Digital for Development: An analysis from a geopolitical perspective

The digital transformation reaches almost every corner of the world and poses new opportunities and challenges for international development cooperation. Development cooperation today can utilize a large variety of digital technologies and data to improve their work and facilitate digital development in partner countries, e.g. building digital literacy and supporting digital transformation in public administrations. However, they also need to understand the broader implications and challenges of digital technologies and develop adequate approaches and programmes to support and accompany the digital transformation in their partner countries.

In a networked world, the digital development process of a country is interdependent – though to varying degrees and in differing ways – with trends and dynamics on the global level. More specifically, the rivalry between the US and China on various and, in particular, technological issues is affecting countries worldwide. Development cooperation in areas related to digital transformation is situated in this broader and complex context of digital geopolitics. As a means of foreign policy and for shaping international partnerships, it is therefore not neutral or free of the self-interests of the donor. A key question is therefore how digital development cooperation can succeed in a way that strengthens the digital sovereignty of partner countries in the Global South and puts their development priorities first.

Competing digital economy models

Two distinct approaches, the US market-centred, liberal model and the Chinese state-led model, have dominated the development of the global digital economy over the past decades. China’s digital development model is built on a strong role of the state in developing a thriving domestic tech industry, fostering its success abroad as well as protecting the industry at home against foreign competition.

China is an advocate of strong data localisation rules, which it understands as a matter of both economic development as well as national security. With the Belt and Road Initiative as well as the Digital Silk Road, it is expanding its trade and foreign relations and increasingly shapes international discourses on digital policy issues and technical standard setting, for example in the area of 5G technology, but also artificial intelligence. China is very active in countries of the Global South, particularly in Africa, where it has become the main supplier of telecommunications infrastructure and technologies, including those that can be used for surveillance.

The US is leading in the global development of digital technologies as well as in the platform economy. This frontrunner position is built on an efficient research and innovation ecosystem as well as a market liberal approach supporting a quick commercialisation of digital innovations. US tech companies, such as Google and Facebook have been active in developing digital infrastructures in several developing countries. Moreover, the Silicon Valley success story has shaped the notion of entrepreneurship and start-up ecosystems in many developing countries. However, overall, the US has long had a blind spot on digital development issues in the Global South, in particular in Africa. In the light of the competition with China, it is now stepping up its efforts. With the Better Utilization of Investments Leading to Development (BUILD) Act, signed in 2018, it has created a new development finance corporation with a budget of USD 60 billion and digital technologies as one focal area. Besides, in April 2020, USAID launched its first Digital Strategy. The strategy aims to improve the use of digital technologies and tools within the agency itself, strengthen its digital capacities and foster the development of sound digital ecosystems in partner countries. This also includes spreading US digital policy approaches, for example with regard to 5G technology, by providing technical assistance and advice. With the G7 initiative Build Back Better World, the US has also taken a step to counterbalance China's Belt and Road Initiative.

In recent years, the European Union (EU) has emphasised its aspiration to strengthen its digital sovereignty and to play a more active geopolitical role. Among other things, the EU is making great efforts to position itself as a player with an alternative approach to shaping the digital economy and society, sometimes referred to as “European Third Way”: with a regulatory, human-centred approach, the EU combines a market economy model with a normative orientation underscoring, in particular, the protection of the individual’s data and privacy rights. The EU increasingly sees its activities as a counterweight to China's growing influence. Its “Global Gateway” connectivity strategy, launched in September 2021, is the latest example of this.

The EU and its member states promote their human-centred approach to digital transformation in the international and development cooperation with their partner countries. The EU’s approach to digital development has become more and more pronounced since 2017, but still lacks a clear strategy and substantial funding. Currently, the EU’s digital development activities are programmed with around EUR 5 billion with the EU D4D Hub focussing in particular on African partner countries. However, the EU aims to strengthen its digital development cooperation in Latin America – with the BELLA programme being a first step – as well as with the Asia-Pacific region, where India is one of its most important partners. Furthermore, it remains to be seen if the EU’s digital development cooperation can fit the needs and expectations of the rapidly developing and growing regions in the Global South eager to catch up in the digital transformation.

Ways forward

For shaping and developing its external relations on digital policy issues, the experience the EU has gained in recent years in regulating the digital transformation can be an important asset. Partner countries from the Global South have noticed these developments and many of them are interested in cooperation. The EU should develop a clear strategy for its digital development cooperation with these partners in the Global South, including the promotion of interoperability, common standards and data markets, a human-centred digital governance approach, as well as the development and implementation of adequate funding mechanisms. In addition, the EU and particular member states with largescale development cooperation programmes such as Germany and France need to strengthen capacities and knowledge resources on digital development issues and improve their coordination. Furthermore, there is great potential for deepening and broadening cooperation between like-minded countries in the Global South and the EU, for example on issues of data protection, a fair digital and data economy and cybersecurity. The EU should particularly support African countries in their digital development efforts and strengthening their digital sovereignty. In addition, the EU should intensify its dialogue with countries such as Brazil, India and Mexico on digital policy issues. With China and the US, the EU should seek exchange and dialogue on common interests and possible synergies, while also addressing problematic aspects, be it data protection, individual privacy and human rights in cyberspace, or a fair distribution of the benefits of the global digital economy.