islands Forum Fisheries Agency GDP gross domestic productGPS Global Positioning SystemICT information and communications technologyIIDS Institute of Integrated Development Studies

26、 IoT Internet of thingsIT information technologyITU International Telecommunication UnionIUU illegal,unreported and unregulated(fishing)LDCs least developed countriesLLDCs landlocked developing countriesMSMEs micro,small and medium-sized enterprises NGO non-governmental organization PDEP Pacific Dig

27、ital Economy Programme PFIP Pacific Financial Inclusion ProgrammePICAP Pacific Insurance and Climate Adaptation ProgrammePTAs preferential trade agreementsR&D research and developmentSAMOA Small Island Developing States Accelerated Modalities of Action(Pathway)SIDS small island developing StatesSPTO

28、 Pacific Tourism OrganisationUN/CEFACT United Nations Centre for Trade Facilitation and Electronic Business UNCDF United Nations Capital Development FundUNCITRAL United Nations Commission on International Trade Law UNCLOS United Nations Convention on the Law of the Sea UNCTAD United Nations Conferen

29、ce on Trade and Development UNDP United Nations Development Programme UNICEF United Nations Childrens FundWTO World Trade OrganizationivASIA-PACIFIC COUNTRIES WITH SPECIAL NEEDS DEVELOPMENT REPORT 2024Executive summaryThe Asia-Pacific Countries with Special Needs Development Report 2024:Leveraging D

30、igitalization for Productivity and Decent Employment explores the transformative potential of digitalization for enhancing productivity and employment in countries in special situations,comprising the regions least developed countries(LDCs),landlocked developing countries(LLDCs)and small island deve

31、loping States(SIDS).Advances in digitalization and the evolving tradability and productivity of the services sector present unprecedented development opportunities.To seize these opportunities,it is crucial that these countries address foundational needs,such as enhancing digital infrastructure and

32、skills,while also fostering a conducive ecosystem for the digital economy.These opportunities come at a time when traditional labour-intensive industrialization is becoming less viable due to a surge in labour automation.Accordingly,while historically,the manufacturing sector has played a pivotal ro

33、le in driving productivity growth and generating employment,especially for the relatively unskilled workforce,there has been a noticeable shift towards the services sector,which,until recently,offered relatively fewer opportunities because of its largely non-tradable nature and limited opportunities

34、 for mechanization,and the intrinsic role of labour and lower economies of scale.However,most workers have transitioned to the non-business sector in which informality is widespread and productivity at best is marginally higher than in agriculture.Propelled by advances in digitalization,many of the

35、positive attributes of manufacturing are increasingly exhibited by the services sector,opening the door to increased levels of productivity,especially in the business services sector.However,harnessing these benefits requires tackling several underlying challenges.First,limited digital infrastructur

36、e results in lower Internet utilization,stability and affordability in many countries in special situations,especially those in LDCs and SIDS,which are confronted with weak high-speed,fixed Internet connectivity,such as fibre optic and broadband,and often lack fast mobile connections.Moreover,low di

37、gital literacy rates,slow adoption of digital technologies and weak regulatory frameworks for data protection and online transactions are pushing operational costs higher for digital businesses in these economies.Indeed,the ESCAP Digital Transformation Index shows that especially LDCs are falling be

38、hind as evidenced by their low scores on the five pillars of the index,which reflect the state of a countrys network infrastructure,government digital initiatives,digital businesses,peoples capacities and the overall ecosystem.Digitalization,productivity and employmentThe impacts of digitalization o

39、n productivity and employment are dynamic and multi-faceted.Digitalization can significantly boost productivity by automating routine tasks,accelerating processes and minimizing human errors.It also can improve supply change management and resource allocation,while fostering innovation through enabl

40、ing new ways of working,new product development and new business models that can be applied to a range of sectors.However,the impact of digitalization on employment is complex and depends critically on the skills level of the workforce and the economys ability to adapt.Automation and artificial inte

41、lligence can replace human labour,particularly in routine and manual tasks.While this leads to job losses in certain areas,new opportunities will also emerge in digitally oriented sectors,which tend to require higherskills.Digitalization may heighten the risks of wage stagnation and a widening digit

42、al divide within and among countries.The rapid pace of digital transformation may outstrip the local workforces ability to acquire the necessary digital skills,leading to job displacement for many workers,particularly in traditional industries.Furthermore,income disparities may widen as skill-biased

43、 technical advancements increase the demand for high-skilled workers and,at the same time,diminish demand for those lacking such skills.This dynamic is especially a concern for countries in special situations,in particular LDCs,where levels of human development tend to be lower and the risk of becom

44、ing dependent on low-wage,low-skill jobs within the global digital supply chains is higher,thereby limiting the potential for higher-value job creation.v Ensuring access to reliable digital infrastructure and skills is a prerequisite to harness the benefits of digitalization.SIDS,for instance,have,o

45、n average,only 2.9 fixed broadband subscriptions per 100 inhabitants,and LDCs have,on average,only 1.2 fixed broadband subscriptions per 100 inhabitants,compared to the regional average of 28.The same applies to mobile-broadband subscriptions per 100 inhabitants in which LDCs in the region score 64.

46、7 compared to 85.2 in the region as a whole.These gaps highlight the necessity for substantial Investment in digital infrastructure,such as broadband and mobile networks,to harness the benefits of the digital transformation.Furthermore,the readiness of LDCs to embrace a digital transformation is not

47、ably hampered by the lack of skills of the future workforce,highlighting the importance of digital literacy.Emerging role of the services sectorBolstered by digitalization,the services sector is increasingly exhibiting the development attributes of the manufacturing sector,which includes,among other

48、s,tradability,economies of scale,productivity growth and innovation.However,unlike the manufacturing sector,the dual outcomes of productivity growth and employment of unskilled labour are less prevalent in subsectors within the services sector.For instance,remarkable productivity gains have been mad

49、e in business services,such as information,communications and technology(ICT)services,but the employment generation potential for unskilled labour in this sector remains limited.On the other hand,modest growth in productivity has been recorded for non-business services,such as retail trade,but this

50、sector is absorbing most of the unskilled labour.The diffusion of digital technologies into services offers significant opportunities,especially for countries in special situations,to develop micro,small and medium-sized enterprises(MSMEs)and formalize informal activities.First,advances in digital t

51、echnologies and communications have enhanced the tradability of services.This allows smaller countries to achieve economies of scale through digital platforms.Second,starting and scaling service-oriented businesses,especially those based on digital platforms,require less capital and infrastructure t

52、han manufacturing operations.Third,services,particularly in information technologies(IT),finance and tourism,can reach global markets through digital channels,offering significant growth potential.Fourth,the services sector,boosted by digitalization,can create a wide range of formal jobs that requir

53、e varying levels of skills,including high-skilled jobs,in IT and finance,and more accessible jobs in areas,such as digital marketing and customer service.Finally,the services sector can quickly adapt to and innovate new technologies,making it more dynamic and responsive to digitalization trends.Poli

54、cy considerations and regional cooperation to harness digitalization Digitalization offers a transformative pathway for countries in special situations.Mobile technology,satellite systems and solar mini grids,for instance,allow these countries to bypass traditional infrastructure,such as extensive l

55、andline networks and centralized grid systems.Digital platforms further democratize access to global markets and catalyse job creation and entrepreneurship,even in the most remote areas,by fostering economies of scale.They also enable the delivery of crucial services,such as mobile banking,online ed

56、ucation and telemedicine.The shift towards a digital economy requires,however,the development of essential infrastructure and inclusive policies to ensure equitable access and benefits for all.Addressing the rural-urban divide,particularly in LDCs,and ensuring inclusivity for all,including women and

57、 people in geographically isolated areas,are paramount.Additionally,fostering a digitally literate workforce is critical to fully leverage digitalization and avoid a widening of the skill gap between digitally skilled and unskilled workers,which would exacerbate social disparities.Notwithstanding th

58、e transformative pathway for countries in special situations that digitalization offers,it also presents risks.These include exploitation in informal sectors,privacy breaches and overdependence on certain digital platforms.Addressing these risks requires establishing,implementing and enforcing stron

59、g regulatory frameworks,effective cybersecurity measures and viASIA-PACIFIC COUNTRIES WITH SPECIAL NEEDS DEVELOPMENT REPORT 2024stringent data protection laws to promote equitable growth and protect individual and societal rights.Supporting evidence-based policymaking through digital data collection

60、,including gender-disaggregated data,is also crucial for informed decision-making.A balanced strategy that capitalizes on rapid digital advancements,while also nurturing foundational sectors is critical for countries in special situations.This means prioritizing high-impact areas,such as e-commerce

61、and digital marketing,especially capitalizing on the higher tradability of services and more servitized agriculture and industrial activities.At the same time,more needs to be invested in building capacities in sectors,such as manufacturing,that require a robust infrastructure encompassing transport

62、ation,power and telecommunications to support exports.Some strategic examples from LDCs include the digital literacy initiatives implemented in Bangladesh and support for digital entrepreneurship in Nepal,which showcase the potential for digital technologies to meet global demands and stimulate loca

63、l innovation.In Cambodia,the Bakong system exemplifies the innovative use of digital currency to enhance economic independence and financial inclusivity,leveraging mobile technology for broader financial participation.In LLDCs,expanding digital infrastructure and fostering public-private partnership

64、s,such as ICT integration and connectivity initiatives in Bhutan and“Giga”by the International Telecommunication Union(ITU)and the United Nations Childrens Fund(UNICEF)in several Asian LLDCs,are vital for overcoming geographical challenges and ensuring equitable digital access.These initiatives unde

65、rscore the importance of strategic policies and international cooperation to bridge the digital divide and promote development.For SIDS,tailored digital strategies are instrumental in enhancing economic sectors and addressing societal needs,with digitalization playing a pivotal role in tourism,e-com

66、merce,and combating illegal,unreported,and unregulated(IUU)fishing.Digital marketing initiatives in Fiji,Maldives and Samoa highlight how digital marketing and e-commerce can open global markets for local products and services.Moreover,addressing IUU fishing through digital solutions,such as satelli

67、te monitoring,demonstrates the ability of digitalization to ensure equitable fisheries resource management,while also increasing public revenues from fisheries.Regional cooperation is also critical for countries in special situations to leverage digitalization in trade and investment.Despite their g

68、rowing engagement,these countries face significant hurdles in fully harnessing the potential of digital trade,hindered by domestic challenges in e-commerce and external barriers in integrating digital trade provisions into trade agreements.Addressing these complexities requires a comprehensive appro

69、ach that emphasizes legal and technical interoperability,aligning with international standards to facilitate streamlined digital transactions and engaging in regional initiatives to boost digital trade capacities,rather than engaging in a proliferation of a“noodle-bowl”of digital trade agreements.Co

70、llaborative efforts are,therefore,essential to facilitate these countries participation in digital trade and to ensure a cohesive and inclusive digital trade ecosystem that benefits all.Efforts to increase digital foreign direct investment(FDI)are also essential to develop the digital economy in the

71、se countries,focusing on policies that improve digital skills,reduce the regulatory burden on businesses and foster a supportive environment for digital businesses.Furthermore,regional initiatives,such as the Asia-Pacific Information Superhighway(APIS),and the digital transformation of rail networks

72、,highlight the importance of collaborative efforts in enhancing connectivity and digital integration.They not only aim to reduce digital trade barriers and stimulate investment,but they also contribute towards a more integrated and inclusive digital trade framework,offering economic benefits and fos

73、tering long-term productivity and job creation across the region.The Doha Programme of Action for the Least Developed Countries for the Decade 20222031 underscores the critical role of digitalization in the sustainable development of LDCs,emphasizing the importance of enhancing digital infrastructur

74、e and literacy as foundational elements.Similarly,two upcoming global conferences dedicated to LLDCs and SIDS in 2024 are a vital opportunity to highlight the significance of digitalization in the development trajectories of these States.These conferences are also pivotal moments for the internation

75、al community to offer support to complement the digital transformation efforts of countries in special situations and shape a future in which digital inclusivity and resilience underpin equitable growth and sustainability for these countries.vii Explanatory notesAnalyses in the report are based on d

76、ata and information available up to the end of February 2024.Groupings of countries and territories/areas are defined as follows:ESCAP region:-Members 49:Afghanistan;Armenia;Australia;Azerbaijan;Bangladesh;Bhutan;Brunei Darussalam;Cambodia;China;Democratic Peoples Republic of Korea;Fiji;Georgia;Indi

77、a;Indonesia;Iran(Islamic Republic of);Japan;Kazakhstan;Kiribati;Kyrgyzstan;Lao Peoples Democratic Republic;Malaysia;Maldives;Marshall Islands;Micronesia(Federated States of);Mongolia;Myanmar;Nauru;Nepal;NewZealand;Pakistan;Palau;Papua New Guinea;Philippines;Republic of Korea;RussianFederation;Samoa;

78、Singapore;Solomon Islands;Sri Lanka;Tajikistan;Thailand;Timor-Leste;Tonga;Trkiye;Turkmenistan;Tuvalu;Uzbekistan;Vanuatu;and Viet Nam;-Associate members 9 American Samoa;Cook Islands;French Polynesia;Guam;Hong Kong,China;Macao,China;New Caledonia;Niue;and Northern Mariana Islands.Least developed coun

79、tries(LDCs)10:Afghanistan;Bangladesh;Cambodia;Kiribati;Lao Peoples Democratic Republic;Myanmar;Nepal;Solomon Islands;Timor-Leste;and Tuvalu.Landlocked developing countries(LLDCs)12:Afghanistan;Armenia;Azerbaijan;Bhutan;Kazakhstan;Kyrgyzstan;Lao Peoples Democratic Republic;Mongolia;Nepal;Tajikistan;T

80、urkmenistan;and Uzbekistan.Small island developing States(SIDS)22:-ESCAP member States 15:Fiji;Kiribati;Maldives;Marshall Islands;Micronesia(Federated States of);Nauru;Palau;Papua New Guinea;Samoa;Singapore;Solomon Islands;Timor-Leste;Tonga;Tuvalu;and Vanuatu;-Associate members 7:American Samoa;Cook

81、 Islands;French Polynesia;Guam;New Caledonia;Niue;and Northern Mariana Islands.Countries with special needs/countries in special situations 37:least developed countries(LDCs),landlocked developing countries(LLDCs)and small island developing States(SIDS).Developing ESCAP region ESCAP region,excluding

82、 Australia,Japan and New Zealand.Developed ESCAP region Australia,Japan and New Zealand.Pacific American Samoa;Australia;Cook Islands;Fiji;French Polynesia;Guam;Kiribati;Marshall Islands;Micronesia(Federated States of);Nauru;New Caledonia;New Zealand;Niue;Northern Marina Islands;Palau;Papua New Guin

83、ea;Samoa;Solomon Islands;Tonga;Tuvalu;and Vanuatu.Due to the limited availability of data,associate members of ESCAP are excluded from the analysis in the report unless otherwise indicated.For the purposes of this report,Singapore is not considered to be a small island developing State because of it

84、s high level of development and high-income status,and for simplicity of analysis.Bibliographical and other references have not been verified.The United Nations bears no responsibility for the availability or functioning of URLs.The designations employed and the presentation of the material in this

85、publication do not imply the expression of any opinion on the part of the Secretariat of the United Nations concerning the legal status of any country,territory,city or area,or of its authorities,or concerning the delimitation of its frontiers or boundaries.Mention of firm names and commercial produ

86、cts does not imply the endorsement of the United Nations.References to dollars($)are to United States dollars,unless otherwise stated.viiiASIA-PACIFIC COUNTRIES WITH SPECIAL NEEDS DEVELOPMENT REPORT 2024ContentsForeword iiAcknowledgements iiiAcronyms ivExecutive summary vExplanatory notes viiiBoxes,

87、figures and tables xChAPtEr 1 Introduction 11.1 Background 21.2 The patterns of productivity and employment in countries in special situations 31.3 The digitalization landscape of countries in special situations 11ChAPtEr 2 Digitalization,productivity and employment 172.1 The nexus between digitaliz

88、ation and productivity 182.2 The nexus between digitalization and employment 192.3 The role of the services sector in the digital era 23ChAPtEr 3 Policy considerations and regional cooperation to harness digitalization 303.1 Policy considerations 313.2 Regional cooperation for digital trade and inve

89、stment 403.3 Digitalization in the latest and upcoming programmes of action for countries in special situations 413.4 Conclusion 45References 46ix FIGUrE 1.1 Change in composition of employment,19912022 3FIGUrE 1.2 Key features of manufacturing 4FIGUrE 1.3 Employment in traditional versus modern ser

90、vices,most recent data 5FIGUrE 1.4 Productivity growth by sectors,19912022 6FIGUrE 1.5 Relative contribution to productivity growth,19912022 7FIGUrE 1.6 Decomposing labour productivity growth,19912022 8FIGUrE 1.7 Sectoral drivers of labour productivity growth,19912022 9FIGUrE 1.8 Change in average r

91、eal wages(earliest to latest available year)10FIGUrE 1.9 The Digital Transformation Index Framework 11FIGUrE 1.10 Digital Transformation Index score distribution by the regions and Asia-Pacific subregions 12FIGUrE 1.11 The Digital Transformation Index by(a)pillar and(b)stages 12FIGUrE 1.12 Correlati

92、on between the Digital Transformation Index and the network foundation pillar 13FIGUrE 1.13 Internet users 13FIGUrE 1.14 Fixed broadband per 100 people 14FIGUrE 1.15 Affordability of fixed and mobile broadband,weighted averages,in Asia-Pacific countries in special situations 15FIGUrE 2.1 Digitalizat

93、ion,productivity and high-tech exports 19FIGUrE 2.2 The competitiveness of the workforce 22FIGUrE 2.3 Productivity variation within services,2022 23FIGUrE 2.4 Share of employment in the formal and informal services in the Asia-Pacific countries in special situations 25FIGUrE 2.5 Gender-based employm

94、ent in the Asia-Pacific countries in special situations by economic sector,19912021 26FIGUrE 2.6 Export in services(per cent of GDP)28FIGUrE 2.7 Information and communications technology export share of service export 29Boxes,figures and tablestABLE 1.1 Share of jobs created between 1991 and 2022(pe

95、r cent)5tABLE 1.2 Digital Transformation Index score on select indicators of the government and people pillar 16tABLE 2.1 Digital Skill Gap Index(DSGI)in selected Asia-Pacific countries,2021 22BOX 2.1 Application of digitalization in countries in special situations 20BOX 2.2 A new set of stylized fa

96、cts for the services sector 27BOX 3.1 Navigating towards a Smart Future:the digital transformation in Bangladesh 32BOX 3.2 Advancing the information and communications technology penetration and digital transformation of Cambodia 33BOX 3.3 Accelerating digital transformation in Nepal:strategies,prog

97、ress and future directions 34BOX 3.4 Digital transformation in Bhutan:progress,strategy and the path forward 35BOX 3.5 Connecting every school to broadband Internet for enhanced digital learning:Giga initiative in Asian landlocked developing countries 37BOX 3.6 Enhancing financial inclusion through

98、digital transformation in Asia-Pacific small island developing States 38xCHAPTER 1Introduction11.1 Background Countries in special situations(comprising LDCs,LLDCs and SIDS)face an increasingly uncertain landscape,as the unfolding wave of automation limits pathways of labour-intensive industrializat

99、ion.With most labour shifting from agriculture directly to the services sector,a widespread concern is that countries are forgoing the dynamism of the manufacturing sector,which was historically instrumental in driving export revenue,productivity growth and employment,among other outcomes.Indeed,thi

100、s phenomenon of“premature de-industrialization”,whereby the share of the manufacturing sector peaks at lower levels of employment and per-capita income,is exhibited by a majority of developing economies and not just limited to the countries in special situations(Rodrik,2016).However,the latter faces

101、 numerous structural impediments to development,which makes industrialization particularly challenging.The limited population size and domestic market scale of these countries hinder the growth potential of various sectors and capacity to capitalize on economies of scale.Additionally,their geographi

102、cal isolation from major economic hubs impedes access to regional markets.Because of their specific terrain,many also face heightened vulnerability to climate change,natural calamities and environmental deterioration.Despite endeavours to improve,social indicators in many countries in special situat

103、ions lag regional averages.Moreover,several of these countries have recently emerged from conflicts.Consequently,although comprising more than half of the members of ESCAP,these countries contribute only 3percent to the regions gross domestic product(GDP)and trade in goods and services.Amid such a l

104、andscape,the evolving tradability and potential of the services sector,which has been bolstered by advances in digitalization,presents unprecedented opportunities for countries in special situations with a possible platform to leapfrog.If embraced effectively,digitalization presents significant econ

105、omic dividends.Among them are the ability to expand market reach and match supply and demand through digital platforms,and raise the possibility to develop production systems that are more precise and more rapid.To effectively harness opportunities from digitalization,it is essential to address foun

106、dational requirements related to digital infrastructure and skills in addition to fostering a conducive ecosystem for digital businesses.This would enable countries in special situations to achieve a service sector-oriented transformation marked by higher productivity.At the same time,digitalization

107、 and automation also poses risks related to labour substitution and unequal distributional outcomes.Automation has the potential to replace jobs,while digital technologies,which often favour skilled labour,diminish the comparative advantage of developing countries abundant unskilled labour.This bias

108、 also makes it more challenging for countries to offset their technological disadvantage with their cost advantage of low-wage labour(De Melo and Solleder,2022).Moreover,within countries and industries,the level and readiness to harness opportunities arising from digitalization varies.Accordingly,th

109、e present report provides a succinct discussion of the nexus between digitalization,productivity and the nexus between digitalization and decent employment in countries in special situations.This report is structured as follows:A The first section provides an assessment of patterns of productive cap

110、acity transformation in countries in special situations,focusing,in particular,on the services sector.This is complemented by a brief assessment of the digitalization landscape in countries in special situations.B The second section provides a brief synthesis of the potential impacts of digitalizati

111、on on employment generation,productivity growth and inclusive development.The potential of the services sector in driving economic transformation is also explored in this section.C The final section provides policy considerations and experiences from countries in special situations to help them leve

112、rage such technologies for decent employment and productivity growth,while highlighting the role of regional cooperation.2ASIA-PACIFIC COUNTRIES WITH SPECIAL NEEDS DEVELOPMENT REPORT 20241.2 The patterns of productivity and employment in countries in special situationsthe pace of economic transforma

113、tion in Asia-Pacific countries in special situations has been sluggish.As a result,many of these countries,particularly the least developed countries,remain structurally underdeveloped(in a state in which the share of agriculture in employment is greater than the share of industry or services,see fi

114、gure 1.1).Indeed,except for a few of these countries,such as Bangladesh,Cambodia and Turkmenistan,the share of manufacturing in employment has remained below 10percent,as labour is moving directly from subsistence agriculture to informal services.FIGUrE 1.1 Change in composition of employment,199120

115、22Sources:ESCAP,based on data from the International Labour Organization Database(ILOSTAT)and the United Nations National Accounts Main Aggregates Database(UN-AMA)(accessed on 1 March 2024).020406080100Timor-LesteSolomon IslandsNepalMyanmarLao Peoples Democratic RepublicCambodiaBhutanBangladeshAfgha

116、nistan020406080100VanuatuTongaSamoaPapua New GuineaMaldivesFiji020406080100UzbekistanTurkmenistanTajikistanMongoliaKyrgyzstanKazakhstanAzerbaijanArmenia1991 202219912022199120221991202219912022199120221991202219912022199120221991202219912022199120221991202219912022199120221991 2022 1991 2022 1991 20

117、22 1991 2022 1991 2022 1991 2022 1991 2022 1991 2022LEAST DEVELOPED COUNTRIESLANDLOCKED DEVELOPING COUNTRIESPACIFIC SMALL ISLAND DEVELOPING STATESAgricultureManufacturingIndustry excluding manufacturingServicesSMALL ISLAND DEVELOPING STATESPER CENT OF TOTAL EMPLOYMENTPER CENT OF TOTAL EMPLOYMENTPER

118、CENT OF TOTAL EMPLOYMENT3Chapter 1:IntroduCtIonThis contrasts to earlier pathways of industrialization that typically involved a shift in employment from agriculture to industry and then to services in which manufacturing played a pivotal role in the development of todays developed economies and the

119、 newly Industrialized economies(Sen,2023).1 In these countries,underpinned by tradability and labour augmenting capital,the manufacturing sector has harnessed economies of scale,capital accumulation and positive spillover effects.Consequently,it has delivered unparalleled productivity growth and lar

120、ge-scale employment,especially for relatively unskilled labour.However,in addition to domestic supply side limitations,automation in advanced countries is creating an impediment to this pathway for development for countries in special situations.FIGUrE 1.2 Key features of manufacturingWith a manufac

121、turing-oriented transformation becoming increasingly elusive for countries in special situations,employment is shifting directly to the services sector,circumventing industry.In fact,in the countries in special situations,services account for the largest share of new jobs created(table 1.1).2 While

122、a few LDCs have managed to harness their low-cost labour advantage to promote some level of manufacturing,a steep increase in the share of jobs created have occurred in the services sector of LLDCs and SIDS.However,the services sector encounters multiple limitations in delivering the same outcomes a

123、s manufacturing(Baumol,1967).The prevailing view outlines four broad reasons for the relatively limited opportunities:(a)its largely non-tradable nature;(b)limited opportunities for capital accumulation;(c)the intrinsic role of labour;and(d)lower economies of scale.Worryingly,workers in the countrie

124、s in special situations have mostly transitioned to traditional services,which is characterized by informality and lower productivity as opposed to the modern services sector(Eichengreen and Gupta,2013;Sen,2023).3 The most recent data available show that the average share of modern services accounte

125、d for only 6percent of overall employment in the services sector(figure 1.3).1 This included Singapore,the Republic of Korea and more recently China,Malaysia and Thailand.2 This is a crude estimation that simply derives the share of each sector from the aggregate change in employment between 1991 an

126、d 2022.3 The former encompasses more modern activities,such as financial services and telecommunications,whereas the latter includes more traditional services such as public administration.ECONOMIES OF SCALEPRODUCTIVITYSPILLOVERSJOB CREATIONDriven by tradability and storabilityMachines and technolog

127、y make labour more productiveImpacts spread through input and output linkagesmachines and technology make labour more productiveBoosted by new markets and growing local demand4ASIA-PACIFIC COUNTRIES WITH SPECIAL NEEDS DEVELOPMENT REPORT 2024tABLE 1.1 Share of jobs created between 1991 and 2022(per c

128、ent)aGrICuLtureManuFaCturInGInduStrYSerVICeSLeaSt deVeLoped CountrIeSLDC average2.819.314.363.6Afghanistan38.010.911.040.1Bangladesh8.918.413.059.6Bhutan5.815.013.365.9Cambodia4.126.917.052.0Lao Peoples Democratic Republic50.45.06.937.7Myanmar-157.358.946.1152.3Nepal41.419.88.830.0Solomon Islands26.

129、39.75.758.3Timor-Leste7.59.07.376.2LandLoCKed deVeLopInG CountrIeSLLDC Average-29.82.129.398.5Armenia-60.5-23.71.9-17.7Azerbaijan18.7-10.08.582.8Kazakhstan-221.4-27.081.0267.4Kyrgyzstan-0.9-2.522.580.9Mongolia3.25.622.968.3Tajikistan28.94.715.051.4Turkmenistan5.324.912.856.9Uzbekistan5.86.721.665.9S

130、MaLL ISLand deVeLopInG StateSSIDS Average-14.53.120.688.4Fiji62.0-4.611.031.6Maldives2.76.819.371.3Papua New Guinea-2.85.515.482.0Samoa-86.112.823.2150.1Tonga-85.3-15.650.9150.0Vanuatu-6200.01350.0400.04550.0Sources:ESCAP,based on data from the International Labour Organization Database(ILOSTAT)and

131、the United Nations National Accounts Main Aggregates Database(UN-AMA)(accessed on 1 March 2024).Notes:The numbers show the contribution of each sector to the percentage change in total employment.The large negative numbers need to be interpreted with caution and must be taken in relation to the othe

132、r figures.For instance,in Vanuatu,total employment in agriculture declined by 12,400,employment in manufacturing,industry and services increased by 2,700,800 and 9,100,respectively,which totaled 12,600.Accordingly,net employment only increased by 200,resulting in inflated percentages.FIGUrE 1.3 Empl

133、oyment in traditional versus modern services,most recent data Source:International Labour Organization(ILO)ILOSTAT.Available at https:/ilostat.ilo.org/.Accessed on 1 March 2024.020406080100Employment in modern servicesEmployment in traditional servicesVanuatuTuvaluTongaTimor-LesteSamoaNauruNepalMyan

134、marMongoliaMarshall IslandsMaldivesLao Peoples Democratic RepublicKiribatiFijiCook IslandsCambodiaBangladeshArmeniaAfghanistan99.590.296.193.993.292.897.390.994.493.391.797.394.292.293.697.787.193.891.60.59.83.96.16.87.22.79.15.66.78.32.75.87.86.42.312.96.28.4PER CENT OF EMPLOYMENT IN SERVICES SECTO

135、R5Chapter 1:IntroduCtIonRecent studies(Nayyar,Hallward-Driemeier and Davies,2021;Owusu,Szirmai and Foster-McGregor,2020;Baldwin and Forslid,2023),however,highlight the diversity of services,and that many modern service sectors are dynamic,tradable and offer opportunities for innovation and productiv

136、ity gains,such as manufacturing,did in the past.Indeed,service productivity can be equal to or even higher than other sectors(Owusu,Szirmai and Foster-McGregor,2020),just as improving service productivity may be even more crucial than manufacturing,as services often support and enhance other sectors

137、,especially by digitalization and global value chains(Timmer and de Vries,2009).Such recent findings are prompting a revision of earlier stylized facts that associated the services sector with low productivity at the aggregate level to the view that modern services can be just as productive(or even

138、more important)for overall economic growth.4 This is supported by the fact that even in a few countries in special situations,productivity growth for services has either been at par or exceeded industrial productivity growth(figure 1.4).FIGUrE 1.4 Productivity growth by sectors,19912022Sources:ESCAP

139、,based on data from the International Labour Organization Database(ILOSTAT)and the United Nations National Accounts Main Aggregates Database(UN-AMA)(accessed on 1 March 2024).When estimating the relative contribution of each sector to an economys overall productivity growth,the service sector exceed

140、s that of every other sector because of its sheer size and relatively higher productivity compared to agriculture(figure 1.5),while the contribution of manufacturing,despite its productivity enhancing characteristics,is muted,as it accounts for a very negligible share of employment and GDP.4 A more

141、detailed discussion on the potential of the services sector is presented in chapter 2.0-50051 0001 5002 0003 0004 0002 5003 5004 500VanuatuTongaSamoaPapua New GuineaMaldivesFijiUzbekistanTurkmenistanTajikistanMongoliaKyrgyzstanKazakhstanAzerbaijanArmeniaTimor-LesteSolomon IslandsNepalMyanmarLao Peop

142、les Democratic RepublicCambodiaBhutanBangladeshAfghanistanChange in labour productivity in servicesChange in labour productivity in industryChange in labour productivity in agricultureLEAST DEVELOPEDCOUNTRIESLANDLOCKED DEVELOPING COUNTRIESSMALL ISLAND DEVELOPING STATESCHANGE IN PRODUCTIVITY(PER CENT

143、)5006ASIA-PACIFIC COUNTRIES WITH SPECIAL NEEDS DEVELOPMENT REPORT 2024FIGUrE 1.5 relative contribution to productivity growth,19912022Sources:ESCAP,based on data from the International Labour Organization Database(ILOSTAT)and the United Nations National Accounts Main Aggregates Database(UN-AMA)(acce

144、ssed on 1 March 2024).Notes:The percentage contribution represents the relative contribution of each sector to productivity change.Accordingly,very high productivity growth may occur in the manufacturing sector,but its relative contribution may be lower due to its size compared to other larger secto

145、rs,such as agriculture and services.When applying a shift share decomposition technique(Peneder,2001)to assess the drivers of productivity in structural transformation,overall productivity growth can be attributed to three components:5 1 Within effect occurs when productivity growth in the sector is

146、 attributable to improvements in technology or processes,or when firms within a sector ascend the value chain and engage in higher value-added activities.The result would be an increase in average productivity.2 Static shift growth occurs when resources move to activities that are more productive.Fo

147、r instance,from agriculture to manufacturing or services,average productivity would naturally increase,as these two sectors are relatively more productive than agriculture.3 Dynamic shift effect is the most powerful channel and occurs when resources move to sectors where productivity is growing.5 Th

148、e formula for the decomposition is:-113579110246810AfghanistanBangladeshBhutanCambodiaLao Peoples Democratic RepublicMyanmarNepalSolomon IslandsTimor-LesteArmeniaAzerbaijanKazakhstanKyrgyzstanMongoliaTajikistanTurkmenistanUzbekistanFijiMaldivesPapua New GuineaSamoaTongaVanuatuLEAST DEVELOPED COUNTRI

149、ESLANDLOCKED DEVELOPING COUNTRIESSMALL ISLAND DEVELOPING STATESWEIGHTED CHANGE IN LABOUR PRODUCTIVITYAgricultureIndustryManufacturingServices7Chapter 1:IntroduCtIonApplying the above decomposition at the aggregate level of the economy reveals that a significant share of productivity growth has been

150、due to the within effect component,followed by the static shift component(figure 1.6).In contrast,the dynamic shift component has been marginal and,in some cases,contributed even negatively to productivity growth,implying that in these cases employment has been shrinking in sectors in which producti

151、vity growth has been recorded(such as in Maldives,Afghanistan,Vanuatu,Kyrgyzstan and Tajikistan).FIGUrE 1.6 Decomposing labour productivity growth,19912022Sources:ESCAP,based on data from the International Labour Organization Database(ILOSTAT)and the United Nations National Accounts Main Aggregates

152、Database(UN-AMA)(accessed on 1 March 2024).Applying the same technique at a more disaggregated level to identify sectors that propelled productivity growth shows that,on average,the relative contribution of productivity growth within the services sector to overall productivity growth has been nearly

153、 at par with industry(figure 1.7-A).Moreover,the contribution to productivity growth from the movement of labour to the services sector has been higher than that from the movement to industry(Figure 1.7-B),mainly because the services sector has absorbed most of the labour.Because of its disproportio

154、nate share in employment,boosting productivity in the services sector through digital innovation can,therefore,have significant impacts,even though an assessment of the status of digitalization suggests that countries in special situations still need to address the foundational requirements of digit

155、alization.-4-2024681012-40-20020406080100120AfghanistanBangladeshBhutanCambodiaLao Peoples Democratic RepublicMyanmarNepalSolomon IslandsTimor-LesteArmeniaAzerbaijanKazakhstanKyrgyzstanMongoliaTajikistanTurkmenistanUzbekistanFijiMaldivesPapua New GuineaSamoaTongaVanuatuCHANGE IN LABOUR PRODUCTIVITY(

156、PER CENT)SHARE OF CONTRIBUTION TO LABOUR PRODUCTIVITY GROWTH(PER CENT)Static shiftDynamic shiftWithin efectChange in labour productivitySMALL ISLAND DEVELOPING STATESLANDLOCKED DEVELOPING COUNTRIESLEAST DEVELOPEDCOUNTRIES8ASIA-PACIFIC COUNTRIES WITH SPECIAL NEEDS DEVELOPMENT REPORT 2024FIGUrE 1.7 Se

157、ctoral drivers of labour productivity growth,19912022Sources:ESCAP,based on data from the International Labour Organization Database(ILOSTAT)and the United Nations National Accounts Main Aggregates Database(UN-AMA)(accessed on 1 March 2024).1.0B)PERCENTAGE CONTRIBUTION DUE TO LABOUR MOVING TO MORE P

158、RODUCTIVE SECTORS-0.8-0.6-0.4-0.20.00.20.40.60.81.0AfghanistanBangladeshBhutanCambodiaLao Peoples Democratic RepublicMyanmarNepalSolomon IslandsTimor-LesteArmeniaAzerbaijanKazakhstanKyrgyzstanMongoliaTajikistanTurkmenistanUzbekistanFijiMaldivesPapua New GuineaSamoaTongaVanuatuSHARE OF CONTRIBUTION T

159、O GROWTH DUE TO STATIC SHIFTStatic shift agricultureStatic shift industryStatic shift servicesA)PERCENTAGE CONTRIBUTION DUE TO PRODUCTIVITY GROWTH WITHIN EACH SECTORSMALL ISLAND DEVELOPING STATESLANDLOCKED DEVELOPING COUNTRIESLEAST DEVELOPEDCOUNTRIES-0.4-0.20.00.20.40.60.8AfghanistanBangladeshBhutan

160、CambodiaLao Peoples Democratic RepublicMyanmarNepalSolomon IslandsTimor-LesteArmeniaAzerbaijanKazakhstanKyrgyzstanMongoliaTajikistanTurkmenistanUzbekistanFijiMaldivesPapua New GuineaSamoaTongaVanuatuSHARE OF CONTRIBUTION TO GROWTH DUE TO WITHIN SECTOR CHANGESWithin growth agricultureWithin growth in

161、dustryWithin growth servicesSMALL ISLAND DEVELOPING STATESLANDLOCKED DEVELOPING COUNTRIESLEAST DEVELOPEDCOUNTRIES9Chapter 1:IntroduCtIonIt is important to ascertain that such improvements in productivity have also corresponded to increases in real average wages,which is the case across the countries

162、 in special situations.The most dramatic increases have been recorded in Bangladesh where real average wages increased nearly sixfold over the period 20132022(figure 1.7-A).A disaggregated assessment reveals that this was primarily driven by a very large increase in real wages in agriculture and ind

163、ustry(figure 1.8-B).Surprisingly the growth in real wages in the manufacturing sector has been relatively low,suggesting that the gains for labour from expansion in this sector are limited.This must also be assessed in the light of the minimum wage,which was increased in 2019(Kabir and others,2022).

164、Other notable improvements were in Cambodia,Azerbaijan,Kazakhstan and Kyrgyzstan.In the case of Cambodia,significant growth came from the public sector followed by the capital-intensive mining and utilities sectors.These cursory findings also show that wage growth has exceeded productivity growth by

165、 a wide margin across the services,industry and agriculture sectors(figure 1.8-C).It is important to understand the factors behind the disproportionate wage increases.While wage increases are a desirable outcome,it is essential to ensure that they are supported by productivity growth and commercial

166、sustainability.FIGUrE 1.8 Change in average real wages(earliest to latest available year)Sources:ESCAP,based on data from the International Labour Organization Database(ILOSTAT)and the United Nations National Accounts Main Aggregates Database(UN-AMA)(accessed on 1 March 2024).Notes:Only countries wi

167、th data over a sufficiently long period were included in this analysis given that structural transformation is a long-term phenomenon.The period for the disaggregated wage and productivity growth plotted in figures 1.8-B and 1.8-C correspond to the period in 1.8-A for each country.A)AGGREGATE PRECEN

168、TAGE CHANGEC)PERCENTAGE CHANGE IN WAGES VERSUS PRODUCTIVITY BY BROAD SECTORSB)WAGE GROWTH BY SECTORS-30003006009001200 150003006009001200 1500ProductivityWagesTimor-LesteNepalMongoliaLao Peoples Democratic RepublicCambodiaFijiBangladeshArmeniaTimor-LesteNepalMongoliaLao Peoples Democratic RepublicCa

169、mbodiaFijiBangladeshArmeniaAgricultureIndustryServicesAgricultureIndustryServicesAgricultureIndustryServicesAgricultureIndustryServicesAgricultureIndustryServicesAgricultureIndustryServicesAgricultureIndustryServicesAgricultureIndustryServicesAgricultureManufacturingTrade transportation and accomoda

170、tionPublic administrationMining and utilitiesConstructionPERCENTAGE CHANGEPERCENTAGE CHANGEFiji(20052016)Uzbekistan(20112022)Tajikistan(20002017)Mongolia(20092022)Kyrgyzstan(19952022)Kazakhstan(19932020)Azerbaijan(20052022)Armenia(19942021)Timor-Leste(20072016)Nepal(19992017)Lao Peoples Democratic R

171、epublic(20102022)Cambodia(19962019)Bangladesh(20132022)595.6685.381.8371.290.11537.1168.0374.51049.867.51563.863.162.610ASIA-PACIFIC COUNTRIES WITH SPECIAL NEEDS DEVELOPMENT REPORT 20241.3 The digitalization landscape of countries in special situationsharnessing the benefits of digitalization requir

172、es addressing the state of limited digital infrastructure,poor digital literacy,the weak adoption of digital technologies and weak regulatory frameworks,especially pertaining to data protection and online transactions,which drive up operational costs.Notwithstanding the various definitions of digita

173、lization and digital transformation,6 ranging from information and communications technology(ICT)-specific definitions to broader definitions that include the impacts of digital technology applications on the business and/or the society,the ESCAP Digital Transformation Index(DTI)aims to capture the

174、dynamics of digital transformation by identifying three stages(foundation,adoption and acceleration)and five pillars(network,government,business,people and ecosystem)to reflect that transformation is a comprehensive process across a countrys economy,society and industry(figure 1.9).7,8FIGUrE 1.9 the

175、 Digital transformation Index FrameworkSource:Park,Jun and Kim(2022).6 For example,Machekhina(2017)defines“digitalization”as transformation of all information types(text,sound,visuals,video and other data from various sources)into the digital language,while Yoo and others(2010)defines it as the deve

176、lopment and implementation of ICT systems and concomitant organizational change that involves the transformation of socio-technical structures formerly mediated by non-digital artefacts into ones mediated by digitized artefacts.Fitzgerald and others(2014)define“digital transformation”as the use of n

177、ew digital technologies,such as social media,mobile technology,analytics or embedded devices to enable major business improvements including enhanced customer experiences,streamlined operations,or new business models.Verhoef and others(2021)view digital transformation as the final phase of the imple

178、mentation of digital technology in an organization that leads to the development of new business models.7 Unfortunately,most of the countries in special situations lack sufficient data to determine their digital transformation status,resulting in their exclusion from Digital Transformation Index.Mor

179、e than 40percent of the middle-income countries also lack sufficient data for the 105 indicators related to digital transformation.On the contrary,86percent of high-income countries have sufficient data to examine their digital transformation status.For countries in special situations,only 30percent

180、 the of countries are included in the Index.8 More detail on the methodology are available at Park,Jun and Kim(2022).DIGITAL TRANSFORMATION INDEX FRAMEWORKFOUNDATION STAGEADOPTION STAGEACCELERATION STAGENETWORK/INFRASTRUCTUREGOVERNMENTBUSINESSPEOPLEECOSYSTEMNetwork availability and afordability Qual

181、ity connectivityInclusive connectivityInvestment and regulationApplications and servicesInclusive competitivenessICT marketDigital marketInnovation marketBasic skills and educationDigital skills and literacyDigital capacity and creativityMacroeconomic stabilityDiversity and dynamismEnvironmental sus

182、tainability5 PILLARS(Total:105 indicators)11Chapter 1:IntroduCtIonRelative to other regions,the Asia and the Pacific exhibits a very high degree of dispersion in DTI scores,suggesting a digital divide among and within subregions(figure 1.10).While this may be due to the sheer size and diversity of t

183、he region,the least developed countries included in the analysis rank at the bottom in the region as a whole(figure 1.11).FIGUrE 1.10 Digital transformation Index score distribution by the regions and Asia-Pacific subregionsSource:Jun,Park and Kim(2022).FIGUrE 1.11 the Digital transformation Index b

184、y(a)pillar and(b)stages Source:ESCAP,based on Park,Jun and Kim(2022).Notes:Other ESCAP plots the average of the region excluding the countries in special situations.This provides a starker contrast.DIGITAL TRANSFORMATION INDEX SCORE0102030405060708090100South-East AsiaEast and North-East AsiaPacifcN

185、orth and Central AsiaSouth and South-West AsiaDIGITAL TRANSFORMATION INDEX SCOREAsia-PacifcAfricaLatin America and the CaribbeanEuropeNorth America0102030405060708090100NepalCambodia0102030405060NepalBangladeshLao Peoples Democratic RepublicLao Peoples Democratic RepublicCambodiaMongoliaKazakhstanAz

186、erbaijanOther ESCAP0102030405060NepalBangladeshCambodiaMongoliaKazakhstanAzerbaijanOther ESCAPDIGITAL TRANSFORMATION INDEX SCOREEcosystemPeopleBusinessGovernmentNetworkAdaptionFoundationAccelerationA)PILLAR B)STAGESDIGITAL TRANSFORMATION INDEX SCORE12ASIA-PACIFIC COUNTRIES WITH SPECIAL NEEDS DEVELOP

187、MENT REPORT 2024Across the five pillars of DTI,least developed countries,in particular,lag significantly,whereas landlocked developing countries exhibit a higher level of readiness to benefit from digitalization(figure 1.11).In fact,the DTI score for the least developed countries included in the ana

188、lysis is only about half of the average for the region,reflecting the digital transformation divide.Countries in special situations are constrained by a weak network infrastructure,as reflected by their lower score on the network pillar,which captures important parameters,such as availability and af

189、fordability,quality connectivity and inclusiveness.Importantly,it provides a comprehensive evaluation of an economys network infrastructure.The importance of the network pillar,especially for the developing countries,is evident from the correlation between the network pillar and the overall DTI.When

190、 categorizing countries by income group(high,low and low-middle)and DTI grade(high and low),9 the correlation is much higher for the low and low-middle income group and the group with low DTI ratings.These findings indicate that the lower the degree of digitalization,the more important the network i

191、nfrastructure becomes in the process of digital transformation.This is perhaps due to the more significant marginal impacts of improving the infrastructure foundation at lower levels ofincome.This is expected considering that even though 68percent(figure 1.13)of the population in countries in specia

192、l situations have access to the Internet,the Internet infrastructure in those countries is weak,lacking high-speed and fixed Internet connectivity,such as fibre optic and broadband,or high-speed mobile connections.This results in lower Internet utilization,stability and affordability.Small islands d

193、eveloping States,for instance,have,on average,only 2.9 fixed broadband subscriptions per 100inhabitants,and least developed countries have,on average,only 1.2 fixed broadband subscriptions per 100 inhabitants,compared to the average of 28 for other ESCAP member countries.The same applies for mobile-

194、broadband subscriptions per 100 inhabitants in which least developed countries in the region have recorded 64.7percent compared to the 85.2percent in the region as a whole(ESCAP,2023).9 The high-grade group includes countries that score above 60 and the low-grade group includes countries that score

195、below 39 on the index.FIGUrE 1.12 Correlation between the Digital transformation Index and the network foundation pillarSource:ESCAP based on Park,Jun and Kim(2022).Note:For the income category,low includes both lowand low-middle income countries.CORRELATION COEFFICIENT0.00.20.40.60.81.0LowHighGrade

196、Income0.750.810.500.86FIGUrE 1.13 Internet users 0102030405060708090100KazakhstanFijiAzerbaijanMaldivesBhutanESCAP excluding countries in special situationsMongoliaArmeniaSamoaKyrgyzstanUzbekistanTuvaluTongaVanuatuLao PeoplesDemocratic RepublicKiribatiMyanmarTimor-LesteSolomon IslandsPapua New Guine

197、aSHARE OF POULATIONSource:International Telecommunication Union(ITU)World Telecommunication/ICT Indicators Database,2021.Accessed on 5 November 2023.13Chapter 1:IntroduCtIonFIGUrE 1.14 Fixed broadband per 100 peopleSource:ESCAP,based on data from International Telecommunication Union(ITU)(2021).Worl

198、d Telecommunication/ICT Indicators Database.Accessed on 5 November 2023.When examining the fixed broadband subscription rates(2021)for each individual country in special situations included in the analysis,only 2 out of 22 countries were above the global average.This is despite the relatively high g

199、rowth in fixed broadband subscription rates in LDCs,such as Bangladesh,the Laos Peoples Democratic Republic and Nepal,over the past decade.Regarding mobile connectivity,the level of coverage is relatively high among Asia-Pacific LDCs.Mobile broadband,however,in Asia-Pacific countries in special situ

200、ations is,on average,three times as expensive as the average for the region(ESCAP,2023).Fixed broadband data also remain expensive in these countries.Among the Asia-Pacific countries in special situations,LLDCs,especially those in North and Central Asia,benefit from more affordable access to broadba

201、nd services than LDCs and SIDS(figure 1-15).This can partly be attributed to targeted government interventions.In Kazakhstan,for example,Digital Kazakhstan,a public digital infrastructure programme focusing on rural areas,has improved overall broadband access.While mobile broadband services have exp

202、anded in SIDS over the past five years,fixed and mobile broadband remain unaffordable.10The government pillar is also important for countries in special situations,as it captures a countrys position on such parameters as investment and regulation,applications and services,and inclusive competition.T

203、he countries in special situations,apart from LLDCs,lag even further on this pillar,highlighting gaps in institutional frameworks.Some of the specific areas from which these countries lag are the dimensions on the ICT regulatory environment,e-government and most glaringly on efforts related to resea

204、rch and development(R&D)expenditure and higher education,for which all countries in special situations rank below the seventieth position globally.10 For more details on the digitalization landscape,including gender disaggregated figures,see ESCAP(2024).051015202530ESCAP excluding countries in speci

205、al situationsUzbekistanAzerbaijanArmeniaMaldivesKazakhstanMongoliaTongaTurkmenistanKyrgyzstanTuvaluFijiLao Peoples Democratic RepublicMyanmarVanuatuSamoaBhutanKiribatiPapua New GuineaSolomon IslandsTajikistanTimor-LesteSHARE OF POPULATION14ASIA-PACIFIC COUNTRIES WITH SPECIAL NEEDS DEVELOPMENT REPORT

206、 2024FIGUrE 1.15 Affordability of fixed and mobile broadband,weighted averages,inAsia-Pacific countries in special situationsSource:ESCAP(2023).DATA-ONLY MOBILE BROADBAND INTERNET 2GB,AS A PERCENTAGE OF GNI/CAPITA 2%IS CONSIDERED AFFORDABLE 2%IS CONSIDERED AFFORDABLEFIXED BROADBAND INTERNET 5GB,AS A

207、 PERCENTAGE OF GNI/CAPITAAFFODABILITY OF MOBILE BROADBANDAFFORDABILITY OF FIXED BROADBAND 0123456EuropeNorth AmericaAsia-Pacifc regionAsia-Pacifc countries in special situationsLatin America and the CaribbeanAfrica01020304050North AmericaEuropeAsia-Pacifc regionLatin America and the CaribbeanAsia-Pa

208、cifc countries in special situationsAfrica49.95.75.03.51.31.05.64.23.21.00.70.6The countries in special situations are also constrained by significant skills deficit in harnessing digital technologies.The people pillar of DTI captures indicators related to digital skills and literacy,and digital cre

209、ativity in addition to more general indicators of education attainment of the workforce.Given the skill-bias of digital technologies,digital skills are critical in ensuring that the workforce can realize the positive employment outcomes from digitalization,as discussed in the next section.For the co

210、untries in special situations,the quality of vocational education,in particular,requires attention.It is evident that the countries in special situations still need to ramp up investment in digital infrastructure,regulatory frameworks and efforts to equip the workforce with the requisite skills.Thes

211、e factors also impede their competitiveness in the digital economy,based on the fact that Asia-Pacific LDCs received only 0.10percent of the digital FDI inflows in the region in 2021.Similarly,Asia-Pacific LDCs accounted for less than 1percent of the regions exports of digitally deliverable services

212、 in 2022(ESCAP,UNCTAD and UNIDO,2023).In the following section,the linkages between digitalization and the two important parameters of productivity and employment are explored.15Chapter 1:IntroduCtIontABLE 1.2 Digital transformation Index score on select indicators of the government andpeople pillar

213、 aZerBaIJanBanGLadeShCaMBodIaKaZaKhStanLao peopLeS deMoCratIC repuBLICMonGoLIanepaLeSCap aVeraGeIntellectual property protectionScore35.9814.2016.9923.9822.4412.7316.6728.24Rank2910092616910394ICT regulatory environmentScore34.4636.8831.4724.9014.8733.9833.0140.23Rank8475921021068688Research and dev

214、elopment expenditure by government and higher educationScore14.7719.353.173.057.086.5719.3536.66Rank8275102103909174E-Government indexScore70.0848.5647.7184.4327.1663.2943.0569.22Rank588386271067190Artificial Intelligence Readiness IndexScore41.2120.9819.6841.3819.7628.1916.0348.72Rank60879061917610

215、1Digital skills among active population Score39.1216.3016.5633.1425.0019.6618.0828.25Rank18919038637885Quality of vocational trainingScore25.1510.5412.5916.2515.3814.4110.0422.27Rank411009372798299Skills of current workforceScore66.8226.8132.3446.0246.6827.6932.4753.75Rank30999162619890Source:ESCAP,

216、based on Park,Jun and Kim(2022).16ASIA-PACIFIC COUNTRIES WITH SPECIAL NEEDS DEVELOPMENT REPORT 2024CHAPTER 2Digitalization,productivity and employment17the impact of digitalization on productivity and employment are dynamic and multi-faceted.While digitalization can significantly boost productivity,

217、its impact on employment depends on such factors as the nature of the workforce and the adaptive capacity of economies.Nuanced policy and regulatory responses are,therefore,required so that the digitalization and productivity gains translate into inclusive employment growth.Beyond its economic impac

218、ts,digitalization can also be leveraged to enhance public service delivery,while also contributing to wider social and environmental outcomes.Box 2.1 provides some examples of how digital applications are being pursued across a range of domains in countries in special situations.2.1 The nexus betwee

219、n digitalization and productivity Leveraging digitalization can significantly increase productivity.Digital technologies can automate routine tasks,speed up processes and reduce the room for human errors.Digital solutions can also enhance supply chain management and resource allocation.Importantly,t

220、hey foster innovation by enabling new ways of working,new product development and new business models,all of which can be applied to a range of sectors.While there is limited research on the influence of digitalization on productivity in countries with special situations,insights can be gleaned from

221、 studies focused on the effects on non-digital sectors,the implications for unskilled workers and comparative analyses between developed and developing countries.Extensive research has shown the strong correlation between the integration of digital technologies and the performance of individual comp

222、anies and entire industries.For instance,a 10 percentage point rise in the proportion of companies using high-speed broadband Internet at the industry level has been estimated to correspond to a 1.4percent upsurge in multi-factor productivity for the typical firm in that industry within one year acr

223、oss European Union member countries(Gal and others,2019).Similarly,labour productivity is an estimated 3.7 times higher in African firms using the Internet,as opposed to firms without internet access(World Bank,2016).And the average firm in digital sectors tends to be more productive and manages to

224、improve its productivity more rapidly than the average firm in non-digital sectors(Calvino and others,2018).However,broadband Internet has had a positive impact on labour market outcomes and the productivity of skilled workers,while potentially having a negative effect on unskilled workers(Akerman,G

225、aarder and Mogstad,2015).11 These findings collectively carry significant implications for ongoing policy discussions surrounding government investment in broadband infrastructure,aiming to promote productivity and wage growth.Indeed,there is a high degree of correlation between the Digital Transfor

226、mation Index,labour productivity and an economys high-tech exports(figure 2.1).Countries with a higher DTI score are also among the most productive to the extent that a one unit improvement in the score is correlated with an approximately a$1,600 increase in a countrys labour productivity in service

227、s.The share of high-tech exports is also significantly higher for countries that record a stronger performance on the Index.As seen in figure 2.1,countries in special situation rank at the lower end of the spectrum and high-tech exports account for a very negligible share of their export basket.The

228、figure also suggests that a minimum threshold score is necessary to achieve success with high-tech exports.This can be seen from the larger size of the bubbles for countries that score above 40 on DTI.11 Investigating the various potential reasons for the skill-specific nature of broadband Internets

229、 effects indicates that the adoption of broadband in firms complements the capabilities of skilled workers in carrying out non-routine abstract tasks and,conversely,substitutes for unskilled workers in routine tasks.18ASIA-PACIFIC COUNTRIES WITH SPECIAL NEEDS DEVELOPMENT REPORT 2024FIGUrE 2.1 Digita

230、lization,productivity and high-tech exportsSources:ESCAP,based on data from International Labour Organization(ILO)ILOSTAT.Available at https:/ilostat.ilo.org/.Accessed on 1March 2024;and United Nations Department of Economic Development and Social Affairs.UNSTATS.Available at https:/unstats.un.org/U

231、NSDWebsite.Accessed on 1 March 2024;and Park,Jun and Kim(2022).Note:The size of the bubbles reflect an economys ranking on the dimension on high-tech exports.2.2 The nexus between digitalization and employment the impact of digitalization on employment depends on the skills level of the workforce an

232、d the availability of new opportunities.Automation and artificial intelligence can often replace human labour,particularly in routine and manual jobs.However,new opportunities are emerging in digitally oriented sectors,which tend to be in high-skilled areas.For instance,while the advent of generativ

233、e artificial intelligence has rendered certain low-end programming jobs obsolete,it has created new jobs,such as prompt engineers,which previously did not exist.Digitalization,therefore,leads to a transformation in the types of skills that are in demand.However,there are potentially significant chal

234、lenges and negative consequences as the rapid pace of digitalization may outstrip the local workforces ability to acquire the necessary digital skills,leading to job displacement,particularly in traditional industries.Additionally,the digital divide,limited access to technology and infrastructure ga

235、ps can further marginalize large segments of the population,hindering their participation in the digital economy and job opportunities.Moreover,there is a risk that countries in special situations may become dependent on low-wage,low-skill jobs in global digital supply chains,limiting the potential

236、for higher-value job creation.0204060801000102030405060708090100LABOUR PRODUCTIVITY SCOREDIGITAL TRANSFORMATION INDEX SCOREy=1.0877,x=-16.841Other countriesCountries in special situationsLinear(other countries)KazakhstanNepalLao Peoples Democratic RepublicMongoliaCambodia19Chapter 2:dIGItaLIZatIon,p

237、roduCtIVItY and eMpLoYMentDigital technologies can boost productivity,even in agriculture,which accounts for the largest share of employment in several LDCs.For example,technologies,such as Global Positioning System(GPS),Internet of things(IoT)and drones,can make farm management more efficient by en

238、abling farmers to access real-time information about weather,disease control and best practices and improve crop yields and quality,and digital platforms can enable business-to-business and business-to-consumer interaction,bypassing intermediaries and improving pricing.One example is iPAGE,a United

239、Nations award-winning tech start-up in Bangladesh,which uses data,machine learning and artificial intelligence to provide small farmers and ecosystem players with actionable information to improve their operations.iPAGE has collaborated with more than 10,000 small farmers and has helped reduce ferti

240、lizer usage by 25percent.On average,the initiative has improved yields by 12percent,slashed capital costs by 75percent,lowered sourcing costs for buyers,and boosted sales for input vendors and machine partners.It has contributed to a reduction of 2million kilograms in carbon emissions annually.In LD

241、Cs,modernizing production processes in the manufacturing sector through digitalization and automation can boost productivity significantly.However,while these countries have experienced some success in manufacturing by leveraging their low-cost labour,automation would reduce their comparative advant

242、age in labour-intensive production,prompting a drive to climb up the value chain.In Asian LLDCs,where mining and commodity exports constitute a large share of the economy,digitalization can enhance productivity and create decent employment.For instance,automated and remote-controlled mining technolo

243、gies increase efficiency and safety.Digital tools can optimize logistics and supply chain management,reducing costs and improving transparency.Digital solutions,such as three-dimensional mapping software used to create digital underground maps and machine automation,also improve efficiency,reliabili

244、ty and cost effectiveness.For instance,in Kazakhstan,to adapt to increasingly complex and competitive conditions in the mining industry,which accounts for 13percent of GDP,digital transformation of existing business models is being pursued.In SIDS,digital banking and mobile money services play an in

245、strumental role in improving financial inclusion,especially for remote communities.Furthermore,they have reduced the cost of remittances,an important source of financial flows in many these States,such as in Fiji and Samoa.Additional efforts are required for people in vulnerable situations,who are t

246、he most likely to be excluded from digital banking due to lack of skills,engagement in the informal sector and limitedaccess.E-commerce platforms to promote and sell local products globally can help diversify the economy.For instance,through the Pacific Agreement on Closer Economic Relation(PACER)Pl

247、us implementation unit,e-commerce strategies and policies across the Pacific have been launched.Recent examples are the E-Commerce Acceleration Work Plan in the Cook Islands and the National E-Commerce Strategy of Samoa in two of its islands.Digital marketing and online booking platforms can greatly

248、 expand the global reach of their tourism industry.Virtual tourism experiences can also be developed.BOX 2.1 Application of digitalization in countries in special situationsContinues on next page20ASIA-PACIFIC COUNTRIES WITH SPECIAL NEEDS DEVELOPMENT REPORT 2024Productivity growth generally results

249、in increased labour demand,subsequently leading to higher employment and wages,even if technological advancements tend to favour workers with higher skills.Moreover,while productivity gains may result in job reductions within that sector,other sectors expand and contribute to employment and wage inc

250、reases.Overall,innovation has led to shifts in employment patterns rather than a net decline in employment(Bessen,2015;Katz and Margo,2014).One reason for this is that the introduction of high-productivity technology can lower the input costs for production factors,resulting in production expansion

251、and increased demand for labour(Acemoglu and Restrepo,2017,2019).Data also show that while labour demand is subject to fluctuations based on the skill set of the workforce(OMahony,Robinson and Vecchi,2008),the need for highly skilled labour capable of effectively managing technology rises in the ini

252、tial phases of adopting digital technology.However,over time,as new technologies become more standardized,they also become accessible to low-skilled workers and labour demand gradually transitions towards lower-wage,lower-skilled labour.As a result,digitalization can initially widen existing dispari

253、ties(Brynjolfsson and McAfee,2014);as skill-biased technical advancements increase,the demand for high-skilled workers rises.For the Asia-Pacific countries in special situations to effectively leverage digitalization,comprehensive measures are,therefore,required to ensure that the workforce is equip

254、ped with the requisite skills.However,even the relatively more developed LLDCs do not possess the average skills endowment of the Asia Pacific region(figure 2.3),although their favourable position for the dimension on“skills of future workforce”is encouraging.LDCs lag the furthest in term of their p

255、reparedness to harness digital transformation in several indicators,particularly in terms of the quality of vocational training,highlighting the importance of digital literacy.The Digital Skill Gap Index(DSGI)was developed to measure the gap in demand for digital skills for a given level of industri

256、al development and the supply side of digital skills.In other word it measures the capacity of economies policymakers to respond to the talent deficit,and education institutions and corporate trainers to deliver the needed skills and present additional insights.Built on six pillars:digital skills in

257、stitutions;digital responsiveness;government support;supply,demand and competitiveness;data ethics and integrity;and research intensity,a higher DGSI score signals a narrower digital skill demand and supply gap in a country.While most of the Asia-Pacific countries in special situations have low DGSI

258、 scores and global rankings,some of them,specially LLDCs in North Central Asia,have higher scores and rankings than countries that are not categorized as countries in special situations(see table 2.1).Beyond commercial benefits,the productivity dividends from digitalization are also significant for

259、government services and are critical for SIDS that have limited avenues for economic activities.By improving efficiency and accessibility,they are especially important for countries with geographically dispersed populations as they can promote interoperability,facilitating smooth integration with a

260、range of government and private sector services.Digital technologies can also be used for monitoring and responding to climate-related challenges and natural disasters.The Science Monitoring and Reliable Telecommunications(SMART)Subsea Cables initiative does this by measuring sea bottom temperatures

261、 and pressure.Digital technologies also provide reliable data for climate observation and early warning data for disaster mitigation to better understand climate change and enhance climate resilience and crisis response for the vulnerable small island developing States.Sources:https:/ M.,and others(

262、2023).Fuel and energy complex of Kazakhstan:geological and economic assessment of enterprises in the context of digital transformation.Energies,vol.16,No.16,6002;Digwatch(2023).Papua New Guinea rolls out platform for management of digital IDS.4 May.;United Nations Economic and Social Commission for

263、Asia and the Pacific(ESCAP)(2023),Asia-Pacific Countries with Special Needs Development Report 2023:Strengthening Regional Cooperation for Seamless and Sustainable Connectivity.United Nations publication;and The Fiji Times(2023).$782.4m mobile money transfers.29March.BOX 2.1 continued21Chapter 2:dIG

264、ItaLIZatIon,produCtIVItY and eMpLoYMentFIGUrE 2.2 the competitiveness of theworkforceSource:Schwab and Zahidi(2020).Skills of current workforceQuality of vocational trainingDigital skills among active populationEase of fnding skilled employeesSkills of future workforceESCAP excluding countries in sp

265、ecial situationsHigh Income countriesLeast developed countriesLandlocked developing countries050100 150 200 250 300 350AzerbaijanESCAP excluding countries in special situationsTajikistanKazakhstanArmeniaLao Peoples Democratic RepublicNepalKyrgyzstanBangladeshMongoliaCambodiaTOTAL SCORESkills of curr

266、ent workforceQuality of vocational trainingDigital skills among active populationEase of fnding skilled employeesSkills of future workforce010203040506070tABLE 2.1 Digital Skill Gap Index(DSGI)inselected Asia-Pacific countries,2021CountrY/terrItorYdSGI SCoreGLoBaL dSGI ranKInGnon-CountrIeS In SpeCIa

267、L SItuatIonSSingapore7.81Malaysia7.210Republic Korea715China6.718Hong Kong,China6.619Indonesia5.247Philippines5.151Viet Nam553India556Brunei Darussalam6.132Japan5.936Sri Lanka4.962Thailand4.578Pakistan3.994CountrIeS In SpeCIaL SItuatIonSArmenia 559Azerbaijan6.231Kazakhstan 5.643Uzbekistan4.676Mongol

268、ia3.3108Fiji558Papua New Guinea3.3109Bangladesh3.4106Myanmar3115Cambodia2.8117Nepal2.4124Source:Wiley(2024).22ASIA-PACIFIC COUNTRIES WITH SPECIAL NEEDS DEVELOPMENT REPORT 20242.3 The role of the services sector in the digital era the services sector is not a uniform sector;it varies significantly ac

269、ross parameters,from skill levels to tradability and the use of capital.Accordingly,because of digitalization,there is a need for a more granular understanding of its various subsectors.This includes not only differentiating between formal and informal services12 but also between“business services”a

270、nd“non-business services”(Sen,2023).The latter is because a large proportion of the non-business service sector is informally employed,while a large proportion of the business services sector is formally employed,between“traditional services”(construction,transport and tourism)and“modern services”(R

271、&D and development,business services,computer and information services,and financial intermediation)(Cornelli,Frost and Mishra,2023).It can also be differentiated by classifying the services sector into four categories(Nayyar,Hallward-Driemeier and Davies,2021):low-skill domestic services;low-skill

272、tradable services;skill-intensive social services;and global innovator services(see box 2.1).Using this classification,most of the services in Asia Pacific countries in special situations would fall into the low-skill domestic services and the low-skill tradable services categories.Indeed,a quick gl

273、ance at the productivity levels of various subsectors under services shows the diversity(see figure 2.3).Some capital and technology intensive subsectors,such as transport and communications exhibit high productivity levels relative to trade and accommodation.FIGUrE 2.3 Productivity variation within

274、 services,2022Sources:ESCAP,based on data from International Labour Organization(ILO)ILOSTAT.Available at https:/ilostat.ilo.org/.Accessed on 1March 2024;and United Nations Department of Economic Development and Social Affairs.UNSTATS.Available at https:/unstats.un.org/UNSDWebsite.Accessed on 1 Marc

275、h 2024.12 The informal economy refers to all economic activities by workers and economic units that are in law or in practice not covered or insufficiently covered by formal arrangements(ILO,1993).05 00010 00015 00020 00025 00030 00035 00040 00045 00050 000AfghanistanBangladeshBhutanCambodiaLao Peop

276、les Democratic RepublicMyanmarNepalSolomon IslandsTimor-LesteArmeniaAzerbaijanKazakhstanKyrgyzstanMongoliaTajikistanTurkmenistanUzbekistanFijiMaldivesPapua New GuineaSamoaTongaVanuatuPRODUCTIVITY IN USDWholesale,trade,restaurants and hotelsTransport and communicationsOther servicesLEAST DEVELOPEDCOU

277、NTRIESLANDLOCKED DEVELOPING COUNTRIESSMALL ISLAND DEVELOPING STATESAverage23Chapter 2:dIGItaLIZatIon,produCtIVItY and eMpLoYMentThe evolving nature of the services sector and advances in digitalization also presents opportunities for the development of countries in special situations.Recently,the se

278、rvices sector has exhibited many of the positive attributes of manufacturing in addition to other advantages(Baldwin and Forslid,2023),as follows:A tradability:One such area is tradability,as advances in digital technologies and communications have made many services more tradable.Among them are inf

279、ormation technology(IT)services,online education and telemedicine,which can be provided globally without a physical presence.B Scalability:Digital platforms also expand accessible markets,allowing countries in special situations to benefit from economies of scale.C Ease of establishment:Importantly,

280、service-based businesses typically require less capital investment than manufacturing,benefiting development in countries with scarce financial resources.D Employment:The services sector,boosted by digitalization,can create a wide range of jobs that require varying levels of skills,including high-sk

281、illed jobs,in IT and finance,and more accessible jobs in areas,such as digital marketing and customer service.E Adaptability:The services sector can quickly adapt to new technologies,making it more responsive to digitalization trends and more agile in leveraging new opportunities.However,unlike the

282、manufacturing sector,the dual outcomes of productivity growth and employment of unskilled labour are less prevalent in subsectors within the services sector.For instance,while subsectors within business services,such as ICT,are characterized by extremely high levels of productivity,their employment

283、generation potential for unskilled workers is limited.On the other hand,the non-business services sector,such as retail trade,is characterized by limited productivity growth,but it can absorb most of the unskilled labour.Regardless,digital platforms enable informal workers to access wider markets an

284、d,therefore,increase their incomes as online marketplaces and social media enable artisans to showcase their products and reach customers globally.This boosts income and reduces reliance on traditional middlemen,as exemplified in Nepal where digitalization and online market access has benefited loca

285、l artisans,and in Cambodia,where transport and delivery platforms have integrated motorbike taxis and tuk-tuks into their services,offering workers access to a formalized system of employment.In addition,the rise of global freelancing platforms creates opportunities for workers in countries in speci

286、al situations.Digitalization can,therefore,transform low-skilled,non-business,informal services,which account for 37percent of employment in services in countries in special situations.This can come about by(a)providing access to online training and education platforms,(b)creating new job opportunit

287、ies in areas,such as e-commerce,delivery services and digital administration and(c)formalizing informal workers,offering them with digital financial services(mobile banking)and more job security andbenefits.This also has implications for gender-related objectives considering that the share of female

288、 employment in the services sector to total female employment is higher than the share of male employment in this sector to the total male employment.Trends in employment gap between males and females also show that the increase in female employment is greater than the increase of male employment in

289、 the services sector(figure 2.5).24ASIA-PACIFIC COUNTRIES WITH SPECIAL NEEDS DEVELOPMENT REPORT 2024FIGUrE 2.4 Share of employment in the formal and informal services in the Asia-Pacific countries inspecialsituationsSource:International Labour Organization(ILO)ILOSTAT.Available at https:/ilostat.ilo

290、.org/.Accessed on 1 March 2024.020406080100Employment in informal services sector Employment in formal services sectorSamoaVanuatuTuvaluTongaTimor-LesteNauruNepalMongoliaMyanmarMarshall IslandsMaldivesLao Peoples Democratic RepublicKiribatiCambodiaFijiCook IslandsBangladeshArmeniaAfghanistan02040608

291、0100SamoaVanuatuTuvaluTongaTimor-LesteNauruNepalMongoliaMyanmarMarshall IslandsMaldivesLao Peoples Democratic RepublicKiribatiCambodiaFijiFijiCook IslandsBangladeshArmeniaAfghanistanSamoaVanuatuTuvaluTongaTimor-LesteNauruNepalMongoliaMyanmarMarshall IslandsMaldivesLao Peoples Democratic RepublicKiri

292、batiCambodiaCook IslandsBangladeshArmeniaAfghanistanMALE VS.FEMALE EMPLOYMENT IN FORMAL SERVICES(AS SHARE OF TOTAL EMPLOYMENT IN FORMAL SERVICES)SHARE OF EMPLOYMENT IN THE FORMAL AND INFORMAL SERVICES IN THE ASIA-PACIFIC COUNTRIES IN SPECIAL SITUATIONS(PERCENTAGE OF TOTAL EMPLOYMENT IN SERVICES SECT

293、OR)MALE VS.FEMALE EMPLOYMENT IN INFORMAL SERVICES(AS SHARE OF TOTAL EMPLOYMENT IN INFORMAL SERVICES)020406080100FemaleMalePER CENTPER CENTPER CENT25Chapter 2:dIGItaLIZatIon,produCtIVItY and eMpLoYMentFIGUrE 2.5 Gender-based employment in the Asia-Pacific countries in special situations byeconomicsec

294、tor,19912021Source:ESCAP based on data from International Labour Organization(ILO)ILOSTAT.Available at https:/ilostat.ilo.org/.Accessed on 1 March 2024.Digital financial services have also significantly increased financial inclusion,particularly in countries where banking infrastructure is limited.T

295、his has enabled a range of additional transactions.These services empower informal workers,enabling them to access banking services,credit and insurance;securely save money;and conduct transactions.Furthermore,the impact extends to street vendors and small retailers,who,through mobile payment system

296、s and e-commerce platforms,gain access to broader markets.This allows for more efficient inventory management and the receipt of electronic payments,offering a safer and more convenient alternative to traditional cash transactions.In Bangladesh,online payment platforms have played a revolutionary ro

297、le in mobile banking,transforming small-scale transactions that were once primarily cash based.The use of online platforms and applications also contributes to skill development and enhances digital literacy.It is,however,important to ensure that these platforms are accessible,affordable and regulat

298、ed in a way that protects the rights of informal workers.Digitalization and services tradeAs mentioned earlier,digitalization has facilitated a significant increase in the tradability of services.While this requires addressing trade-related barriers(discussed in the following section on policy consi

299、derations),an understanding of countries in special situations in this area is important to deal with bottlenecks.Tradable services are those that can be easily exchanged or traded across borders,allowing for international transactions.These services typically involve activities that can be delivere

300、d remotely or involve tangible outputs that can be transported.For example,software development,consulting services and financial services are often considered tradable as they can be provided to clients located in different countries.On the other hand,non-tradable services are those that are locall

301、y bound and cannot be easily exported.Some examples are hairdressing,and health-care and construction services,which are inherently tied to specific geographic locations because of the need for physical presence or proximity to the consumer.01020304050601991199319951997199920012003200520072009201120

302、132015201720192021Agriculture-MaleAgriculture-FemaleIndustry-MaleIndustry-FemaleServices-MaleServices-FemalePER CENT OF THE RESPECTIVE GENDER-BASED TOTAL EMPLOYMENT26ASIA-PACIFIC COUNTRIES WITH SPECIAL NEEDS DEVELOPMENT REPORT 2024Nayyar,Hallward-Driemeier and Davies(2021)classify the services secto

303、r into four categories based on six parameters,namely trade intensity,offshorability,R&D intensity,capital intensity,intersectoral linkages and low skill intensity.These categories include the following:1 Low-skill domestic services:Services under this category are characterized by the low share of

304、value-added exported and the high share of low-skill workers:administrative and support services;personal services;retail services;and arts,entertainment and recreation services.2 Skill-intensive social services:This category comprises services with a low share of value-added exports and a low share

305、 of low-skill workers:health and education sectors.3 Low-skill tradable services:The category includes services with a high share of value-added exports and a high share of low-skilled workers:services in the accommodation and food,wholesale;and transportation and storage sectors.4 Global innovator

306、services:Services under this category are characterized by the high share of value-added exports and the low share of low skilled workers:ICT services;finance and insurance services;and professional,scientific and technical services.FIGUrE A new classification for the services sectorSource:Nayyar an

307、d others(2021).Based on this classification the authors have derived a set of stylized facts that characterize the services sector in the digital era:A There is a productivity and jobs dichotomy such that no subsector generates productivity growth and employment simultaneously.B Wide productivity va

308、riation exists across subsectors.C Services firms are smaller in employment terms than manufacturing.D Size matters less for productivity.E Physical capital plays a small role.F Productivity dispersion is higher in services than in manufacturing.G Services firms employment growth is lower than in ma

309、nufacturing firms.h Firms boost their productivity over their life cycles.I Entry and exit play much larger roles in job creation and destruction in services than in manufacturing.Source:Nayyar,Guarav,Mary Hallward,Driemeier and Elwyn Davies(2021).At Your Service?The Promise of Services-Led Developm

310、ent.Washington,D.C.:World Bank.BOX 2.2 A new set of stylized facts for the services sectorSHARE OF LOW-SKILLED WORKERS(PER CENT),2018-50020406080100510152025SHARE OF VALUE-ADDED EXPORTED(PERCENTAGE),2015HealthArts,entertainmentand recreationRetailPersonalservicesAdministration and supportEducationAc

311、commodation and foodProfessional,scientifc,technicalFinance and insuranceInformation and communicationWholesaleTransportationand storageSKILL-INTENSIVE SOCIAL SERVICESGLOBAL INNOVATOR SERVICESLOW-SKILL DOMESTIC SERVICESLOW-SKILL TRADABLE SERVICESHigh-linkageservicesLow-linkageservicesOfshorableservi

312、cesR&D intensiveservicesCapital intensity27Chapter 2:dIGItaLIZatIon,produCtIVItY and eMpLoYMentOn a global scale,tradable services contribute approximately 15percent to GDP,on average,with high-income countries exhibiting a higher proportion,which exceeds 25percent.For Asia Pacific countries in spec

313、ial situations,the share of services exports of LDCs and LLDCs is 3.24 and 3.06percent,respectively,which is notably lower than the worldwide average.Clearly,there is significant scope to enhance the tradability of services in the countries in special situations.FIGUrE 2.6 Export in services(per cen

314、t of GDP)Source:ESCAP,based on data from World Bank,World Development Indicators database.Available at https:/data.worldbank.org/.Accessed on 5 November 2023.A quick glance the top 50 service exporting countries shows that 68percent of them are high-income countries,indicating a strong correlation b

315、etween income and service exports.On the other hand,only four out of the Asia Pacific countries in special situations analysed in this report have a higher proportion of service exports than the world average.Moreover,the ICT sector accounts for a relatively high proportion in service exports of the

316、 lower-middle-income group,while the travel sector accounts for a relatively high proportion of low-income groups.In the case of ICT services,the proportion of such exports for the lower middle-income group is significantly higher,perhaps because of high rates for India and Philippines,while the sha

317、re of the travel sector was higher in the low-income group.The digitalization of trade in services has expanded significantly,particularly in the realm of digitally delivered services.Developing economies have played a pivotal role in this expansion by exporting more services and embracing digital t

318、rade.As of 2022,exports of digitally delivered services amounted to$3.82 trillion,constituting 54percent of the total global services exports for the same year(WTO,2023).Trade in digitally delivered services has surged nearly fourfold since 2005.While at the global level,developed countries continue

319、 to exert a predominant influence on trade in digitally deliverable services,the contribution of developing countries has increased from 19percent in 2010 to 24percent in 2022,with China making a noteworthy contribution.However,small island developing States have exhibited the highest annual growth

320、rate,at 12percent,elevating their share of global exports of digitally deliverable services by two percentage points to reach 5percent,which is aligned with their overall share of services exports.In contrast,LDCs and LLDCs command significantly lower shares in digitally deliverable services trade c

321、ompared to general services trade.In 2022,LLDCs represented 0.75percent of global services trade,but only 0.3percent of digitally deliverable services exports,while for LDCs,these figures were 0.6percent and 0.2percent,respectively.051015202530Asia-Pacifc small islands developing StatesAsia-Pacifc l

322、andlocked developing countriesAsia-Pacifcleast developed countriesHigh IncomeWorld01020304050607080KiribatiLao Peoples Democratic RepublicPapua New GuineaBhutanTimor-LesteTajikistanUzbekistanNepalBangladeshKazakhstanCambodiaSolomon IslandsAfghanistanVanuatuMarshall IslandsPalauTuvaluMongoliaKyrgyzst

323、anFijiAzerbaijanMyanmarSamoaTongaWorldFrench PolynesiaNauruMaldivesEXPORT IN SERVICE(PER CENT OF GDP)EXPORT IN SERVICE(PER CENT OF GDP)28ASIA-PACIFIC COUNTRIES WITH SPECIAL NEEDS DEVELOPMENT REPORT 2024The potential for skilled providers worldwide to engage in trade is facilitated by digital deliver

324、y,but such opportunities are not universal.While digitally deliverable services can be provided remotely through computer networks,certain services continue to be delivered using non-digital means.Developing countries often grapple with challenges related to infrastructure and resources,limiting the

325、ir ability to fully participate in digitally delivered trade.Moreover,only a select few countries actively measure the scope and types of trade in digitally delivered services,encompassing sectors,such as telecommunications,computer services,financial services,insurance,pension and various business

326、services.In the next section,policy considerations that countries can pursue towards this effect and the role of regional cooperation in supporting the countries in special situations are highlighted.FIGUrE 2.7 Information and communications technology export share of service exportSource:ESCAP,base

327、d on data from World Bank,World Development Indicators database.Available at https:/data.worldbank.org/.Accessed on 5 November 2023.0510152025303540Asia-Pacifc small islands developing StatesAsia-Pacifc landlocked developing countriesAsia-Pacifc least developed countriesLower incomeLower-middle inco

328、meUpper-middle incomeHigh incomeWorld0510152025303540PalauAzerbaijanKyrgyzstanKazakhstanTajikistanPapua New GuineaMongoliaFijiTuvaluSolomon IslandsUzbekistanBangladeshWorldCambodiaNepalVanuatuTongaLao Peoples Democratic RepublicSamoaPER CENT OF EXPORTSPER CENT OF EXPORTS29Chapter 2:dIGItaLIZatIon,pr

329、oduCtIVItY and eMpLoYMentCHAPTER 3Policy considerations and regional cooperation to harness digitalization30this chapter contains a summary of the key opportunities,challenges and risks of digitalization as previously discussed,focusing on how Asia-Pacific LDCs,LLDCs and SIDS can leverage them.By re

330、viewing the experiences of these countries,the discussion in this chapter includes several policy considerations and underscores the importance of regional cooperation in maximizing the benefits of digitalization,while mitigating its potential drawbacks.Digitalization offers a range of opportunities

331、 for leapfrogging development in countries in special situations.Technological advancements are transforming connectivity in remote areas,enabling LDCs,LLDCs and SIDS to bypass traditional infrastructure hurdles.For example,the swift adoption of mobile technology and satellite systems has negated th

332、e need for extensive landline networks,while solar mini grids offer an alternative to centralized electricity grids.Furthermore,digital platforms are democratizing access to global markets,spurring entrepreneurship and job creation,including in remote and rural areas.This is especially beneficial fo

333、r SIDS and remote,rural regions of LLDCs,where it catalyses economies of scale.The impact of this can be substantial,as these countries,particularly LDCs,strive to amplify their presence in business services exports,an area in which they have traditionally had only limited engagement.Additionally,digital technologies are revolutionizing the delivery of essential services,such as mobile banking,onl