Digital transformation holds immense potential to tackle persistent economic inequality in Asia and the Pacific, according to the Asian Development Bank’s (ADB) latest report. However, the benefits of digitalization will only be fully realized if governments actively work to close existing “digital gaps” — including disparities in infrastructure, internet access, and digital skills — that currently limit inclusion across the region.
The report, titled Asian Development Policy Report 2025: Harnessing Digital Transformation for Good, was released on May 6, 2025. It highlights that while developing Asia and the Pacific have experienced rapid digital growth over recent decades, this progress has been unevenly distributed. Urban areas continue to enjoy significantly higher internet penetration and faster mobile internet speeds compared to rural regions. For instance, internet usage rates in cities exceed those in rural locations by 13 percentage points, and mobile internet download speeds are 38 percent faster in urban centers, reflecting a substantial divide in digital access and quality.
Beyond connectivity, the report also points out that many countries in the region lag in digital literacy and inclusion. Low levels of digital skills among large segments of the population restrict their ability to benefit from technological advances. This uneven development hampers efforts to address broader socio-economic disparities, with economic inequality remaining stubbornly high despite the region’s overall growth.
Data from the report underscores this ongoing challenge: the population-weighted average Gini coefficient — a widely used measure of income inequality — in developing Asia was 6 percent higher in 2022 compared to 1990. Moreover, nearly 19 percent of the region’s population continues to live in poverty, defined as surviving on less than $3.65 per day.
ADB Chief Economist Albert Park emphasized the strategic importance of digital inclusion. “Developing Asia and the Pacific’s rapid digital transformation puts the region in a position to reap significant benefits,” he said. “Governments that promote inclusive, sustainable digitalization have an opportunity to not only boost overall productivity and innovation but also reduce economic inequality at the same time.”
The report identifies several ways digitalization can directly alleviate inequality. By expanding access to essential services such as personal finance and education, digital technologies can empower underserved populations. Small business owners, often excluded from traditional financing and networks, can leverage digital tools to grow their enterprises and reach wider markets. Additionally, digital transformation supports environmental sustainability and resilience, vital for a region frequently exposed to climate-related risks. For example, digital platforms can improve disaster risk management through advanced analytics and help promote climate-resilient agricultural practices.
To maximize these benefits, the ADB report urges governments to craft comprehensive national digital strategies that embed goals of inclusion and sustainability. Policymakers should tailor initiatives to local contexts and collaborate closely with private sector players, civil society, and both local and international communities to foster broad-based digital participation.
In summary, while digitalization in Asia and the Pacific has progressed rapidly, addressing infrastructural and skill-based gaps is crucial for transforming this momentum into a powerful engine for reducing inequality. Inclusive digital policies not only promise economic growth but also the equitable sharing of its rewards — a vital step toward a more prosperous and sustainable future for the region.