As the traditional drivers of global economic growth gradually weaken, the digital economy has emerged as a key new engine driving global recovery. According to the United Nations Conference on Trade and Development (UNCTAD), the global digital economy is growing at an annual rate of 10-12%, significantly outpacing overall global economic growth, and is expected to continue playing a dominant role in generating global value added. Digital technologies are comprehensively permeating production, trade, and public governance. In 2023, global digitally deliverable services trade reached US$ 4.5 trillion, continuously reshaping the structure of the global economy and international trade.
For countries across the Global South, digital transformation represents a crucial opportunity to narrow the North–South development gap. However, persistent challenges remain, including inadequate digital infrastructure, limited technological capacity, and a widening global digital divide. How to ensure that the dividends of digitalisation are broadly shared, and how to transform the digital revolution into a driver of sustainable development, has become a pressing common challenge for developing countries worldwide.
Compared with traditional infrastructure, digital infrastructure requires lower investment, has a shorter construction cycle, and offers significant marginal cost advantages, providing developing countries with limited fiscal capacity and industrial foundations an opportunity for leapfrog development.
According to the 'International Telecommunication Union (ITU) Measuring Digital Development: Facts and Figures 2025', nearly three-quarters of the global population are now online, yet around 2.2 billion people remain offline, the vast majority of whom live in low- and middle-income countries. Internet penetration is closely correlated with income levels: high-income countries have a penetration rate of about 94%, approaching universal access, while low-income countries stand at only 23%, reflecting a substantial global North-South digital divide. Although mobile broadband and 5G coverage continue to expand, gaps in service quality, affordability, as well as urban-rural and gender disparities remain significant.
As digital technologies become a core infrastructure of modern economies, the digital divide is increasingly turning into a development divide. For developing countries, accelerating digital infrastructure development and improving inclusive access is not only a matter of technological progress, but also a decisive factor shaping future economic growth, employment creation, and social development opportunities.
Constrained by weak financial infrastructure and uneven urban–rural development, rural populations and low-income groups in developing countries have long faced difficulties in accessing formal financial services. Digital finance, built on mobile networks and smart devices, has shifted services such as savings, transfers, and credit to online platforms, significantly lowering access barriers and effectively expanding the reach of financial services.
According to the World Bank’s Global Findex Database 2025, the share of adults with formal financial accounts rose to 79% in 2024, a substantial increase from 51% in 2011. In low- and middle-income economies, the figure has also reached around 75%. At present, approximately 40% of adults in developing economies save through formal financial accounts, an increase of 16 percentage points compared with 2021, highlighting the positive impact of digital finance on financial behaviour.
Globally, around 900 million adults remain unbanked, the majority of whom own mobile phones, and more than 500 million have access to smartphones. This provides a strong technological foundation for the further expansion of digital financial services.
Most developing countries exhibit a pronounced youth-dominated demographic structure, with abundant labour supply but limited absorption capacity in domestic manufacturing and service sectors. Combined with constraints on female labour force participation and insufficient rural–urban labour mobility channels, structural employment imbalances have persisted over time. Emerging forms of employment in the digital economy, such as the gig economy, platform-based work, and remote employment, have expanded job opportunities through low-entry and flexible arrangements, offering new pathways to ease employment pressures.
The International Labour Organization (ILO) notes that the digital platform economy has expanded rapidly worldwide and has become an important channel for absorbing informal employment, with particularly strong growth in developing countries. At the same time, women’s participation in platform-based work has continued to increase; however, significant disparities remain in income distribution and occupational structure. Overall, the digital economy is reshaping employment structures, shifting labour markets from “job availability constraints” toward “skills matching constraints.” While creating new employment opportunities, it also imposes new demands on workforce skills and human capital development.
Traditional cross-border trade is often characterised by long value chains, where small and medium-sized enterprises (SMEs) rely heavily on multiple layers of intermediaries to access international markets. This results in high transaction costs and weak bargaining power, contributing to the persistent dependence of many developing countries on primary commodity exports and relatively narrow trade structures. Digital cross-border e-commerce platforms, by reshaping supply and demand matching mechanisms, reduce intermediaries and lower information and transaction costs, providing SMEs with a more direct pathway to global markets.
Studies by the United Nations Conference on Trade and Development (UNCTAD) and the World Trade Organization (WTO) indicate that digital trade and platform-based economies are expanding market access opportunities for SMEs and fostering a more diversified and inclusive global trading system. However, significant disparities in digital infrastructure, logistics capacity, and business environments across regions mean that the benefits of digital trade have not yet been evenly distributed.
To sum up, the importance of the digital economy for developing countries lies not only in its role as a new source of growth momentum, but also in its capacity to partially reduce dependence on capital intensity, traditional infrastructure, and accumulated industrialisation. By lowering market entry barriers, expanding service boundaries, and improving resource allocation efficiency, it opens up a low-cost pathway for developing economies to participate in globalisation.
However, the digital economy does not automatically translate into inclusive development gains. The distribution of its benefits remains constrained by factors such as infrastructure development, institutional capacity, and human capital. Therefore, transforming the advantages of digital technologies into inclusive growth outcomes and ensuring that they effectively serve more balanced development objectives remains a key challenge for developing countries.
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Prof. Dr. He Hongmei is the Director of the Institute of South Asian Studies, Yunnan Academy of Social Sciences, China.
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Views expressed in this article are the author's own.
