The Value and Limitations of Market-Based Innovations for Impact
Posted: Thu Feb 13, 2025 3:43 am
For those of us who work toward economic inclusion in emerging markets, the year and a half since the outbreak of the COVID-19 pandemic has validated one key element of our approach: The value of emphasizing digital innovation in service delivery and infrastructure has never been clearer.
From the outset, the pandemic has underscored the importance of digital infrastructure in getting relief to recipients quickly. Globally, governments announced about $12 trillion in aid last year. According to research by McKinsey, economies with low-cost digital rails, national digital identity and functioning data regimes were able to disburse relief faster and more efficiently. For example, India’s digital infrastructure investments allowed it to instantly deposit aid payments in over 320 million beneficiaries’ accounts. Meanwhile, in the United States, with decades-old payment rails and no national ID, millions of Americans waited months to get relief payments by paper check.
The government wasn’t the only sector to turn to digital service delivery during the pandemic. As people around the world scrambled to get groceries, to keep earning a living and to stay connected to loved ones while socially distanced, services in nearly every sector moved online. Digital adoption and industry shifts that we thought would take years happened within weeks.
At the same time, the COVID-19 economic crisis was a humble japan whatsapp number data reminder that digital infrastructure, private-sector innovation and market-based solutions are not sufficient to ensure broad-based prosperity.
Financial markets were at risk of seizing up in March of 2020: Without government intervention, the economic fallout from the pandemic — and the impact on people in financial precarity — could have been much worse. The need to intervene and stabilize was unquestioned, and the relief packages passed by governments around the globe were a reminder that some economic challenges are so big that they require state action — and that state action depends on social consensus.
The developments of the last year and a half have implications for entrepreneurs, investors, digital platforms, financial incumbents, policymakers and social advocates alike. As I think about the digital future, I’m simultaneously more ambitious and more realistic about the potential for market-based innovations to make a positive impact on the living standards and financial health of low-income communities. Here are three observations, rooted in the experiences of the pandemic, about the value — and limitations — of private-sector approaches in a post-COVID world.
From the outset, the pandemic has underscored the importance of digital infrastructure in getting relief to recipients quickly. Globally, governments announced about $12 trillion in aid last year. According to research by McKinsey, economies with low-cost digital rails, national digital identity and functioning data regimes were able to disburse relief faster and more efficiently. For example, India’s digital infrastructure investments allowed it to instantly deposit aid payments in over 320 million beneficiaries’ accounts. Meanwhile, in the United States, with decades-old payment rails and no national ID, millions of Americans waited months to get relief payments by paper check.
The government wasn’t the only sector to turn to digital service delivery during the pandemic. As people around the world scrambled to get groceries, to keep earning a living and to stay connected to loved ones while socially distanced, services in nearly every sector moved online. Digital adoption and industry shifts that we thought would take years happened within weeks.
At the same time, the COVID-19 economic crisis was a humble japan whatsapp number data reminder that digital infrastructure, private-sector innovation and market-based solutions are not sufficient to ensure broad-based prosperity.
Financial markets were at risk of seizing up in March of 2020: Without government intervention, the economic fallout from the pandemic — and the impact on people in financial precarity — could have been much worse. The need to intervene and stabilize was unquestioned, and the relief packages passed by governments around the globe were a reminder that some economic challenges are so big that they require state action — and that state action depends on social consensus.
The developments of the last year and a half have implications for entrepreneurs, investors, digital platforms, financial incumbents, policymakers and social advocates alike. As I think about the digital future, I’m simultaneously more ambitious and more realistic about the potential for market-based innovations to make a positive impact on the living standards and financial health of low-income communities. Here are three observations, rooted in the experiences of the pandemic, about the value — and limitations — of private-sector approaches in a post-COVID world.