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deployment of technologies. Digital technologies and new business models, such as platforms and e-commerce, allow self-employed and small producers, including food delivery, repair services, and passenger transportation, to trade goods and offer services that can help them grow and formalize, create better jobs, and raise incomes. To the extent that digitalization of government services helps to reduce the transaction costs of accessing these services, it may also incentivize formalization. On the other hand, automation within services could create new opportunities for data-driven business backed by large technology firms and potentially displace numerous small and medium enterprises. Further analysis of the potential impacts of technology on these sectors is important because they employ the majority of the poor, who already face many hurdles in accessing better-quality jobs in the formal sector. Greater adoption of technologies requiring higher levels of cognitive, technical, and socioemotional skills could further deepen inequalities in the labor market, unless countervailing public policy measures are put in place. These include improving opportunities for better-quality preemployment education and skills training, massive reskilling of the existing workforce, as well as social protection for workers who are displaced from their jobs. Another feature of South Asia is the low labor force participation rate of women. This low rate means that no matter how much human capital is accumulated by girls in their early and adolescent years, much of it remains underutilized and does not benefit either the country’s growth or the empowerment of women. How digital technologies will affect women’s labor force participation and empowerment depends on several factors. On the one hand, by enabling women to work from home, such technologies may help them to raise their income. On the other hand, lower levels of digital skills and limited access to devices and broadband can accentuate disparities between men and women, while confining women to the home may prevent broader social participation. Although more analysis is essential to understanding the implications of the deployment of technologies in each South Asian country, especially their effects on equity, gender, and inclusion, it is also clear that South Asia needs to invest heavily in dynamic social protection systems and in adaptive reskilling of the population. It is impossible to predict exactly the future course of the economy and the sectoral reallocation of labor. But having in place the institutional mechanisms for protecting vulnerable populations is the best insurance against the backdrop of an uncertain future.
The Digitization of Innovation and the Role of Advanced Human Capital The national innovation system plays a crucial role in the application and deployment of technologies in the economy and society. It comprises many actors and has become increasingly complex. A recent conceptualization highlights the interaction of different components of the technical infrastructure, including information and communications
