The Political Economy of GovTech

IMF Notes, July 21, 2023

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The Political Economy of GovTech

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Bibliographic details

• Authors: Arthur Silve, Mariano Moszoro
• Published: July 21, 2023
• Series: IMF Notes
• DOI: https://doi.org/10.5089/9798400246500.068

Overview

• The digitalization of public services, known as GovTech, can disrupt traditional mechanisms to promote economic development (for example, financial inclusion, education, and health care), improve the delivery of public services, and expedite development objectives.
• For GovTech to be successful in enhancing the public sector's efficiency, transparency, and inclusiveness, its design and implementation require that private interests be aligned with the overarching goal of a “citizen-oriented” digitalization.
• Because the interests of the state and private providers are often antagonistic, the social dividends from GovTech remain contingent on implementing the appropriate market structure through adequate property rights and regulatory oversight.

Key findings

• GovTech has the potential to:
  • Disrupt traditional mechanisms to promote economic development, including financial inclusion, education, and health care.
  • Improve the delivery of public services.
  • Expedite development objectives.
• Realizing these potentials depends on aligning private-provider incentives with citizen-oriented digitalization goals.
• Antagonistic interests between the state and private providers can limit social dividends from GovTech unless addressed through market-structure design, property-rights arrangements, and regulatory oversight.

Policy implications and recommendations

• Design GovTech initiatives to align private interests with citizen-oriented objectives.
• Implement appropriate market structures to mitigate antagonistic interests between the state and private providers.
• Ensure adequate property rights frameworks and regulatory oversight to secure social dividends from GovTech deployment.

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