Data and methodological limitations, knowledge gaps, and future work

started to use, or have increased the use of, the internet, online social media, specialized apps, or digital platforms for business purposes. About 17 percent of firms are investing in new equipment or software to adapt their product mix, while 19 percent of firms are changing their product mix. These results suggest that there already is a sizeable increase in demand for DT solutions applied for business, which can also lead to new opportunities for digital entrepreneurs in Senegal. An ongoing study is investigating if having access to DTs before the CovID-19 pandemic helped firms to cope better with this shock. of greater concern in terms of widening digital divides is the finding that the share of medium and large firms investing in DT solutions in response to CovID-19, at 33 and 36 percent of these groups, respectively, is more than twice as large as it is for small firms, at 14 percent, as figure 1.10 shows. A similar divide exists between formal and informal firms. If these digital divides remain unaddressed, these diverging investment trends are expected to widen productivity, sales, and owner and worker income gaps over time.

DATA AND METHODOLOGICAL LIMITATIONS, KNOWLEDGE GAPS, AND FUTURE WORK

Several caveats and limitations were identified in the process of the preparation of this book. first, regarding the studies of digital adoption by households and individuals, there is scarce micro-level information on the usage of DTs such as fixed and mobile (2G/3G/4G) broadband internet, mobile money, and use of other digital platforms. for instance, the 2017–18 household budget survey, the Experimental light Survey 2017–18 (ElEPS), 28 does not offer any direct or indirect measure of whether individuals/households use mobile broadband internet—which account for a large majority of internet users in Senegal—nor on ownership of smartphones. Even if household surveys ask questions on the use of internet such as in the EhCvM 2018/2019 survey, such self-reported internet access measures tend to be highly imprecise because of the lack of understanding by households and individuals of what access to the internet really means (as shown by International Telecommunication union [ITu] and Research ICT Africa [RIA] studies). Because of these limitations, some proxy measures for internet use/adoption were used in the analysis, particularly to measure trends over time. however, these proxies are not free of measurement errors. Collecting more granular and reliable information on coverage, access, and use of the internet through micro-level surveys would allow a more rigorous analysis on barriers of adoption of new technologies and their effects on outcomes of interest.29

Expanding the availability of key data on coverage, access, and use of DTs is key for data integration and to conduct a more rigorous analysis of the importance of DTs for jobs and economic transformation. Second, the results presented in this book correspond to cross-sectional analyses only. Data with granular spatial coverage of digital infrastructure such as 2G/3G/4G were very difficult to obtain, sometimes only for some providers and with limited temporal coverage. having reliable longitudinal data on digital infrastructure and the use of other DTs such as mobile money and digital platforms—which can be disaggregated at the subnational level—would allow future work to identify potential spatial gaps in access to DTs and how these gaps have changed over time. It also would allow a better understanding of the economic and welfare implications of such digital divides.

The analyses included in this book do not make any causal claims about the impacts on welfare and efficiency of DTs or provide exact evidence on what factors cause individuals or firms to adopt new technologies. Given limitations in the data available, the findings presented in this book should be interpreted as correlations and upper- or lower-bound effects of the relationship between DTs and outcomes. Identifying causal relationships requires rigorous implementation of empirical strategies based on quasi-experimental methods to explicitly address multiple issues such as self-selection in the dependent variable, survival bias, endogeneity, and measurement error, among other issues.

Several important policy questions linking DTs to household welfare and firm performance remain to be answered and should be the subject of future research. It would be desirable to continue expanding the evidence base on the efficiency and equity effects of DT adoption. A long list of questions remains unanswered and should be the subject of future work. for example, what is the relative contribution of different factors that explain the effect of DTs on welfare and poverty? what is the current and potential future role and effect of greater youth and women participation, at owner/entrepreneur, managerial, and worker levels, and across sectors?30 how do education levels and digital skills affect the degree to which individuals benefit from access to internet and associated DTs? what are the critical complements that maximize the gains from DT adoption? how does the use of digital platforms such as mobile money and e-commerce affect efficiency and equity? who would benefit most from a fast rollout of digitalization of government functions, particularly delivery of services such as the world Bank’s ID4D (Identification for Development) initiative; asset registries including land, taxation, health and education; and social protection services that mitigate various risks by providing insurance? what are the business functions that are most relevant for inclusive productivity growth, and what is the relative importance of different DTs (such as availability of different digital finance services applications including insurance services and management applications such as inventory control and point-of-sale software)? Is the support of access and the capabilities to use internet and DT solutions that ride on the internet to upgrade general business functions sufficient to significantly improve productivity? or is it also essential to support access and the capabilities to use the DT solutions to upgrade sector-specific business functions if sustained productivity growth and better jobs for more people are to be achieved?

Additional work to identify the causal effects of technology adoption on firm performance is being produced using the firm-level Adoption of Technology (fAT) survey (introduced in the overview). The first study explains the main sources of variation in technology adoption across countries, sectors, and regions, and within firms, and it shows how these variations are associated with productivity levels. This analysis compares Senegal with Brazil and vietnam. The second study seeks to understand how technology adoption, especially DTs, can help firms to better cope with CovID-19. A follow-up survey already has been implemented in a subsample of firms in Senegal, Bangladesh, Brazil, and vietnam. The third study categorizes the patterns of digitalization among firms to understand how investments in infrastructure and other potential complementary factors can further stimulate this process. further work also is being considered using the Business Pulse Survey to monitor the continuing effect of CovID-19 on businesses. Additional work is being explored with AnSD and ADEPME to conduct new waves of the firmlevel survey and integrate Senegal’s analysis with those done by other countries.