ECONOMIC PROBLEMS

1
ECONOMIC PROBLEMS PERSPECTIVES OF ICT IN
DEVELOPING COUNTRIES

• Prof. Dr. Ali M. ABBASOV
• The Minister of Communications and Information
  Technologies of the Republic of Azerbaijan
• The Global ICT Summit 2004
• Cyberport, Hong Kong

2
ECONOMIC PROBLEMS PERSPECTIVES OF ICT IN
DEVELOPING COUNTRIES

• Describes the problems of digital divide between
  developing and developed countries, also analyses
  ICT as an infrastructure factor for sustainable
  development, and as an industry the main
  tendencies of the growth of ICT industry and its
  impact on the global economy.
• Describes how ICT has developed in developing
  countries, opens the necessitates of development
  programs and projects, advocacy, campaigns,
  distance education, studies and research on
  technology and Human Development.
• Attempts to provide a perspective on ICTs
  potential for development in developing countries.

3
ICT 2-IN-1

• The United Nations Final Report of the Digital
  Opportunity Initiative finds that the role
  assigned to ICT can be broadly characterized
• in 1 of 2 ways
• ICT as a production sector
• (growth of computer hardware, software,
  telecommunications equipment and ICT-enable
  services)
• 2. ICT as an infrastructure
• /or an enabler of socio-economic development
• (harnessing ICT to accelerate a wider development
  process, infrastructure organism for other
  sectors development of not only economic, and
  also cultural, society, integration carrier in
  national level, and also in regional and global
  levels)

4
EVOLUTION PARADOCSAL EFFECTS

• ICT industrys evolution and its dual effects
• ltgt birth of internet in the late 1960s -gt
  appearance of the personal computer (PC) in the
  1970s -gtchanges -gt evolution (with effects)
• -gt however, ICT in its present context actually
  picked up momentum in the early 1990s when,
  assisted by the communication technology, the PC
  and the web based technology got together to
  emerge as a powerful tool for business and
  development in developed countries. Since then,
  ICT has integrated computing, communications, and
  graphics through the process digitalization.
• -gt the pace of technological change has been
  accelerating. This has been driven by both in the
  hardware as well as the software. There is no
  reason to believe that we have come to the end of
  this process.
• -gt qualitatively, the most important change that
  has been made possible by ICT is that it has
  further separated product development from the
  production process. In some basic sense, this not
  new and began with the basic reorganization of
  work following the division of labor, which no
  answer the developing countries growth factors
  (as well as labor and capital, especially human
  capital). Following Adam Smith, the Industrial
  Revolution had accelerated the process further
  imparting greater efficiency and productivity
  under the factory system.

5
HUMAN DEVELOPMENT BARRIERS

• ICT can help human development
• Providing information
• - For health and education
• - For remote specialists and researchers
• - For developing regions and infrastructure of
  economy
• Enabling empowerment
• - Giving voice to NGOs and free society
• - Empowering governments of developing countries
• - Addressing censorship
• Raising productivity
• - Creating commerce for small business
• Balancing conflict of interests
• - Between government (state bodies), business
  markets and society

• but there are many barriers in developing
  countries
• Scarce infrastructure
• - Telecommunication networks
• - Access to stabile electricity
• - Liberalization and regulation (which is not
  always helping to balance the interests of state,
  business and society). We name this problem
  conflict of interests SBS)
• Low quality of telecommunication
• High cost of ICT and its facilities
• Not updated systems
• Not well training human resources
• - for research, use, maintenance (repair) and
  management
• Low access to high quality human capital (labor
  force), foreign direct investment (physical
  capital), real production (which requests modern
  production methods and their implementation
  mechanisms)

6
2080 PROBLEM

• 15 world high income population
• - 82 internet users
• - 69 mobile users
• - 58 telephone lines
• 85 world low income population (about 80 lives
  in developing countries)
• - 18 internet users
• - 31 mobile users
• - 42 telephone lines
• Gap between developed and developing countries
  scales about digital divide, and so dramatically
  shows the missing links so deeply that one way
  to resolve this problem (some researchers name
  this as 2080 PROBLEM. But in any case using
  optimistic scenario, the present gap in ICT
  provision between countries, there are some
  positive signs
• investment in telecommunication infrastructure
  and related services is expanding at a
  substantial rate in many developing countries, as
  well as in Asia and Eastern Europe
• Investment costs are also decreasing in real
  terms as a result of technological advances in
  ICT.

7
SHRINKING, BUT ALSO SHIFTING

• Share of low and lower-mid income countries

8
LOW HIGH

• THE DIGITAL DIVIDE IN JANUARY 2003

9
THE GAP

• THE GAP BETWEEN THE MOST INDUSTRIALISED COUNTRIES
  AND THE POOREST DEVELOPING NATIONS REMAINS VERY
  LARGE (!)
• While there has been significant progress, there
  also have been many disappointments as result of
  limited progress. Many poor countries in Africa,
  Asia and Latin America continue to have low
  teledencities, in some cases still less than one
  telephone per 1,000 inhabitants. For these
  countries, the period required to bridge the
  investment gap will be much longer the period
  could be as much as 100 years for many part of
  sub-Saharan Africa.
• 4-Key Change have taken place during the last
  decade
• (i) the telecommunication sector has been
  subjected to PRIVATISATION, LIBERALISATION and
  REGULATION at the national level. COMPETITION has
  proved difficult to stimulate, but new
  competitive forces are being brought to bear at
  both the GLOIBAL and NATIONAL LEVELS.
• (ii) the expansion of the market for services and
  equipment has occurred at a dramatic pace. This
  has particularly been the case in South-East
  Asia.
• (iii) key technical advances have enabled many
  less developed countries like China to take
  advantages of the latest digital technologies,
  rather than depending on legacy switching system.
  New channels of communication have been created
  through mobile technologies.
• (iv) the opening up of the transition economies
  of Eastern Europe and CIS has been accompanied by
  a significant expansion of the telecommunication
  infrastructure that was largely neglected until
  the political changes of the late 1980s.

10
THE ICT DIVIDE
11
SCIENCE TECHNOLOGY

• The best opportunities to improving living
  standards including new ways of reducing
  poverty will come from SCIENCE and TECHNOLOGY
• Science, advancing rapidly in virtually all
  fields particularly biotechnology is playing
  a growing economic role countries able to
  access, generate, and apply relevant scientific
  knowledge will have a competitive EDGE over those
  that cannot. And there is greater appreciation of
  the need for high-quality scientific input into
  public policy issues such as regional and global
  environmental concerns. Technological innovation,
  often fueled by government-led research and
  development (RD), has been the driving for
  industrial growth around the world.
• Science and technology cover a range of issues to
  complex and to broad to be qualified by any
  single set of indicators which effects in all
  cases with the technological potential of a
  country to open THE DOORS to develop its economy.
• The growth of the ICT industry worldwide is
  provide us believe the positive-signed global
  economy. So, the global economy has been driven
  by a greater integration of world markets using
  E-COMMERCE and ICT INDUSTRY, and a spectacular
  growth of ICT taking the global economy to the
  new levels, which requires the views to trade and
  integration countries. It seems to be - NEW
  ECONOMY will reinforce the gap between rich and
  poor nations, and increase income and spatial
  inequalities within countries.

12
TECHNOLOGY DIFFUSION CREATION
13
WORLD DATA INFRASTRUCTURE, 2001
14
INVESTMENT TECH COMPETITIVENES

• Rapid technical change accelerating
  globalization are radically changing the context
  for economic development. These changes offer
  developing countries both enormous promise
• MASSIVE PRODUCTIVITY INCREASE MORE ACCESS TO
  NEW RESOURCES MARKETS
• AND CONSIDERABLE RISK OF ECONOMIC DISLOCATION,
  STAGNATION MARGINALIZATION

• INTERNATIONAL COMPETITIVENES
• is more than ever before at the core of
  INDUSTTRIAL SUCCESS, and it is taking NEW FORMS.
• trade liberalization is forcing enterprises to
  face unprecedented GLOBAL COMPETITION in domestic
  as well as foreign markets
• the falling COSTS OF DISTANCE make this
  competition more immediate intense in the PAST.
  Rapid technical change forces PRODUCERS to
  constantly UPGRADE their process technologies
  introduce NEW PRODUCTS
• It also changes patterns of trade, with PRODUCTS
  SEGMENTS based on RD growing faster than LESS
  TECHNOLOGY-INTENSIVE SEGMENTS
• INNOVATION itself is more costly and often risky
  than before, with a continuing high concentration
  of advanced RD spending by COUNTRY ENTERPRISE
• There is now greater INTER-FIRM CROSS-NATIONAL
  COLLABORATION and NETWORKING in innovative effort.

15
THE MAIN REASONSTECHNOLOGIACALECONOMIC
DISTANCE

• INTERNATIONAL COMPETITIVENESS has long been
  considered vital to growth in INDUSTRIAL
  ECONOMIES
• With GLOBALIZATION, it is also becoming crucial
  for the DEVELOPING COUNTRIES that have long
  insulated themselves from the WORLD MARKETS
• Attaining competitiveness is DIFFICULT, and needs
  much more than simply OPENING UP passively to
  FREE MARKETS
• INDUSTRIAL COUNTRIES WORRY greatly about
  competitiveness, about maintaining their
  competitive lead over NEW ENTRANTS, and their
  concerns are revealed by the steady stream of
  productivity and competitiveness analyses.
• THE EVIDENCE SHOWS IT IS LEADING TO GROWING
  DIVERGENCE INDUSTRIAL PERFORMANCE RATHER THAN
  CONVERGENCE
• THE MAIN REAONS FOR THE GROWING IMPORTANCE OF
  INTERNATIONAL COMPETITIVENESS ARE TECHNOLOGICAL
• Since NEW TECHNOLOGIES benefit all activities,
  traded and non-traded, rapid access to such
  technologies in the form of new products,
  EQUIPMENT KNOWLEDGE becomes vital for NATIONAL
  WELFARE.
• Insulation from GLOBAL MARKETS TECHNOLOGIES is
  no longer a viable option for any DEVELOPING
  COUNTRY. Then there is shrinking of ECONOMIC
  DISTANCE a consequence of technological change
  in COMMUNICATION TRANSPORT that REDUCES
  TRANSACTION AND INFORMATION COSTS AND SO FORCES
  ECONOMIES TOGETHER

16
LEARN TO LEARN PROBLEM NO CLASSICAL LAW OF
MARKET, JUST FIND THE NEW PARADIGM LIKE
EXTERNALITIES, SUPPLY/DEMAND UNDOMINATION

• The learning curve is not known in advance.
  LEARNING IS TECHNOLOGY and firm specific,
  often occurs in an uncertain environment where
  the SKILLS, INFORMATION, NETWORKS CREDIT needed
  are not available.
• (((The learning process is, in other words, fife
  with externalities, agglomeration, path
  dependence and CUMULATIVE EFFECTS. THECHNOLOGY
  DEVELOPMENT CAN THUS FACE MARKET FAILURES. J.
  STIGLITZ, 1996)))
• 10 FEATURES OF TECHNOLOGICAL LEARNING IN
  DFEVELOPING COUNTRIES
• Technological learning is a REAL SIGNIFICANT
  PROCESS.
• Firms do not have FULL INFORMATION ON TECHNICAL
  ALTERNATIVES.
• Firms may not know how to build up the NECESSATY
  CAPABILITIES learning itself often has to
  learned. Learning process faces risk, uncertainly
  and cost.
• Learning is path-dependent and cumulative.
• The learning process is highly technology-specific
  , since technologies differ in their learning
  requirements.
• Different technologies have different spillovers
  effects and potential for further technological
  advance.
• Capability building at all levels shop-floor,
  process of product engineering, quality
  management, maintenance, procurement, inventory
  control,outbound logistics and relations with
  other firm and institutions.
• Technological development can take to different
  DEPTH. KNOW-HOW KNOW-WHY.
• Technological learning is rife with EXTERNALITIES
  INTERLINKAGES.
• Technological interactions occur within a country
  and with other countries within the TNCs and
  with other transnational organizations and
  institutions.

17
INFO-SEPARATOR INFO-INEQUALITY

• Scientists in developing countries have a
  problem those who work under adverse conditions
  in developing countries need to achieve more to
  win recognition than those who work under better
  conditions in developed countries, and often
  scientists in these developing countries watch
  their work go unnoticed, no matter its quality.
• Technology exacerbates the information spread
  inequality and further marginalizes scientists on
  the periphery. It is important for researchers to
  know what is happening around the world and to
  publicize their own work.
• Information is key to the GROWTH OF KNOWLEDGE,
  and dissemination of information is crucial for
  scientific enterprise.
• Today there are 1000s of journals and many of
  them are
• TOO EXPENSIVE
• for libraries in developing countries. The best
  academic science library in India, the Indian
  Institute of Science, receives less than 2,100
  serials. In the USA and Europe, many libraries
  subscribe to upwards of 50,000 journals.
• However, few laboratories in developing countries
  have the necessary equipment to access
  information in cyberspace. How can scientists
  working in these laboratories be equal partners
  in the worldwide enterprise of KNOWLEDGE
  PRODUCTION?
• (((THE SIMPLE ANSWER IS THAT THEY CANNOT. AS A
  RESULT, THESE SCIENTISTS SUFFER NOT BECAUSE
  THEY ARE POOR SCIENTISTS, BUT BECAUSE THAY LACK
  TECHNOLOGY)))

18
LT, MT, HTIN FIGURESOF THE 20 FASTEST-GROWING
PRODUCTS IN THE WORLD TRADE (WITH EXPORT VALUES
OF 5 BILLION OR MORE) IN 1990-2000, THE 5
LEADERS ARE ALL HIGH-TECHNOLOGY PRODUCTS.
19
s vs. sANNUAL GROWTH RATES OF EXPORTS BY
DEVELOPED AND DEVELOPING COUNTRIES, 1985-2000 ()
20
ICT ECONOMIC GROWTH

• Growth in use of ICT has been identified as both
  a cause and a result of economic growth. When ICT
  are seen to be the cause of economic growth, this
  is because ICT are being used in the construction
  of systems and applications that are capable of
  generating economic value. This economic value
  can only be realized when the necessary
  mobilization of
• HUMAN CAPITAL
• has taken place. Similarly, ICT systems and
  applications can also be seen to be the result of
  economic growth. As societies become richer,
  human working time spent on tasks is an
  increasing input. This means that there is
  pressure to automate using ICT. This applies even
  when the required skill levels are
• RELATIVELY HIGH.
• THE ROLE OF ICT IN ENHANCING INCOME AND HUMAN
  DEVELOPMENT THROUGH REDUCTION OF BARRIERS TO
  KNOWLEDGE AND INFORMATION ASYMMETRIES IS YET TO
  BE EMPIRICALLY TESTED USING DATA FROM DEVELOPING
  COUNTRIES

21
E-LIFE

• TRADITIONAL E-COMMERCE
• Business to Business only
• Closed groups, often industry specific, limited
  trading partners
• Closed proprietary networks
• Known and trusted partners
• Security, part of network design
• THE MARKET IS A GROUP

• MODERN E-COMMERCE
• Business to Business (B2B)
• Business to Consumer (B2C)
• Business to Government (G2B)
• User to User (U2U)
• Open groups, marketplace model, unlimited
  trading partners
• Open networks
• Most partners unknown
• Security and authentication needed
• THE NETWORK IS THE MARKET

22
GROWTH OF E-COMMERCE

• E-COMMERCE
• (i) B2B Business to Business takes place
  whenever a business concludes some form of
  electronic exchange with a customer, supplier
  partner or other third party business
  organization, e.g. a business procuring its raw
  materials on-line from another business
• (ii) B2C Business to Consumer covers retail
  activities including sales, communications,
  advertising and relationships between commercial
  organizations and their customers, e.g. an
  individual purchasing a book from an on-line
  bookstore
• (iii) G2B Government to Business covers the
  relationship between a government and business,
  typically relating to aspects of procurement of
  goods and services (government procurement),
  dissemination of information (e.g. taxes, duties,
  etc.) and other exchange relationships that a
  government has with businesses
• (iv) G2C Government to Citizen encompasses the
  relationship between a government and its
  citizens, typically relating to aspects of
  collection and payment of funds (e.g. income and
  local taxes), dissemination of information,
  communication of local planning issues and other
  exchange relationships that a government has with
  its citizens
• Currently, E-Commerce breaks down globally into
  80 B2B and 20 B2C transactions

23
BENEFITS OF E-COMMERCE
24
E-BILLIONS

• E-Commerce (1999-2003) Consultant estimates of
  world-wide e-commerce Billions

25
E-TRILLIONS

• E-Commerce is expected to grow by leaps and
  bounds from the 1999 level of US 170 billion to
  about US 6.75 trillion in 2004.
• This will approximately be 7 of the world's GDP
  at that time

26
ICT ECONOMIC GROWTH THE BRIDGES

• ICT can also play a more direct role in the
  PLANNING and MANAGEMENT of INFRASTRUCTURE and
  other key resources. So, international society
  should understand that ICT gap spots the global
  development, and represents a major barrier to
  development, including public administration,
  health, education, etc. by itself.
• MAJOR BRIDGES SHOLD BE
• Bridging the gap in the area of public
  administration
• Bridging the gap in the health sector
• Bridging the gap in education
• Bridging the gap in environment
• Bridging the gap in commerce
• Bridging the gap between consumption producing
• Bridging the gap in economic (internal economic,
  regional integration, foreign policy on
  understanding the interests) policy
• Bridging the gap in production factors global
  access without any barriers and constraints
• Bridging the science and technology for all human
  welfare

27
ICT POVERTY REDUCTION

• UNIVERSAL ACCESS
• to or at least a more equitable distribution of
  access to ICT is widely regarded as a means
  towards the reduction of poverty, especially in
• RURAL AREAS.
• It is necessary to recognize that between the two
  sides of the correlation, access and poverty
  reduction, the path of causality is by no means
  certain. At the risk of starting the obvious,
  greater access to ICT could aid in the reduction
  of poverty but may not be a necessary, let alone
  sufficient condition for doing so. Much more
  probably, on the other hand, is the idea that the
  reduction of poverty would generate demand for
  access. WHY START WITH THIS POINT? Because at the
  core of GOOD REGULATION, especially in developing
  countries, lies an ECONOMIC PROBLEM.
• -gt ALLOCATING SCARCE RESORCES Providing access
  involves the use of scarce resources, and
  providing access to UNECONOMIC AREAS usually
  involves a higher use of scarce resources. The
  economic justification lies in demonstrating
  within reason that gains in SOCIAL WELFARE, for
  example in terms of poverty reduction, can be
  achieved and that the SOCIAL RETURNS are
  SUFFICIENT high to choose one particular project
  over others competing for the same resources.
• -gtPOLITICAL LOBBYING (UN, G7, EU)
• -gtINTERNATIONAL LENDING INSTITUTIONS (WB, IMF,
  EBRD)
• -gt SUSTAINABLITY Sustainability refers to the
  ability of the projects to generate income, or
  other material resources such as sponsorship and
  cross-subsidies from activities and organizations
  related to the projects, after the initial
  sources of funding comes to an end.

28
ICT POVERTY REDUCTION - TELECENTERS

• The real test for sustainability comes during
  periods of economic recession, and projects that
  prove non-sustainable are written-off along their
  resources, although not completely if there is
  some permanent benefit from them, such as
  enabling one person to learn how to read and
  write.
• Sustainability is most likely achieved if the
  provision of access either really does bring
  benefits that can be turned into TANGIBLE
  ECONOMIC GAINS, such as access to MARKET
  INFORMATION and TRADE, or it reveals hitherto
  unknown purchasing power within a community, or
  existing local businesses and community
  organizations substitute telecommunications and
  online access to the internet for more
  traditional modes of communication, such as
  travel and postal services.
• TELECENTERS are perhaps the most widely
  publicized examples of setting up facilities in
  RURAL AREAS in DEVELOPING COUNTRIES to provide
  local access to a TELEPHONE LINE, the INTERNET, a
  COMPUTER, a PRINTER, a FAX MACHINE, a
  PHOTOCOPIER, a BOOK BINDER, A local
  entertainment, AND SO FORTH.
• TELECENTERS in many developing countries have
  been plagued by delays in getting hooked up to
  the public telecommunications network, limited
  bandwidth, poor reliability, and HIGH COSTS for
  INTERNET CONNECTIONS because of lack of local
  points of presence.

29
ICT REGULATION

• COMPOUNDING these problems are prices well above
  cost for domestic and international calls and
  leased circuits common under MONOPOLY REGIMS
  and early in the TRANSITION TO COMPETITION.
• lt.gt BUT these problems are at least solvable,
  especially if the REGULATOR or MINISTRY
  responsible takes them seriously.
• lt.gt Solving them, that is REDUCING COSTS and
  IMPROVING QUALITY of services, may bring the
  telecenters into a phase of sustainable growth
  but only if there is SUFFIIENT DEMEND.
• REGULATION POVERTY REDUCTION
• Regulation is clearly important in promoting
  poverty reduction by promoting and facilitating
  first, UNIVERSAL ACCESS to networks and second,
  bridging the DIGITAL DIVIDE.
• REGULATION POLICY
• The regulation of telecommunications has
  traditionally been aimed at one or more of THREE
  OBJECTIVES
• -gt(i) to regulate the activities of the incumbent
  MONOPOLIST or DOMINANT NETWORK OPERATORS
• -gt(ii) to facilitate the development of and
  access to a NATIONAL INFORMATION INFRASTRUCTURE
• -gt(iii) to promote NATIONAL STRATEGIC INTERESTS

30
ICT REGULATION PRINCIPLES

• REGULATORY PRINCIPLES
• (according the Reference paper to the WTOs Basic
  Agreement on Telecommunications)
• -gt TRANSPARENCY Transparency has economic
  implications because without it there is the cost
  of REGULATORY RISK, the risk that regulations
  will change direction without process
• -gt REASONABLE COST Reasonable cost is an
  important principle based upon cost
  accountability
• -gt NATIONAL TREATMENT National treatment
  requires to treat foreign players under the same
  terms and conditions as local players, including
  for example access to scarce resources such as
  radio spectrum and rights of way and telephone
  numbers.
• REGULATORY STRUCTURAL REFORM
• -gt(i) HUMAN RESOURCES Perhaps the biggest
  challenge facing regulations in developing
  economies is the lack of human resources and the
  availability of professionals with skills in
  accounting, economics and law who also have
  sufficient technical knowledge or understanding
  of telecommunications.
• -gt(ii) INFORMATION CAPTURE Under monopoly
  conditions the incumbent never needs to know such
  details, so long as costs are fully distributed
  across the range of service tariffs so that
  revenues cover total costs, including the cost of
  capital.
• -gt(iii) INDEPENDENCE The concept of an
  independent regulator in this regard is not to be
  confused with being independent of government.
  Independent of government can only mean
  independent of MINISTERIAL INTERFERENCE to carry
  out GOVERNMENT POLICY in a fair and
  cost-efficient way. The REGULATOR is appointed by
  government and its dependent upon government for
  the way in which it raises resources. Therefore
  it can NEVER be independent of government in the
  same way as being INDEPENDENT of INDUSTRY.

31
ICT TRIANGLE

• -gt(iv) MULTI-SECTOR REGULATION It is suggested
  that a super-regulatory agency would be less
  easily influenced by politically motivated
  ministers or captured by commercially motivated
  businesses
• -gt(v) CONVERGENCE A multi-sector regulatory
  agency is not to be confused with consolidation
  of regulation across sectors that are converging,
  such as telecommunications, computers and IT,
  cable TV, broadcasting, internet and mobile
  cellular sectors.
• THE PRINCIPLE CHALLENGE FACING REGULATORS OVER
  THE PAST DECADE HAS BEEN THE TRANSITION FROM
  MONOPOLY AND DOMINANCE TO NEW ENTRY AND EFFECTIVE
  COMPETITION
• THERE IS TRIANGLE INTERCONNECTON
• lt-gt PRIVATIZATION lt-gtCOMPETITION
  lt-gtREGULATIONlt-gt

32
TO FIND TO LOOK TO DO

• FIND WHAT RU LOOKING FOR
• 6.2 billions people on the world
• 5 billions of them live in developing countries
• 1 billions are poor
• No safe water for 1.1 billions
• No stable electricity for 1.8 billions
• Precarious housing for 1 billion
• 56 homes have no TELEPHONE
• Radios per 1,000 people in low income countries
  is 156, but in high income is 1,268 (highest in
  Canada 3,324)
• Cost of international call to USD per 3 minutes
  in low income countries is 5.27, but in high
  income economies is 0.81

• WHAT TO DO?
• Development projects
• Advocacy, campaigns
• Education and training for development
• Studies and research on Technology for Human
  development
• Building policies and applying the real
  mechanisms
• To finance the developing regions of the world
• To improve the management of regulation process
• To great manufacturing markets in developing
  countries, not just export goods and services

33
WORLD GDP (Trillions, current )
2002G7WORLD23
34
HIGH TECH EXPORTS
35
LEADERSLEADING EXPORTERS OF HT MANUFACTURERS IN
2000 ( MILLION)
36
GDP ( BILLIONS) EDUCATION EXPENDUTURE (GNI)
37
THE INFORMATION AGEG7 COUNTRIES EXPENDITURE
(FROM GDP) ON ICT IS ABOUT 1.5 TRILLON (IN
2001)
38
TNCs VIS-À-VIS ECONOMIESIN 2000 ( BILLIONS)GDP
FOR COUNTRIES AND VALUE ADDED FOR TNCs
39
TELECOMMUNICATIONS INDUSTRY IS LEADERTHE
WORLDS TOP10 NON-FINANCIAL TNCs, RANKED BY
FOREIGN ASSETS, 2000( BILLIONS, NUMBER OF
EMPLOYEES - 1000)
40
TOP-10

• ONE OF THE TOP TEN INTERNATIONAL CARRIERS
  (MILLIONS OF MINUTES)

41
ICT POLICY

• ICT policies of necessity have to take into
  account other policy areas, such as
• -gt education policy
• -gt information policy
• -gt trade policy
• -gt investment policy
• -gt cultural policy
• -gt linguistic policy and so on.
• However, the mere establishment of a written
  national ICT policy has VALUE IN ITSELF. At a
  minimum, it conveys the massage that the
  government is forward-looking and intends to
  pursue the utilization of ICT in SOCIETY.
  Government should, of course, aspire to more by
  putting the policy content into actual practice
  and becoming a role model in applying ICT in
  their own administration and services.

42
OBJECTIVES OF POLICY

• COMMON OBJECTIVES OF ICT POLICIES WHICH OFTEN TRY
  TO MEET
• Increasing the benefits from information
  technologies
• Helping people and organizations to adapt to new
  circumstance and provide tools and methods to
  respond rationally to challenges posed by ICT
• Providing information and communication
  facilities, services and management at a
  reasonable or reduced cost
• Improving the quality of services and products
• Encouraging innovations in technology
  development, use of technology and general work
  flows
• Promoting information sharing, transparency and
  accountability and reducing bureaucracy within
  and between organizations, and towards the public
  at large
• Providing citizens with a change to access
  information they may further specify the quality
  of that access in terms of media, retrieval
  performance, and so on
• Identifying priority areas for ICT development
  (areas that will have the greatest positive
  impact on programs, services and customers)
• Attaining a specified minimum level of
  information technology resources for educational
  institutions and government agencies
• Supporting the concepts of lifelong learning
• Providing individual and organizations with a
  minimum level of ICT knowledge, and the ability
  to keep it up to date
• Helping to understand information technology, its
  development and its cross-disciplinary impact

43
ICT POLICY ELEMENTS

• COMMON ICT POLICY ELEMENTS
• DEVELOPMENT OF ICT INFRASTRUCTURE
• -gt Infrastructure development
• -gt Interoperation of information systems
• -gt Enhancement of public services
• -gt Cost savings in services delivery,
  purchasing, communication, etc.
• -gt Electronic commerce and secure transactions
• -gt Development of technological standards
• DEVELOPMENT OF SKILLS
• -gt Research and development
• -gtICT education and training
• DEVELOPMENT OF LEGISLATION AND POLICIES TO
  CORRESPOND TO THE REQUIREMENTS OF NEW ICT
• -gt Diffusion of information technology
• -gt Development of ICT industries
• -gt Trade policies for ICT-related goods and
  services
• -gt Pricing and taxation of electronic services

• -gt Protection of intellectual property
• -gt Privacy of personal data
• -gt Protection of cultural and linguistic
  diversity
• -gt Protection against illegal and harmful
  content
• -gt Adoption of standards
• INSTITUTIONAL DEVELOPMENT AND COORDINATION
• -gt Institutional and regulatory structures
• -gt National ICT development coordination
• -gt International Interface and cooperation
• ACCESS TO ICT
• -gt Access to infrastructure
• -gt Access to information
• MONITORING ICT
• -gt Monitoring the use of ICT
• -gt Measurement of the impact of ICT
• SECURITY REASONS
• -gt Use of applications of ICT
• -gt Protection from e-crime

44
ICT POLICIES IN DEVELOPING COUNTRIES

• FACTORS AFFECTINF THE FORMULATION OF NATIONAL
• ICT POLICIES IN DEVELOPING COUNTRIES
• (The effectiveness of an ICT policy in one
  country does not guarantee that the same recipe
  would work in another and many developing
  countries face similar constraints that need to
  be taken into account when ICT policies
  formulated)
• -gtICT INFRASTRUCTURE IS WEAK lt
• -gtICT-RELATED GOODS AND SERVICES ARE MADE
  AVAILABLE ON SUPPLIERS TERMS AND LOW PER CAPITA
  PURCHASING POWER DOES NOT ALLOW MARKETS TO MATURE
  
• (POOR MANS PC)lt-
• -gtTELECOMMUNICATIONS MONOPOLIES STILL EXIST
  (MAINLY IN THE HANDS OF GOVERNMENT MONOPOLIES)lt-
• -gtICT READINESS VARIES SIGNIFICANTLY BETWEEN
  GOVERNMENT DEPARTMENTSlt-
• -gtPUBLIC SECTOR IS A SIGNIFICANT EMPLOYERlt-
• -gtMNAGEMENT STRUCTURE AND STYLES ARE NOT
  CONDUCTIVElt-
• -gtGOVERNMENTS ARE STRUGGLING TO FIND MONEY FOR
  BASIC PUBLIC SERVICESlt-
• -gtTHE PENETRATION AND INFLUENCE OF THE INTERNET
  ARE STILL MINIMALlt-
• -gtGOVERNMENTS FIND IT DIFFICULT TO RECRUIT AND
  RETAIN QUALIFIED ICT STAFFlt-

45
INTERCONNECTED FACTORS
46
GLOBALIZATION ICT PARTNERSHIP

• Globalization has intertwined the world's
  economies and societies creating a global
  marketplace with new opportunities and challenges
  particularly for developing countries striving
  to participate in the global economy and improve
  their competitiveness. Without a robust
  international framework supported by good
  economic policies and governance at both the
  national and international level, trade and
  investment could deter economic and social
  development. By leveraging ICT, countries can
  foster global participation and partnerships that
  promote job creation, knowledge transfer and
  greater efficiency and transparency in politics
  and business.
• Making available the benefits of ICT is itself an
  global development target. In this context,
  access to basic telecommunication services is
  essential. Telecommunication sector reforms
  creating an enabling pro-competitive environment
  and public-subsidies that support rural expansion
  have improved access and lowered costs.
  Cross-country evidence strongly suggests that
  economies with well-regulated, competitive
  information and communication infrastructure
  experience lower costs, better service, wider
  access and greater disseminations of
  telecommunications and internet services.

47
ICT LABOR KEY ISSUES FOR DEVELOPING COUNTRIES

• 1ST. ICTs EMPLOYMENT
• 2ND. ICTs, SKILLS WORK
• 3RD. ICTs ORGANIZED LABOR

48
ICTs EMPLOYMENT

• ICTs have long been recognized as having an
  important impact on WORK, WORKERS, and the
  WORKPLACE
• ICT can contribute to better employment
  opportunities in developing countries both
  through improved labor market facilitation and
  direct employment
• The global information revolution is making it
  possible for many service-related jobs to be
  outsourced to developing countries and for new
  forms of work outside of the traditional office
  and new opportunities for the self-employed and
  entrepreneurs
• ILO estimates that some 12 million new
  service-sector jobs can be created in the South
• TELEWORKS, TELETRADE AND THE WAY TO SUSTAINABLE
  DEVELOPMENT
• REQUIRE AT LEAST A FOUR YEAR COLLEGE DEGREE
• NEW ECONOMIC OPPORTUNITIES
• - E-COMMERCE - E-SERVICES - TELECENTERS - INFO
  KIOSKS
• GENDER, ICT JOBS Advanced in IT are making
  many manufacturing jobs traditionally held by
  women redundant. On the other hand, IT is
  creating other jobs in service industries where
  women have also traditionally held a large
  proportion of the jobs, including in INFORMATION
  PROCESSING, BANKING, INSURANCE, PRINTING and
  PUBLISHING
• MEN HOLD MOST OF THE HOGH-SKILLED, HIGH-VALUED
  JOBS, AND WOMEN ARE CONCENTRATED IN LOW-SKILLED,
  LOWER VALUE-ADDED JOBS
• ICTs for job placement services. ICTs can also
  assist in the process of matching employers with
  employees. Electronic job marketplaces can help
  employers and employees match labor skills and
  availability to satisfy their demands

49
ICT, SKILLS WORK BRAIN DRAIN

• WHAT ARE THE ICT SKILLS GAPS IN DEVELOPING
  COUNTRIES?
• THE EXTENT TO WHICH DEVELOPING COUNTRIES CAN TAKE
  ADVANTAGE OF NEW EMPLOYMENT OPPORTUNITIES IN THE
  GLOBAL ECONOMY WILL DEPEND TO A LARGE EXTENT NOT
  ONLY ON THE AVAILABLE IT INFRASTRUCTURE BUT ON
  THE AVAILABILITY OF SKILLED WORKERS
• NOT EVERYONE NEEDS TO BE A SOFTWARE ENGINEER BUT
  MOST NEW JOBS CREATED AS A RESULT OF THE
  INFORMATION TECHNOLOGY REVOLUTION REQUIRE A
  MINIMUM LITERACY AND MANY REQUIRE DIGITAL
  LITERACY AND MORE ADVANCED SKILLS AS WELL AS
  ENGLISH LITERACY
• MANY INITIATIVES HAVE BEEN LAUNCHED TO START
  BRIDGING THE IT SKILLS GAPS WITH SPECIALIZED IT
  TRAINING, BUT THE ABILITY OF DEVELOPING COUNTRIES
  TO FULLY TAKE PART IN THE INFORMATION SOCIETY
  WILL DEPEND ON LONG-TERM EFFORTS TO IMPROVE
  OVERALL EDUCATION AND LITERACY LEVELS, TO REFORM
  THE SCHOOL CIRRICULUM TO ADAPT IT TO THE NEEDS OF
  THE EMERGING GLOBAL ECONOMY, AND TO INSTILL
  LIFELONG LEARNING SKILLS EARLY ON
• MANY DEVELOPING COUNTRIES SUFFER FROM A
  SIGNIFICANT BRAIN DRAIN, WHEREBY THE MOST
  EDUCATED OF ITS PEOPLE MIGRATE TO DEVELOPED WORLD
  NATIONS WHERE OPPORTUNITIES FOR HIGHLE PAID
  EMPLOYMENT AND LIVING STANDARDS ARE BETTER. THIS
  BRAIN DRAIN HAS BEEN PARTICULARLY SIGNIFICANT IN
  THE IT SECTOR BECAUSE IT SKILLS ARE IN HIGH
  DEMEND IN THE DEVELOPED WORLD

50
ICTs ORGANIZED LABOR

• ORGANIZED LABOR HAS GENERALLY BEEN OPPOSED TO
  TECHNOLOGY BECAUSE IT IS SEEN AS REPLACING JOBS
  THROUGH AUTOMATION AND DISPLACING WORKERS
• PRIVATIZATIONS IN THE TELECOMMUNICATIONS INDUSTRY
  AROUND THE WORLD HAS ALSO RESULTED IN SIGNIFICANT
  JOB LOSSES
• IT IS PROVIDING NEW MEANS FOR EMPLOYERS TO
  MONITOR EMPLOYEES, CREATING THE POTENTIAL FOR NEW
  TENSIONS BETWEEN MANAGEMANT AND WORKERS
• AS PART OF CIVIL SOCIETY, HOWEVER, LABOR UNIONS
  SHOULD BE INVOLVED IN PARTICIPATORY POLICY MAKING
  PROCESSES AROUND NATIONAL ICT STRATEGIES (In
  February 2003, UNI (Union Network International)
  distributed an official statement highlighting
  its position in the context of the World Summit
  on the Information Society. The statement
  includes 11 proposals or principles along which
  information society should be created)
• ORGANIZED LABOR CAN ALSO MAKE USE OF ICTs TO
  COMMUNICATE WIITH WORKERS AND POLICY MAKERS
  (ON-LINE INTERNATIONAL)

51
UNEMPLOYMENTUNEMPLOYMENT IN THE WORLD (MILLIONS)
52
UNEMPLOYMENT RATES BY REGIONS AND SEX (2003, )
53
KNOWLEDGE ECONOMY NEW ECONOMY

• The GAP between developing countries and
  developed countries in terms of real income and
  labor productivity has been widening since the
  Industrial Revolution. Differences in the
  accumulation of technology may account for much
  of this gap. Although globalization has
  contributed to the increased flow of goods and
  services, it has not resulted in a significant
  transfer of technology to developing countries.
  Technology in developed countries has now
  advanced to such a degree that developing
  countries are at a significant competitive
  disadvantage such that even a ready supply of
  CHEAP LABOR cannot make up the difference.
• Approximately one third of the worlds population
  is technologically deprived, neither producing
  their own innovations and technological
  developments, nor having access to the
  technologies developed by other nations.
• Only 15 of the global population provides nearly
  all technological innovations. One approach to
  reducing this inequality is to foster
  collaboration. Collaboration is seen as a useful
  tool even in countries with advanced technology
  and a highly competitive market place in which
  companies are driving to outperform their
  competition.
• The modern world is characterized by the
  emergence of the knowledge economy or the new
  economy that is dependent on the explicit
  recognition of knowledge as the motive force of
  economic growth. This emergent knowledge market
  system depends on an integration of science and
  technology with policy in ways that do not
  presently exist in many developing countries. As
  a result, the productivity gains that are
  associated with this integration are not fully
  realized in these countries.
• Many of the developing countries will have to
  move from natural resource extraction economies
  to knowledge-based ventures that add value to
  these resources. All these changes require a
  shift in public policy at the national and global
  level. Domestic innovation will not be possible
  without access to international markets access
  to international markets will not be possible
  without domestic technological innovation. Local
  factors and global dynamics are thus intertwined
  in new ways requiring fresh approaches to
  domestic and international policy.

54
THE NEW LAW OF DEMAND SUPPLY

• MOST OF THE NEW ECONOMY ISNT REALLY NEW EXCEPT
  THAT SUPPLY AND DEMAND HAS CHANGED TO DEMAND AND
  SUPPLY.
• TODAYS MARKET IS RULED BY BUYERS INSTEAD OF
  SELLERS AND THIS IS A SEA CHANGE FROM THE MARKETS
  OF THE PAST.
• IT USED TO BE THAT COMPANIES SUPPLIED WHAT THEY
  THOUGHT THE CONSUMER WANTED AND RELIED ON
  MARKETING AND PROMOTION TO STIMULATE CONSUMER
  DEMAND FOR GOODS.
• IN THE 21ST CENTURY THE SUPPLY OF GOODS NOW
  EXCEEDS THE DEMAND BY CONSUMERS.
• LOWERED BARRIERS HAVE BROUGHT MORE COMPETITORS
  INTO THE MARKETPLACE AND THE PRODUCTS ARE TOO
  SIMILAR TO CREATE MUCH DISTINCTION BETWEEN THEM.
• COMPETING IN THIS NEW MARKET WILL REQUIRE
  COMPANIES TO DIFFERENTIATE SUPPLY TO MEET DEMAND
  AND CREATE EVEN MORE DIFFERENTIATION WITH VALUE
  ADDED GOODS.
• WE CAL THIS CANGE A DEMAND STRATEGY AND EVERY
  21ST CENTURY BUSINESS MUST HAVE ONE.
• THERE ARE 6 STEPS TO DEVELOPING A DEMAND
  STRATEGY
• ANALYZE THE DEMAND FORCES AND INDUSTRY FACTORS
  THAT HAVE AN IMPACT ON YOUR BUSINESS.
• SELECT YOUR MOST PROFITABLE DEMAND SEGMENTS.
• BUILD ENDURING VALUE PROPOSITIONS THROUGH
  DIFFERENTIATION.
• IDENTIFY THE STRATEGIES AND BUSINESS SYSTEMS
  NEEDED TO MEET DEMAND
• ALLOCATE YOUR RESOURCES
• EXECUTE YOUR DEMAND STRATEGY
• THE BUILD IT THEY WILL COME THINKING IS A
  CERTAIN FAILURE IN DEMAND ECONOMY. TODAYS
  COMPANIES MUST PURSUE PROFITABLE DEMAND TARGETS
  TO INSURE SUCCESS IN THIS NEW ECONOMY. AND THE
  DEVELOPING COUNTRIES MARKETS NEED TO BE MORE
  DIFFERENTIATED STRATEGIES, ESPECIALLY ICT
  MARKETS, SO TNC AND DEVELOPED COUNTRIES MUST
  RETHING ABOUT THEIR STRATEGIES TO FING MORE
  CONSUMERS WITHOUR BORDERS.

55
SOLVETION FUTUREFROM COUNTRY PARTNERS TO TNCs
PARTNERS

• THE MOST basic problems and challenges that must
  be addressed by policy makers in global
  (international) level to be able enhance IT
  diffusion and development are (WHICH WILL SERVE
  THE SOLVETION OF THE PROBLEMS OF ICT IN
  DEVELOPING COUNTRIES)
• LACK OF FINANCIAL RESOURCES FOR LARGE-SCALE
  IT-RELATED PROJECTS AND PROGRAMS
• THE MAINTANCE OF A STABLE MACROECONOMIC
  (GLOBAL-ECONOMIC) ENVIRONMENT
• THE ADOPTION OF APPROPRIATE SECTOR POLICIES TO
  SPEED UP THE SETTING UP OF NECESSARY
  INFRASTRUCTURE
• CHANGE GLOBAL BUSINESS PARTNERS FROM CAPITAL
  OWNERS STATES TO CAPITAL OWNERS TNCs NOT TO LOSE
  THE TIME FOR ATTRACTING FDI AND COMPETITIVENESS
  ADVANTAGES
• - - - - - - - - - - - - -
  - - - - - - - - - - - -
  - - - - - - - -------
• 01010101010101010101010101010101010101010101010101
  0101010101010101010101010101010101010101010101
• THE CONTINUOUS PROBLEM OF DIGITAL DIVIDE AND
  RALATED ICT ALL PROBLEM OF DEVELOPING WORLD HAVE
  TO BE TAKEN INTO ACCOUNT BY ALL INTERNATIONAL
  SOCIETY AND SHOLD BE ADDRESSED AT ONCE TO CLOSE
  THE GAP OF PROGRESS BETWEEN THE POOR AND THE
  RICH. THE RICHER PART OF THE WORLD AND
  MULTILATERAL INSTITUTIONS HAVE VERY IMPORTANT
  ROLES TO PLAY IN RESOLING THE PROBLEM FOR ALL
  HUMAN WELFARE.
• THE OKINAWA SUMMIT WAS A GOOD FIRST STEP FOR THIS
  LONG PROCESS,
• AND I AM DEEPLY SURE THE GLOBAL ICT SUMMIT HONG
  KONG2004 WILL BE THE NEXT
• THAN YOU FOR ATTENTION