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

This research paper by Kitrhona Cerri and Maria Mexi examines the evolution of industrial policy in the digital age, using Kenya as a primary case study. The authors argue that while digitalization offers growth opportunities, it risks creating a new form of structural dependency for low- and middle-income countries (LMICs) if they provide the 'informational raw materials'—data and labour—without controlling the underlying digital infrastructure and governance.

• Industrial policy has shifted from a focus on physical manufacturing and sectoral promotion to the governance of digital infrastructure. In the modern economy, competitiveness is driven by the ability to coordinate through digital platforms and the capacity to transform data into domestic innovation, making data governance a central pillar of industrial strategy.
• Kenya's digital economy demonstrates a paradox of 'industrial thinness,' where significant growth in digital services and online labour does not translate into domestic value capture. Despite having approximately 1.9 million people in digital work by 2025, including 1.2 million gig workers, most data is stored and monetized abroad by foreign-owned platforms.
• There is a direct link between data governance and labour conditions in the platform economy. Algorithmic management often reproduces power asymmetries, leading to vulnerabilities such as psychological trauma in content moderation, unstable earnings, and a lack of social protections for gig workers.
• Because digital infrastructures operate across borders and often evade national oversight, individual state regulation is insufficient. The authors advocate for coordinated regional and multilateral frameworks, such as the African Continental Free Trade Area Digital Protocol and ILO standards, to prevent a regulatory 'race to the bottom' and ensure equitable technology transfer.

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} }