Digital technology has enabled poor countries to stand on the same starting line with rich countries in some areas. Poor countries even have the opportunity to snatch and leapfrog. In less and least developed countries, especially those where mobile phones spread rapidly, consumers are more likely to accept mobile payment.
The chart above shows the results of a survey conducted by the Centre for International Governance Innovation in Canada, which refer to respondents who strongly or moderately agreed with the question “How likely are you to use mobile payments on your smartphone in the next year?”. While more than 90 percent of participants in China and Indonesia, more than 80 percent in India, and close to 80 percent in Kenya embrace payments by mobile phone, this number is less than 45 percent in the United States, 31 percent in France, and less than 30 percent in Japan
A crucial factor driving this stark difference in attitudes toward digital technology applications is that current financial and retail services tend to be much less efficient in emerging markets. Therefore, what economists call the “marginal”, benefits of adopting digital technologies are thus much larger. Furthermore, existing traditional service providers, which are more prevalent in developed markets clustering on the right side of the chart, tend to resist change. Developing and emerging markets on the top left side of the chart leapfrogged past the PC directly into mobile internet, taking a lead position in not just in the development and adoption of mobile payment systems, but in the development of rich, interdependent ecosystems enabled by mobile internet.
(This chart and the associated texts are mainly from Luohan Academy’s publication Digital Technology and Inclusive Growth. The executive summary can be downloaded here, and the full text will be available on Amazon by late Jan. 2020.)