Digital Dividends or Dependency? Industrial policy in the age of digital economies

Using Kenya as a primary case study, the authors examine how the shift from traditional manufacturing-based industrial policy to a platform-based digital economy risks creating a new form of 'informational dependency'. While Kenya has successfully integrated into global digital services, the authors find that value capture remains limited because data and algorithmic control reside with foreign platforms. The paper advocates for a holistic industrial policy that integrates data governance, decent work standards, and regional cooperation to ensure digital transformation leads to inclusive development rather than extractive accumulation.

• Industrial policy has evolved from focusing on physical factories and tariffs to the governance of digital infrastructure, where competitiveness is now driven by the ability to coordinate through platforms and turn data into domestic innovation.
• Kenya's digital economy exhibits 'industrial thinness,' where the country is a major exporter of digital labour—with approximately 1.9 million Kenyans in digital work by 2025—yet lacks control over the foreign-owned platforms and data infrastructures that organize this work.
• Low- and middle-income countries often face a 'global data divide' and an informational dependency similar to the 'resource trap,' providing raw data and labour while the intellectual property and analytics gains accrue to foreign entities.
• The commodification of data and labour are linked, with algorithmic management in the gig economy and content moderation sectors—such as at Sama's Nairobi facility—leading to psychological trauma, unstable earnings, and power asymmetries.
• National reforms are insufficient to address global digital asymmetries; therefore, regional frameworks like the African Continental Free Trade Area Digital Protocol and the East African Community (EAC) Digital Trade Protocol are essential to prevent a regulatory 'race to the bottom'.

APA

Cerri, K., & Mexi, M. (2025). Digital Dividends or Dependency? Industrial policy in the age of digital economies. International Institute for Sustainable Development. https://www.iisd.org/articles/policy-analysis/digital-dividends-or-dependency

Chicago

Cerri, Kitrhona, and Maria Mexi. Digital Dividends or Dependency? Industrial policy in the age of digital economies. International Institute for Sustainable Development, 2025. https://www.iisd.org/articles/policy-analysis/digital-dividends-or-dependency.

Wikipedia

{{cite report |last1=Cerri |first1=Kitrhona |last2=Mexi |first2=Maria |title=Digital Dividends or Dependency? Industrial policy in the age of digital economies |publisher=International Institute for Sustainable Development |date=5 December 2025 |url=https://www.iisd.org/articles/policy-analysis/digital-dividends-or-dependency |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{cerri2025digital, author = {Cerri, Kitrhona and Mexi, Maria}, title = {{Digital Dividends or Dependency? Industrial policy in the age of digital economies}}, institution = {International Institute for Sustainable Development}, year = {2025}, month = dec, url = {https://www.iisd.org/articles/policy-analysis/digital-dividends-or-dependency}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }