Information and Communications for Development 2009: Extending Reach and Increasing Impact - Overview

This document constitutes Chapter 1, an overview, of a more extensive book that analyses how information and communication technology (ICT), and particularly broadband and mobile, are impacting economic growth in developing countries in 2007 - 2008. The book follows on a 2006 report on the state and lessons learned from ICT access in a range of countries.

According to the document, "mobile networks now constitute the world’s largest distribution platform and create a major development opportunity. Mobile technology is described as the technology with mobility, ease of use, flexible deployment, and relatively low and declining rollout costs that enable it to reach rural populations with low levels of income and literacy....Mobile operators are thus taking innovative approaches to reach rural customers, such as offering village phone programs in Bangladesh, low-denomination recharges for prepaid phones in East Africa, and combined voice and agricultural information services in China." Mobile technology is used to access market information, do banking and money transfers, and manage and track health care service delivery, budgetary expenses, drug inventories, and patient compliance with prescribed medications.

The authors contend that high-speed internet connections through broadband access increase productivity and economic growth through access to goods and services, entertainment, information, and markets. "Firms in the media, export, and other information intensive sectors have benefited most from integrating broadband into their business processes.... According to a recent World Bank econometrics analysis of 120 countries, for every 10-percentage-point increase in the penetration of broadband services, there is an increase in economic growth of 1.3 percentage points.... This growth effect of broadband is significant and stronger in developing countries than in developed economies, and it is higher than that of telephony and Internet.... The impact can be even more robust once the penetration reaches a critical mass."

The document describes the expansion of the global market for information technology (IT) - hardware and software maintenance, network administration and system integration, help desk services, application development, and consulting, as well as activities in engineering, such as mechanical design, production, and software engineering - and information technology enterprise solutions (ITES) - services that can be delivered remotely using telecommunications networks: "The services sector is growing globally - it already accounts for 70 percent of employment and 73 percent of gross domestic product (GDP) in developed countries and for 35 percent of employment and 51 percent of GDP in developing countries." The document cites a number of countries, including India, as having expanded IT and ITES services through offshore contracts, and explains that China, Mexico, and the Philippines are emerging as potential "players" in IT and ITES. In addition, transition economies in Central and Eastern Europe (the Czech Republic, Hungary, Moldova, Poland, Romania, and the Russian Federation) have developed their capacity in IT services and ITES, though on a smaller scale.

Not only are economic benefits expanding due to increased work in the IT and ITES sector, but social benefits are increasing, particularly benefits to women. "Another important positive impact of the growth of IT services and ITES is on the status of women. Women account for about 65 percent of the total professional and technical workers in IT services and ITES in the Philippines. In India, women make up 30 percent of the IT services and ITES workforce - a much higher rate of female participation than in the services sector in general - and this share is expected to grow to 45 percent by 2010. More than half of call center employees are women. In both countries, women fill a greater number of high-paying jobs in IT services and ITES than in most other sectors of the economy."

The document predicts that only 27% of global IT growth potential will be reached by 2010 and that countries that "meet the requirements of the untapped IT and ITES market are likely to experience rapid growth in these industries." Countries positioning themselves for growth are described here: "South Africa, for example, is emerging as an attractive ITES location by leveraging its English-speaking workforce. Similarly, the Arab Republic of Egypt, Morocco, and Tunisia are developing a range of ITES operations, including call centers. Israel, Malta, and Mauritius are beginning to fill niche segments such as packaged application development (Israel), remote gaming (Malta), and higher-value-added activities such as advisory, design, and legal services (Mauritius)."

The document describes the introduction of e-government as a potential way to "mainstream ICT applications" including "reduced transaction costs and processing time" and increasing government revenues. In some cases, it can reduce corruption and employee denial-of-service to citizens. "The potential to access public services at home or at a local center also empowers women and minorities. For example, among the users of e-government services, women are usually in charge of dealing with public administrations at the household level. The delivery of e-government services translates to easier access and less time than traveling to or queuing up at government departments. For minorities, ICT facilitates access to relevant public information on rights and benefits, inheritance and family laws, health care, and housing, allowing the public to make informed decisions on issues of importance."

However, there is a higher failure rate in the adoption of e-government by developing countries. IT development and roll-out, particularly as technologies converge, often leaves the rural and the urban marginalised groups behind; fast-paced technological changes have led some countries to a "wait-and-see" position on IT policy and development, and a scarcity of skilled labour in the technical sector leaves some countries behind.

As stated here, ICT sector development and regulation policies may be driven by "market traction" through service providers seeking to diversify their businesses, increase revenues, and cut costs as technology convergence takes place using expanded broadband networks. An example of convergence is the call service of Skype, a provider of computer-to-computer call capability, as well as computer-to-landline or -mobile access. Skype carried an estimated 27 billion minutes of computer-to-computer calls in 2007. "[E]merging trends point to three global good practice principles for regulatory frameworks to enable convergence. First, regulatory frameworks must promote competition....Second, policy makers should rely more on market forces and less on regulation....Finally, policy and regulatory frameworks should allow new technologies to contribute everything they have to offer."

Public-private partnerships are recommended and should include universal service funds and output-based aid that offer incentives for operators to provide services in areas of the country that otherwise would not be commercially viable. "The key to the success of these projects will be ensuring that they are structured so that the private sector has sufficient incentives to invest and operate networks efficiently while also achieving the governments’ policy objectives of broadband network rollout."

The document charts four models for e-government institutions in various countries. It enumerates the benefits and drawbacks of each model and where it is being attempted (available on page 12). It concludes by encouraging a degree of public funding to leverage increased IT and ITES. It describes some of the successful service development strategies in attracting IT services and ITES investments, including developing globally benchmarked skills in partnership with leading standards organisations, in order to attract business from the global finance industry. It concludes with the need for further impact evaluation to ensure that ICT strategies are relevant and to be able to hold governments accountable for their implementation.