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28 Feb 2025

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Closing the North/South Digital Transformation Gap

The world's top 20 economies encompass 75 to 80 percent of the world's total economy. This is true whether looking at GDP in nominal or purchasing power parity (PPP) terms. That leaves 160 nations or so to share the remaining 20 to 25 percent.

This picture is much less dire when looking at national populations rather than national borders, because the world's top 20 economies include China and India, which have almost 2.9 billion of the world's 8 billion people within their borders. Thus, the world's top 20 economies encompass 59 percent of its people.

The average annual income of the top 20 is about $18,000, while the average annual income of the other 160 or so is about $6,000. The average of the Top 20 group is similar to that of Chile or Bulgaria. The average of the other 160 is similar to that of Ecuador or Thailand.

Thus, there is a 3X disparity in general wealth across the world when viewed this way. But, as the IDCA Digital Economy Report (2025) shows, there is far, far more disparity in the digital infrastructure among nations, as much as 100,000X in the footprints of data centers. There are thus big gaps in the resultant progress in building out Digital Economies. (The report was released this week as noted in the “Inside IDCA” item at the end of this newsletter).

Economic and technological progress cannot be traced in a linear fashion, that is to say it cannot be measured along a straight line. The data creates curves, often very steep curves, that get increasingly more difficult to climb. A gain of 10 percentage points in, say, internet access is less expensive and less difficult to achieve in most developing nations than in most developed nations, for example.

Progress can be fitful and inconsistent in any nation. But the disparity among most nations is not so great so as to be impossible to overcome. There is much talk today among developers, analysts, investors, and companies about dramatically increasing the world's data center footprint and digital infrastructure. Most of this talk involves the design, operational, and performance implications of AI chips and the concepts of large, multi-facility, multi-phase “AI Centers.” The data shows that the developing world can play an increasing role in these discussions, to bridge the gap between a 3X income disparity and infrastructure disparities of as much as 100,000X as outlined in the IDCA Digital Economy Report (2025).

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