1. The case for a digital government in Mexico

This chapter discusses the technological trends and the new policy scenario brought about by the 4th industrial revolution. Growing connectivity and new emerging technologies such as the Internet of Things, blockchain, cloud computing, data analytics and artificial intelligence enable new production and delivery models. These new business models allow for greater organisational performance, improved decision-making and services that better respond to user needs. The chapter analyses what these changes mean for the Mexican public sector, and why governments have put digital government at the core of public sector reform. The chapter advances a framework for understanding digital government and explains how it can help the government of Mexico achieve its policy objectives.

    

The age of disruption

The world is facing an age of dramatic technological change. The speed, depth and breadth of change promises to reshape economies and societies across the globe. Financial services in rural areas are being delivered through mobile phones, distributed networks and blockchain-based solutions challenge existing business models, self-driving cars are taking the streets, artificial intelligence (AI) prepares to transform medical science, and the Internet of Things (IoT) has opened the road for the rise of digital cities. Data have become a critical strategic resource, so much so that it has been famously referred to as the oil of the 21st century (The Economist, 2017).

Still, the digital revolution is in its early stages and more rapid innovation should be expected as our ability to produce, store and process massive amounts of data accelerates. To put things into perspective and assess the significance of these changes, and the potential for societal transformation, one has but to think that in 1995, barely 4% of the world population was on line (OECD, 2017a). Even today, only 48% of the world population use the Internet (International Telecommunications Union, 2017). The OECD estimates that as digital technologies such as IoT, AI, machine learning, robotics and 3D printing become more ubiquitous and combined with new biotechnologies, the world will see a new production revolution of a scope and speed that have never been seen before (OECD, 2017b).

Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, has convincingly argued that we are entering the fourth industrial revolution (Schwab, 2016). He suggests that current technological trends will significantly transform the production models of goods and services, patterns in socialisation as well as the way governments operate and interact with their constituents. According to Schwab, the fourth industrial revolution will be unique in its speed, scope and complexity, and will be characterised by exponential productivity growth.

Indeed, today’s most valuable companies are those that are able to harness the power of technology and data to gain deeper insights, build closer relationships with their customers, and re-engineer their production processes and service offerings. As markets closed at the end of September 2018, seven of the ten most valuable companies in the world were technology companies. The OECD has found that the ability to use technology and data strategically is a significant factor in explaining the growing productivity gap among firms (Andrews, Criscuolo and Gal, 2015; 2016).

In addition, the world, and OECD countries in particular, has seen the rise of the first generation of digital natives; that is, individuals that grew up connected to the Internet through digital devices. A generation that learns, socialises, works and accesses services in a radically different way than any generation that came before it. A generation that requires very different administrative arrangements and a new digital social contract. For instance, the digital natives will require a very different set of skills to succeed in the digital era than the generation of their parents (or any other before it).

As the pace of change accelerates, governments around the world must not only be able to keep abreast of technological changes as regulators, but they should also be equipped with a broader understanding of how new technologies are changing expectations about public services and policies and the capabilities to act on them. For too long governments from around the world have outsourced digital skills and capability, which has progressively eroded their ability to respond to the rapid technological changes of the fourth industrial revolution. Public authorities have realised that they have some catching up to do in order to update governance arrangements and transform business processes to meet the challenges of the 21st century. Analogue governments cannot effectively serve digital economies and societies.

The government of Mexico has strived to keep up with the pace of change. As its start-up ecosystem matures, the Latin American country has sought to create a conducive environment that allows technology-driven innovation to thrive. Most recently, the approval of the new FinTech law, in force since September 2018, set up a framework for structuring and publicly sharing application programming interfaces in the financial industry to support open digital innovation (OECD, 2018). The law stands as the clear acknowledgement of Mexico’s willingness of the need of keep up with the rapid digitalisation of the economy.

Mexico has also made significant efforts to modernise public sector operations, striving to achieve fully mature digital government implementation. Still, 27% of government transactions in the country require three or more interactions and users of public services in Mexico need an average of 6.9 hours to complete a transaction (IDB, 2018), above the average for the region (25% and 5.4 hours respectively).

The question going forward is not if, but how, to digitalise government and how to do it in a sufficiently agile and sustainable manner to keep serving businesses and citizens ever more effectively. The question has significant import. McKinsey, a consultancy firm, estimates that governments will be spending over USD 1 trillion annually worldwide by 2025 to digitalise their services, with potential cost savings of 60-75% on administrative task (Manyika et al., 2013). The government of Mexico alone had mapped 120 public sector ICT projects with budgets above USD 10 million in 2014 (OECD, 2015). However, the benefits of these massive investments in digitalisation will only be realised if they are guided by a strategic approach that is supported by the right governance frameworks, business processes, culture and capability (OECD, 2014). This realisation has put digital transformation at the centre of public sector reform agendas around the world.

Digital government at the core of public sector reform

The fast-paced development of the digital ecosystems in which public sectors operate today has brought about new opportunities and new challenges for governments. Access to mobile phones has become virtually universal. There are today 104.5 mobile subscriptions per 100 people globally and 78.7% of the OECD population uses the Internet (World Bank, 2018). Mexico itself has seen a profound transformation. The share of Mexicans using the Internet went from 5.1% in 2000 to 31.1% in 2010 and 63.9% in 2017 (World Bank, 2018). Mobile phone penetration has experienced even faster growth (even if it has stalled in recent years), from 13.9 subscriptions per 100 people in 2000 to 77.9 in 2010 and 88.5 in 2017 (World Bank, 2018).

Unprecedented levels of home-based and mobile connectivity make it possible to deliver public services in ways that are more convenient and that generate data to enable continuous improvement, while saving time and resources for users and the public sector. Yet, despite continuous progress in the adoption and use of digital technologies, the digital divide and digital exclusion remain as significant challenges to be tackled (OECD, 2017e).

Beginning in the late 1990s, governments set out to implement e-government – “the use of information and communication technologies (ICTs), and particularly the Internet, to achieve better government” (OECD, 2014). These initiatives aimed at responding to the growing demand for more responsive, efficient, effective and participatory government. National e-government projects succeeded in making public information more readily available and putting public services on line as a means of modernisation. These reforms had important achievements, allowing in effect individuals and businesses to more conveniently access services remotely and public administrations to achieve efficiency gains in service delivery.

While the OECD was early in calling for a whole-of-government approach, common business processes and greater integration (OECD, 2003, 2005, 2009), the e-government wave had a number shortcomings. Most notably, it left a legacy of siloed systems, digital fragmentation and the digitisation of systems without significant transformation – from processes to organisational culture. The digital maturity of public sector organisations, but most importantly, its leadership, governance frameworks and the digital capability of the public sector, were not conducive to the emergence of modern, digital governments.

Mexico was not the exception to this trend. The push for digitalisation coming from the centre, driven by the Coordination of the National Digital Strategy at the Office of the President, has achieved significant success. Today roughly 90% of government transactions can be initiated on line and 75% can be completed digitally (IDB, 2018), making Mexico the uncontested leader in the region by this metric1. Nevertheless, only 10% of Mexicans reported completing their last government transaction through digital channels and several interactions with government are too often needed to complete a single transaction (IDB, 2018). This suggests that Mexico has yet to reap the full benefits of digital government in terms of enhancing interactions with government by enabling a multi-channel, joined-up and user-driven approach.

This conclusion is in tune with the paradigm shift in the use of technology in the public sector. This shift has been driven by growing fiscal pressures, citizens’ expectations of greater openness, the limitations of siloed systems and a more dynamic environment of digital innovation. There is growing awareness among relevant stakeholders of the critical role digital technologies can play in ensuring public sector effectiveness, helping achieve critical policy objectives such as sustainable development, public trust and overall public sector performance. This paradigm shift is embodied by the transition from e-government to digital government, characterised by dramatic change in how the public administration relates with citizens and businesses.

Digital government uses technology to enable open, user-driven, proactive and inclusive public services; redesign government processes; and take data-driven decisions. The strategic use of technologies in the public sector also enables the rise of government as a platform and facilitates greater integration of services, but also deeper collaboration and sharing within and outside of the public sector, from innovative ICT commissioning processes to open government data and crowdsourcing of collective knowledge (OECD, forthcoming). Digital government is about users taking the centre stage by putting digital technologies and data as strategic tools at the core of the public sector reform agenda (OECD, 2014).

To keep in tune with this age of disruption, OECD governments, including Mexico, must be able to integrate digital tools and approaches into their DNA, or else be increasingly challenged by new business models and players that are better able to meet the needs of citizens and businesses. Not adapting, failing to deliver the quality services citizens expect and policy failures due to the lack of technological capability could mean a rapid erosion of trust in public institutions. Public organisations would thus be challenged by new digital organisations and become less relevant and capable. Ultimately, they might lose the standing and strategic position to help set up their national economies for success in the 21st century.

The OECD has identified six areas of intervention that can help to restore, sustain or increase levels of trust in government (OECD, 2017c; 2017d):

1. 1. Reliability: Governments have an obligation to minimise uncertainty in the economic, social and political environment.

2. 2. Responsiveness: Trust in government can depend on a citizen’s experience when receiving public services – a crucial factor of trust in government.

3. 3. Openness: Open government policies that concentrate on citizen engagement and access to information can increase public trust.

4. 4. Better regulation: Proper regulation is important for justice, fairness and the rule of law as well as in delivering public services.

5. 5. Integrity and fairness: Integrity is a crucial determinant of trust and is essential if governments want to be recognised as clean, fair and open.

6. 6. Inclusive policy making: Understanding how policies are designed can strengthen institutions and promote trust between government and citizens.

Figure 1.1. The digital transformation of the public sector

Source: OECD (forthcoming), “The digital transformation of the public sector: Helping governments respond to the needs of networked societies”.

Digital government significantly advances state capability to deliver results across these dimensions by making government more data- and evidence-driven, enabling it to act as a platform that leverages collective intelligence by facilitating co-creation with internal and external stakeholders, and strengthening transparency and accountability. All of these characteristics result in more robust, user-driven, proactive and effective policy making, and service delivery arrangements and solutions. Digital government has become an essential policy area, not so much for the future of government, but for its present and continuous modernisation efforts.

References

Andrews, D., C. Criscuolo and P. Gal (2016), “The best versus the rest : The global productivity slowdown, divergence across firms and the role of public policy”, OECD Productivity Working Papers, No. 5, OECD Publishing, Paris, https://doi.org/10.1787/63629cc9-en.

Andrews, D., C. Criscuolo and P. Gal (2015), “Frontier firms, technology diffusion and public policy: Micro evidence from OECD countries”, OECD Productivity Working Papers, No. 2, OECD Publishing, Paris, https://doi.org/10.1787/5jrql2q2jj7b-en.

IDB (2018), Wait No More: Citizens, Red Tape and Digital Government, Roseth, B., a. Reyes and C. Santiso (eds.), Inter-American Develpoment Bank, Washington, DC, https://publications.iadb.org/handle/11319/8930.

International Telecommunication Union (2017), Measuring the Information Society Report 2017, International Telecommunication Union, Geneva.

Manyika, J. et al. (2013), ‘Disruptive technologies : Advances that will transform life business, and the global economy’, McKinsey Global Institute, May. https://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/disruptive-technologies.

OECD (forthcoming), “The digital transformation of the public sector: Helping governments respond to the needs of networked societies”, OECD, Paris, forthcoming.

OECD (2018), Open Government Data in Mexico: The Way Forward, OECD Publishing, Paris, https://doi.org/10.1787/9789264297944-en.

OECD (2017a), “Going digital : Making the transformation work for growth and well being”, OECD, Paris, https://www.oecd.org/mcm/documents/C-MIN-2017-4%20EN.pdf.

OECD (2017b), The Next Production Revolution: Implications for Governments and Business, OECD Publishing, Paris, https://doi.org/10.1787/9789264271036-en.

OECD (2017c), Trust and Public Policy: How Better Governance Can Help Rebuild Public Trust, OECD Public Governance Reviews, OECD Publishing, Paris, https://doi.org/10.1787/9789264268920-en.

OECD (2017d), Trust in government website, http://www.oecd.org/gov/trust-in-government.htm (accessed 13 March 2019).

OECD (2017e), “Report on the implementation of the Recommendation of the Council on Digital Government Strategies”, C(2017)139, OECD, Paris, https://www.oecd.org/gov/digital-government/Recommendation-digital-government-strategies.pdf.

OECD (2015), Government at a Glance 2015, OECD Publishing, Paris, https://doi.org/10.1787/gov_glance-2015-en.

OECD (2014), “Recommendation of the Council on Digital Government Strategies”, OECD, Paris, https://www.oecd.org/gov/digital-government/Recommendation-digital-government-strategies.pdf.

OECD (2009), Rethinking e-Government Services: User-Centred Approaches, OECD e Government Series, OECD Publishing, Paris, https://doi.org/10.1787/9789264059412-en.

OECD (2005), e-Government for Better Government, OECD e-Government Series, OECD Publishing, Paris, https://doi.org/10.1787/9789264018341-en.

OECD (2003), The e-Government Imperative, OECD e-Government Series, OECD Publishing, Paris, https://doi.org/10.1787/9789264101197-en.

Schwab, K. (2016), The Fourth Industrial Revolution,World Economic Forum. Geneva.

The Economist (2017), “Data is giving rise to a new economy”, The Economist, 6 May.

World Bank (2018), World Development Indicators (database), World Bank, Washington, DC, https://datacatalog.worldbank.org/dataset/world-development-indicators.

Note

← 1. While in Uruguay 100% of government transactions can be initiated digitally, only 40% of them can be completed digitally from end-to-end.