global econ - information communication technologies - lecture

8/9/2019 Global Econ - Information Communication Technologies - lecture

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Information and Communication

Technologies

Dr. Katherine Sauer

Global Economic Issues

ECON 241

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ICTs are the:

hardware

software

networks

media

used to:

collect

store

process

transmit

information in the form of:

voice

data

text

images

The Digital Divide reflects the notion that globally, noteveryone has the same access to ICTs.

(usually referring to the gap between developed and developing

nations)

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Region Spending on

ICTs (% of

GDP)

households with

televisions

fixed telephone

line subscribers

(per 1000

people)

mobile

telephone

subscribers

(per 1000

people)

internet users

(per 1000

people)

East Asia & Pacific 5.3% 80% 188 243 74

Europe & Central Asia 5.1% 92% 79 457 138

Latin Am & Caribbean 5.9% 88% 180 319 115

Mid. East & N. Africa 3.0% 88% 90 129 58

South Asia 5.8% 32% 35 41 26

Sub-Saharan Africa 15% 10 74 19

Least Developed Ctry. 11% 9 28 8

Eur. Monetary Union 5.5% 97% 526 904 443High Income 7.2% 98% 537 772 545

World 6.9% 84% 192 279 140

United States 8.8% 97% 606 617 630

China 5.3% 91% 241 258 73

Measuring the Digital Divide (2005)

Source: World Bank World Development Indicators 2006

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What are the reasons for the dramatic increase in ICTs in

developing nations?

Liberalization and competition (and the resulting increase in

private investment) have driven the development of the

telecommunications infrastructure and ICTs in general.

In many developing nations, the telecom industries weremonopolies. Many governments have now opened up their

countries telecom markets to competition.

- competition leads to lower prices increased adoption

- privatization attracts FDI to the telecom sector

Foreign investors seeking new markets are now welcomed by

governments looking to attract FDI as a way to expand networks,

develop new services, and generate revenue in developing

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Factors that determine the effective use of ICTs

1. physical access - Can people physically get to the ICT?

Ex. In NW Zimbabwe, donkey drawn electro-communication

library carts travel from village to village. Each cart has a radio,

telephone, fax machine, and internet service (as well as books

and periodicals). Some have satellite dishes.

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2. appropriate technology - What are the local needs?

Ex. Motorola makes a mobile phone for Africa that has a two weekstandby time.

Ex. Asynchronous ICT services are sufficient to meet most rural

connectivity needs. (email, voice messaging, digital storage)

IEEE Computer Society 2004 6


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IEEE Computer Society 2004 7


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5. relevant content - Is the content delivered in the local language?

- Is the content useful to the people?

Ex. Your cell phone menu probably allows you to choose from

several major world languages. There are 1800 languages used in

Africa.

Ex. A variety of estimates indicate that between 65% and 80% of theentire internet content is in English.

6. socio-cultural issues -Is your access to the ICTs limited by yourrace or gender?

Ex. In many developing nations girls do not receive the same access

to education as boys. Also, women have traditional roles in society.9


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7. trust - Do people trust that transactions made with ICTs are

private and secure?

Ex. Differences in the number of secure internet servers is vast.

- developed nations have 300 secure servers per million people

- developing nations have less than 2 per million people

8. local economy - How can ICTs boost the local economy?Ex. In the late 1990s in Bangladesh, a non-profit was started to

provide low cost phone service to rural areas.

- some villagers borrowed money to buy cell phones

- they became entrepreneurs and sold phone services (by

the minute) to other villagers

- it is now much easier to call distant family members,

look for jobs, check prices, and transfer funds

Many craftspeople now sell their wares on-line.10


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9. legal/regulatory framework - Is the government helping or

hurting?

Ex. In the Congo there is a 33% tax on new mobile phones

- In Syria the tax is 45.6%.

- In Turkey there is an 18% monthly tax as well as a 25%

special communications tax.

- In Afghanistan, the government receives 14% of its revenuefrom taxes on telecommunications.

- In China, to start a telecomm service you need a complex set of

licenses, the permits are expensive, and you have to pay bribes.

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10. political will - Is the government willing to help promote ICTs?

- Do the people support the government?

Governments could focus on developing a sound legal/regulatory

framework, decreasing corruption, and providing ICTs in markets

that dont have access.

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Summary of the

Information and Communication for Development 2006 report

(World Bank and IFC)______________________________________________________

ICT plays a vital role in advancing economic growth and

reducing poverty.

- survey of firms in developing nations finds that firms thatuse ICTs grow faster, invest more, and are more productive

than firms that dont

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Over the last 25 years, developing countries have

considerably increased ICT access. (especially telephone

services)

Source: World Bank IC4D 2006: Global Trends and Policies report

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Opening up to private competition has led to huge inflows of

foreign investment from overseas.

- between 1990 and 2003, 122 out of 154 developingcountries received $200billion of foreign investment in

telecommunications


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In order to provide ICT access, developing countries need to

transition to a

- well-regulated

- and competitive

service provision.

(half of the countries still have monopolies)

While there has been huge progress in building basic ICT

infrastructure, the advanced use of ICTs is still lagging.

There is a continued need for government support to accessand application initiatives.

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A review of 40 national e-strategies from developing nations

finds that 85% aim to

- expand ICT use in governments and schools

- expand telecommunications infrastructure

- provide adequate legal and regulatory framework

More work is needed to make e-strategies effective tools for

development.- strategies need to have clear objectives

- strategies need clearer budgets

Countries should increase efforts to collect and share ICT data.

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The role of ICT in doing business in developing nations:

Three main ICT indicators:

- percent of firms workforce regularly using computers in

their jobs

- whether a firm uses email to interact with clients and

suppliers

- whether a firm uses a web site to interact with clients andsuppliers

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The study found that firms in developing nations who used ICTs

- had higher sales and employment growth

- had higher profitability- invested more

- had higher productivity

However, there are many challenges

Quality

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Bribery

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Capacity Issues

Example: Business dropped dramatically at a small hotel in

Sengiggi, Indonesia after a riot.

To boost business, the hotel developed a web site. However, the

managers lacked a basic understanding of how to use the web site

and the internet.- After the hotel had the web site designed and launched, it

never updated or improved the site.

- The hotel had 5 computers but only 1 was connected to

the internet.

- Only the manager was allowed to check emails and thiswas done once a month.

Not surprisingly, this firm was dissatisfied with its e-business

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Example: A small fruit and vegetable trading company in Nairobi

outlines his procedures for dealing with an email inquiry:

- Ignore any inquiry from a hotmail or yahoo email address.

- Check to see if the company making the inquiry was a web site and

is listed in the online yellow pages.

- Consider the product requested. It is better to deal with robust

products (e.g. fruit is easier to ship than vegetables) because thelogistics are simpler.

- Check on the internet to see who the competitors are in the market.

- Follow up the inquiry with a quote based on the cost of local

sourcing, packaging, freight costs, and the exporters markup. The

follow up contact is done primarily over email.- A 50% down payment is required and the balance is due upon

proof of shipment.

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Firms face a shortage of workers with ICT skills.

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global econ - information communication technologies - lecture

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