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Book Chapter

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Asian Development Bank Institute




Harnessing Digitalization for Sustainable Economic Development: Insights for Asia describes digitalization’s role in raising the productive capacities of economies. It examines how digital transformation can enhance trade, financial inclusion, and firm competitiveness, as well as how greater digital infrastructure investment, internet connectivity, and financial and digital education in the region can maximize digitalization’s economic benefits. It also explains the importance of striking the right balance between the regulation and supervision of financial technology to enable innovation and safeguarding financial stability and consumer protection.

Part I of the book seeks to build an understanding of digitalization’s effects on macroeconomic performance, including through trade channels and financial inclusion. Part II examines automation and the impact advancements in digital technology can have on firms via technology spillovers and the labor market. Finally, Part III highlights onward policy challenges for achieving sustainable and inclusive economic development outcomes amid accelerating technological change and demand for a more digitalized economy.


Chapter 8 draws upon the author's book The New Goliaths: How Corporations Use Software to Dominate Industries, Kill Innovation, and Undermine Regulation, Yale University Press (2022).

Introduction to Chapter 8:

As the dot-com boom accelerated 2 decades ago, there was much talk in the business world of a “new economy.” Fast Company, one of the magazines created to herald this change, declared that this “democratic capitalist” movement was about “the expansion of individual opportunity, the disruptive energy of ceaseless innovation, and the transformative power of information technology and communications.” Individuals could access inexpensive new computer and networking technology, learn valuable skills, innovate, create new companies based on their innovations, grow these companies rapidly, outsource other tasks to global partners thanks to the internet, and ultimately disrupt entrenched old economy companies.

In this view, new information technology was fundamentally changing the nature of the capitalist economy. But in hindsight, the new economy vision failed. While several aspects of the new economy did play out for a time, few seem to hold true today. One might suppose that the new information technologies failed to fundamentally change the nature of the economy. This chapter argues, to the contrary, that information technology is indeed transforming capitalism—just not in the way envisioned by the new economy proponents. It is changing the nature of markets, innovation, and firm organization, exacerbating economic inequality and undermining government regulation.

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