What companies need

Businesses have a key role to play in bringing e-commerce to developing countries. But the challenges are great.

Whenever business leaders from the developing world meet these days, two objectives overshadow all else: attracting foreign investment to their countries, and realising the boundless potential of electronic commerce. At recent regional conferences of the International Chamber of Commerce (ICC), executives from member companies in developing countries saw the two objectives as interlinked.

They are convinced that the full range of Internet-based business and information possibilities will be central to economic growth, employment, expansion of trade and improved social conditions. However, e-commerce cannot flourish in a vacuum. Without wealth-generating foreign direct investment and infrastructure development, it will have trouble taking root.

Whether from Africa, Asia, Latin America or the Arab world, senior executives attending ICC regional conferences in the last quarter of 2000 were eager to exploit the Internet’s promise of access to knowledge and markets on an unprecedented scale.

Especially for those huge regions that share common languages – the Arab world and much of Latin America – the Internet can be the great unifier and creator of business opportunities and hence of higher living standards. Business in developing countries rightly sees information and communications technology (ICT) as a chance to compete on terms of equality in world markets.

And yet as long as the digital divide yawns, the web will be worldwide in name only. There are more Internet hosts in Manhattan than in the whole of Africa. The overwhelming majority of the world’s Internet users live in industrialised countries and less than 1% in the world’s poorest countries.

But generalisations can be misleading and the numbers will change. The extent of Internet access varies from country to country. According to some estimates, the number of Internet users in the Asia-Pacific region is expected to jump from 73 million in 2000 to 233 million in 2005. At present rates of growth, China could have the world’s biggest online population within 10 years.

However, most statistics show that the gap between the haves and the have-nots is growing. Because a widening digital divide will heighten the risk of the world’s poorest nations being left out of economic globalisation, G8 governments at their Okinawa summit last July made bridging it a priority.

Many United Nations agencies have engaged in initiatives designed to get poorer countries online. The International Telecommunications Union (ITU), which is able to provide solid backing on a technical level, has established an e-business infrastructure programme in more than 80 countries.

Private enterprise will certainly play its part. The Okinawa Charter on Global Information Society, issued after the G8 summit, remarked: “The private sector remains a central actor driving ICT forward in developing countries and can contribute significantly to international efforts to bridge the digital divide.”

Ultimately, the divide will not be bridged by fine words or by the helping hand of governments of industrial countries, however generous. The key lies in economic development.

This requires continued trade liberalisation through the World Trade Organisation so that markets are opened up to the products and services of the developing world. It means that the governments of developing countries must encourage foreign direct investment through business-friendly policies backed by political and social stability and the rule of law.

The Internet is no magic wand, nor can it bring about change on its own. It depends entirely on computers linked to adequate telecommunications networks. Basic infrastructures, like an effective education system, must be in place if electronic commerce is to flourish and to be more than the preserve of privileged minorities. Hence the need for investment and economic development.

Amid all the hype about e-commerce and the new economy, it is easy to forget that its success will ultimately depend on traditional business values and disciplines.

Products and services will still have to satisfy the customer, costs and profit margins have to be carefully watched and markets studied. In fact, even greater management and organisational capacities will be needed. Ability to deliver on time and as ordered will be crucial to commercial success.

For businesses in developing countries, the great boon of e-commerce is that it puts them in touch with markets and business partners that they otherwise would have scant chance of reaching. In theory at least, the Internet is the great equaliser – provided that companies use it to master the new arts of providing services online and doing business electronically.

Information technology is set fair to becoming the great accelerator, as the business leaders at the ICC regional conferences so clearly perceived. Already, public-private sector co-operative ventures are putting the Internet to work as a channel for disseminating knowledge, whether medical advice, farming techniques or educational support to people in least-developed countries.

The International Chamber of Commerce supports these projects while focusing its own effort on helping companies, in particular small and medium-sized enterprises, to do business over the Internet with maximum confidence and at least cost.

ICC has been engaged in several initiatives.

In December, we agreed with the Global Business Dialogue on Electronic Commerce and the OECD’s Business and Industry Advisory Committee to work together to identify best practices for e-commerce and share expertise in such subjects as Internet property rights, bridging the digital divide, and alternative dispute resolution.

ICC played a pivotal role in devising a Global Action Plan for e-commerce that brings together dozens of private sector initiatives. They cover the full range of self-regulation, including marketing and advertising standards, defences against illegal content, privacy protection, certification and authentication of transactions, and trustmarks enabling users to identify reliable vendors.

An online application is about to be launched that enables businesses to conclude contracts with the help of secure interactive software. The new business-to-business facility will be based on ICC’s model sale contract, which has been in worldwide use since 1997.

ICC’s International Bureau of Chambers of Commerce has established World Chambers Network (WCN), a global hub on the Internet where chambers and individual companies exchange information about themselves, their products and business opportunities. ICC has built its reputation on devising self-regulatory standards and mechanisms for paper-based trade. We have long argued that self-regulation by business users of e-commerce is the most effective and practical solution, considering the rapidity of technological change and the difficulty of enforcing national laws in cyberspace.

For governments, the emphasis should be on achieving regulatory efficiency by allowing business to take on as much of the task as possible. After all, business has a strong interest in creating trust across the whole spectrum of users and providers of services. Without such trust, there will be no electronic commerce. But where should the dividing line be drawn between business self-regulation and government regulation? Clearly, governments must ensure that the law is respected in cyberspace, for example, to protect intellectual property and stop criminal abuse.

Business accepts the key role of governments in establishing Internet policy and is no less determined that the Internet should not become a free-for-all. In general terms, business urges governments to leave untouched all those areas where there is no clear evidence that business conduct will have a negative effect on society or on the fundamental rights of individuals.

I remain optimistic that governments will hold to a minimalist and carefully co-ordinated international approach to e-commerce regulation. The future of e-commerce depends on it – as do the hopes placed in e-commerce in the industrial and developing worlds alike. The stakes are high for all of us.

©OECD Observer No 224, January 2001

Economic data


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