How e-Government Services Can Pay Dividends

IMF Blog, February 11, 2021

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The accessibility of government information and services online is linked to the volume of foreign direct investment (FDI) a country receives.
A review of FDI inflows in 178 host countries over a period of roughly 16 years finds that the presence of e-government services appears to stimulate the inflow of foreign direct investment.
Countries that implement and adopt strong information and communication technologies, regardless of their level of development, are found to attract more inflows compared to countries with weaker internet access.
The positive connection between e-government and foreign direct investment is visually apparent in the research "chart of the week."

The findings expose a potential point of divergence: the global digital divide and technological disparities between higher- and lower-income economies.
Many people worldwide still do not have access to the internet.
According to the 2020 United Nations’ E-Government Development Index:
- About half of the 193 countries covered by the index score below the world average of 0.60.
- The average index score for countries in Africa is almost one-third lower than the index average.
Denmark, the Republic of Korea, and Estonia lead the world in providing e-government services and electronic dissemination of information.
Several developing countries—including Bhutan, Bangladesh, and Cambodia—have advanced from the middle group of countries in the index to become some of the highest ranked among developing countries in 2020.

Countries should focus on the development of e-government services as part of their strategy for attracting more foreign direct investment.
To reduce the divide between higher- and lower-income economies and provide digital services to all people, governments need to:
- Push for better information and communications technology infrastructure (a critical component for effective e-government services).
- Work to make the internet accessible, affordable, and secure to all.

The ability to renew a passport or driver’s license, pay a tax bill, or access government data online—anytime and anywhere—has grown more important during the COVID-19 pandemic to prevent the spread of the virus.
The pandemic is likely to strengthen the positive impact of e-government on FDI as governments push to provide more services and information online.

Source: How e-Government Services Can Pay Dividends, Ali Al-Sadiq, February 11, 2021