The Benefits of Digital Public Infrastructure

The UN Secretary General’s Roadmap for Digital Cooperation argues that “a concerted global effort to create digital public goods [will] be key to achieving the Sustainable Development Goals.” In the same way capturing the value of advances in automobile and aircraft technology during the 20th century depended on investment in public goods such as roads and runways, capturing the full value of advances in digital technology will depend on investment in a new generation of digital public infrastructure. The evidence to support this claim is strong and growing:

• In Bangladesh, an ambitious effort to digitize government radically improved service delivery and saved Bangladeshi citizens nearly 2 billion days, over $8 billion, and 1 billion visits to government offices.
• Estonia’s efficiency gains from its X-Road system are equivalent to 2 percent of the country’s GDP and give citizens back the equivalent of an extra 844 working years annually.
• In Kenya, improvements in digital infrastructure have already lifted 2 percent of the country’s population out of poverty.
• India’s digital identity and payments platforms eliminated an estimated 47 percent of fraud and abuse after it was introduced, amounting to $22.4 billion in savings each year.
• Ukraine’s Ministry of Economic Development and Trade (MEDT) estimated that the country previously lost about 20 percent of the total value of its procurement budget due to the use of systems that allowed for corruption and collusion. The successful deployment of an open source digital procurement platform immediately reduced corruption losses by 46 percent.
• Moldova’s open source procurement platform MTender reduced the cost of procurement administration by an estimated 30 percent, and used open source principles to prevent vendor lock-in.
• Governments delivering the most effective responses to the pandemic — Taiwan, South Korea, New Zealand, and Estonia — all rely on world-class digital infrastructure to power their institutions.
• The costs of the status quo are staggering:
  • By its own admission, the U.S. Treasury makes $175 billion in improper payments each year.
  • The United Nations estimates that the world economy loses nearly $2.6 trillion — five percent of the global GDP — to corruption annually.
  • Estimates vary, but the World Bank has calculated that governments forego $3.1 trillion in revenue each year as a result of tax evasion.
• The funding gap for the UN Sustainable Development Goals, which include everything from eradicating extreme poverty to ending climate change, is estimated at $2.5 trillion.
• Deploying digital public goods to bring greater accountability to public finance and taxation may be the only viable source of closing the funding gap for the SDGs.

Tools for Measuring Benefits

The early successes of population-scale technology platforms in Estonia, India, and numerous other countries suggest that profound benefits are possible when national governments deploy interoperable digital systems for digital identity, digital payments, and data exchange. These three foundational elements work together to facilitate the frictionless movement of people, assets, and information to unlock striking improvements in efficiency. The blueprint below outlines how these solutions can help support a comprehensive suite of digital services.

Even societies that only implement a few modular elements from this framework still achieve improvements in efficiency. Significantly, these benefits show up regardless of whether countries are rich or poor.

• Research in Niger concluded that the country’s decision to administer its cash transfer program digitally saved enough working hours to enable each participant in the program to feed a family of five for a day. Cost of administering the program fell by 20 percent (Aker et al., 2013).
• A World Bank report showed that the Republic of Georgia’s blockchain-based land titling system — deployed in collaboration with New America — reduced the time and costs associated with property and title registration to one day. Registration wait times in the United States and Germany average 15.2 and 39 days respectively.
• In South Africa, the cost of disbursing social grants in 2011 by smart card was one-third that of manual cash disbursement.
• The Mexican government’s shift to digital systems for wages, pensions, and social welfare eliminated nearly $1.3 billion in annual losses.
• In the United States, the long waits required to process and clear analog transactions are a prime cause behind the $50 billion spent each year on check cashing, payday lending, and bank overdraft services. Low-income, marginalized populations use these services at disproportionate rates to access liquidity more quickly. This phenomenon was particularly pronounced during the pandemic, when millions faced financial ruin as they waited weeks to receive paper checks with benefits and unemployment insurance.

Scaling

Finally, there is strong evidence that high-quality open source digital platforms can scale very effectively across regions. The healthcare sector, which is roughly two decades ahead of most governments in applying the benefits of open source digital platforms, is emblematic of this phenomenon. The DHIS2 system (District Health Information Software 2) has enabled 73 low and middle-income countries with combined populations of over 2.3 billion people access open source, web-based health management information systems at extremely low cost. DHIS2 demonstrates how digital public goods can generate a wave of progress that transcends borders and spans across continents. Digital public goods particularly shine during crises, when governments must balance the priorities of rapid response and strategic integration with other systems. For example, the State of Alabama quickly repurposed a COVID-19 information hub developed by the State of New Jersey, and the city of San Francisco is harnessing data platforms developed by the municipal government of Tokyo.