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Positioning of ICTs in Economic Models in Developing
Countries
ITU-D Workshop on New Trends for building and Financing Broadband: Policies & Economies
Manama, Bahrain, 24 - 25 September 2013
Slaheddine Maaref Senior Advisor, ITU Regional Office for the Arab States
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ICT & Economic growth in developing countries
Analysts say. . . . . « detailed analysis of experience around the world reveals
ample evidence that, used in the right way and for the right purposes, ICT can have a dramatic impact on achieving specific social and economic development goals as well as play a key role in broader national development strategies »
An extract from :
The Business Model Handbook for Developing Countries
Alexander Osterwalder, Mathias Rossi, Minyue Dong; Ecole des HEC, University of Lausanne.
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ICTs offer every day new opportunities of development and market expansion
for companies products and services
« Adopting ICTs properly in their process of production and sales, SMEs in Developing Countries may have a substantial competitive advantage by providing customized services at significantly lower prices. »
Example : «The Internet makes it possible for a tailor in Shanghai to hand-make a suit for a lawyer in Boston, FedEx taking care of the expedition » [The Economist]
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ICTs offer every day new opportunities of development and market expansion
for companies products and services
ICTs allow to reduce transaction costs within the companies themselves (more efficiency) and with their suppliers and partners (more agility)
In most cases, thanks to ICTs, Companies are able to sell directly to their end customers, thereby saving the costs of intermediaries
Example : By using the web portal
http://www.peoplink.org, craftsmen can now receive up to 95% of the selling price of their products, while they previously received only 10%. [Digital Opportunity Initiative]
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ICT = Multisectoral Infrastructure
« ICT and related applications are increasingly important in the delivery of services such as health and education, in the creation of economic opportunities for poor people, and in amplifying their voices. »
In economic models « It is not a matter of choosing
between ICT and health or ICT and education, but instead that of choosing the most effective way for ICT to help in the delivery of health, education, and small business development services. » [World Bank, 2002]
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Correlation between the development of ICT and that of GDP is well
established
Fairly strong correlation (0.71 in 2008) between the growth of ICT Development Index and that of GDP per capita observed in 153 countries
Source : 2011 International Conference on Sociality and Economics Development, IPEDR vol.10 (2011) © (2011) IACSIT Press, Singapore
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Relationship between IDI index and GNI per capita
in each region of the world
Areas where the ratio between these two variables is the lowest are CEI and Africa
Source : ITU (2011a)
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Growth effects of various ICTs on GDP
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Broadband impact on GDP worldwide is more important than other ICTs
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Correlation between Broadband increase & GDP
Broadband impact on GDP increase is particularly interesting
Source : The Impact of Broadband on the Economy: ITU / 2012
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Correlation between Broadband increase & GDP (some country cases)
Relationship between broadband penetration and contribution to GDP growth
Source : The Impact of Broadband on the Economy: ITU / 2012
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The more access to ICT is easy the more development opportunities arise
Source : Les TIC et la pauvreté, Charles Kenny, Juan Navas-Sabater, Christine Z. Qiang1
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Investing in ICT is the best way for developing countries to get out of crises
«… Indeed, investing in high quality, affordable information infrastructure, education, and knowledge may be the best way to innovate out of this crisis, especially for developing countries. Investing in broader access to knowledge becomes even more important during times of crisis, rather than less so. »
Source : Confronting the Crisis: Its Impact on the ICT Industry,
ITU, February 2009, pg. 71
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ICT: a way to get out of poverty ICT can contribute in eradicating poverty and hanger
(which is one of the UN MDG) Poor people are aware of that: if ICT are available to
them, they are ready to spend more than 2% of their income
Source : Les TIC et la pauvreté, Charles Kenny, Juan Navas-Sabater, Christine Z. Qiang1
Example : Percentage of income spent on telecommunications, water and electricity in Chile:
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Practical Uses of Mobile Communications in Low-income Countries
Obtain better-paid job with more stable and/or increased income
Help farmers in agriculture and food chain intermediaries
Financial inclusion via m-payment and m-banking services
Survive emergencies and natural disasters
Help create a low-carbon economy
Improve health outcomes
14 Source : THE STATE OF BROADBAND 2012:ACHIEVING DIGITAL INCLUSION FOR ALL , ITU
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But to achieve that, ICT prices in developing
countries should be lower!
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Mobile Broadband prices Fixed Broadband prices
Fixed and mobile Broadband prices in developing countries are still much higher than those in developed countries
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Sectorial analysis of ICT impact on economy
Case study of Tunisia Observation of the 90s: Tunisien economy historically
based on traditional services (trade, tourism, transport) and manufacturing outsourcing (Textile-Clothing-Leather and Automotive Components) has reached its limits
insufficient growth rate to improve the population living standards and the resorption of unemployment, especially among graduate
Solution: Structural Readjustment Program: Orientation of the economy towards activities with high technology and intensive skills: ICTs
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ICT impact on GDP in Tunisia The contribution of traditional sectors in GDP declines,
while that of ICT sector grows
2005-2010: Average annual GDP growth - 4.7%
GDP structure was evolving in the direction of a weight regression of traditional sectors versus an increase in the weight of sectors with high added value
Source : Commerce extérieur, INS et compilations ITCEQ.
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ICT impact on GDP in Tunisia ICT to boost exports
2001-2011: the share of high-tech industries in Tunisian exports increased from 2.6% to 12%
Source : Commerce extérieur, INS et compilations ITCEQ.
Decline of the share of industries with low technological integration in exports (62,1 % in 2001 versus 41,2% in 2011)
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ICT impact on GFCF in Tunisia
2005-2010: Fluctuation of ICT contribution in GFCF
Traditional sectors contribution in GFCF is more consistent than that of ICT
GFCF: Gross Fixed capital Formation
Source : Commerce extérieur, INS et compilations ITCEQ.
Need to accelerate investment in ICT
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Some fundamentals to be included in the government strategies
to promote ICT-based growth
Supporting Companies in structural mutations that occur on the production process thanks to and because of ICT
Promote broadband infrastructure development (Regulation, Frequencies, Rural Areas ...)
Ensure human resources adaptation
Encourage the development of local content and applications
Promote a culture of security and upgrade regulations on data protection
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National Broadband Plan World map
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At the beginning of 2013, 134 countries adopts National Broadband Plan to
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NBP Goals and Means of Financing
Source : ITU/ICT Regulatory Database
Goals of the national broadband plans, 2012 Means of financingbroadband plans, 2012
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Impact of National Broadband Plan on BB penetration
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Fixed and mobile Broadband penetrations are higher in countries adopting national broadband plan
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Characteristics of a good BNP (1)
Make the case for broadband, specific to the needs and economic structure of the country, based on thorough market analysis and benchmarking
Be developed in consultation and based on consensus with a broad range of stakeholders
Consider the vital issue of enforceability/execution
Consider both demand and supply side considerations
Be forward-looking over a timescale of maximum 3-5 years
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Source: ITU “Trends in Telecommunication Reform 2012”, ITU
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Characteristics of a good BNP (2)
Be broadly technology-neutral and can include technology-specific measures
Contain detailed, measurable goals and strategies to allow evaluation of progress
Address related legislation to ensure that e-government systems all work together
Balance between high-level strategic direction and detail
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Source: ITU “Trends in Telecommunication Reform 2012”, ITU, Geneva
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National Broadband Strategies in Arab Region (1)
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“eMisr” : National broadband plan in Egypt with the objective of reaching 98% 3G/UMTS coverage by 2015 and 90% 4G/LTE coverage by 2021 [source : GSMA, Arab States Mobile Observatory 2013]
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National Broadband Strategies in Arab Region (2)
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By 2015, all countries should have a national Broadband plan or strategy or include Broadband in universal access /service definitions
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National Broadband Strategies in Arab Region (3)
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Conclusion The positive impact of ICT and Internet on economic
growth is confirmed by several studies and field experiences Obvious correlation between the maturity of Internet
ecosystem and Companies productivity improvement
Economic models having favored investment in broadband achieve better growth rate
Contribution of traditional sectors in GDP declines while that of ICT sector grows
Necessity for well-structured National strategies and plans to promote ICT and Broadband especially in developing countries
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Thank you for your Attention
Slaheddine Maaref [email protected]
ITU-D Workshop on New Trends for building and Financing Broadband: Policies & Economies
Manama, Bahrain, 24 - 25 September 2013