Unleashing the power of information technology

William Mougayar, Yale Center for the Study of Globalization, Toronto

The gloom spread by the dot-com bust is over. Not a day goes by without being reminded by business leaders and think tanks that the future of the economy lies in better harnessing information technology. Yet the first UN-sponsored gathering to discuss the future of IT ended with mostly complaints, not substantive agreements.

This failure is even more striking as a report on IT use prepared by the Geneva-based World Economic Forum (WEF), published just before the UN-sponsored meeting, clearly showed the close correlation between information and communication technology (ICT) use and a country's economic success.

The Global Information Technology Report, a WEF December 2003 study, evaluated 48 factors for each of the 102 countries surveyed, resulting in a composite ranking on readiness and usage of ICT by government, individuals and businesses. After assessing the market, political, regulatory and infrastructure environments, the top 10 IT-savvy countries that surfaced were, unsurprisingly, amongst the most developed and economically successful ones: the United States, Singapore, Finland, Sweden, Denmark, Canada, Switzerland, Norway, Australia and Iceland.

The same week that the World Economic Forum released its scorecard, 170 countries participated in Geneva in a mega- gathering sponsored by the United Nations -- the World Summit on the Information Society.

The Summit was intended to help demonstrate how ICT can help developing countries achieve the UN Millennium Development Goals. But the conference soon devolved into a forum for debate on three heated issues -- governance, open source technology, and financial resources.

On the governance issue, a group of countries led by China, Brazil and France took issue with the de-facto situation that Internet domain names are administered by ICANN, a California corporation under the jurisdiction of the U.S. Department of Commerce. These countries proposed to transfer this authority to the United Nations. After much discussion, however, the issue was shelved until the next Information Society's conference in Tunis in 2005.

The second major discussion targeted the open source movement, a perceived cheaper alternative for software procurement that potentially denies the Western monopoly in the area. However, the Summit's final declaration included only a mild reference to open source, favoring competition and choice.

Although an argument could be made for these grievances, by allowing these issues to dominate the Summit, the developing countries missed the opportunity to learn from developed countries lessons on how to put ICT in lock-step with economic progress.

By allowing the discussion on domain registrations to drag-on until 2005, the Summit missed an opportunity to otherwise deal pro-actively with a handful of more pressing issues where a UN- led approach could make a difference, such as the enforcement of email spam, network security and privacy issues, resolution of electronic transaction disputes, use of digital signatures, Internet taxes and the protection of intellectual property, including the fight against software piracy.

In contrast to the politically correct but vague formulations of the World Summit's Final Declaration, the WEF offered a quantitative analysis that could serve as a guide to action. By analyzing 48 factors for each one of the 102 countries covered, the report offered a clear framework where progress could be effectively measured. The WEF analysis revealed that several emerging economies held very respectable overall rankings in their usage of ICT. Developing countries like Estonia, Malaysia, Slovenia, Chile and Czech Republic have implemented progressive usage of ICT and consistently enjoyed high economic growth.

So what needs to be done to fully exploit the benefits of ICT in developing countries?

The recipe for ICT progress as it impacts advancing socio- economic conditions includes several necessary but not sufficient conditions. An analysis of successful cases reveals that common practices have emerged. First, governments must de-politicize IT policy, break-up existing monopolies, lessen censorship, encourage grass-root approaches for applying technology to solve real problems and open their markets to international trade.

Second, they should enact privatization allowing it to lead to open competitiveness in communications networks and low tariffs, resulting in affordable user access. With less government control, more private sector initiatives will flourish attracting foreign direct investments in technology-related initiatives. Finally, this must all be done in an environment of freedom of expression and the absence of corruption and monopolies.

While the lessons from successful countries are undeniably valuable, it is also useful to understand the adverse impact resulting from not doing the right thing. For example, Lebanon-- a country with a youth unemployment rate of 34 percent according to the International Labor Organization has a relatively well educated and cheap labor pool, but it can't compete in the multi- billion dollar outsourcing market because the government has not been able to lower the cost of telecommunications. Whereas it costs 1.8 cent per minute to call the United States from India, the same call from Lebanon would be 73 cents per minute, making call-center operations extremely uncompetitive.

In India, on the other hand, the entire information technology industry employs just under one million people (in contrast to 40 million unemployed), but they are responsible for US$16 billion in revenues, $12 billion of which are earned abroad, accounting for 24 percent of total exports. This technology segment alone boasts a workers' productivity of $16,000 per capita a figure that is ten-fold their national average.

At the grass-root level, there is also a role for NGOs in promoting ICT as an engine for growth and human development. Bridges.org, a Capetown NGO that prides itself on originating from the technology community and not the development aid community, has been focusing on proving that the digital divide can be narrowed with simple, practical, common-sense projects. They tested physicians and medical students' usage of handheld PDAs in Kenya, Uganda, and Ghana by enabling them to collect health data and access medical reference information from remote point-of-care locations. The trial project proved that technology was an effective tool in improving patient care when included in the practitioners' daily routines.

Although ICT practices alone cannot guarantee economic progress, they are a powerful catalyst for economic growth and poverty reduction when used in conjunction with open markets, education, human rights, freedom of speech and clean government.

The writer, wm@mougayar.com, is an independent scholar and management consultant. A 23-year IT industry participant and observer, he is currently investigating the impact of IT on the globalization process.