About the Methodology
The IDES takes into account four building blocks relevant to the development of a digital economy:
1. In the Policy & Regulation block, the scorecard captures the extent to which the government actively promotes the development of an inclusive digital economy, as well as the policies and regulations in place that support digital finance and the digital economy.
2. In the Infrastructure block, the scorecard quantifies the level of development of the digital infrastructure (e.g. ID infrastructure, access to electricity, phone ownership and network coverage) and the status of the digital payment ecosystem, including the level of interoperability and the openness of the digital infrastructure for third-party players.
3. In the Innovation block, the scorecard measures the status of a country’s innovation ecosystem. Key elements are the following: the level of development and the synergies within the innovation community; the level of skills in the ecosystem; the presence of supporting infrastructure; and the availability of financing for innovation.
4. In the Skills block, the scorecard tracks the active participation of the public and private sectors in digital and financial skills development, as well as the usage of digital channels for relevant skills development.
The first two ‘blocks’, Policy & Regulation together with Infrastructure, form the foundation of an inclusive digital economy. At UNCDF, this foundation is referred to as the ‘digital rails’. If the digital rails are properly developed, they open avenues for innovation by third-party players and for the use of technology to aid people’s skill development.
Since UNCDF’s key focus is to support digital economies that leave no one behind, the inclusiveness of the digital economy is measured across the four building blocks, based on a supply-side qualitative assessment of the efforts made by the public and private sectors to include key segments of the population in the expansion of the digital economy (see description of DIS above). As a subscore of the DIS, the Women’s Inclusiveness Score (WIS) additionally relies on a set of quantitative indicators on relative gender gaps in the four building blocks of IDES.
The list of indicators used for the scorecard can be found here.
The scores of the four building blocks are closely interlinked. An enabling policy and regulation environment should encourage the development of the infrastructure for a digital economy, spur innovation to accelerate digital transformation, and equip the country’s population with the skills to leverage the dividends of an inclusive digital transformation. As such, it is imperative that we see the Policy & Regulation score in conjunction with the scores for the other three blocks.
As an example, if a country has scored relatively high in Policy & Regulation, compared with the other three blocks, this may indicate that the government recognizes the importance of the digital transformation and has placed it high on their policy agenda. However, if the same country has scored relatively low in Infrastructure, Innovation and Skills, this indicates there is a potential opportunity for the government to improve its policies and regulations to incentivize the necessary investments in relevant infrastructure and innovation. The government may need to reassess its approach to policy implementation in these areas and also work on building the population’s digital skills.
IDES is designed to help national partners bring focus to key priorities and to track their progress. Its primary purpose is as a policy tool, so UNCDF works with national partners to implement it in a way that is locally relevant and pragmatic to use. As such, the implementation of IDES also involves the incorporation of high quality local data sources where available, in consultation with national partners. Given possible variations in local reporting standards, IDES’ main focus is hence less on country-by-country comparisons but primarily on monitoring national developments in inclusive digital economies over time.