Promoting Inclusive Growth in the Digital Economy: The OECD Evidence and Practice Base

Ambassador Daniel A. Sepulveda
Deputy Assistant Secretary and U.S. Coordinator for International Communications and Information Policy, Bureau of Economic and Business Affairs
Joint USCIB/BIAC/OECD Conference
Washington, DC
March 10, 2015

I would like to thank our organizers (USCIB/BIAC/OECD) for hosting this meeting. I would also like to extend our thanks to the honorable Raul Montemayor (Director General for Innovation, Services and Domestic Commerce, Ministry of Economy, Government of Mexico) for Mexico’s generous support in hosting the 2016 Committee on Digital Economy Policy Ministerial.

The evolving digital economy has fundamentally changed the way we live, work, govern, and express ourselves. Among the many repercussions of that change is our undeniable dependence for economic production and innovation on modern communications and everything it enables.

As early as 2011, the global digital economy’s impact on GDP growth in G7 countries had already surpassed that of other global sectors, such as energy and agriculture, and it is rapidly transforming the emerging markets that are the key to future growth and globally shared prosperity.

Three billion people are connected to the Internet today. And trillions of devices are set up to join them in the Internet of Things. Together, that connectivity holds the potential to lift people out of poverty, formalize the informal economy around the world, increase the efficiency of supply chains, increase the productivity of workers, and in turn raise wages and make possible activities that we have not even dreamed up yet.

But it will take open markets, the cooperation of leaders around the world, the participation of a vibrant and diverse range of stakeholders, and strong trade agreements, with language preserving the free flow of information, to protect the Internet’s potential as the world’s engine for future growth. And for it to truly succeed, these policy approaches will require the buy in of leaders from the emerging economies we want to help grow. We cannot impose these ideas on them; we have to convince them of the merits.

We believe that this new paradigm represents a tremendous opportunity to accelerate social and economic development, but it is incumbent upon all of us to ensure that it develops in a way that is inclusive and for the benefit of all. Wide-ranging estimates suggest that more than half the world’s population remains offline, and that offline population is concentrated among the poor populations who will not be reached purely by commercial expansion of digital offerings. We all have to work together to create the right policy, legal, and regulatory space worldwide necessary to bridge the digital divide and drive the benefits of the digital economy deeper into our societies.

A truly inclusive digital economy will ensure that all populations have access to technology, and no singular group is excluded due to barriers such as prohibitively high costs, lack of network connectivity, or social or cultural hurdles.

Achieving this inclusive digital economy is going to take a focused effort of governments, both multilaterally and bilaterally, the ICT industry and the multi-stakeholder community all working together.

The U.S. Government is trying to do its part. For example:

  • USAID worked with the Government of Indonesia to develop the country’s new National Broadband Plan, which will catalyze an estimated $23 billion of investment in expanding the reach of broadband networks, and enable the deployment of new technologies like TV White Space to deliver rural broadband and more affordability.
  • USAID created the Better Than Cash Alliance, which is accelerating the development of electronic payments infrastructure by digitizing major payments by governments, development organizations, and multinational companies.
  • And together, USAID and the State Department are partnering with the world’s broadest technology coalition, the Alliance for Affordable Internet, to bring broadband prices within reach of even the most underserved populations. Based on the Alliance’s advocacy, the government of Ghana recently agreed to drop its 20% tax on smartphone imports.
  • In addition, the National Telecommunications and Information Administration’s Broadband USA Program (BTOP) is developing new resources for broadband deployment. These include BTOP’s Broadband Adoption Toolkit and BTOP’s guide for Public Private Partnerships. BTOP is also working on a follow up to the Toolkit that is helping governments develop national broadband policies.

It is within the multilateral context that our attention is turned to the role of the OECD in promoting the digital economy, but we do so respecting the necessity for full multistakeholder participation. We believe that the OECD plays a critical role as one of the organizations in the constellation of multi-stakeholder and multilateral forums that deal either directly or indirectly with the global Internet and the networks on which it runs. And we need all of them to work if we are to meet our goals. The OECD’s evidence-based research across a number of Committees and related working parties work with and inform the multi-stakeholder community and policymakers on a wide range of topics related to the digital economy. And at a time when various interest groups and policymakers are bringing their own opinions, research, and statistics to the table, many of them reaching vastly different conclusions, we need the rigor of the OECD to help us decipher and assess the pros and cons of various perspectives.

Earlier this morning, Andy Wyckoff, cut a wide swath in describing the work-streams undertaken by his directorate (DSTI – Directorate for Science, Technology and Innovation) demonstrating the opportunities for innovation, growth, and employment provided by ICTs and Internet-based innovation. ITU Sec General Houlin Zhao indicated how the OECD’s evidenced-based research may help inform some of his goals and objectives for the ITU going forward.

OECD Work Related to Consumer Policy

The OECD has long recognized that improving consumer trust in the digital economy is key to boosting economic growth. Accordingly, the sister Committee of the CDEP, the Committee on Consumer policy has been working on a wide range of digital economy issues. I understand that last year, it issued two significant policy guidance documents: one on consumer protection for mobile and online payment mechanisms (April 2014) and the other on intangible digital content products (October 2014).

With the emergence of new forms of electronic commerce, the consumer policy committee is currently working on revising the OECD’s groundbreaking 1999 Guidelines on Consumer Protection in the Context of Electronic Commerce.

The Committee on Consumer Policy also will issue, later this year, a significant study on industry-led self-regulation that has implications for businesses in the online world.

As we move forward, the debates between policymakers and other stakeholders over self-regulation vs co-regulation vs traditional regulation of electronic commerce will continue. We should focus on outcomes that any given proposal achieves relative to the consumer protection challenge before it rather than wed ourselves to any single formulaic process or ideology. The OECD can help create a space where various methodologies and their historical and changing application can receive their due consideration and from which policymakers can draw their own conclusions.

The State Department has worked closely with the FTC to provide input to the Committee on Consumer Policy as it develops policies and guidelines relating to electronic commerce. It is an area of work that we take great interest in, and we look forward to continued and vigorous dialogue.

OECD Work Relating to Privacy Enforcement Cooperation:

The OECD has also been a leader in improving privacy enforcement cooperation in this era of global data flows. The OECD’s 2007 Recommendation on Cross-border Co-operation in the Enforcement of Laws Protecting Privacy called on members to improve their domestic frameworks for enforcement, and to develop mechanisms to facilitate international enforcement cooperation, including the development of an enforcement network. Following the recommendation, several privacy authorities founded the Global Privacy Enforcement Network (GPEN).

In America, we have a vigorous system of sectoral privacy protection backstopped by the FTC’s authority to penalize unfair or deceptive practices. This Administration has dedicated time and effort over the last six years studying the privacy challenge in the digital age and has produced multiple significant reports as well as a discussion draft of legislation for our Congress to consider as it moves forward with its own examination of the challenge.

Every policymaker and stakeholder around the world that I have talked to has an interest and opinion on the relationship between the individual and those collecting, using, and distributing his or her information, whether that be online or digitally enabled off line.

The scope of the challenge is as staggering as the amount of data involved. And the implications of rising to the challenge hold great weight for the future of our digital selves and dignity, as well as the potential of the proper uses of big data to exponentially improve our productive capacity and help us tackle some of the worlds’ biggest economic and social challenges.

The truth is that even though it may feel like the digital economy has been with us a long time, it hasn’t. There are no easy answers. And there is no guarantee it will evolve in a manner that allows everyone to participate safely and equally. We all feel compelled to contribute to the continued growth of the digital economy while serving the global public interest. Together we can achieve both ends.

To do so, we need to embrace the work of the OECD and enhance its capacity and ability to bring together leaders from various communities with various perspectives in a way and place that allows for rigorous analysis, fair debate, and collaborative cooperation. We are committed to that end and we hope you will join us.