Digitisation is often presented as an almost automatic route to development. Putting government services online, introducing digital payments, creating a national digital ID and suddenly the state becomes faster, cheaper and more accessible.

There is good reason for this optimism. Digital public infrastructure can expand financial inclusion, reduce administrative costs and make public services available to people who were previously excluded from them. But technology is not neutral. Its benefits depend heavily on the institutions using it.

The same digital infrastructure that can make a government more efficient can also make it more intrusive. The difference is not necessarily the technology itself, but the incentives, safeguards and accountability surrounding it.

When Digitisation Works

India provides one of the clearest examples of digitisation being used as a development tool. Its digital public infrastructure, built around Aadhaar (India's national digital ID) and UPI, has helped bring millions of people into the formal financial system. UPI (Unified Payments Interface), in particular, has made instant digital payments possible at enormous scale, while Aadhaar-linked systems have helped the government deliver welfare payments directly to recipients and reduce leakages. The World Bank estimates that Aadhaar-enabled direct benefit transfers have helped transfer hundreds of billions of dollars to beneficiaries.1

Estonia offers a very different example. Rather than simply putting existing bureaucracy online, it built an interconnected digital state. Its X-Road infrastructure allows different government databases to communicate securely, meaning citizens generally only need to provide information once. Estonia also operates online voting and an e-ID system used across public and private services. Crucially, citizens can see who has accessed their data, while the system is supported by legal and technical safeguards.2

These examples have something in common. Digitisation was not treated as an end in itself, but was rather built around relatively clear rules about data, institutional capacity and user trust. In other words, the infrastructure followed the institutions, rather than attempting to replace them.

Britain has a different problem

Britain's recent experience with digital ID illustrates the opposite problem.

Andy Burnham's decision to scrap his predecessor's national digital ID scheme was due to the Labour party's "reset of priorities", with the government arguing that resources should instead be directed towards immediate cost-of-living pressures. The Office for Budget Responsibility had previously estimated the scheme could cost around £1.8bn over three years.3

But the backlash also revealed something deeper. The scheme had become closely associated with immigration enforcement and fears of an increasingly centralised state, with Starmer presenting it as mandatory for right-to-work checks in an illegal-working crackdown. This is particularly significant because Britain has been here before. Labour introduced the Identity Cards Act in 2006, creating a framework for national identity cards and a National Identity Register. After the change of government in 2010, the scheme was repealed and the register destroyed in 2011. Parliament described the central purpose of the new legislation as abolishing the cards and the register.4

The contrast with Estonia is revealing. Estonia's digital state has largely been framed around convenience and giving citizens greater control over their interactions with government. Britain's recent proposal was much more closely associated with enforcement.

The stakes become considerably higher in countries where institutional checks are weaker.

China demonstrates the darker side of the same technologies. Digital identity, online payments, facial recognition and vast databases allow the state to observe and connect information about citizens on a scale that would be difficult to achieve through traditional bureaucracy. WeChat, for example, operates within a system where companies are subject to extensive state demands for data, while real-name registration and surveillance technologies allow authorities to monitor online activity. 5

It is important not to reduce this to the simplistic idea that "digitisation equals surveillance". The problem is the institutional environment surrounding the technology. Where independent courts, media and privacy protections are weak, the same data infrastructure that makes services more efficient can become an instrument of state control.

Even India illustrates this tension. Aadhaar has delivered substantial gains in welfare administration and financial inclusion, but India's Supreme Court has also confronted concerns about privacy, mandatory use and the aggregation of personal information. The Court explicitly recognised the danger that linking Aadhaar across databases could allow the state to construct detailed profiles of individuals.6

This is perhaps the most important point: digitisation amplifies institutional quality. Good institutions can use it to make government more efficient. Weak institutions can use it to make government more intrusive.

So who should digitise?

The countries with the most to gain may actually be developing economies. Where large informal economies coexist with weak physical infrastructure, digital systems can allow countries to leapfrog expensive stages of development. Kenya's mobile-money ecosystem and Brazil's Pix payment system demonstrate how digital payments can spread financial services without requiring the same traditional banking infrastructure. The World Bank now describes digital ID, payments and secure data-sharing systems as core infrastructure for expanding economic opportunity.7

But digitisation should not necessarily come first. In countries where judicial independence is weak or governments have a history of using surveillance against political opponents, legal safeguards should come before digital infrastructure. Privacy laws, independent oversight and meaningful routes of appeal are not luxuries to be added later. They are part of the infrastructure itself.

Britain occupies an unusual position. It is neither a developing country trying to leapfrog missing infrastructure nor an authoritarian state seeking greater control. Its problem is primarily one of trust. That means the answer is unlikely to be simply building a bigger digital system. A more sensible approach would be to establish transparency, demonstrate that data will be used proportionately and allow citizens to opt into services before making digital infrastructure unavoidable.

Overall, whilst digitisation is a powerful development tool, it is not itself a development strategy. It is a mirror of the state using it. Building institutions that make digitisation safe, accountable and inclusive may be the real prerequisite for development across the world.

Footnotes

  1. World Bank, India's digital transformation could be a game-changer for economic development (opens in a new tab), 20th June 2023.

  2. e-Estonia, X-Road (opens in a new tab), 2025e-Estonia, e-Governance (opens in a new tab), 2025.

  3. ITV News, Burnham to scrap digital ID to focus on cost of living in 'reset of priorities' (opens in a new tab), 19th July 2026.

  4. UK Parliament, Identity Documents Act 2010 (opens in a new tab), 2010; House of Lords Library, Identity Cards in the UK (opens in a new tab), 8th January 2016.

  5. Freedom House, China: Freedom in the World 2026 (opens in a new tab), 2026.

  6. Supreme Court of India, Justice K.S. Puttaswamy (Retd.) v Union of India (opens in a new tab), 26th September 2018.

  7. World Bank, Global Digital Public Infrastructure Program (opens in a new tab), 6th May 2026.