Author: Editorial Board, ANU

The internet once promised a world of seamless connectivity for anyone with access to a digital device. As connectivity costs fell, the workplace became mobile, and digitalisation transformed industrial sectors, the laissez-faire agenda of digital developmentalists appeared to align with and promote democratic ideals.

That was then. Today, even as cloud computing and digital transformation agendas have become mainstream, it is clear the threat of digital fragmentation must be actively addressed.

The COVID-19 pandemic and associated lockdowns and social distancing accelerated an e-commerce boom and digitalisation globally. The uptake was most remarkable in Asia with 60 million new digital consumers in Southeast Asia. Over half of South Asians have experienced using the internet. Many can now work from home, access healthcare online, and touchless pay is widespread. Fax machines are finally starting to be phased out in high-tech Japan.

Greater digitalisation and access to digital service will be central to productivity growth. Distance matters less and transaction costs are close to zero. Data is also non-rival — one company’s use of data need not impede the use of the same data by others — so barriers to the free flow of data are even more costly than those for physical goods.

As different rules around privacy, cybersecurity and digital sovereignty emerge to thwart interoperability, fragmentation is impacting both governance and infrastructure. Digital borders in China, cross-border data restrictions in Europe and America’ disavowal of Chinese telecom equipment make for increasing disconnection.

Even as digital services and the online world collapses space and time, the connection to the real world means that distance still matters. The movement of goods, people and capital is increasingly underpinned by data and digital services. Fragmented digital regimes will impede real economic activity between countries. Conversely, regional interoperability and moving towards a digital single market will unleash productivity, …continue reading