beyond the internet: radical reformer vs. smooth transformer meelis kitsing international policy...
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Beyond the Internet: Radical Reformer vs. Smooth
Transformer
Meelis KitsingInternational Policy FellowCenter for Policy Studies
(affiliated with the Open Society Institute and Central European University)
PISTA'03 Orlando, Florida
Outline
Why research the Internet diffusion of Estonia and Slovenia?
Methodology
Outcomes in Internet diffusion
Explaining outcomes
Estonia: Radical Reformer
Slovenia: Smooth Transformer
Reformation vs. Transformation
PISTA'03 Orlando, Florida
Why research the Internet diffusion of Estonia and Slovenia?
Public policy: enlargement of the European Union, the eEurope+ and eEurope programs, agendas of governments, international organizations and NGOs.
Political economy of transition The performance of different political and economic
systems (free markets vs. social democratic corporatism)
Role of institutions in economic performance Market failures and public sector failures Trade, FDI and technology transfer
Studies on Internet diffusion
PISTA'03 Orlando, Florida
Methodology
A qualitative approach
Two primary case-studies: Estonia and Slovenia
Two secondary case studies: Latvia and Slovakia
Dependent variable is Internet penetration
Explanatory variables are political, legal and economic factors
PISTA'03 Orlando, Florida
Outcomes in the Internet diffusion
Country Internet Users in 1999 2000 2001 2002 (per 10,000 inhabitants)
Czech Republic 682 971 1363 1467Estonia 1387 2721 3005 4133Greece 705 947 1321 1815Hungary 597 715 1484 1576Italy 1430 2304 2758 3010Latvia 430 619 723 1331Lithuania 279 609 679 679Poland 542 725 978 984Portugal 1000 2494 3494 3555Romania 267 357 447 806Slovakia 1112 1203 1203 1604Slovenia 1257 1507 3008 4008Spain 703 1343 1828 1931
Source: International Telecommunications Union (2003).
PISTA'03 Orlando, Florida
Explaining outcomes
Geography Size of country
Per capita GDP
Civil liberties and democracy
Infrastructure
Number of personal computers
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Estonia: Radical Reformer
Initial starting position: COCOM and limited diffusion of ICTs
Privatization of incumbent telecom company in 1992 Monopoly in fixed lines over voice telephony until end of
2000 Free market in data transmissions, ISPs and backbone
providers Partial liberalization in leased lines and alternative uses
of infrastructure Free market reforms: liberal FDI and unilateral free
trade, flat income tax, zero corporate income tax Government use of Internet – “epistemic IT community” Presence of diverse interests in the telecom sector Predominantly center-right political parties
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Slovenia: Smooth Transformer
Initial conditions: limited technology transfer and trade relations with Western Europe
State/domestic ownership of incumbent telecom company
End of monopoly in fixed lines over voice telephony delayed constantly
Licenses required for ISPs; leased lines partially liberalized; data transmissions monopoly a reality
Trade gradually liberalized; selective protectionism in the FDI regime (discriminatory privatization process)
Social democratic corporatism: centralized labor unions and predominantly center-left political parties
Government use of Internet
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Reformation vs. Transformation
Gradualism and shock therapy in transition Social democratic corporatism and free market system Wealth effect Path-dependence Vested interests and regulatory capture Accountability of incumbent telecom company Regulatory framework: formal and informal factors Internet access prices
PISTA'03 Orlando, Florida
Conclusion
Similar outcomes with different paths of transition and political economy systems
Slovenia represents exception: initial position and wealth
Estonian experience more relevant for policy implications
Little hope for specific Internet policy without broader changes
Independence of regulator Reducing barriers for competition Liberalizing FDI regime Credible commitments to market opening
PISTA'03 Orlando, Florida
Thank you
Presentation and conference paper are available. Research paper and policy paper will be made
available by September at
www.policy.hu/kitsing