The Changing DNA of Digital Growth: From Economic Might to Human Capital

The Asian Development Bank (ADB), together with researchers from Fulbright University Viet Nam, Loughborough University London, and Imperial College London Business School, presents an incisive exploration of how digital transformation has evolved globally in ADB Brief No. 358, "What Drives Digital Transformation Globally? Insights from 99 Economies." Authored by Willem Smit, Kun Fu, Erkko Autio, Donghyun Park, and Shu Tian, the brief examines how 99 economies have navigated the digital revolution from 2010 to 2021. Using composite indices that measure digital adoption, human capital, infrastructure, and institutional strength, the study highlights how the drivers of progress have shifted from wealth and connectivity to education, trust, and governance.

The Breakaway Years: 2010–2015

The early 2010s marked a period of digital divergence. A handful of economies surged ahead, forming a "breakaway pack" of digital leaders. These frontrunners, mostly high-income nations, accelerated through aggressive investment in internet infrastructure, electricity access, and broadband networks. Urbanization amplified their progress, as dense cities offered both demand and efficiency for rapid rollout. Economic development, represented by GDP per capita, was the single strongest determinant of early success, allowing wealthier nations to extend connectivity and digital services faster than their peers. Institutional quality and human capital were secondary at this stage, as the main challenge lay in building the basic digital backbone. The digital divide of this era was structural and infrastructural, defined by who had physical access to technology rather than the skills to use it effectively.

The Catch-Up Era: 2016–2021

By the mid-2010s, the dynamics of digitalization changed dramatically. As internet access became cheaper and more widespread, the determinants of progress shifted from economic capacity to human capability. The "catch-up phase" saw middle- and lower-income economies narrow the gap with early adopters. The decisive drivers now became digital skills, literacy, and institutional strength. Economies that invested in education, particularly in science and technology, converted connectivity into creativity and competitiveness. Governance emerged as the invisible hand behind sustained success, effective governments ensured trust, security, and regulatory stability, enabling citizens and businesses to use digital systems confidently. Meanwhile, economic affluence lost its monopoly on progress; even modest economies with strong institutions began outperforming wealthier but poorly governed nations.

Enduring Enablers and Emerging Challenges

Throughout both phases, certain fundamentals remained constant. Urbanization continued to support the spread of digital infrastructure, while lower income inequality promoted inclusivity, ensuring that technology reached broader segments of society. Government effectiveness remained the most stable predictor of digital success across all contexts. The chart on page 5 of the brief strikingly visualizes how digital adoption, once concentrated in a few countries, became globally diffused between 2015 and 2021. Yet, as connectivity reached near-universal levels, new divides emerged, not of access, but of ability. The challenge today lies not in connecting people to the internet, but in ensuring they can use it productively, securely, and meaningfully.

Rethinking Policy for the Digital Age

The brief urges governments to evolve their priorities from "hardware" to "humanware." Infrastructure, once the main engine, must now be complemented by large-scale investments in education and digital literacy, particularly targeting women, rural communities, and marginalized groups. Institutions must be strengthened through improved governance, robust data protection, and cybersecurity systems that sustain trust. The remaining access gaps must be bridged through affordable connectivity, locally relevant content, and community-led innovation. At a regional level, the report calls for greater cross-border collaboration, especially within frameworks such as ASEAN, to harmonize standards, share infrastructure, and jointly manage cybersecurity risks.

Finally, the study recommends aligning digital policy with broader sustainability goals. Digital transformation should serve not only economic growth but also environmental and social resilience. Governments are encouraged to integrate environmental, social, and governance (ESG) principles into digital strategies, invest in green technologies, and use data-driven tools to promote inclusive and sustainable development.

From Access to Empowerment

The ADB brief concludes that the global digital journey has entered a new phase, one defined not by who is connected but by who is capable. Infrastructure remains the foundation, but education empowers use, and institutions ensure durability. The next frontier of digital progress lies in converting access into empowerment, technology into opportunity, and connectivity into collective resilience. As the authors summarize, "Infrastructure enables access, but skills enable use, and institutions sustain impact." It is this balance between human capital and institutional trust that will determine which economies lead the digital century and which risk falling behind.